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Saturday, August 14, 2010

Liability of the paying banker on crossed cheques

The paying banker should make payment of a crossed cheque only through the collecting banker. In case of special crossing the payment of cheque should be done only to the banker show name has been mentioned between the two transverse parallel lines. In case the paying banker makes payment of a crossed cheque in contravention of the above rules, its liability will be as follows:

(i) The paying banker will have to reimburse the true owner for any loss that he might have suffered on account of payment being made to a wrong person.

(ii) The paying banker shall not be entitled to debit his customers account with the amount of payment in case payment has been made to a wrong person since it has not followed the mandate of the customer. Such payment will not be taken as a 'Payment made in due course'.

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