Sections 85-85A explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 85 says when a drawee bank is discharged by paying a cheque in due course: where an order cheque purports to be indorsed by or on behalf of the payee, and where a cheque originally expressed to be payable to bearer is paid to the bearer. Section 85A gives the same discharge for a draft drawn by one office of a bank on another office of the same bank. This article reads both as per the consolidated text consulted.
Where a cheque payable to order purports to be indorsed by or on behalf of the payee, the drawee is discharged by payment in due course (section 85(1)). Where a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due course to the bearer, whatever indorsement appears, even one that purports to restrict or exclude further negotiation (section 85(2)). The same discharge applies to a draft drawn by one office of a bank upon another office of the same bank, payable to order on demand (section 85A).
The key phrase: "payment in due course"
Both sections turn on payment "in due course". The Act defines payment in due course in section 10; see holder, holder in due course and payment in due course. Section 85 and section 85A do not repeat the definition. They simply say that where payment is made in due course in the described situations, the paying bank is discharged. For a bank or a drawer worried about a disputed payment, a legal consultation can help check the facts against the definition.
Section 85(1): cheque payable to order
Section 85(1) reads: "Where a cheque payable to order purports to be indorsed by or on behalf of the payee, the drawee is discharged by payment in due course."
Note the word "purports". The bank is protected where the cheque purports to be indorsed by or on behalf of the payee. The sub-section does not say the bank must establish that the indorsement is genuine. Its protection is conditioned on payment being in due course. The Act spells the word "indorse"; "endorse" is the common spelling in business use.
Example 1. Abraham Textiles draws an order cheque on its bank payable to Basu Dyers. The cheque comes in for payment with an indorsement that purports to be by Basu Dyers. The bank pays in due course. Under section 85(1), the bank, as drawee, is discharged by that payment.
Section 85(2): cheque originally payable to bearer
Section 85(2) states: "Where a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due course to the bearer thereof, notwithstanding any indorsement whether in full or in blank appearing thereon, and notwithstanding that any such indorsement purports to restrict or exclude further negotiation."
Break it down:
- Which cheque: one that is originally expressed to be payable to bearer.
- Who is paid: the bearer.
- What the drawee gets: discharge, if the payment is in due course.
- Despite what: any indorsement, "whether in full or in blank", and even one that purports to restrict or exclude further negotiation.
This sub-section ties up with section 50, under which words in an indorsement may restrict or exclude negotiation; see converting a blank indorsement and the effect of indorsement. Section 85(2) says that on a cheque originally payable to bearer, the drawee that pays the bearer in due course is discharged notwithstanding such an indorsement. The words "originally expressed to be payable to bearer" are important. A cheque that began as an order cheque and was later indorsed in blank is dealt with by section 54, covered in title through holder in due course and blank indorsement, not by section 85(2).
Example 2. Chaudhary Motors draws a bearer cheque. A person into whose hands it has come writes on the back "Pay Dalal only" and signs. A different person presents the cheque as bearer and the bank pays in due course. Under section 85(2), the bank is discharged notwithstanding the restrictive indorsement.
| Cheque | Section | Bank is discharged by | Despite |
|---|---|---|---|
| Payable to order, purports to be indorsed by or on behalf of the payee | 85(1) | Payment in due course | The text speaks only of the purported indorsement |
| Originally expressed payable to bearer | 85(2) | Payment in due course to the bearer | Any indorsement, in full or in blank, even one purporting to restrict or exclude negotiation |
Section 85A: drafts drawn by one branch on another
Section 85A provides: "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 indorsed by or on behalf of the payee, the bank is discharged by payment in due course."
Conditions:
- A draft, described in the text 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.
- It purports to be indorsed by or on behalf of the payee.
- The bank pays in due course.
Result: "the bank is discharged by payment in due course". The section mirrors section 85(1) for this kind of draft. It does not mention bearer drafts or drafts drawn on a different bank, and this article does not extend it to them. The text consulted does not describe how such a draft is issued or priced, and no charges are discussed here.
Example 3. Eswaran Exports buys a draft from the Pune office of a bank, drawn on the same bank's Mumbai office, payable to order on demand in favour of Fonseca Imports. It is presented with an indorsement purporting to be by Fonseca Imports. The Mumbai office pays in due course. Under section 85A, the bank is discharged.
What this means for drawers and payees
- The protection is for the bank. These sections say when a bank is discharged. They do not say what happens between the payee and a person who forged an indorsement. The text consulted is silent on that in these sections.
- A purported indorsement can be enough for the bank. Sections 85(1) and 85A speak of an indorsement that "purports" to be by or on behalf of the payee.
- Choose bearer or order deliberately. A cheque originally written as bearer can be paid to the bearer regardless of indorsements on it (section 85(2)). If you want the cheque payable only to a named person, write it as an order cheque; the crossed-cheque provisions (sections 123 to 131A in the text consulted) are separate and are not explained here.
- Keep records of instruments you issue. If a payment is disputed, the date, form and payee on the instrument are the first things anyone will ask for.
Need help with a disputed cheque or draft payment?
If a cheque or draft was paid on an indorsement you did not authorise, or you are a bank or payee defending a payment, a legal consultation can help you read the facts against sections 85 and 85A. Bring the instrument, the statement and any bank correspondence.
Key takeaways
- Section 85(1): a drawee is discharged by payment in due course of an order cheque that purports to be indorsed by or on behalf of the payee.
- Section 85(2): for a cheque originally payable to bearer, the drawee is discharged by payment in due course to the bearer, notwithstanding any indorsement, even one purporting to restrict or exclude negotiation.
- Section 85A: the same discharge applies to a draft drawn by one office of a bank upon another office of the same bank, payable to order on demand.
- All three depend on payment being in due course.
Read next
- Cheque not presented in time and drawer damaged (section 84)
- Qualified or limited acceptance of a bill (section 86)
- Converting a blank indorsement and the effect of indorsement (sections 49-50)
- Types of negotiable instruments: cheque, bill, promissory note
Disclaimer: Based on a consolidated text of the Negotiable Instruments Act, 1881 stating the position as of 26 December 2015 and on the Negotiable Instruments (Amendment) Act, 2018, as consulted on 2 October 2026. Later amendments and current criminal procedure law should be checked. This article is general information, not legal advice; check the official text before acting.