Banking · Negotiable Instruments Act
A cheque is altered using chemicals to change the amount from ₹10,000 to ₹1,00,000 in a manner not detectable even under Ultra-Violet lamps. The collecting bank collects the cheque in good faith. What is the primary factor determining the collecting bank's protection?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Liability rests solely with the paying bank under Section 89 because they debited the drawer's account.
- 2The collecting bank is liable only if it failed to capture high-resolution images as per CTS standards.
- 3The collecting bank is protected if it followed standard banking practice in good faith and without negligence, where the alteration was not apparent.✓
- 4The collecting bank is strictly liable as the clearing gatekeeper, regardless of the alteration's sophistication.
Correct answer
The collecting bank is protected if it followed standard banking practice in good faith and without negligence, where the alteration was not apparent.
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