Legal Question in Banking Law in India

Encoding error

There was an encoding error on part of presenting bank. the payee bank returned the chq due to encoding error, present again. The chq was again presented and encoding error was not corrected on presenting bank. The chq was paid with the less amount. The difference amount was paid to the customer of the presenting bank. Now the customer demands interest for the delayed payment. Will the presenting bank be liable for paying the interest or the payee bank is also liable for not catching up with the encoding error and debiting their party for less amount.


Asked on 3/18/09, 10:17 pm

4 Answers from Attorneys
Ankur Mittal MITAL & MITAL Advocates

Re: Encoding error

yes

Read more
Answered on 3/19/09, 1:43 am
J. Radhakrishnan independent Practice

Re: Encoding error

It is necessary to find out at whose end the encoding error occurred, whether it is at the end of the collecting/presenting bank and or the drawee (don't use the expression payee bank) Bank. If it is at the latter, you as the customer of the bank and as drawer can sue your bank for deficiency of service. If the encoding error is at the presenting/collecting bank, it is anwerable only to its customer i.e. the payee and you as drawer cannot do anything about it.

Read more
Answered on 3/20/09, 5:45 am
Sudershan Goel India Law Offices of Sudershan Goel - Advocate

Re: Encoding error

The bank may be liable but you may take your decision to litigate with the bank taking into consideration the total amount involved.

You may make a demand from the Bank pointing out its fault and may consider going to Consumer Forum for claiming damages.

However, if the amount is very small, you may better avoid the dispute. The litigation may be expensive and time consuming.

Read more
Answered on 3/19/09, 7:24 am
Aniruddha Pawse Aniruddha.P.Pawse Advocates

Re: Encoding error

yes

Read more
Answered on 3/19/09, 10:54 am


Related Questions & Answers

More Banking Law questions and answers in India