Legal Question in Civil Rights Law in India

Section 131 of the Negotiable Instruments Act, 1881 confers protection to a collecting

banker receiving payment of a crossed cheque in case the title of the customer to it is

proved defective.

According to Section 5(b) of the Banking Regulation Act X of 1949 "Banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise." A banker is one who in the ordinary course of business honours cheques drawn upon him by a person from whom and for whom he receives monies on current account. A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially in good faith and without negligence in receiving payment, i.e., in the process of collection, (b) that the banker should receive payment for a customer, i.e., act as mere agent in the collection of the cheque, and not On his own account as holder, (c) that the person for whom the banker acts must be his customer, and (d) that the cheque should be one crossed generally or specially to himself. There can be no negligence without a duty and that there is no contractual relation between the collecting banker and the true owner, giving rise to a duty on the part of the former to the latter. The banker's only contractual obligation is to his own customer and conduct beneficial to the customer at the expense of the true owner is no breach of that duty.

Regards,