Legal Question in Banking Law in India

04.03.2015

Dear Sir / Madam,

Banks are required to classify between clear balance (actual balance lying in the A/c) and unclear balance (cheques deposited awaiting clearing) in the intimation to the A/c holder, be it intimating the A/c holder by way of an SMS message, email or Statement of A/c. The SMS message that you received the next day may have read : "We have received a cheque in A/c No XXXXXXXXX amounting to Rs. ________/- for clearing. The same will be credited within the next ____ days" The balance in your A/c is Rs. ________/-" Should there be no classification in the intimation you received, this balance means clear balance. The issue is simple. Even if you have spent the money erroneously given by the Bank to you, the Bank ought to have received the money through the realization of the deposited cheque within the next two working days after the Bank paid you. And if the error was on the part of the Bank, the Bank is not entitled to penalize you in any way whatsoever. If the cheque you deposited is dishonoured and returned back uncleared, the Bank is entitled to treat the amount erroneously paid to you as a temporary advance / overdraft / loan and you remain liable to repay back the amount erroneously paid to you by the Bank. Here too, the Bank may not be legally entitled to charge you any interest, if the error is on the part of the Bank.

So, if the latter be the case, you should instruct the Drawer / Payer of the deposited and dishonoured cheque to pay you the cheque amount which in turn you should return back to the Bank. If the Drawer / Payer fails to pay you the cheque amount, you will have to file a recovery suit u/s 138 of the Negotiable Instruments Act, 1938 on the Drawer / Payer of the deposited and dishonoured cheque with compensation / damages.

Regards,