Negotiable Instruments Act, 1881

Section Description
31 The banker is bound to pay the cheques drawn by customer i,e, to honor his customer’s mandate
10,85,89, 128 Grants protection to paying banker
6 Cheque is defined as bill of exchange. Protection to Paying Banker if payment is in due course
10 Payment In Due Course
85 Grants protection to a Paying banker, but it is not absolute Banker can seek protection under section 85 only where payment has been made to the holder, his servant or his agent, i.e. payment must be made in due course. Payment to a person who had nothing to do with the firm or a payment to an agent of the bank would not be payment in due course.
89 Payment of instrument on which alternation is not apparent The material alteration on both the cheques are visible and since they were not authenticated by the drawers initials, the payment made by the bank was not according to apparent tenor of the instrument and as such bank cannot claim protection under section 89 When the customers Signature on the cheque is forged there is no mandate to the bank to pay. As such banker is not entitled to debit the customers account on such forged cheque In a Joint account if one of the signature is forged then there is no mandate and banker cannot make payment.
244A Indian companies Act : An official liquidator was required to open an account with a bank and pay therein moneys received by him in the course of the liquidation Paying bank was bound to keep an ultraviolet ray lamp and to scrutinize the cheque under the said lamp.

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