Is a bank liable for passing and paying a forged Cheque?

There is no mandate of the customer to the bank to pay on such a forged cheque. The bank is not liable to debit the said amount of the cheque even if it is found that the customer did not take proper care to keep the cheque or the relevant cheque book in proper custody.

Who is liable when a customer’s bank pays an altered check?

The bank is liable to paying a check that has been materially altered. This means that the check was changed in some way that modifies the obligation of a party or includes an unauthorized addition of words or figures. For example, the recipient of the check may change the amount from $10 to $100.

Who is obliged to pay the amount of a Cheque?

Section 31 of the Negotiable Instruments Act 1881, provides that “The drawee of a cheque, having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque, must pay the cheque when duly required to do so and in default of such payment must compensate the drawer for any loss or damage …

What do you do if someone forges your check?

Contact your bank or credit union right away. State law generally provides that you are not responsible for a check if someone forged the signature of the person to whom you made out the check. Tell your bank or credit union what happened and ask for the money to be restored to your account.

What are the liabilities of a paying banker?

If it is an open cheque, a banker can pay cash to the payee or the holder across the counter. If the banker pays against the instructions as indicated above, he is liable to pay the amount to the true owner for any loss sustained. Further, a banker loses statutory protection in case of forged endorsement.

What are the liabilities of banker for his negligence?

When a bill of exchange, accepted payable at a specified bank, has been duly presented there for payment and dishonored, if the banker so negligently or improperly keeps, deals with or delivers back such bill as to cause loss to the holder, he must compensate the holder for such loss.

Can someone change the amount on a check?

What can I do? Contact your bank or credit union as quickly as you can. If your bank or credit union cashed the check, you may be able to have the difference restored to your account. You are still responsible for the original amount of the check.

Is it illegal to modify a check?

Errors on a check could include a misspelling of your name or the check being written to a different name. It is illegal to correct any error on a check on your own. Fortunately, there are other methods of correcting the error so you can still cash or deposit the instrument.

When should a banker refuse payment of cheque?

A banker must also refuse payment of cheques when its customer has been adjudged insolvent or has become insane since in such cases its original authority to pay on behalf of the customer ceases to exist. A fresh authority is required on those accounts.

What happens if a cheque is paid with a forged signature?

Payment of a cheque with forged signature of the drawer is deemed as payment without the authority of the customer and hence a breach of the implied contract between a banker and his customer. Banker who pays a cheque with a forged signature suffers the loss himself.

Who is bound to pay the cheque drawn by the customer?

The banker is bound to pay the cheque drawn by the customer. The duty on the part of the banker, to honors his customer’s mandate is provide in sec31 of the Act. Sec 31 applies only to the banker. The customer has the right to ask back his money from the banker (debtor).

When is a bank at fault in a cheque case?

If a cheque presented to a banker for payment had been fraudulently altered and alteration is apparent. The banker will be fault if cheque is paid by him. Where the banker cannot debit the customer’s account with anything more than the original amount on the cheque. Since the customer is not negligent.

What is the law on responsibility of paying bank cheque?

The law on responsibility of paying bank is providing in the Negotiable Instrument Act, 1881.The relationship b/w the banker and the customer is just like Debtor and Creditor relationship. The banker is bound to pay the cheque drawn by the customer.