Unit 1 of Law of Banking and Negotiable Instruments (syllabus: Module I — the business of banking and the structure of the Indian banking system; public sector, private and foreign banks; banking reform; and the Insolvency and Bankruptcy Code 2016 including information utilities). Below: what the unit covers, the provisions it turns on, and the cases an examiner expects you to name.
What this unit covers
- What is banking, and why does the purpose element decide the question?
- Is a co-operative bank within the banking entry of List I?
- When does a person become a customer of a bank?
- When is a dishonour wrongful, and what may the customer recover?
- Who bears the loss where a cheque bearing the customer's forged signature is paid?
- What duty does the customer owe the bank in drawing a cheque?
- Over what may a banker exercise his general lien, and over what may he not?
- Is the banker's duty of secrecy absolute, and when may he disclose?
Treat that list as a self-test: recite each topic's rule from memory before you open its cases.
Provisions
- Banking Regulation Act 1949, s. 5(b)
- Constitution of India, s. Seventh Schedule, List I entry 45 and List II entry 32
- Negotiable Instruments Act 1881, s. 131
- Negotiable Instruments Act 1881, s. 31
- Negotiable Instruments Act 1881, s. 10
- Negotiable Instruments Act 1881, s. 89
- Indian Contract Act 1872, s. 171
- Bankers' Books Evidence Act 1891, s. 4
Leading cases
- Sajjan Bank (Private) Ltd. v. Reserve Bank of India
- Pandurang Ganpati Chaugule v. Vishwasrao Patil Murgud Sahakari Bank Ltd.
- Central Bank v. Gopinathan Nair
- Canara Bank Ltd. v. I. V. Rajagopal
- Canara Bank v. Canara Sales Corporation
- London Joint Stock Bank Ltd. v. Macmillan
- Brandao v. Barnett
- Tournier v. National Provincial and Union Bank of England
Full case summaries
- Tournier v. National Provincial and Union Bank of England (1924)
- London Joint Stock Bank Ltd. v. Macmillan (1918)
- Canara Bank Ltd. v. I. V. Rajagopal (1975)
- Canara Bank v. Canara Sales Corporation (1987)
- Sajjan Bank (Private) Ltd. v. Reserve Bank of India (1961)
- M/S Integrated Finance Co. Ltd. v. Reserve Bank of India (2015)
- Pandurang Ganpati Chaugule v. Vishwasrao Patil Murgud Sahakari Bank Ltd. (2020)