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CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments

Consider these statements about Section 20 of the Negotiable Instruments Act, 1881. I. The signer is liable on the completed instrument in the capacity in which he signed it, to any holder in due course. II. A person who is not a holder in due course may recover from the signer more than the amount he intended to be paid, if it is within the stamp cover. Which is correct?

Only statement I is correct. The signer is liable to a holder in due course in the capacity in which he signed. A holder who is not in due course cannot recover more than the signer intended to pay, even if the amount is within the stamp cover.

  1. AOnly I is correctCorrect
  2. BOnly II is correct
  3. CBoth I and II are correct
  4. DNeither I nor II is correct

Explanation

Statement I reflects Section 20. Statement II is wrong because the proviso says no person other than a holder in due course can recover from the person delivering the instrument anything in excess of the amount intended by him to be paid.

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