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Indian Overseas Bank vs Industrial Chain Concern on 7 November, 1989 cites

Lloyds Bank, Ltd. vs P.E. Guzdar And Co. on 10 April, 1929

It is a settled law that the test of negligence for the purpose of section 131 of the Act is whether the transaction of paying in any given cheque coupled with the circumstances antecedent and present is so out of the ordinary course that it ought to arouse doubts in the banker's mind and cause him to make inquiries. Lloyds Bank Ltd. v. E.B. Savory and Co., (supra), Marfani & Co. Ltd. v. Midland Bank Ltd., (supra), Arab Bank Ltd. v. Ross, [1952] 1 All E.R. 709 and Karak Rubber Co. Ltd. v. Burden, (No. 2) [1972] 1 All E.R. 1210. are some of the authorities laying down the above rule. The banker is bound to make inquiries when there is anything to rouse suspicion that the cheque is being wrongfully dealt with in being paid into the customer's account.
Calcutta High Court Cites 13 - Cited by 25 - Full Document

Bapulal Premchand vs The Nath Bank, Ltd. on 20 November, 1945

In Bapulal Premchand v. Nath Bank Ltd., AIR 1946 Bom. 482, Chagla J, as he then was, in the facts of that case expressed that in his opinion, there was no absolute and unqualified obligation on a bank to make inquiries about a proposed customer and that modern banking practice required that a customer should be properly introduced or the bank should act on the reference of some one whom it could trust. Therefore, perhaps in most cases it would be wiser and more prudent for a bank not to accept a customer without some reference. But he was not prepared to go so far as to sug- gest that after a bank had been given a proper reference with regard to a proposed customer and although there was no suspicious circumstances attendant upon the opening of the account, it was still incumbent upon the bank to make fur- ther inquiries with regard to the customer. In that case the manager of the defendant-bank accepted.the reference of the cashier Modi and also in fact made certain inquiries of Modi as to the position and status of the customer. It was held that it was not obligatory upon the defendant-bank to make any further inquiries about his customer and in having failed to make any such further inquiries in his Judgment they were not guilty of negligence. In the instant case the Manager himself gave the introduction.
Bombay High Court Cites 6 - Cited by 23 - Full Document
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