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Section 129: Payment of crossed cheque out of due course

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 1881
Section 128 All 148 Sections of Negotiable Instruments Act Section 130

Legal Commentary & Landmark Judgments: Section 129

Section 129 establishes the statutory liability of a paying banker for paying a crossed cheque out of due course, enacting that the bank is liable to the true owner of the cheque for any loss sustained.

  • Payment in Breach of Crossing: Applies where the bank pays a generally crossed cheque over the counter in cash, or pays a specially crossed cheque to an unauthorized bank.
  • Direct Liability to True Owner: The true owner (payee or lawful holder) can sue the paying bank directly for conversion, even though there is no direct customer contract between them.
  • Full Indemnity for Loss: The bank must pay the full face value of the cheque plus interest to make good the true owner's loss.
Key Landmark Precedents:
  • Kerala State Co-operative Marketing Federation v. State Bank of India (2004) 2 SCC 425: The Supreme Court affirmed that a bank paying or collecting in violation of crossing rules is liable in conversion to the true owner under Section 129.
  • Bobbett v. Pinkett (1876) 1 Ex D 368: The classical authority holding that paying a crossed cheque out of due course renders the bank directly liable in damages to the true owner.
Courtroom Practice & Strategic Litigation Guidance:

If a debtor claims they mailed your client a crossed cheque, but the bank cashed it across the counter to an imposter, file a recovery suit against the bank under Section 129. The bank has zero defense and must pay your client the full cheque amount.

Section 128 All 148 Sections of Negotiable Instruments Act Section 130