According to Section 8 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”. A person is called the holder of a negotiable instrument if the following condition are satisfied.a. He must be entitled to the possession of the instrument in his own name and under a legal title. Actual possession of the instrument is not essential; the holder must have the legal right to possess the instrument in his own name. It means that the title to the instrument is acquired lawfully and in a proper manner. For example, if a person acquired a cheque or bill by theft fraud, or forged endorsement of finds it lying some where, he does not acquire in his name legal title thereto and hence he cannot be called its holder.
b. He must be entitled to receive or recover the amount from the parties concerned in his own name. For this purpose it is essential that the name of the holder appears on the document as its payee or endorsee, if it is an order instrument. In case of bearer instrument, the bearer may claim the money without having his name mentioned on the cheque. The holder is competent to receive payment or recover the amount by filing a suit in his own name against other parties, to negotiate the instrument and to give a valid discharge.
In case a bill, note or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction (Section 8). In other words, the person who was entitled to receive payment at the time the instrument was lost, will continue to be regarded as its holder; the finder does not become its holder.
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