''Holder in due course''
Section 9 of the Negotiable Instruments Act, 1881 deals with ''Holder in due course''. "Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if [payable to order,] before the amount mentioned in it became payable, and without having sufficient cause to The Act came into force on 01 Mar 1882.
"Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer,
or the payee or indorsee thereof, if 1[payable to order,]
before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.
Section 9, The Negotiable Instruments Act, 1881 (Act 26 of 1881).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Pradeep Kumar vs Post Master General
Court's Decision & Legal Precedent
When a negotiable instrument (including Kisan Vikas Patras) is presented for encashment at a post office, the post office must verify that the person presenting the instrument is the 'holder' as defined under Section 8 of the Negotiable Instruments Act, 1881, by following the prescribed rules and procedures including verification of identity slip and obtaining written application from the actual holder. Payment made to a person in possession of the instrument but not entitled to receive payment in his name is not a valid discharge under Section 78 or Section 82(c) of the NI Act. Such payment constitutes negligence and violates the requirement of 'payment in due course' under Section 10 of the NI Act. The post office is vicariously liable for fraudulent acts of its employees committed during the course of employment, and such liability cannot be avoided by claiming that the employee acted in individual capacity or that the fraud was committed by a third party.
On this section: Defines 'Holder in due course' - Rukhsana was not a holder in due course as she obtained possession by means of fraud
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Punjab & Sind Bank vs Vinkar Sahakari Bank Ltd.
Court's Decision & Legal Precedent
A Pay Order issued by a bank is a cheque within the meaning of Section 138 of the Negotiable Instruments Act, 1881, and the holder of such Pay Order has the legal standing to file a criminal complaint for dishonour. The fact that the drawer and drawee are the same banking institution does not prevent the instrument from being a cheque when held by a third party. The holder is presumed to be a holder in due course under Section 118(g) unless the contrary is proved, and such presumption cannot be rebutted at the stage of quashing the complaint but only during trial.
On this section: Definition of holder in due course; court applied this to establish the bank's status
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Milind Shripad Chandurkar vs Naimulla M. Khan
Court's Decision & Legal Precedent
A sole proprietor of a proprietary concern cannot maintain a complaint under Section 138 of the Negotiable Instruments Act, 1881, based solely on affidavit claiming proprietorship. The proprietor must establish his proprietorship through documentary evidence such as business registration documents, tax records, bank account statements, and similar official records to satisfy the statutory requirement of being the 'payee' or 'holder in due course' of the cheque. Mere affidavit statements, admissions by the accused, or oral testimony of witnesses are insufficient when documentary evidence can reasonably be expected to exist for a substantial business undertaking.
On this section: Definition of 'Holder in Due Course' - any person who for consideration became possessor of a cheque
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Abilio Dsouza vs Adarsh Yeshwant Shet Mayekar
Court's Decision & Legal Precedent
A sole proprietor can file a criminal complaint under Section 138 of the Negotiable Instruments Act in his individual capacity for cheques issued in the name of his sole proprietorship concern, as a sole proprietorship does not constitute a separate juristic person and does not fall within the ambit of Section 141 of the NI Act. The complaint is maintainable when the sole proprietor is the sole beneficiary and manager of the proprietorship account, and the cheques are issued in discharge of a legally enforceable debt. All ingredients of Section 138 NI Act are satisfied when: (i) valid cheques are drawn on the account of the drawer; (ii) cheques are for payment of money; (iii) cheques are issued in discharge of debt or liability; (iv) cheques are returned unpaid; and (v) demand notice is served and payment is not made within 15 days. The presumption under Section 139 NI Act applies unless rebutted by the accused.
On this section: Cited regarding definition of holder in due course and possession of cheques
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 9
What have the courts held on Section 9 of the Negotiable Instruments Act?
Pradeep Kumar vs Post Master General (07 Feb 2022) is the leading judgment on this section among those set out below: Defines 'Holder in due course' - Rukhsana was not a holder in due course as she obtained possession by means of fraud. Another 3 judgments on this section are set out below, 3 of them from the Supreme Court. They run from 2001 to 2025.
How do I find court cases under Section 9 of the Negotiable Instruments Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: NI Act 9, section 9 NI Act, section 9 of the Negotiable Instruments Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 4 reported judgments on this section are set out on this page, beginning with Pradeep Kumar vs Post Master General (07 Feb 2022).
When did Section 9 of the Negotiable Instruments Act come into force?
Section 9 of the Negotiable Instruments Act, cited as NI Act 9, came into force on 01 Mar 1882, having been enacted on 09 Dec 1881. It is in force as at the date shown on this page.
Other sections of this Act
- 138. Dishonour of cheque for insufficiency, etc., of funds in the account312 words
- 142A. Validation for transfer of pending cases299 words
- 143. Power of Court to try cases summarily297 words
- 143A. Power to direct interim compensation291 words
- 142. Cognizance of offences290 words
- 141. Offences by companies287 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.