Calcutta High Court
The Peerless General Finance & ... vs Uco Bank on 30 April, 2025
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
(COMMERCIAL DIVISION)
PRESENT:
THE HON'BLE JUSTICE BIVAS PATTANAYAK
CS-COM/769/2024
IA NO: GA/3/2012 (Old No: GA/372/2012),
GA/5/2016 (Old No: GA/1246/2016)
THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD
VS
UCO BANK
For the plaintiff : Mr. Mr. Rahul Karmakar, Advocate
Mr. Tapan Nag Chowdhury, Advocate
For the defendant : Mr. Sailesh Mishra, Advocate
Reserved on : 17th September, 2024
Delivered on : 30th April, 2025
JUDGMENT
Bivas Pattanayak, J. :-
1. This is a suit for declaration and a decree for a sum of Rs.14,01,732/-
of the plaintiff against the defendant along with other reliefs.
2. The plaintiff's case, in brief, is as follows:
(i) The plaintiff is an existing company within the meaning of the
Companies Act, 1956 having its registered office at Peerless Bhavan
No.3, Esplanade East, Kolkata-700069 and regional and branch
offices in several parts situated at Kancharia Towers, 1-7-143/143A,
Golkonda 'X' Roads, Mursheerabad, Hyderabad.
(ii) The business of the plaintiff-company comprises of offering
various small savings schemes to the public at large. Under the
schemes, the subscribers have to pay in lump sum or in installments
to the plaintiff-company over a contractually stipulated period of time
and the subscribers would get back deposited amount along with
guaranteed accretions/bonus as per contract at the end of a
contractually stipulated term. The plaintiff is a residuary non-banking
company in terms of the Residuary Non-Banking Companies (Reserve
Bank) Directions, 1987.
(iii) At the time of repayment of maturity amount to the certificate
holders, such payment is made through account payee cheques/pay
orders/drafts or manager's cheques issued by the bank. Manager's
cheque is considered to be the most convenient and secure mode of
repayment which is mostly used by the plaintiff-company for payment
of maturity amounts.
(iv) In between 2002 and 2003, the plaintiff-company had requested
the UCO Bank, Abids Circle Branch, Hyderabad to draw manager's
cheques in favour of large number of certificate holders of the
plaintiff-company for the purpose of payment of maturity value of
their certificates. The entire requisite amount for the purpose of
issuance of manager's cheques along with list of certificate holders in
whose favour the cheques were to be made out were deposited with
the UCO Bank, Abids Circle Branch, Hyderabad sufficiently ahead of
the due date and/or the maturity date. The said branch of the UCO
Bank drew several numbers of manager's cheques in favour of the
certificate holders and handed over the said manager's cheques to the
plaintiff-company.
(v) The said manager's cheques were dispatched to the
parties/certificate holders by way of payment of maturity of their
certificates at their respective recorded addresses.
(vi) Subsequently, it transpired that a large number of certificate
holders did not present the manager's cheques to the bankers for
encashment nor did they send them back to the company for
revalidation and the said manager's cheques have remained uncashed
for a long period of time and have become invalid and/or stale and no
money can be realized on the basis of the said manager's cheques.
However, despite non-encashment of the manager's cheques, the
amount paid by the plaintiff company to the account of UCO Bank for
purchase of manager's cheques was not debited till date. The total
amount covered by such unpresented/uncashed manager's cheques
as on date is Rs.8,41,500/-.
(vii) By a letter dated 15th July, 2006, the defendant bank informed
the plaintiff-company that from the bank's record, it is observed that
an amount of Rs.8,41,500/- covering about 599 instruments/
manager's cheques are lying unpaid for more than three years. The
bank requested the plaintiff to present the manager's cheques or
furnish Indemnity Bond of Rs.100/- for payment of the manager's
cheques so that the entire amount can be credited to the current
account of the plaintiff-company then numbered as 718 (now
numbered as 14410200000228). It was further intimated that since
the manager's cheques is lying unpaid for more than three years, the
bank would be forced to transfer the entire amount to the Head Office
immediately unless the manager's cheques are presented or
Indemnity Bond of Rs. 100/- is furnished to the bank and a
fortnight's time was given to the plaintiff-company for response.
(viii) In response to the aforesaid letter dated 21st July, 2006, the
Officer-in-Charge, Regional Maturity Cell of the plaintiff-company
wrote to the Chief Manager of the defendant-Bank, Abids Circle
Branch, Hyderabad requesting him to kindly provide the plaintiff-
company the proforma of indemnity bond to be executed on a non-
judicial stamp paper of Rs.100/- for claim of Rs.8,41,500/-. However,
no such proforma of Indemnity Bond was provided to the plaintiff-
company, thereby, constraining the plaintiff-company to write again
to the Chief Manager of the defendant bank on 6th September, 2007
with similar request.
