Section 42: Bill drawn in a fictitious name

Key rule and applicability

The bill is drawn in a fictitious name and payable to the drawer’s order. The protected claimant is a holder in due course claiming under an indorsement in the same hand as the drawer’s signature and purporting to be by the drawer.

Limits and related provisions

Each condition matters. The section is not a general validation of fictitious documents or protection for every possessor, and it addresses relief based on the fictitious name rather than all possible defences.

Hypothetical business example

Hypothetical: an accepted bill payable to the drawer’s order bears a fictitious drawer name. A financier claiming as holder in due course compares the indorsement with the drawer’s signature before relying on the section 42 restriction on the acceptor’s defence.

Practical decision flow

Confirm that the bill is payable to the drawer’s order and identify the alleged fictitious name.

Assess the claimant’s holder-in-due-course status.

Examine whether the indorsement is by the same hand and purports to be by the drawer.

• India Code: Negotiable Instruments Act, section 42

Practical checklist

Glossary

Drawer’s order

The payment direction specified in the provision.

Same-hand indorsement

The indorsement linked by handwriting to the drawer’s signature under the stated test.

Frequently asked questions