Section 8 NI Act: "Holder"

Negotiable Instruments Act, 1881

Section 8 NI Act at a Glance

Section 8 NI Act defines the holder of a promissory note, bill of exchange, or cheque as any person entitled in that person's own name to possess the instrument and to receive or recover the amount due on it.

Section 8 NI Act Bare Act Text

8. "Holder".

The “holder” of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto.

Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction.

Section 8 NI Act in Simple Words

Section 8 NI Act defines who is the holder of a promissory note, a bill of exchange, or a cheque. To be a holder, a person must meet two requirements: the person must be entitled in that person's own name to the possession of the instrument, and the person must be entitled to receive or recover the amount due on the instrument from the parties to it.

Section 8 NI Act also covers what happens when a promissory note, bill of exchange, or cheque is lost or destroyed. In that situation, the holder is the person who held that entitlement to possession and payment at the time of the loss or destruction.

When Section 8 NI Act Applies

  • The instrument is a promissory note, a bill of exchange, or a cheque.
  • The person is entitled in that person's own name to the possession of the instrument.
  • The person is entitled to receive or recover the amount due on the instrument from the parties to it.
  • Where the note, bill, or cheque is lost or destroyed, its holder is the person so entitled at the time of the loss or destruction.

Example of Section 8 NI Act

Prakash in Bhubaneswar draws a cheque for ₹25,000 payable to Shabnam and hands the cheque to Shabnam. Because Shabnam is entitled in Shabnam's own name to possess the cheque and to receive or recover the ₹25,000 from the parties to the cheque, Shabnam is the holder under Section 8 NI Act. Two days later, the cheque is accidentally destroyed in a fire at Shabnam's office in Bhubaneswar. Under the second paragraph of Section 8 NI Act, Shabnam remains the holder because Shabnam was the person so entitled at the time of the destruction.

FAQs on Section 8 NI Act

What is Section 8 NI Act?▼

Section 8 NI Act defines the holder of a promissory note, bill of exchange, or cheque. A holder is any person entitled in that person's own name to possess the instrument and to receive or recover the amount due from the parties to it.

What two conditions must a person meet to be a holder under Section 8 NI Act?▼

Entitlement to possession in the person's own name and entitlement to the amount due. The person must have the right in that person's own name to possess the note, bill, or cheque, and the right to receive or recover the money due on it from the parties.

Who is the holder if a cheque or promissory note is lost or destroyed under Section 8 NI Act?▼

The person who was entitled to possess it and receive or recover payment at the time of the loss or destruction. Losing or destroying the instrument does not take away that person's status as holder under Section 8 NI Act.

How does a holder under Section 8 NI Act differ from a holder in due course under Section 9 NI Act?▼

Section 8 NI Act defines a holder based on entitlement in the person's own name to possession and recovery of the amount due. Section 9 NI Act defines a holder in due course as a person who becomes the possessor (if payable to bearer) or payee or indorsee (if payable to order) for consideration, before the amount becomes payable, and without sufficient cause to believe any defect existed in the transferor's title.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·