Payment in due
course means payment in accordance with the apparent tenor of the instrument in
good faith and without negligence to any person in possession thereof under
circumstances, which do not afford a reasonable ground for believing that he is
not entitled to receive the amount therein mentioned. A paying banker does not
get statutory protection under NI Acts if he does not make the payment of
negotiable instrument in due course. According to above, the following four
conditions to be satisfied to treat the payment as a payment in due course.
i.
Payment must be in accordance with the apparent tenor of the instrument.
ii.
Payment made must be to a legally entitled person in good faith and
without negligence
iii.
Payment must be made only against the presentation of the instrument for
payment.
iv.
The person to whom payment is made should be in possession of the
instrument and should also be entitled to receive payment on it.
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