Negotiable Instruments Act Section 89 — Payment of instrument on which alteration is not apparent
CHAPTER VII OF DISCHARGE FROM LIABILITY ON NOTES, BILLS AND CHEQUES
General
Summary
If a promissory note, bill of exchange, or cheque has been changed in a significant way, but the change is not visible on its face, the person or bank that pays it based on how it looks at the time of payment is released from all liability for that payment. This means the payment cannot be challenged later just because the document was secretly altered or because a cheque had a crossing that was removed. For electronic images of truncated cheques, if the electronic image looks different from the original truncated cheque, that difference counts as a material alteration, and the bank or clearing house must make sure the electronic image exactly matches the original when it is created and sent. Any bank or clearing house that receives such an electronic image must confirm with the sender that the image it received is exactly the same as the one transmitted.
Official Text
1[(1)] 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. 2[
(2) 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.
(3) 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.]