Section 85A NI Act: Drafts drawn by one branch of a bank on another payable to order

Negotiable Instruments Act, 1881

Section 85A NI Act at a Glance

Section 85A NI Act governs drafts drawn by one office of a bank upon another office of the same bank for money payable to order on demand, discharging the bank upon payment in due course.

Section 85A NI Act Bare Act Text

85A. Drafts drawn by one branch of a bank on another payable to order.

where any draft, that is an order to pay money, drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand, purports to be endorsed by or on behalf of the payee, the bank is discharged by payment in due course.

Amendments to this section
  • Ins. by Act 25 of 1930, s. 2.

Section 85A NI Act in Simple Words

Section 85A NI Act states when a bank is discharged from liability on a bank draft drawn between offices of the same bank. Act 25 of 1930 inserted it.

Section 85A NI Act describes a draft as an order to pay money, drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand. Where such a draft purports to be endorsed by or on behalf of the payee, the bank is discharged by payment in due course.

When Section 85A NI Act Applies

  • The instrument is a draft, meaning an order to pay money drawn by one office of a bank upon another office of the same bank.
  • The draft is for a sum of money payable to order on demand.
  • The draft purports to be endorsed by or on behalf of the payee.
  • The bank makes payment in due course.

Example of Section 85A NI Act

The Kochi office of a bank draws a draft on its Chandigarh office ordering the payment of ₹1,00,000 to Mary or order on demand. The draft is presented to the Chandigarh office bearing an endorsement that purports to be made by Mary. The bank pays the ₹1,00,000 in due course. Under Section 85A NI Act, the bank is discharged from liability on the draft.

FAQs on Section 85A NI Act

What is Section 85A NI Act?▼

Section 85A NI Act states when a bank is discharged from liability on a draft drawn by one office of the bank upon another office of the same bank for a sum of money payable to order on demand. When such a draft purports to be endorsed by or on behalf of the payee, the bank is discharged by payment in due course.

How does Section 85A NI Act define a draft?▼

Section 85A NI Act describes a draft as an order to pay money drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand.

Does Section 85A NI Act cover an endorsement purporting to be made on behalf of the payee?▼

Yes. Section 85A NI Act applies where the draft purports to be endorsed either by the payee or on behalf of the payee, and the bank is discharged by payment in due course.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·