Negotiable Instruments Act, 1881 · Chapter XIV: O F C R O S S E D C H E Q U E S
Section 131: Non-liability of banker receiving payment of cheque
In plain words
A bank that, in good faith and without negligence, collects a crossed cheque for a customer is not liable to the true owner just because the customer's title proves defective.
- This applies even if the bank credits the customer's account before receiving payment.
- A bank collecting on a truncated cheque image must check its apparent genuineness and any fraud, forgery or tampering visible with due diligence.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
Official text
A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such payment.
[Explanation [(I)].— A banker receives payment of a crossed cheque for a customer within the meaning of this section notwithstanding that he credits his customer's account with the amount of the cheque before receiving payment thereof.]
[Explanation II.— It shall be the duty of the banker who receives payment based on an electronic image of a truncated cheque held with him, to verify the prima facie genuineness of the cheque to be truncated and any fraud, forgery or tampering apparent on the face of the instrument that can be verified with due diligence and ordinary care.]
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.