The
banker who is liable to pay the value of a cheque of a customer as per the
contract, when the amount is due from him to the customer is called “Paying
Banker” or “Drawee Bank.”
The
payment to be made by him has arisen due to the contractual obligation. He is
also called drawee bank as the cheque is drawn on him.
The
payment has to be made by the banker as per the legal obligation also. Section
31 of Negotiable Instrument Act 1881, says that “the drawee of a cheque, having
sufficient funds of the drawer in his hands properly applicable to the payment
of such a cheque, must pay the cheque, when duly required to do so, and in
default of such payment, must compensate the drawer for any loss or damage
caused by such default.” According to this provision, the drawee of a cheque, i.e., paying
banker has a legal obligations to honour the demand of the drawer or customer.
If he fails to pay the money held, he is liable for damages. Thus paying banker
has certain obligations to discharge.
