Negotiable Instruments

Bankers’ Duties and Responsibilities (76)

The duties of Paying Banker as regards crossed cheques – Section 126 to 129.





126       Where a cheque is crossed generally/specially



127       Crossed specially to more than one banker except when crossed to an agent for the purpose of collection, the banker on whom it is drawn shall refuse payment thereof.



128       Protection to Paying Banker



129       Crossed generally/specially otherwise to the banker shall be liable to true owner of the cheque for any loss he may sustain.





Section 128: Protection to Paying Banker

Section 131: Protection to Collecting Banker

Paying Banker – Duties and Responsibilities

·         Payment Of Cheques

·         Precautions to be taken

1.    Open or Crossed Cheques

2.    Payment at the branch where account stands

3.    Mutilated Cheques

4.    Cheque must be drawn in proper form

5.    Post-dated/Stale

6.    Stale Cheque – A cheque in circulation for an unreasonably long period is said to be stale.

7.    Amount in words and figures should tally: - if it is stated differently in figures and in words, the amount stated in words shall be the amount ordered to be paid.

8.    Payment within banking hours: Section 65 of N.I. Act: Payment of cheques after banking hours are not ‘Payment in Due Course’ and not eligible for protection under section 10 of the N.I. Act.

9.    Alternation :

10. Material Alternation : Section 87 of NI Act

11. Computational Balance : ‘Effects not cleared, Please present again’

12. Endorsements

13. Forged Signature

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Payment of Cheques and Protection to the Paying Banker Section 10, 31, 85,85A, 87, 89, 126 to 130 of N.I. Act

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 reasonable ground for
		believing  that  he  is  entitled  to  receive
		payment of the amount mentioned.

Holder For Value – where a banker has parted with funds before collecting the proceeds of the cheque from another banker, the banker is holder for value.

Dishonor of Cheques (92)

The cheque is considered to have bounced and the drawer is considered to have committed offence. But when the drawer has intimated the payee that he shall not present the said cheque without his prior consent in that event such cases will not fall within the frame of Sections 138 to 147.