16 Apr 2026 12:53 PM
Supreme Court
Supreme Court

Banking--Cheque Collection--Failure to Re-Present Cheques Within Validity Period Constitutes Deficiency in Service

A bank acting as an agent for collection of cheques is under a legal obligation to exercise due diligence in presenting instruments within their validity period. Failure to re-present cheques on available working days, resulting in the instruments becoming stale, constitutes deficiency in service under consumer protection law. Such negligence also deprives the customer of the right to initiate proceedings under Section 138 of the Negotiable Instruments Act, 1881, which is not barred even where the drawer is under insolvency proceedings. Where loss resulting from deficiency in service is indeterminate, compensation must be moderate and proportionate.

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