A customer of your branch Raju deposits a cheque which he steals from another person named Raju. Your branch collects this cheque (on which the customer is having a defective title) without being aware about the defect

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	Collecting bank will get protection if it has complied with the requirement u/s 131
B	Collecting bank is responsible for conversion
C	Collecting bank is negligent but will get protection
D	Collecting bank is negligent but will not get protection

Explanation:

Detailed explanation-1: -The maker of a bill of exchange or cheque is called the “drawer; ” the person thereby directed to pay is called the “drawee.” When in the bill or in any indorsement thereon the name of any person is given in additional to the drawee to be resorted to in case of need, such person is called a “drawee in case of need.”

Detailed explanation-2: -Legal action According to Section 138 of the Act, the dishonour of cheque is a criminal offence and is punishable by imprisonment up to two years or with monetary penalty or with both. If payee decides to proceed legally, then the drawer should be given a chance of repaying the cheque amount immediately.

Detailed explanation-3: -Section 128 This is the protection in case of a crossed cheque. This section implies that the banker has made the payment in due course with good faith and without negligence, as per section 10.

There is 1 question to complete.