(ix) On 20th September 2007, the Manager, UCO Bank, Mubarak
Bazar, Abids Circle Branch, Hyderabad wrote to the Zonal Officer of
the Bank to pay the amount covered by the outstanding manager's
cheques which had not been encashed or presented for encashment
without production of physical instrument by taking Indemnity Bond.
(x) No intimation was received from the defendant bank. The
plaintiff-company wrote two letters dated 12th March, 2008 and 29th
May, 2008 requesting the bank for arrangement of credit of
Rs.8,41,500/- together with interest from the date of submission of
the claim till the date of payment.
(xi) Despite the aforesaid letters, no intimation was received and on
19th September, 2008, the Director (Operations) of the plaintiff-
company wrote a letter to the Chairman and Managing Director, UCO
Bank for credit of Rs.8,41,500/- in account of the plaintiff-company
then numbered as 718 (now numbered as 14410200000228).
(xii) It was informed by the Chief Officer, UCO Bank that the
complaint of the plaintiff-company had been referred to the Zonal
Office of the Bank at Hyderabad for redressal. Again, on 20th
September, 2008 and 11th November, 2008, the plaintiff-company
reiterated its request for crediting of the amount covered by the
manager's cheques.
(xiii) On 23rd January, 2009, it was informed by the Chief Manager,
UCO Bank, Mubarak Bazar, Abids Circle Branch, Hyderabad to the
plaintiff-company alleging that the bank is liable to the holders of the
manager's cheques for value and unless the cheques are presented by
the holders for value, the bank is not liable to pay any amount to any
other person and as such, the amount of the manager's cheques for
Rs.8,41,500/- cannot be paid to the plaintiff-company which is the
purchaser of the manager's cheques even on the basis of the
Indemnity Bond executed on non-judicial stamp paper as there is no
consent of the holders of the manager's cheques to pay the amount to
the plaintiff.
(xiv) The plaintiff-company through its learned advocate on 5th March,
2009 sent a letter to the Chief Manager, UCO Bank, Mubarak Bazar,
Abids Circle Branch, Hyderabad requesting for immediate credit for a
sum of Rs.8,41,500/- along with simple interest @ 15% per annum
which was followed by another letter dated 16th March, 2009.
(xv) In reply to the aforesaid advocate's letters, the learned advocate
for UCO Bank, Mubarak Bazar, Abids Circle Branch, Hyderabad
contended in its letter dated 26th May, 2009 that the defendant-bank
cannot consider the claim of the plaintiff-company in the absence of
furnishing original manager's cheques and without written consent of
the holders of the manager's cheques as the validity periods of the
said cheques have expired and that the defendant-bank has no
obligation to proceed the manager's cheques to the purchasers when
the same were not encashed by the beneficiary in the absence of
furnishing original or consent from the beneficiary.
(xvi) Hence the plaintiff company prayed as follows:
"a) Declaration that the stand of the Defendant as contained in the said
letters dated 23rd January, 2009 and 26th May, 2009 is wrongful and void
and the same letters dated 23rd January, 2009 and 26th May, 2009 are
void, inoperative and of no effect;
b) The letters dated 23rd January, 2009 and 26th May, 2009 of the
defendant may be adjudged to be void and the same may be directed to
be delivered up and cancelled;
c) A decree for a sum of Rs.14,01,732/- in favour of the Plaintiff and
against the Defendant as stated in Paragraph 29 above;
d) A decree for interest in favour of the Plaintiff and against the Defendant
as stated in Paragraph 30 above;
e) Ad-interim and further interest;
f) Receiver;
g) Injunction;
h) Attachment;
i) Costs;
j) Further and other reliefs."
3. The defendant-bank keenly contested the instant suit by filing its
written statement contending, inter alia, as follows:
(i) Since no part of cause of action arose within the jurisdiction of
this Hon'ble Court, the plaint filed in the said suit is liable to be
rejected as this Hon'ble Court lacks both territorial and pecuniary
jurisdiction to try and entertain the said suit.
(ii) The plaint in the said suit does not disclose any cause of action
against the defendant-bank and is barred by limitation.
