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CS Professional · Banking and Insurance - Laws and Practice · Payment and Collection of Cheques and Other Negotiable Instruments

Anita, the maker of a promissory note payable to order, pays it in full on the due date to the holder, Bharat. Bharat then indorses it to Chandan, who has no notice of the payment. Under Section 60, what is the position about negotiating the note?

The note cannot be negotiated after payment. Section 60 keeps an instrument negotiable only until payment or satisfaction by the maker, drawee or acceptor at or after maturity. Once Anita paid on the due date, Bharat's indorsement to Chandan could not make it negotiable again.

  1. AIt can still be negotiated by Bharat, as the note remains negotiable for three years
  2. BIt cannot be negotiated after payment or satisfaction by the maker at or after maturityCorrect
  3. CIt can be negotiated only if Chandan pays value
  4. DIt can be negotiated if Anita consents in writing

Explanation

Section 60 allows negotiation until payment or satisfaction by the maker, drawee or acceptor at or after maturity, but not after such payment or satisfaction. Since Anita paid on the due date, the note ceased to be negotiable. Chandan's lack of notice and his payment of value do not revive it.

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