Banking · Negotiable Instruments Act
Assertion (A): A paying banker is discharged from liability when it pays a bearer cheque in due course, even if the person receiving payment is not the true owner. Reasoning (R): According to the concept 'Once a Bearer, Always a Bearer' under Section 85(2) of the Negotiable Instruments Act, a cheque originally issued as a bearer instrument continues to be treated as such by the paying banker, regardless of subsequent endorsements.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A is false, but R is true.
- 2A is true, but R is false.
- 3Both A and R are true, but R is not the correct explanation of A.
- 4Both A and R are true, and R is the correct explanation of A.✓
Correct answer
Both A and R are true, and R is the correct explanation of A.
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