Commissioners of Taxation v English, Scottish & Australian Bank (1920) | Who Is a Bank Customer?

Banking Law Case 10 of 29 by Law Easy, for LL.B., CLAT PG, UGC NET Law and Judiciary exams. Case: Commissioners of Taxation v English, Scottish and Australian Bank (1920), Privy Council (appeal from Australia), decided February 1920, judgment of Lord Dunedin. FACTS: A taxpayer in Sydney posted a crossed bearer cheque of about 786 pounds to the Commissioners of Taxation, and it was stolen. The next day a man calling himself Stewart Thallon opened an account at the bank with 20 pounds in cash, giving a false name and address. A day later he paid in the stolen cheque, the bank collected it, and within days he withdrew the money and vanished. The Commissioners sued the bank, which relied on the statutory protection for a banker who collects a crossed cheque for a customer in good faith and without negligence. LEGAL ISSUE: Is a person who has banked for only one day a customer of the bank, so that the collecting banker can claim the statutory protection? JUDGMENT: The Privy Council held that duration is not of the essence of the word customer. A person whose money the bank has accepted on the footing that it will honour his cheques up to the amount standing to his credit is a customer, whether his connection with the bank is long or short. On the facts the bank was not negligent, so it kept its protection. PRINCIPLE TO REMEMBER: A customer relationship can arise on the first day. Separately, the collecting banker must still prove good faith and absence of negligence. PROVISIONS: Section 131 of the Negotiable Instruments Act, 1881 (protection of a banker who collects a crossed cheque in good faith and without negligence); also read Section 131A. EXAM NOTE: Customer status does not remove the duty of care. Today Indian banks must also follow detailed KYC identification rules. Do not confuse those later regulatory duties with the 1920 common law question on who is a customer. PLAYLIST (all 29 cases in order): https://www.youtube.com/playlist?list=PLbhYsrMKgACA COMPLETE LECTURE (all 29 cases with timestamps): https://youtu.be/ayAN7RLlfPM PREVIOUS CASE (09, All India Bank Officers' Confederation v Union of India): https://youtu.be/n8V-hR4rGZM More law notes: https://www.thelaweasy.com If this helps your exam preparation, please subscribe to Law Easy. This video is for education and is not legal advice. #BankingLaw #BankerCustomer #NegotiableInstrumentsAct #CLATPG #Judiciary #LLB #LawEasy