Cheques Act, 1959

Protection of bankers collecting payment of cheques, etc.

4.— (1) Where a banker, in good faith and without negligence,—

(a) receives payment for a customer of an instrument to which this section applies; or

(b) having credited a customer's account with the amount of such an instrument, receives payment thereof for himself;

and the customer has no title, or a defective title, to the instrument, the banker does not incur any liability to the true owner of the instrument by reason only of having received payment thereof.

(2) This section applies to the following instruments, namely,—

(a) cheques;

(b) any document issued by a customer of a banker which, though not a bill of exchange, is intended to enable a person to obtain payment from that banker of the sum mentioned in the document;

(c) any document issued by a public officer which is intended to enable a person to obtain payment from the Paymaster General of the sum mentioned in the document but is not a bill of exchange;

(d) any draft payable on demand drawn by a banker upon himself, whether payable at the head office or some other office of his bank.

(3) A banker is not to be treated for the purposes of this section as having been negligent by reason only of his failure to concern himself with absence of, or irregularity in, indorsement of an instrument.