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Legal News
BANKING FINANCE
|August 2025
Kerala high court has held that banks are liable for effecting payment on forged cheques and, in one case, directed the Bank of Baroda to return the lost amount of Rs 57 lakh to the petitioners, along with 6% interest per annum, for having encashed cheques bearing forged signatures.
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HC: Banks liable for effecting payment on forged cheques
A bench of Justices Sathish Ninan and P Krishna Kumar passed the order on June 13 while allowing the petitions filed by Minar Textile Industries, Kozhikode, and its sister concerns. The petitioners had challenged the trial court's order dated Jan 30, 2015, which dismissed their suits seeking recovery of the amount.
According to the petitioners, cheques bearing forged signatures of the authorised signatory were negligently honoured by Vijaya Bank (now merged with Bank of Baroda). While 47 cheques were encashed in total, 32 were found to have been paid to third parties, causing a loss of Rs 57 lakh to the petitioners. The suits were instituted for the recovery of these amounts, but the trial court dismissed them, prompting the appeal.
This story is from the August 2025 edition of BANKING FINANCE.
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