Law · Banking Law
Assertion (A): A collecting banker can be held liable for conversion to the true owner of a cheque if the banker collects a cheque for a customer who has no title or a defective title to the instrument. Reasoning (R): The Negotiable Instruments Act 1881 provides a specific statutory protection under Section 131 that effectively shifts the burden of proof to the true owner to demonstrate that the banker acted with gross negligence or bad faith during the collection process.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A is false but R is true.
- 2A is true but R is false.✓
- 3Both A and R are true but R is not the correct explanation of A.
- 4Both A and R are true and R is the correct explanation of A.
Correct answer
A is true but R is false.
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