Legal Question in Banking Law in India

A customer Mr. YYY is maintaining the current account account in his individual capacity with Branch-1 of Bank-ABC and a savings bank account with Branch-2 of Bank-ABC. Now Branch-1 has passed a forged cheque by debit to Mr. AAA by Rs 1000/- for the credit to current account of Mr. YYY and then Branch-2 has passed a forged cheque by debit to Mr. AAA by Rs 1000/- for the credit to savings account of Mr YYY.

Now the Branch-2 has put a hold on the current account for Rs 1000/- and a hold on SB account for Rs 1000/- . Branch-1 has not put any hold in any of the accounts. Now some amount is present in the current account and savings bank account.

1) Please advice which branch has first right to adjust the amount lying in the account.

2) If an amount of Rs 1000/- is lying in current account and 500/- in savings bank account, which branch has the first right and in which order the amount should be adjsuted.

3) Is the above principle called right of sett off?.

4) If any future money is coming in the current account or savings bank account, can the amount be adjusted towards the balances dues in current account/savings bank account.


Asked on 4/22/16, 10:35 pm

1 Answer from Attorneys
Fca Prashant Chavan Expert Edge LLP

23.04.2016

Dear Sir / Madam,

The customer Mr. YYY's accounts being of different type - Current a/c in Branch 1 and Savings A/c in Branch 2. the respective Branch has to exercise its individual right to withhold the amount pending completion of inquiry and investigation. If it is established that the forgery is by Mr. YYY and there is any shortfall, he has to make good the loss to the Bank and to Mr. AAA.

Regards,

Read more
Answered on 4/22/16, 11:19 pm


Related Questions & Answers

More Banking Law questions and answers in India