banker's obligation to honour customers cheques

1. Name: Kashyap Joshi
SY
Div:3
Roll no.: 134/58

3.  1. Relationship of Debtor and Creditor.
 2. Relationship of Pledger and Pledgee.
 3. Relationship of Licensor and Licensee.
 4. Relationship of Bailor and Bailee.
 5. Relationship of Hypothecator and
Hypothecatee.
 6. Relationship of Trustee and Beneficiary.
 7. Relationship of Agent and Principal.
 8. Relationship of Advisor and Client.
 9. Other Relationships

4. Other miscellaneous
relations
 Obligation to honour cheques.
 Secrecy of customer’s account.
 Banker’s right to claim incidental
charges.
 Law of limitation on bank deposits.

5. A banker must honour customers’ cheque
drawn on him provided: (sec31 of NI Act
1881 )
 (a)The banker has sufficient funds of the customer.
 (b)The funds are properly applicable to the
payment of such cheque.
 (c)The banker has been duly required to pay.
 (d)The cheque has been presented within
a reasonable time after the apparent date of its
issue.
 (e)No prohibitory order of the court or any other
competent authority e.g. tax authority, is standing
against the accounts of the customer

6. (a) Sufficiency of Funds
 When the banker has customer’s funds at least
equal to the amount of the cheque.
 While determining the sufficiency of funds, the
customers’ funds which the banker may have in
other accounts, the negotiable instruments
which have not yet been collected etc are not to
be taken into account.
 The obligation to honour the customer’s cheque
may be extended to the extent of the amount of
overdraft which the banker may have expressly
or impliedly agreed to sanction to the customer.

7. (b) Applicability of Funds
 The funds must be available for the cheque
drawn. In case a customer has drawn a
cheque against one account, having
insufficient funds, the banker cannot debit it to
his other account where he has sufficient
funds unless the customer asks for it.
For instance, a customer having insufficient
funds in his current account cannot presume
that the cheque drawn by him will be honoured
by the bank because he has fixed deposit with
the bank.

8. (c) Banker duly required to Pay
 This means that the cheque is complete in all
respects and is presented during banking
hours. The cheque should not be post-dated. A
banker is also not bound to pay a cheque
which does not bear the date of its issue or in
the case of joint account; it is not signed by all
the joint account holders

9. (e) Presented within a reasonable Time
 A cheque is meant for immediate payment
and, therefore, it should be presented within a
reasonable time of its issue. A cheque
becomes stale in case it is not presented
within six months of its issue. Similarly, the
cheque must not be presented before due date
incase of post-dated cheques.