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

Under the Negotiable Instruments Act, 1881, a person is a 'holder' of a cheque if he is:

A holder is a person entitled in his own name to possess the instrument and to receive or recover the amount due on it from the parties to it. Merely having physical possession, as a finder does, is not enough.

  1. AAny person who has physically found the cheque
  2. BAny person entitled in his own name to possession of it and to receive or recover the amount due from the partiesCorrect
  3. COnly the person who drew the cheque
  4. DOnly a person who gave consideration for the cheque

Explanation

Section 8 defines the holder as a person entitled in his own name to possession of the instrument and to receive or recover the amount due on it from the parties. A mere finder has no such entitlement. Consideration is not part of the definition of holder; it matters for a holder in due course.

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