Skip to content

CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments

Anita obtained a bearer cheque from its maker, Deepak, by fraud. She transferred it to Farid for value. Farid sues Deepak and Deepak shows the fraud. Under Section 118(g), who bears the burden of proving that Farid is a holder in due course?

Farid bears the burden. Once it is shown that the cheque was obtained from the maker by fraud, the proviso to Section 118(g) places on the holder the burden of proving that he is a holder in due course, instead of the maker disproving it.

  1. ADeepak, because the maker must disprove the claim
  2. BAnita, because she was the original fraudster
  3. CFarid, because the instrument was obtained from the maker by fraudCorrect
  4. DNobody, because the presumption always remains in force

Explanation

The proviso to Section 118(g) says that where the instrument has been obtained from the maker by means of an offence or fraud, the burden of proving that the holder is a holder in due course lies on the holder. Once fraud is shown, Farid must prove he took for value, before maturity and without notice of defect. The presumption in his favour therefore does not apply.

Did you get it right without looking?

One question tells you little. A timed set on Law relating to Negotiable Instruments shows your real accuracy, how long you take and where you lose marks.

Practise Law relating to Negotiable InstrumentsFree diagnostic mock

More Law relating to Negotiable Instruments questions