Wed. Apr 21st, 2021

Section 85 of The Negotiable Instruments Act, 1881

1 min read

85.  Cheque payable to order.— (1)  Where a cheque payable to order purports to be indorsed by or on behalf of the payee, the drawee is discharged by payment in due course.

(2) Where a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due course to the bearer thereof, notwithstanding any indorsement whether in full or in blank appearing thereon, and notwithstanding that any such indorsement purports to restrict or exclude further negotiation.

Comment

Whenever a cheque purporting to be by a customer is presented before a bank it carries a mandate to the bank to pay. If a cheque is forged there is no such mandate. The bank can escape liability only if it can establish knowledge to the customer of the forgery in the cheques. In action from continuously long period cannot by itself afford a satisfactory ground for the bank to escape the liability; Canara Bank v. Canara Sales Coprtaion, (1990) 2 BLC 475 (SC).

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