As per Section 10 “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.


Payment in due course, which results in discharge of a negotiable instrument, must satisfy the following conditions:

1.  The payment must be in accordance with the apparent tenor of instrument.

2.  The payment must be made by or on behalf of the drawee or acceptor.

3.  The person to whom the payment is made should be in possession of the instrument and should also be entitled to receive the payment on it.

4.  The payment should be made in good faith, without negligence and under bonafide circumstances.

5.  There should not exist any ground for believing that the possessor is not entitled to receive payment.


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