CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments
Ishaan signs and delivers to Jatin a stamped paper with an incomplete cheque. Jatin completes it for an amount within the stamp cover but higher than Ishaan intended, and negotiates it to Kamal, a holder in due course. Under Section 20, Ishaan's liability to Kamal is for:
Ishaan is liable to Kamal for the amount specified in the completed instrument, up to the amount covered by the stamp. Under Section 20, the signer is liable to a holder in due course for that amount, while the intended-amount limit applies only to other holders.
- AOnly the amount Ishaan intended
- BThe amount specified in the instrument, not exceeding the amount covered by the stampCorrect
- CNothing, because the instrument was filled without Ishaan's approval
- DAny amount, even above the stamp cover
Explanation
Section 20 gives prima facie authority to complete the instrument for any amount not exceeding the stamp cover, and the signer is liable to a holder in due course for that amount. Only a person other than a holder in due course is limited to the amount intended. Kamal is a holder in due course, so he recovers the full completed amount within the stamp cover.
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