Mumbai University Solved Question Papers
Law of Banking and Negotiable Instruments
Previous Year Question Paper with Solution
LLB 3 years · Sem 6
Nov 2011 Examination
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LLB 3 years Sem 6 Law of Banking and Negotiable Instruments Nov 2011 Question Paper with Solutions
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First published on munotes.in on 24 October 2026.
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Model answers written and edited by the munotes.in editorial desk.
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The University does not publish an official answer key for this paper. The answers in this volume are model answers, written to show how a full-mark answer is built. They are a study aid, not an authority on what an examiner marked.
The question paper reproduced here is the paper as set by the University of Mumbai at the Nov 2011 examination.
Contents
The questions below are the paper as the University of Mumbai set it at the Nov 2011 examination, in the order it was set.
MarksPage
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the Nov 2011 examination, reproduced as the University of Mumbai set them, in the order it set them. Nothing has been reworded, added or left out. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 100 · 25 questions answered
Instructions printed on the paper
- N.B: Figures to the right indicate full marks assigned to the questions.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q.1
Q.1: Answer in not more than two sentences
20 Marks - 2 marks each
(a)Who is a holder in due course "as defined in" The Negotiable Instrument Act, 1881?[2]
Answer
Definition. Under section 9 of the Negotiable Instruments Act, 1881, a "holder in due course" is a person who meets four conditions.
- He became the possessor of a bearer instrument, or the payee or indorsee of an order instrument.
- He did so for consideration.
- He did so before the amount became payable, that is, before maturity.
- He had no sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.
Stricter than English law. Indian law asks not only for honesty but for due care. In U. Ponnappa Moothan Sons v. Catholic Syrian Bank Ltd., (1991) 1 SCC 113, a bank bought two order cheques from the payee firm and credited it. When the cheques bounced, the Supreme Court held the bank a holder in due course. It had paid value before the cheques were due, the cheques bore no "not negotiable" crossing, and nothing gave it cause to suspect the firm's title.
Why it matters. Every prior party is liable to a holder in due course until the instrument is satisfied (section 36). He also takes free from defects in earlier dealings. Even if the instrument was lost, or obtained by fraud or for an unlawful consideration, he can recover the amount (section 58). Anyone who takes from him gets his rights (section 53). Every holder is presumed to be a holder in due course until the contrary is proved (section 118(g)).
Conclusion. A holder in due course took the instrument for value and before maturity. He also had no cause to suspect a defect in his transferor's title.
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