X is issued a cheque of Rs. 22000 payable to B on order. The cheque is misplaced and found by C. C forges B’s signatures and endorses in favour of D, who obtains payment from the bank.

Section 85(1) in the Negotiable Instruments Act, 1881 - (1) Where a cheque payable to order purports to be endorsed by or on behalf of the payee, the drawee is discharged by payment in due course. (2) Where a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due course to the bearer thereof, notwithstanding any endorsement whether in full or in blank appearing thereon, and notwithstanding that any such endorsement purports to restrict or exclude further negotiation.