Payment to a person other than holder/holder in due course, when does not amount to a valid discharge, explained. When the appellant signed the original Kisan Vikas Patra on back side and handed over to the agent of Post office, she also took pass book of MIS. Subsequently it was discovered that KVPs were encashed and Rs 2554000 was paid in cash which was pocketed by the agent. Held, payment was made in violation of the statutory mandate of S10 of NI Act. The respondents would have avoided the liability and claimed valid discharge if they had accepted the Kisan Vikas Patra with identity slip or if they had made payment by cross cheque that would have proved no negligence and payment in good faith.
[Pradeep Kumar v. Postmaster General, (2022) 6 SCC 351]