Rights of Holder:
1. An endorsement in blank may be converted by him into an endorsement in full
2. He is entitled to cross cheque
3. Can negotiate a cheque with the third person, if negotiation is not prohibited by any crossing etc.
4. Can claim payment of the instrument and sue in his own name on the instrument
5. Can get the duplicate copy of the cheque otherwise lost.
HOLDER IN DUE COURSE:
• Holder in due course (section 10 of NIA, 1881) means a person who has obtained the instrument for lawful and valuable consideration; must have obtained instrument before maturity; is not aware of the defect in the title of his immediate transferor and has nothing apparently wrong in the instrument.
• For instance, if a borrower of the bank, deposits a cheque with his bank in a discharge of his debt, then the position of the bank is “holder in due course”.
Conditions to be Holder in Due Course:
• Possession of instrument in the hands of a holder in due course- if the order, the name must exist as payee or endorsee
• Negotiable Instruments must be regular in all aspects
• Instruments must have been obtained for valuable consideration
• The instrument must have been obtained before the amount mentioned therein becomes payable.
• Holder in due course must obtain an instrument without having any doubt in its title. He receives the instrument free from any defective title.