(iii) The plaintiff purchased several manager's cheques from the
defendant bank in favour of several persons being their
customers/clients/depositors for the purpose of remitting certain
amount of money (maturity value of the deposits with the plaintiff) to
their respective customers/clients/depositors and dispatched the
same to the respective persons. Out of the said manager's cheques,
some were not presented to the defendant-bank for encashment for a
long time.
(iv) The manager's cheques (also known as banker's cheques) are a
payment instrument which is used by banks to settle payment
obligations on behalf of their customers. The said instrument
(manager's cheque) is guaranteed by the bank for its full value and is
a pre-paid negotiable instrument, wherein the drawee bank
undertakes to make payment in full when the instrument is presented
by the payee for payment. In order to obtain payment, the beneficiary
has to either present the instrument directly to the branch concerned
or have it collected by his/her bank through clearing mechanism. In
practice, these instruments are payable at the branch of issue and are
used for payment within the local clearing jurisdiction. Once the said
instrument is handed over to its beneficiary, the issuer's/bank's
obligation to pay against such instrument is to the beneficiary of the
said instrument and not to the purchaser of the said instrument.
(v) The sum of money which is payable against the said instruments
are held by the bank in trust on behalf of the payees/beneficiaries till
the date of encashment of the said instrument by the respective
beneficiaries and the said sum of money cannot be used by the bank
for any other purpose.
(vi) In case a manager's cheque is not encashed for a long time which
is above three years in the present case, the sum of money which is
payable against the instrument is to be transferred from the
respective bank to its Head Office for further recourse.
(vii) After receiving information from the defendant-bank that certain
manager's cheques were not presented to the bank for encashment,
the plaintiff-company disclosed that the said instruments were
dispatched to the respective beneficiaries, however, it wrongfully
insisted to pay the money-in-question to the plaintiff-company,
without having any written consent of the said beneficiaries.
(viii) The manager's cheques amounting to Rs.8,41,500/- were not
presented for payment and the same are outstanding in favour of the
respective payees who have not encashed the said manager's cheques.
(ix) The defendant issued a letter dated 15th July, 2006 considering
that the plaintiff-company was holding the original manager's cheques
and the same was not handed over to the respective beneficiaries of
the said manager's cheques and, accordingly, requested the plaintiff
to present the manager's cheques or furnish an Indemnity Bond
indemnifying the defendant-Bank against any further claims. Once
the manager's cheques are handed over/dispatched to the respective
beneficiaries/rightful owners, the payees of such instruments can
only be the beneficiary/rightful owners of such instruments for the
amounts covered by such instruments and the plaintiff-company
shall not get any entitlement to receive the said amount without the
consent of the payees.
(x) Admitting the communication of the plaintiff-company seeking
for proforma of Indemnity Bond, the plaintiff-company was advised to
present original manager's cheques, if any held by the plaintiff-
company, or the written consent of the payees if sent/dispatched to
the beneficiaries, as the said money could only be credited in favour of
the plaintiff-company in case the said instruments/manager's
cheques were held by the plaintiff-company and not been dispatched
to the owners of the said manager's cheques, or the plaintiff-company
has written consent of the beneficiaries of the said manager's
cheques.
(xi) The letter dated 20th September, 2007 was a part of internal
correspondence of the defendant-bank from branch level to Zonal
level for seeking permission of Zonal Office to pay the outstanding
manager's cheques amount to the plaintiff-company. The purpose of
the said correspondence was to clarify its legal position in the instant
matter and the same cannot be treated as obligation or admission on
part of the defendant-bank to pay the amount in question to the
plaintiff-company. The plaintiff-company has not referred to the said
letter in the plaint and also not disclosed the source of receipt of copy
of the said letter.
(xii) The plaintiff-company has no right to claim outstanding amount
in absence of the original manager's cheque and/or concurrence of
the respective payees.
(xiii) Although the plaintiff-company by letter dated 19th September,
2008 complained to the Chairman & Managing Director of the UCO
Bank for crediting the amount of Rs.8,41,500/- to its current
account, however, since the plaintiff-company was not the rightful
owner of the amount covered by the manager's cheque, the Abids
Circle Branch by its letter dated 23rd January, 2009 expressed its
inability to accede to the request of the plaintiff-company.
(xiv) The amount outstanding against the manager's cheques being
Rs.8,41,500/- is held by the defendant-bank in favour of the payees
of the manager's cheques. The plaintiff-company has received the flow
of consideration for the money paid to the defendant-bank by way of
manager's cheques for value in favour of respective payees/
beneficiaries and thereafter the said flow of consideration has been
passed on to the respective payees towards maturity proceeds of the
certificates immediately after the dispatch of the said instruments by
the plaintiff-company to the beneficiaries. Under such circumstances,
consideration can be claimed either by the payees directly or by the
purchaser by cancellation of the same with the written consent of the
payees.
