Section 58 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 58 protects the party who is asked to pay on an instrument that was lost, or obtained by an offence, by fraud or for an unlawful consideration. The person who found it or got it that way, and anyone claiming through him, cannot demand the amount, unless a holder in due course is somewhere in the chain. This article follows the wording as per the consolidated text consulted.
If an instrument has been lost, or obtained from a maker, acceptor or holder by means of an offence or fraud, or for an unlawful consideration, a possessor or indorsee claiming through the finder or the person who so obtained it is not entitled to receive the amount from that maker, acceptor or holder, or from any prior party. The exception: the possessor or indorsee is, or someone through whom he claims was, a holder in due course.
What section 58 says
The text is a single long sentence. If you are already in a dispute over such an instrument, our legal dispute resolution page explains how we can help. The sentence can be taken apart into four questions.
1. Which instruments? Any negotiable instrument that:
- has been lost; or
- has been obtained from any maker, acceptor or holder by means of an offence or fraud; or
- has been obtained from any maker, acceptor or holder for an unlawful consideration.
2. Who is barred? "No possessor or indorsee who claims through the person who found or so obtained the instrument."
3. Barred from what? From receiving the amount due on the instrument from "such maker, acceptor or holder, or from any party prior to such holder".
4. What is the exception? The bar does not apply if "such possessor or indorsee is, or some person through whom he claims was, a holder thereof in due course."
The meaning of a holder in due course is in section 9; see holder, holder in due course and payment in due course. Section 58 does not restate it.
The three routes into the section
| Route | Wording in the text | Who the possessor claims through |
|---|---|---|
| Lost instrument | "has been lost" | The person who found it |
| Offence or fraud | "obtained ... by means of an offence or fraud" | The person who so obtained it |
| Unlawful consideration | "obtained ... for an unlawful consideration" | The person who so obtained it |
For a lost instrument, the section speaks of the person who found it. For the other two routes, the section speaks of the instrument being obtained "from any maker, acceptor or holder". The text consulted does not define "offence", "fraud" or "unlawful consideration" in this section. Where the idea of an unlawful object arises under contract law, see Section 25 of the Indian Contract Act, 1872: Agreement Without Consideration and Its Exceptions.
The chain and the exception
Section 58 is about a chain of title. Suppose a cheque is lost. The finder indorses it, or simply delivers it, to a second person. The second person then claims the amount. The section says the second person, as a possessor or indorsee who claims through the finder, cannot receive the amount from the maker or from any party prior to the holder, unless he is a holder in due course or someone through whom he claims was one.
That last limb matters in practice. If the instrument passes into the hands of a genuine holder in due course, later holders deriving title from him also benefit; the rule of section 53 is explained in title through holder in due course and blank indorsement.
The way the sentence is built also means this: the section does not bar the true owner. It bars a possessor or indorsee who claims through the wrongdoer or the finder.
Example 1: lost cheque. Banerjee Textiles issues a bearer cheque to a supplier. It falls out of the delivery bag. A passer-by, Dinesh, finds it and gives it to Mehta Jewellers in exchange for goods. Mehta Jewellers presents the cheque. Under section 58, Mehta Jewellers claims through the person who found the instrument. It is not entitled to receive the amount from Banerjee Textiles, unless Mehta Jewellers is, or some person through whom it claims was, a holder in due course.
Example 2: fraud. Pillai & Sons are persuaded by a false story to sign a cheque payable to Sandeep. Sandeep then indorses the cheque to Roy Enterprises. Roy Enterprises claims through the person who obtained the instrument by fraud. Section 58 bars Roy Enterprises from receiving the amount from Pillai & Sons, again unless a holder in due course appears in the chain.
How to protect yourself under the section
- If you lose an instrument. Act quickly and tell the bank, because the section does not protect you against a holder in due course. The text does not describe any stop-payment mechanism and this article does not invent one. For the position of a bank that has a sufficient balance, see liability of drawer and drawee bank of a cheque.
- If you are offered an instrument. Ask how the person came to hold it. If the history is unclear you may be claiming through a finder or a wrongdoer.
- If you are sued on an instrument you say was lost or obtained by fraud. Section 58 is a ground of resistance, but you should expect the claimant to say he or someone before him was a holder in due course. Preserve records of how the instrument left your hands.
- If you are a genuine holder. Keep a record of the value given and the date you received it, so the facts needed to show holder in due course status can be shown.
Need help with a lost, stolen or fraudulently obtained instrument?
If you are facing a claim on an instrument that was lost or obtained by fraud, or you hold an instrument and need to know how a dispute over its history might affect you, our team can discuss legal dispute resolution options with you. Bring the instrument, bank correspondence and a note of how it was issued.
Key takeaways
- Section 58 bars a possessor or indorsee who claims through the finder, or through the person who obtained the instrument by an offence, fraud or for an unlawful consideration.
- The bar operates against claims on the maker, acceptor or holder, and any prior party.
- The exception: the possessor or indorsee is, or some person through whom he claims was, a holder in due course.
- The section does not define offence, fraud or unlawful consideration.
Read next
- Indorsement for part of sum and instrument indorsed by deceased (sections 56-57)
- Instrument acquired after dishonour or when overdue (sections 59-60)
- Holder, holder in due course and payment in due course (sections 8-10)
- Types of negotiable instruments: cheque, bill, promissory note
Disclaimer: Based on a consolidated text of the Negotiable Instruments Act, 1881 stating the position as of 26 December 2015 and on the Negotiable Instruments (Amendment) Act, 2018, as consulted on 2 October 2026. Later amendments and current criminal procedure law should be checked. This article is general information, not legal advice; check the official text before acting.