Section 8 of NI act provides that holder is any person who is entitled in his own name to the possession of negotiable instrument and has right to receive or recover the amount 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.
The holder may be or may not be with possession of the instrument. Holder has the right to obtain a duplicate of lost instrument. The holder can cross a cheque if it is not already crossed. If the payee or endorsee dies then the legal heir of that payee or endorsee becomes the holder.
Section 9 of NI act states that any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or payee or endorsee thereof. If payable to order he has received a negotiable instrument in good faith and without notice that there is a defect existed in the title of the person who negotiated it.
If the instrument bears not negotiable crossing or account payee crossing or restricted endorsement, one cannot claim that he/she is a holder in due course. Further, forgery, theft, deceit do not convey any title to the person in possession of such negotiable instrument.
Thus, the major difference between holder and holder in due course is that holder may be or may not be with possession of the instrument, whereas the holder in due course MUST HAVE THE POSSESION OF THE INSTRUMENT to claim the title over the instrument.