NEW DELHI: The Supreme Court on Wednesday said banks act as agents for their customers and are under a “statutory obligation” to exercise due diligence and present a cheque for collection before it becomes “stale” as such a negligence constitutes a manifest deficiency in service.
A bench of Justices B V Nagarathna and Ujjal Bhuyan held the Canara Bank guilty of deficiency in service for failing to present cheques within their validity period, while reducing the compensation awarded to the complainants.
“A bank receiving cheques for collection acts as an agent of the customer and is under an obligation to exercise due diligence in presenting the instruments within the prescribed validity period. The failure to do so, resulting in the instrument becoming stale, would result in negligence in the discharge of banking duties,” Justice Ujjal Bhuyan, who authored the 57-page verdict, said.