Law:

Section:

Negotiable Instruments Act (XXVI of 1881)--S. 10---"Payment in due course"---Meaning---Pay-Order---Bank's right to stop payment of pay-order at the request of its purchaser or issue duplicate pay order without request/consent of its beneficiary---Scope and procedure stated. Pay-order is a banking instrument, which the Bank issues on receipt of cash from the purchaser in favour of a third party. The beneficiary of pay order is a person in whose favour and benefit pay order is issued. There are three parties in the transaction of pay order, one is the purchaser, second is the issuer and third one is the payee. Under section 10 of Negotiable Instruments Act, 1881 payment in due course means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to pay person thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of amount therein mentioned. In a pay order there are three parties, without consent of payee a duplicate pay order cannot be issued. Section 10 of Negotiable Instruments Act, 1881 shows that payment in due course is a discharge of obligation by the issuer of instruments, if the beneficiary fulfils this condition "The holder and presenter is the real beneficiary of instrument." Under the Banking Law and Procedure, the pay order cannot be paid or encashed at the counter of bank, and it can be collected through banker of beneficiary. The banker of beneficiary while presenting the pay order confirms the payee bank in this undertaking "payees account credited". This means collecting bank is confirming paying bank that amount collected will be credited to the account of real payee. It is the responsibility of collecting bank to confirm and ascertain the identity of his account holder. United Bank Limited v. Trustees of the Port of Karachi 1994 CLC 2116 and Vadlamany Venkatesam and another v. Mangipudi Viswanadham and another AIR 1918 Mad. 512 ref. JUDGMENT MUHAMMAD KHALID MEHMOOD KHAN, J.---The appellant filed a suit under Order XXXVII, C.P.C. against respondent for recovery of Rs.14,60,000 on the basis of a pay order number 0A0/0-0764729 dated…

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