(xv) The defendant-bank is holding money on behalf of the payees of
the manager's cheques and the ownership of the said amount has
already been passed on to respective payees by dispatch of the said
manager's cheques and thus defendant bank is holding the said
amount in trust on behalf of the payees and not on behalf of the
plaintiff-company. The prima facie contract between bank and
beneficiaries as instrument holders has to be honoured under the
banking laws.
(xvi) In view of above, the defendant-bank prayed for dismissal of the
suit with exemplary cost.
4. Upon considering the pleadings of the parties, following issues were
framed:
"1. Whether this Hon'ble Court has territorial and pecuniary jurisdiction
to entertain the instant suit?
2. Is the suit barred by the laws of limitation?
3. Whether the Defendant Bank is under any obligation to pay monies
admittedly paid by the plaintiff to the defendant for issuance of the
Manager's cheques in question when the said Manager's cheques
have not been presented by the beneficiaries thereof to the Bank for
encashment within their validity periods after the said cheques were
dispatched to the beneficiaries?
4. Whether the obligation of issuers of Manager's cheque/bank to pay
against such instrument is towards the beneficiaries of the said
instrument, or is towards the purchaser of the said instrument, after
the said instrument being dispatched by the purchaser to the
respective beneficiaries?
5. Whether the Defendant Bank has any liability towards the
beneficiaries of Manager's cheques issued by it after the expiry of the
validity period of such cheques?
6. Whether the plaintiff or the beneficiaries of the Manager's cheques
are entitled to claim any interest as claimed in paragraph 26 of the
plaint?
7. Whether the plaintiff is entitled to the reliefs prayed for by it in the
suit?
8. To what other reliefs, if any, is the plaintiff entitled?"
5. The plaintiff-company in order to establish their case examined one
witness and proved the following documents:
(i) Letter of Chief Manager, UCO Bank dated 15th July, 2006- Exhibit A.
(ii) Letter of Officer-in-charge, Regional Maturity Cell dated 21st July,
2006- Exhibit B.
(iii) Letter of Regional Maturity Cell dated 6th September, 2006-Exhibit C.
(iv) Letter dated 20th September, 2007 of Manager, UCO Bank-Exhibit D.
(v) Letter of S. Dasgupta, Senior Manager, Peerless General Finance &
Investment Co. Ltd dated 12th March, 2008- Exhibit E.
(vi) Letter of S. Dasgupta, Senior Manager, Peerless General Finance &
Investment Co. Ltd dated 29th May, 2008- Exhibit F.
(vii) Letter of B.Lahiri, Director (Operations), Peerless General Finance &
Investment Co. Ltd dated 19th September, 2008- Exhibit G.
(viii) Letter of Chief Officer, UCO Bank dated 29th September, 2008 -
Exhibit H
(ix) Letter of S. Dasgupta, Sr. Manager (Recovery) dated 20th October,
2008 - Exhibit I
(x) Letter of S. Dasgupta, Chief Manager, Peerless General Finance &
Investment Co. Ltd dated 11th November, 2008 - Exhibit J
(xi) Letter of Chief Manager, UCO Bank Ltd. dated 23rd January, 2009 -
Exhibit K.
(xii) Acknowledgment due card with letter of T.K. Dutta, Advocate dated
16th March, 2009 - Exhibit L (collectively).
(xiii) Letter of R. V. Subba Rao, Advocate dated 26th May, 2009 with
envelope Exhibit M (collectively)
(xiv) Xerox Petition and order dated 25th March, 2013 - Exhibit N
(collect.)
6. Although the defendant-Bank produced one witness (DW1), however
since after part cross-examination the said witness failed to appear, the
evidence of DW1 was expunged from the record vide order dated 9th May
2024 and it was observed the DW1 is deemed to have been not examined.
7. Mr. Rahul Karmakar, learned advocate for the plaintiff-company
submitted that the plaintiff-company carries the business of offering
various small savings schemes to the public at large and under those
schemes, the subscribers are required to pay either in lump sum or in
installments, over a contractually stipulated period of time, to the plaintiff-
company and upon completion of the stipulated period the subscribers
would get back deposited amount along guaranteed accretions/bonus as
per contract. In between the year 2002 and 2003, the plaintiff-company for
the purpose of repayment of maturity amount of the certificates, requested
the UCO Bank, