Bank cleared cheque and then withdraw money w/o concent


06 October 2018

We have made a sale of big consignment on advance payment basis to a client. The client paid us via cheque which was cleared by the bank and amount got deposited into our A/C and we shipped the goods. After 30 days of clearing, Bank came back to us claiming that they mistakenly cleared the cheque and amount in the client A/C was not sufficient and they have to withdraw the amount back from our A/C. Our was a CC A/C which was already at its limit, bank took the money back without any concent increased our CC limit and posted 0 available balance.

Now the client is also refusing to pay and we can't visit him as he is the different state and we have given in paid slip. Because of the Bank's mistake, we have shipped our GOODS and didn't receive the PAYMENT also. Need guidance from experts.

Now we want to take action on Bank to get our money back as the client has refused to pay. Need guidance how can we get our money and from whom. Is there any such case happened in the past which I can refer and what did court decided in such case.


Vijay Raj Mahajan (Expert)
06 October 2018

No doubt mistake is on the part of the bank however the bank acts only as an agent on your behalf to collect payment and deposit it in your bank account nothing more. The mistake on the part of bank cannot make them to pay that amount that was to come from your client.
The bounced payment transfer is on account of your outstation client to whom you serve legal notice and proceed for criminal as well civil cases for what has happened.

Dhingra: (Expert)
Click to Talk
06 October 2018

The description made in your query is just in contradiction of the normal practice of transaction of business by the banks, as banks do not afford credit to the account without getting the cheque cleared by the drawer's bank, specially where the account holder has not made a special request for giving credit in advance of clearance.

That makes clear as if you have presented some hypothetical problem, not a real one. If the problem is not real one, that does not attract any solution from the experts.

It is for your information that banks do not need take consent of the account holder to reverse any wrong credit, if made in to his account.

However, if you really have any such problem, better give clear facts of the case.

Dr J C Vashista (Expert)
06 October 2018

Unbelievable commercial question and contradictory statement.
No bank can take a chance to clear the cheque and revert the same after 30 days (without consent or information to account holder) ???
If there is some truth in the story, consult and engage a local prudent lawyer to take on the case against the bank as well as your customer.

Vijay Raj Mahajan (Expert)
06 October 2018

There is a common practice in many banks the cheque deposited in any account of their branch showing credited in the account of the client. This is done with the presumption that cheque amount will get clearance from the drawer bank and actually get credited in their bank.
This is credit showing in the account is not confirmed and awaited confirmation from the other bank. The actual time taken for clearing the cheque is usually working 48 -60, hours.
The mistake of the queriet that he did not wait for next 2-3 days and sent the consignment to his client. Had he waited for the clearance of cheque from the client's bank, this problem would not have arouse.
If you check with the bank they too will tell to wait for 2-3 days before getting confirmed balance in your account.

Isaac Gabriel (Expert)
06 October 2018

Suo Moto debit in cash credit a/c without knowledge is against banking norms. Ask the bank to reverse the entry

Mayur (Querist)
07 October 2018

Dear Expert, Thank you for you responses. We belong to a small city and after consulting the lawyer their they are also not sure on what to that's the reason I've raised query here.

I can assure everyone it is NOT a hypothetical problem, a real problem my dad is dealing with right now. Adding on to the story the City Bank Manager did come to our house and told us to submit the amount. He accepted that is was the mistake of their branch bank. He explained us that on the day we deposit the cheque the cheque were not sent for CTS clearing and they credited the amount.

@Vijay Sir, I agree the mistake from bank can't make them pay, but what do to I anyone was in my situation. The client is refusing to pay and saying it was advance paid.

@Dhingra Sir, Please let me know what fact I can present. The bank is agreeing that its their mistake and just took the money.

@JC Sir, Sorry If I'm able to clarify my problem very clearly. Local lawyer is also confused. As such cases do not happen often.

@Isaac Sir, I'll share your comment with the local lawyer, and see if he understand it and take any action. I'll get back for you advise if more needed.


Mayur (Querist)
07 October 2018

@Vijay Sir, I understand if all this would have happened in 2-3 days period. But it actually happened after 30 days.

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