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Section 128: Payment in due course of crossed cheque

Negotiable Instruments Act • Official Statutory Text & Practice Guide

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Act 1881
Section 127 All 148 Sections of Negotiable Instruments Act Section 129

Legal Commentary & Landmark Judgments: Section 128

Section 128 confers statutory protection upon the paying banker and drawer where a crossed cheque is paid in due course, providing that both parties are entitled to the same rights as if payment had been made to the true owner.

  • Statutory Discharge for Banker: The drawee bank paying a crossed cheque in good faith and without negligence through a bank account is completely protected.
  • Statutory Discharge for Drawer: The drawer is discharged from liability on the debt as if payment had been made directly to the true owner.
  • Condition of Due Course: Protection applies only if payment was made in accordance with apparent tenor and without negligence under Section 10.
Key Landmark Precedents:
  • Canara Bank v. Canara Sales Corporation (1987) 2 SCC 666: The Supreme Court analyzed Section 128, ruling that paying banks are protected when they pay according to crossing directives, provided the customer's signature was not forged.
  • Great Western Railway Co. v. London and County Banking Co. [1901] AC 414: The House of Lords established that Section 128 protects drawers against double payment where a crossed cheque was stolen in transit.
Courtroom Practice & Strategic Litigation Guidance:

Section 128 is the ultimate reason businesses cross cheques. If a client mails a crossed cheque to a supplier and the cheque is stolen and cleared into an impostor's account, Section 128 protects your client: the drawer is legally discharged from the debt, leaving the supplier to pursue the collecting bank.

Section 127 All 148 Sections of Negotiable Instruments Act Section 129