Report No. 11

165. Sections 121-122.-

No change has been proposed in sections 121-122, except that a clause has been added to section 122, on the lines of section 55(2)(c) of the English Act, to prevent the indorser from denying the validity of the instrument and his title to it at the time of the indorsement.

166. As stated earlier, all provisions exclusively relating to cheques have been put in a separate Part, and in that Part we have included the following new provisions, in order to make it comprehensive:

(i) When a banker's authority may be revoked is not stated in the Act. We have adopted the provision in section 75 of the English Act and amplified by adding notice of insolvency as a third ground.1

(ii) We have introduced a new provision2 relating to cheques marked "account payee", for the reasons already explained,3 and as a sequel to this new provision, it has become necessary to add another provision4 to protect a banker who, bona fide fails to carry out the "account payee" direction because of the obliteration or alteration of such crossing on the cheque.

(iii) That crossing is also a material part of the cheque is not stated in the Act and is not included in the definition of material alteration. We have inserted an express provision,5following section 78 of the English Act.

(iv) We have made it clear6 that a cheque does not amount to an assignment of part of the funds of the drawer in the bank to the payee, following section 53(1) of the Bills of Exchange Act (as applied to cheques by the second paragraph of section 73 of that Act).

1. Section 142, ibid.

2. Section 144 of App I.

3. Para. 19, ante

4. Section 153 of App I.

5. Section 146, ibid.

6. Section 154, ibid.