Section 85 of the Negotiable Instruments Act states that “where a cheque payable to order purports to be endorsed by or on behalf -of the payee the banker is discharged by payment in due course. He can debit the account of the customer with the amount even though the endorsement turns out subsequently to have been forged, or the agent of the payee without authority endorsed it on behalf of the payee”. It would be observed that the payee comprises of endorsee. This protection is approved for the reason that a banker cannot be anticipated to know the signatures of all persons in the world. He is only entitled to know the signatures of his own customers.
Consequently, the forgery of drawer's signature will not usually defend the banker but even in this case, the banker may debit the account of customer, if it can illustrate that the forgery was familiarly connected with the laxity of the customer & was the adjacent cause of loss.
In the case of bearer cheques, the law is once a bearer cheque, always a bearer cheque. Where, consequently, a cheque initially articulated by the drawer himself to be payable to bearer, the banker may disregard any endorsement on cheque. He will be released by payment in due course. But a cheque which turns out to be bearer by a succeeding endorsement in blank is not roofed by this Section. A banker is discharged from liability on crossed cheque if he does payment in due course.