Chapter II - Of Notes, Bills and Cheques
Section 10
Section 10: payment in due course
Section 10 defines payment in due course by the instrument’s apparent tenor, good faith, absence of negligence and no reasonable ground to doubt entitlement.
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Need advice on Section 10?
This article is for general information. Refer to the Negotiable Instruments Act, 1881 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
“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 payment of the amount therein mentioned.
Applicability and limits
Payment in due course must match the instrument’s apparent tenor and be made in good faith, without negligence, to a person in possession in circumstances giving no reasonable ground to doubt entitlement.
A bank or payer should not rely on the visible amount alone if irregularities or suspicious circumstances create a reasonable entitlement concern.
Hypothetical example
Hypothetical: a bank sees a materially irregular payee name on a presented cheque. It investigates before paying rather than assuming the payment will be in due course.
Evidence and decision flow
Read the instrument’s apparent tenor and any visible alteration.
Verify possession and entitlement concerns.
Record good-faith checks and payment decision.
Practical checklist
Do
- Check the instrument, payee or indorsement wording and the person presenting it.
- Pause and verify unusual alteration, inconsistent identity or an irregular custody trail.
- Retain payment and verification records.
Avoid
- Do not rely on the label of an instrument alone; read its wording and the related Act provisions.
Glossary
- Apparent tenor
- The instrument’s face-value terms as they reasonably appear.
- Good faith without negligence
- The statutory care and honesty standard for payment in due course.
Frequently asked questions
Is payment to any person in possession enough?
No. Section 10 also requires apparent-tenor compliance, good faith, no negligence and no reasonable ground to doubt entitlement.
Does payment matching the amount automatically qualify?
No. Section 10 also requires good faith, absence of negligence and no reasonable ground to doubt entitlement.
Why keep a verification record?
It supports the payer’s account of the circumstances in which payment was made.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026