The Kerala State Co-Operative ... vs State Bank Of India And Ors

The Supreme Court held that under Section 131 of the Negotiable Instruments Act, a banker can claim protection from liability if they receive payment in good faith and without negligence. The Court found that the 1st Respondent Bank failed to demonstrate good faith and absence of negligence when it allowed a fictitious account to be opened and permitted significant withdrawals shortly thereafter. Consequently, the Court reversed the High Court's decision and restored the trial Court's decree in favor of the Appellant for the recovery of Rs. 50,000/-.