Legal Question in Banking Law in India

One month ago ABC Bank opened a Current Account of a Firm with some fictitious documents. The firm deposited three forged cheques of SBI amounting Rs 13.53 crore in different dates and all cheques were cleared by the Bank.Amount Rs 5.00 crore was kept in the form of FDR and balance amt was either withdrawn cash or transfered to some other Bank Accounts. Now as the case is under investigation the payee bank is demanding the amount from the collecting Banker. What would be the legal position of the collecting Banker. whether the collecting Bank should pay the amount to the payee Bank or not. What action should be taken by the collecting Banker.


Asked on 8/01/13, 3:26 am

3 Answers from Attorneys
uttam Tibrewal

dear client..........

yes the collecting bank shall return all the money available with it at present..........

for any other query do rpely back at [email protected]

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Answered on 8/01/13, 5:10 am
J. Radhakrishnan independent Practice

If the collecting bank was negligent in verifying the credentials of the account holder it will be liable to the paying banker. It is not the payee banker but paying banker. The collecting banker should find out the customer who has opened the account with false documents to recover the amounts it was forced to reimburse the paying(drawee) banker.

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Answered on 8/01/13, 5:44 am
Fca Prashant Chavan Expert Edge LLP

01.08.2013

Dear Sir / Madam,

ABC Bank is first responsible for negligence on account of having opened the Current A/c without proper KYC norms. The concerned Officer at SBI who verified and passed the cheques owes allegiance to the A/c holder, and he / she is equally liable for questioning and negligence of duty, for not having verified the authenticity of signature(s) of drawer's prior to release of the payment and transfer of funds to ABC Bank. In short, pending the conclusion of the investigation, both banks have failed in the operational process and face legal action.

(Reply No. 13-August, 2013).

Regards,

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Answered on 8/01/13, 7:22 am


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