Sections 89-90 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 89 protects a person or banker who pays an instrument according to its apparent tenor when a material alteration (or the removal of a crossing) is not apparent, and sets duties for banks and clearing houses handling electronic images of truncated cheques. Section 90 extinguishes rights of action on a negotiated bill that the acceptor holds in his own right at or after maturity. This article reads both as per the consolidated text consulted.
A person or banker who pays according to the apparent tenor of an instrument that was materially altered but does not appear altered, or a cheque that does not appear crossed (or whose crossing was obliterated), is discharged from all liability, if the payment was otherwise in due course (section 89(1)). For an electronic image of a truncated cheque, any difference in apparent tenor from the truncated cheque is a material alteration and banks and clearing houses must ensure and verify exactness (section 89(2) and (3)). Under section 90, if a negotiated bill is held by the acceptor in his own right at or after maturity, all rights of action on it are extinguished.
Section 89(1): paying an instrument that does not look altered
Section 89(1) reads: "Where a promissory note, bill of exchange or cheque has been materially altered but does not appear to have been so altered, or where a cheque is presented for payment which does not at the time of presentation appear to be crossed or to have had a crossing which has been obliterated, payment thereof by a person or banker liable to pay and paying the same according to the apparent tenor thereof at the time of payment and otherwise in due course, shall discharge such person or banker from all liability thereon; and such payment shall not be questioned by reason of the instrument having been altered, or the cheque crossed."
Take the elements apart.
Two situations are covered:
- A promissory note, bill or cheque has been materially altered but does not appear to have been so altered.
- A cheque is presented which does not appear crossed or does not appear to have had a crossing which has been obliterated.
What the payer must do: pay "according to the apparent tenor thereof at the time of payment" and "otherwise in due course".
What follows: the person or banker is discharged "from all liability thereon", and "such payment shall not be questioned by reason of the instrument having been altered, or the cheque crossed".
The general rule on the effect of alteration is in section 87; see material alteration of a negotiable instrument. Section 89(1) protects a payer who could not tell from the face of the instrument that it had been changed. Payment in due course is defined in section 10; see holder, holder in due course and payment in due course. The crossed-cheque provisions are sections 123 to 131A in the text consulted and are not explained here.
If a bank has paid on an instrument you say was altered, or you are the bank defending such a payment, a legal dispute resolution discussion can help you test the facts against this sub-section.
Example 1. A cheque for a stated amount is altered by a fraudster so skilfully that the change is not apparent. The drawee bank, acting in due course, pays according to the apparent tenor. Under section 89(1), the bank is discharged from all liability on the cheque and the payment cannot be questioned because of the alteration.
Example 2. A cheque was crossed when issued. The crossing is wiped off so that it does not appear crossed. The drawee bank pays it over the counter according to its apparent state, otherwise in due course. Under section 89(1), the payment cannot be questioned because the cheque had been crossed.
Section 89(2): electronic image of a truncated cheque
Section 89(2) states: "Where the cheque is an electronic image of a truncated cheque, any difference in apparent tenor of such electronic image and the truncated cheque shall be a material alteration and it shall be the duty of the bank or the clearing house, as the case may be, to ensure the exactness of the apparent tenor of electronic image of the truncated cheque while truncating and transmitting the image."
Two rules follow:
- A difference is a material alteration. Any difference in apparent tenor between the electronic image and the truncated cheque is treated as a material alteration.
- A duty to ensure exactness. The bank or clearing house, as the case may be, must ensure the exactness of the apparent tenor of the image while truncating and transmitting it.
Truncated cheque and electronic image are explained in cheque, truncated cheque and electronic cheque.
Section 89(3): verification by the receiving bank
Section 89(3) says: "Any bank or a clearing house which receives a transmitted electronic image of a truncated cheque, shall verify from the party who transmitted the image to it, that the image so transmitted to it and received by it, is exactly the same."
So the duty runs on both sides of the transmission: the sender ensures exactness; the receiver verifies from the sender that what it received is exactly the same as what was sent. The text does not say how the verification is done, in what form or within what time, and none is assumed.
| Sub-section | Subject | Rule |
|---|---|---|
| (1) | Altered instrument that does not look altered; cheque that does not look crossed | Payer paying by apparent tenor in due course is discharged |
| (2) | Image of a truncated cheque | Any difference from the truncated cheque is a material alteration; bank or clearing house must ensure exactness |
| (3) | Receiving bank or clearing house | Must verify from the transmitter that the image received is exactly the same |
Section 90: a bill in the acceptor's hands
Section 90 reads: "If a bill of exchange which has been negotiated is, at or after maturity, held by the acceptor in his own right, all rights of action thereon are extinguished."
The conditions:
- The instrument is a bill of exchange.
- It has been negotiated.
- At or after maturity, it is held by the acceptor in his own right.
Result: all rights of action thereon are extinguished.
The logic is that the acceptor is the person primarily liable on the bill. If he ends up holding it in his own right at or after maturity, no one is left to sue on it; the text says the rights of action are extinguished. The words "in his own right" matter. The section does not speak of an acceptor who holds the bill as someone's agent. For the acceptor's liability, see liability of maker and acceptor and who can accept a bill.
Example 3. Pathak Distributors accepts a bill drawn by Qureshi Mills, which is negotiated to a third party. At maturity Pathak Distributors buys the bill back and holds it in its own right. Under section 90, all rights of action on the bill are extinguished.
Practical points
- For banks: verify transmissions. Section 89(2) and (3) place duties on the bank or clearing house sending and the one receiving an electronic image.
- For payers: pay on the face and in due course. Section 89(1) protects payment according to apparent tenor that is otherwise in due course.
- For acceptors: be careful buying back a bill. Holding it in your own right at or after maturity extinguishes rights of action on it (section 90).
- Keep the paper trail. Where a payment is later questioned, the original instrument or its image and the clearing records are the evidence.
Need help with a payment on an altered cheque?
If a cheque was altered or a crossing was removed, or a bank paid on an image that did not match the original, our legal dispute resolution service can help you set out the facts against section 89. Bring the cheque or image, the bank statement and any clearing records.
Key takeaways
- Section 89(1): a payer who pays an altered instrument, or an uncrossed-looking cheque, according to apparent tenor and otherwise in due course is discharged from all liability, and the payment cannot be questioned.
- Section 89(2): any difference between the electronic image and the truncated cheque is a material alteration; the bank or clearing house must ensure exactness when truncating and transmitting.
- Section 89(3): a receiving bank or clearing house must verify from the transmitter that the image received is exactly the same.
- Section 90: if a negotiated bill is held by the acceptor in his own right at or after maturity, all rights of action on it are extinguished.
Read next
- Material alteration of a negotiable instrument (sections 87-88)
- Dishonour by non-acceptance and by non-payment (sections 91-92)
- Cheque, truncated cheque and electronic cheque (section 6)
- Cheque bounce in business transactions: practical guide
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.