Section 85(1) protects the paying banker for order cheques if the endorsement purports to be regular (even if forged), provided the payment is made in Due Course (good faith and without negligence).

Protection to Collecting Banker (Section 131) applies only for crossed cheques collected for a customer in good faith and without negligence .

In CTS, the Presenting/Collecting Bank captures the image of the cheque and sends the electronic data to the Paying Bank. The physical movement of the cheque is stopped (truncated) at the Collecting Bank's end.

Section 85(2) provides that where a cheque is originally expressed to be payable to bearer, the banker is discharged by payment in due course to the bearer of the instrument, notwithstanding any endorsement whether in full or in blank appearing thereon. This means the banker need not verify the regularity of endorsements on a bearer cheque because the title passes by delivery, and endorsements are legally superfluous for negotiation.

Section 131 protects a banker collecting crossed cheques. Section 131A explicitly applies this chapter to Demand Drafts drawn by one branch of a bank upon another, ensuring that collecting bankers get the same protection for DDs as they do for cheques.

The definition of Payment in Due Course (Sec 10) has three pillars: 1. Payment according to apparent tenor. 2. Payment in good faith. 3. Payment without negligence to any person in possession thereof. If the bank is negligent (e.g., ignores a visible alteration), it is not Payment in Due Course and protection is lost.

Section 125 of the NI Act permits a holder to convert a general crossing into a special crossing. This enhances security and is not considered a material alteration that voids the instrument.

An "Account Payee" crossing directs the collecting banker to credit the proceeds ONLY to the account of the payee named. If the banker collects it for someone else (an endorsee), they lose statutory protection under Section 131 because it is considered negligence.

Payment in Due Course must be "in accordance with the apparent tenor". A post-dated cheque becomes payable only on or after the date on its face. Paying it earlier violates the tenor and is negligent, stripping the bank of statutory protection.

A banker is bound to know the drawer's signature (their customer) but cannot possibly know the signatures of all payees and endorsees in the world. Hence, statutory protection is given if the endorsement appears regular.