Online Help, Guidance and Solutions for Virtual University of Pakistan Students
Due Date: July 26, 2018
Negotiable instrument act discusses different types of crossing of a cheque, although the Act is silent about the “Account Payee” form of crossing but it has been recognized by custom among the businessmen and the bankers. You are required to answer the questions in the light of the practice being followed by banks in this regard in the following cases:
NOTE: You are also advised to visit any nearest branch to get a practical insight about
a. A cheque was drawn in favor of “ABC & others” and was marked with the words “Account Payee”. Mr. Aslam the bearer of the cheque deposited the cheque into his account at his bank that credited his account with the proceeds without making any inquiry about the cheque. Was the bank right in its action as per Negotiable Instrument Act? What is the duty of the banker while collecting a
cheque crossed as “Account Payee”?
b. Ali draws a crossed cheque marked “Account Payee Only” in favor of Ahmad and mails it to Ahmad. The cheque is stolen and gets into the hands of Mr. Muneer. Mr. Muneer personates Mr. Ahmad, and opens the account with a banker by means of stolen cheque. The banker makes no inquiry as to Mr.
Muneer position, the banker collects the cheque and credits Mr. Muneer account with the proceeds. Was the bank right in its action?
2) The banker customer relationship gives rise to certain rights and obligations between them. One of the important duties of a banker is to honor his customer’s cheque, if there is an adequate credit balance in the account of the customer. Discuss the circumstances under which this authority is revoked.
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