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

Deepak holds a bill of exchange accepted by Gupta Exports, payable to order. After the maturity date, Gupta Exports pays Deepak the full amount and the bill is satisfied. Deepak then indorses the bill to Farah, who is unaware of the payment. Which statement is correct under the Act?

The bill cannot be negotiated after the acceptor has paid or satisfied it at or after maturity. Negotiation is possible only until such payment or satisfaction, so Deepak's later indorsement gives Farah no negotiable title, even though she was unaware of the payment.

  1. AFarah can negotiate it further because the bill was originally payable to order
  2. BFarah acquires a valid negotiable title because she had no notice
  3. CThe bill cannot be negotiated after payment or satisfaction by the acceptor, so Farah gets no title as holderCorrect
  4. DThe bill can be negotiated only by the acceptor after maturity

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. Gupta Exports, the acceptor, has already paid, so the bill is no longer negotiable. Farah's lack of knowledge does not revive negotiability.

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