A banker on whom a cheque is drawn should pay the cheque when it is presented for payment.
II. Form of a Cheque a. Printed form b. Unconditional order c. Date d. Amount e. Material alteration III. Sufficient Balance IV. Signature of the Drawer V. Endorsement VI. Legal Bar VII. Minor Precautions
Protection is provided only when the paying banker is acting in good faith, i.e. honoring cheques in a responsible manner, without negligence. Sec.85 of the N.I Act, 1881 Offers protection to the paying banker in india.
The payment must in an apparent tenor of the instrument means according to the instruction of the party or customer as it appears on the cheque. Payment must be in good faith and not with negligence, i.e. payment made with reasonable skill and care. Payment made must be to a person who is in the possession of the cheque. There must not be any unreasonable ground for believing that the payee is not entitle for the cheque payment.
Section 85 (1) provides statutory protection to the paying banker when the order cheque is paid,
Protection in respect of Bearer cheques: {Section 85(2)} Once a bearer cheque is always a bearer cheque, if in case a cheque originally made payable to a bearer is crossed generally or specially, then the paying banker will not be discharged from his liability and not entitled for protection under this section.
Protection in respect of Materially altered cheques: Paying banker is protected under section 89 in respect of payment made on a materially altered cheque if the banker fulfils the following conditions,
Where a promissory note, bill of exchange, has been materially altered, but does not appear to been so altered. Where the cheque is presented for payment that does not at the time of presentation appears to be crossed or to have had a crossing, which has been obtained. the instrument is accepted in good faith and the payment is a payment in due course.
Protection in respect of Crossed cheques: (Section 128) The paying banker is protected by section 128 in respect of payment of a crossed cheque as per the instruction of the customer.
Every holder in due course is a holder, but every holder is not a holder in due course
Money cannot be Recovered Money paid under a mistake of law is not recoverable Holt & Co Vs Markhan
Money paid on a negotiable instrument to an innocent holder is not recoverable.
Indicate the answers you would give for returning the cheques mentioned below, giving reasons for your answer. a. Cheque dated February 2009 b. Cheque dated 8th May 2008 presented on 9th November 2008 c. Cheque dated 12th March 2008 presented on 7th March 2008 d. Cheque dated 13th January 2008 presented on 12th april 2008.