Module: General Practice
Q185: Consider the following statements regarding Section 89 of the NI Act (Payment of instrument on which alteration is not apparent):
If a material alteration is made efficiently and is not visible to the naked eye (invisible alteration), the paying banker is protected if he pays it in due course.
The paying banker is liable to refund the amount even if the alteration was invisible, as the instrument was void.
This protection applies to both Promissory Notes and Cheques.
Which of the statements given above is/are correct?
The paying banker is liable to refund the amount even if the alteration was invisible, as the instrument was void.
This protection applies to both Promissory Notes and Cheques.
Which of the statements given above is/are correct?
✅ Correct Answer: B
Section 89 deals with "invisible" or non-apparent alterations.
Statement 1 (Correct): The law protects the payer (banker) against skillful forgeries that cannot be detected with reasonable diligence.
If the alteration is not "apparent," the banker is discharged from liability if they pay according to the "apparent tenor" of the instrument at the time of payment.
Statement 2 (Incorrect): Since the banker is protected under Section 89, they are not liable to refund the amount to the true owner or drawer, provided they acted in good faith and without negligence.
Statement 3 (Correct): The text of Section 89 explicitly covers "Promissory notes, bills of exchange or cheques," making the protection applicable across these instruments.
Statement 1 (Correct): The law protects the payer (banker) against skillful forgeries that cannot be detected with reasonable diligence.
If the alteration is not "apparent," the banker is discharged from liability if they pay according to the "apparent tenor" of the instrument at the time of payment.
Statement 2 (Incorrect): Since the banker is protected under Section 89, they are not liable to refund the amount to the true owner or drawer, provided they acted in good faith and without negligence.
Statement 3 (Correct): The text of Section 89 explicitly covers "Promissory notes, bills of exchange or cheques," making the protection applicable across these instruments.