Legal Question in Banking Law in India

Encoding error
There was an encoding error on part of presenting bank. the payee bank returned the chq due to encoding error, present again. The chq was again presented and encoding error was not corrected on presenting bank. The chq was paid with the less amount. The difference amount was paid to the customer of the presenting bank. Now the customer demands interest for the delayed payment. Will the presenting bank be liable for paying the interest or the payee bank is also liable for not catching up with the encoding error and debiting their party for less amount.

Asked on 3/18/09, 10:17 pm

4 Answers from Attorneys

Ankur Mittal MITAL & MITAL Advocates

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Re: Encoding error

yes

Answered on 3/19/09, 1:43 am

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J. Radhakrishnan independent Practice

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Re: Encoding error

It is necessary to find out at whose end the encoding error occurred, whether it is at the end of the collecting/presenting bank and or the drawee (don't use the expression payee bank) Bank. If it is at the latter, you as the customer of the bank and as drawer can sue your bank for deficiency of service. If the encoding error is at the presenting/collecting bank, it is anwerable only to its customer i.e. the payee and you as drawer cannot do anything about it.

Answered on 3/20/09, 5:45 am

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