Page 109 - DMGT407Corporate and Business Laws
P. 109
Corporate and Business Laws
Notes 12. Notwithstanding anything contained in Cr.P.C. every offence of cheque bouncing shall be
compoundable (s.147).
13. The provisions of the Information Technology Act, 2000 are made applicable to Negotiable
Instruments Act in relation to electronic image of a truncated cheque and a cheque in the
electronic form (sections 5, 81, 39, and 131 of the Negotiable Instruments Act, 1881).
4.9.3 Consequences of a Wrongful Dishonour
If a banker, without justification, dishonours his customer’s cheque, he makes himself liable to
compensate the customer for any loss or damage. The words ‘loss or damage’ used in s.31, not
only mean the pecuniary loss but also loss of credit or injury to reputation of the customer. Thus,
if the customer is a trader or a business man, the damages may be substantial. But, a non-trader
is not entitled to recover substantial damages for the wrongful dishonour of his cheque. Thus, a
non-trader may be awarded only nominal damages because of the absence of any special loss. In
assessing the damages for injury to credit, the Courts give due consideration to various factors,
such as financial position and business reputation of the customer and the customs of the trade
to which he may belong.
The Amendment Act, 2002 has added an Explanation to s.131. It provides that it shall be the duty
of the banker, who receives payment based on an electronic image of a truncated cheque held
with him, to verify the prima facie genuineness of the cheque to be truncated and any fraud,
forgery or tampering apparent on the face of the instrument that can be verified with due
diligence and ordinary case.
4.9.4 Collection of Bills
Unlike cheques, a banker is not charged with the legal responsibility of collection of his customer’s
bills. But, in fact, no commercial bank can afford to exist without providing this facility to his
customers. In collecting bills a banker has to be extra cautious in examining the title of the
depositor as the statutory protection contained in s.131 does not extend to bills. Thus, if the title
of the banker’s customer turns out to be defective, the true owner can claim the amount of the
bill from the banker. The banker, though he can claim the amount from his customer, should
accept bills for collection only on behalf of the trusted parties. In case of new customers, the bank
should extend this facility to customers with a trusted reference.
Task Writing on a bill of exchange is effaced by sea water. Is the instrument invalid?
Discuss.
Self Assessment
Fill in the blanks:
17. It is necessary that a payment to constitute a payment in due course should be made at or
after…………..
18. The provisions of the Information Technology Act, 2000 are made applicable to Negotiable
Instruments Act in relation to …………………….of a truncated cheque
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