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

Vikram Steels makes a promissory note payable to Gupta & Co. on 1 March. Gupta endorses it to Hari Lal on 10 March, after maturity but before Vikram has paid anything. On 15 March Vikram pays Hari Lal in full and takes back the note. Under Section 60, which statement is correct?

The 10 March endorsement was valid, but negotiation ended on 15 March. Under Section 60 an instrument may be negotiated until the maker, drawee or acceptor pays or satisfies it, even after maturity, but not after such payment.

  1. AHari Lal could not take it, as no negotiation is possible after maturity
  2. BThe note can be negotiated by the payee after maturity until payment, but not after Vikram's payment on 15 MarchCorrect
  3. COnly the maker may negotiate it after maturity
  4. DThe note stays negotiable even after Vikram's payment, if it has not been cancelled

Explanation

Section 60 allows negotiation until payment or satisfaction by the maker, drawee or acceptor, at or after maturity; only the maker, drawee or acceptor cannot negotiate after maturity. Gupta's endorsement on 10 March was valid. After payment on 15 March, no further negotiation is possible.

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