Law · Legal Aptitude
Mr. Suresh draws an 'Account Payee' cheque payable to M/s. RetailCorp. RetailCorp endorses it to M/s. SupplyChain. The cheque is lost, found by Mr. Fraud, who forges SupplyChain's endorsement and obtains payment over the counter from National Bank. If the forgery is discovered, which of the following statements correctly identifies the protection available to National Bank, the liability of the drawer, and the remedy available?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Protection: No protection; Drawer Liability: Not discharged; True Owner Remedy: Claim from the drawee bank.
- 2Protection: Protected under Section 85; Drawer Liability: Not discharged; True Owner Remedy: Claim from the drawer.
- 3Protection: No protection as forgery is a nullity; Drawer Liability: Discharged; True Owner Remedy: Claim from the drawee bank.
- 4Protection: Protected under Section 85 of the NI Act for payment in due course of an order instrument; Drawer Liability: Discharged; True Owner Remedy: Claim from the fraudulent individual or collecting bank.✓
Correct answer
Protection: Protected under Section 85 of the NI Act for payment in due course of an order instrument; Drawer Liability: Discharged; True Owner Remedy: Claim from the fraudulent individual or collecting bank.
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