BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The instrument is not a mandate of the drawer
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Forgery should be detected by the bank in any case
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Bank has signatures of the customer and it cannot deny his liability
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If forgery is allowed, no one will be accountable for the loss
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Detailed explanation-1: -Section 85 of the Negotiable Instruments Act states that “where a cheque payable to order purports to be endorsed by or on behalf-of the payee the banker is discharged by payment in due course.
Detailed explanation-2: -Section 85(1) In the case of an order cheque, this section implies that the payment must be in due course; otherwise, the banker will be deprived of statutory protection, and the banker must confirm the endorsements are regular.
Detailed explanation-3: -The secondary parties are drawers and indorsers. Their liability is conditional: it arises if the instrument has been presented for payment or collection by the primarily liable party, the instrument has been dishonored, and notice of dishonor is provided to the secondarily liable parties.
Detailed explanation-4: -According to Section 82(2) of the Negotiable Instruments Act, 1881, gives protection only when the payee or endorsed signature is forged and the banker makes payment in due course. carries a forged signature of his customer, it does not amount to payment in due course.