What is a forged instrument? (Cheque/bill/Promissory note)

An instrument (negotiable instrument like cheque/bill of exchange/promissory note) is called forged instrument when forgery takes place in signature of the drawer, signature of the endorser, and alteration in name of the payee, alteration in amount, alteration in date etc. validated by forged signature.

 A forged instrument is meaningless as far as drawer/endorser whose signature is forged is concerned because holder of such instruments is not protected under law. Forgery is void ab-initio and confers no title to the holders. Therefore, transferee will not be able to enforce payment from parties to the bill, cheque and promissory note. In case such transferee gets payment by mistake such payment can be claimed back from him/her. For example, when the forged cheque is paid by the drawee bank, it is deemed payment without actual mandate of the customer.The paying bank is required to make good of loss to the customer. Similarly a bank which collected the cheque on the basis of forged endorsement, will be held responsible and may have to return the proceeds collected by it.