Banking · Wrongful Dishonour of Cheques
A retail customer, Ms. Sneha, issues a cheque for fifty thousand rupees to her landlord. Despite a balance of over two lakh rupees, the bank's automated system erroneously dishonors it due to a technical glitch with the memo 'Signature Differs.' The landlord files a complaint under Section 138 of the NI Act and serves an eviction notice. Ms. Sneha sues the bank for wrongful dishonor. What is the bank's liability in this case?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The customer must first prove that the landlord executed the eviction through a court order before claiming any compensation.
- 2No damages are payable because the dishonor occurred due to an automated technical glitch without manual negligence.
- 3Ms. Sneha is entitled to substantial damages because a banker's wrongful dishonor of a cheque is a serious breach of duty that implicitly harms a customer's credit and reputation.✓
- 4The bank's liability is limited to actual financial loss, which is zero since the funds remained in the customer's account.
Correct answer
Ms. Sneha is entitled to substantial damages because a banker's wrongful dishonor of a cheque is a serious breach of duty that implicitly harms a customer's credit and reputation.
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