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Banker and
Customer
By
Group No 5
Meaning and Definition
of Banker and
Customer:
Meaning of Banker
• The term banking is defined as “accepting
for the purpose, of lending or
investments of deposit of money from the
public, repayable on demand or otherwise,
and withdrawable by cheque,draft, order
or otherwise”.
Definition of Banker
• Sec.5(c) defines the term ‘Banking’ has
“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.”
with the modification that the banker is only liable to repay the customer and
the customer demands payment.
1.Countermanding
2.Upon the receipt of notice of death of a customer
3.Upon the receipt of notice of insolvency
4.Upon the receipt of notice of insanity
Countermanding
Countermanding is the instruction given
by the customer of a bank requesting the
bank not to honour a particular cheque
issued by him. When such an order is
received, the banker must refuse to pay
the cheque.
Countermanding, in order to be
really effective
• must be in writing
• The written mandate should contain all the details
of the cheque, viz., date, number of the cheque,
name of the payee and the amount.
• The mandate must be signed by the customer. In
the case of a company, any director can stop
payment of a cheque.
• So also, any partner or any one of the joint
account holders can stop the payment of a cheque.
• In Westminster Bank vs. Hilton, the
customer had instructed his banker
not to pay his cheque No.117283
instead of 117285. The cheque
No.117285, therefore, was paid. It
was held that the banker was not
liable
• If a customer informs by telephone or
telegram regarding the stopping payment
of a cheque, the banker should
diplomatically delay the payment, till
written instructions are received.
• If the situation is very critical, he can
return the cheque by giving a suitable
answer like ‘payment countermanded by
telegram and postponed pending
confirmation.’
• The drawer alone has the right to
countermand the payment of a cheque.
• In case a cheque is lost by a holder, he
should stop payment of that cheque only
through its drawer.
• It is so because; a banker is always
answerable only to the drawer, in the case
of dishonour of a cheque.
• If a cheque is covered by a ‘cheque card,’
then, that cheque can not be countermanded.
• A cheque card is a document issued by a
bank which enables the holder to encash
cheques, upto a stated maximum, at any
branch of the issuing bank.
• Since it contains an undertaking by the
issuing bank to pay it, it is readily acceptable
to all parties particularly to third parties.
Hence, it can not be countermanded.
If a banker, by mistake, honours a
countermanded cheque:
8. Defective title
9. Other Grounds
- A conditional one
-Drawn on an ordinary piece of paper
-A stale one
-A post-dated one
-Mutilated
-Drawn on another branch where the
account is not kept
-Presented during non-banking hours
-If the words and figures differ
-If there is no sufficient funds
-If the signature of the customer is forged
-If a crossed cheque is presented at the
counter