Supreme Court of India

Bihta Co-operative Development and Cane Marketing Union v Bank of Bihar

AIR 1967 SC 38919661 min read
The case in brief30-second read
Facts
The appellant Union kept an account with the respondent bank on terms that cheques were to be signed by two specified officers. A cheque was presented on which one of the required signatures was forged, and the bank paid it.
Issue
Whether the bank was entitled to debit the Union for a cheque that did not bear the genuine signatures required by the mandate.
Held
The bank could pay only on a cheque signed in accordance with the customer's mandate. A cheque bearing a forged signature of one of the required signatories was not the Union's order, and the bank was liable to make good the amount.
Principle
A banker who pays a cheque bearing a forged signature of the drawer or a required signatory is liable to the customer.
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Facts

  • The appellant Union kept an account with the respondent bank on terms that cheques were to be signed by two specified officers. A cheque was presented on which one of the required signatures was forged, and the bank paid it.

Issue

  1. Whether the bank was entitled to debit the Union for a cheque that did not bear the genuine signatures required by the mandate.

Held

  • The bank could pay only on a cheque signed in accordance with the customer's mandate. A cheque bearing a forged signature of one of the required signatories was not the Union's order, and the bank was liable to make good the amount.

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Citation

Bihta Co-operative Development and Cane Marketing Union v Bank of Bihar AIR 1967 SC 389

Reported: https://indiankanoon.org/doc/187706/. This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.