INDIAN OVERSEAS BANK vs INDUSTRIAL CHAIN CONCERN

The Supreme Court held that a bank must exercise reasonable care before accepting a customer to avoid forfeiting immunity under Section 131 of the Negotiable Instruments Act. The Court found that the appellant-Bank acted with negligence in allowing a fictitious account to be opened and in collecting cheques drawn in favor of the plaintiff. Consequently, the Court allowed the appeal, overturning the lower courts' decisions and holding the Bank liable for the plaintiff's loss.