Banking · Protection to Paying Banker under Section 89
A cheque originally written for Rs. 5,000 is altered to Rs. 50,000. The alteration is unapparent and not visible to the naked eye. The bank pays Rs. 50,000 in due course exercising reasonable care. What protection does the bank get under Section 89 of the Negotiable Instruments Act, 1881?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank must recover funds from the presenter before debiting the customer's account.
- 2The bank can only debit Rs. 5,000 to the customer's account and must bear a loss of Rs. 45,000.
- 3The bank is protected and discharged from liability because the alteration was not apparent and payment was made in due course.✓
- 4The bank is strictly liable to refund the entire amount of Rs. 50,000.
Correct answer
The bank is protected and discharged from liability because the alteration was not apparent and payment was made in due course.
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