Chapter VII - Of Discharge from Liability on Notes, Bills and Cheques
Section 85A
Section 85A: Order drafts between offices of the same bank
Section 85A describes a qualifying inter-office bank draft and the bank’s discharge by payment in due course where the stated payee indorsement appears.
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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
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 endorsed by or on behalf of the payee, the bank is discharged by payment in due course.
Key rule and applicability
The draft is an order to pay money, drawn by one bank office on another office of the same bank, payable to order on demand. If it purports to be endorsed by or on behalf of the payee, payment in due course gives the stated discharge.
Limits and related provisions
Do not assume every document called a draft meets this definition. The same-bank, order and demand conditions and the payment standard must be checked; section 131A separately extends the crossed-cheque chapter to the defined draft.
Hypothetical business example
Hypothetical: a business presents an order demand draft drawn by one office of a bank on another office of that bank. The bank checks the payee indorsement and payment-in-due-course conditions instead of relying on the draft label alone.
Practical decision flow
Verify the drawing and paying offices belong to the same bank.
Check the order-on-demand terms and apparent payee indorsement.
Assess payment in due course and any applicable crossing provisions.
Practical checklist
Do
- Verify the drawing and paying offices belong to the same bank.
- Check the order-on-demand terms and apparent payee indorsement.
- Assess payment in due course and any applicable crossing provisions.
Avoid
- Do not assume every document called a draft meets this definition. The same-bank, order and demand conditions and the payment standard must be checked; section 131A separately extends the crossed-cheque chapter to the defined draft.
Glossary
- Inter-office draft
- The same-bank office-to-office order described here.
- Payable on demand
- The payment timing required by this draft definition.
Frequently asked questions
Does a draft on a different bank automatically satisfy this definition?
The section specifically refers to another office of the same bank.
Does the draft have to be payable to order on demand?
Yes. Both conditions appear in the text.
Which provision extends crossed-cheque rules to the defined drafts?
Section 131A.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026