Brahma Shum Shere Jung Bahadur V. Chartered Bank Of Hinde Case Study

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In order to ascertain the obligations of the banks in India with regards to alteration in a negotiable instrument, the following cases could be cited.
In the case Brahma Shum Shere Jung Bahadur v. Chartered Bank of India, Australia & China ,the following points have been laid down by the apex court:-

“Banker is protected even though he has paid a materially altered cheque if (i) the alterations were not apparent at the time of payment and (ii) he pays in due course, i.e. in good faith and without negligence If there is anything to arouse his suspicion, he should make enquiries for the same.
Mere indication that the writer of the body of the cheque is different from the signatory, is not sufficient to arouse suspicion.
Banker’s obligation to pay cheques arises out of contract. Under the contract, the banker may have agreed to follow an overdraft to the customer and pay his cheques upto an agreed limit. Here, the banker’s obligation to pay cheques is subject to the same rules as are applicable to a deposit account.”

In the case of Tanjore Permanent Bank Ltd. v. S.R. Rangachari, the question which arose was whether T.P Bank was entitled to debit the account of Mr. Rangachari with the amount of two cheques which were signed in blank by the customer and which were subsequently filled in by the accountant of the above bank. Mr. Rangachari had drawn the two cheques in favour of his two clerks and the two cheques appeared to have been discharged by the said clerks. Mr.

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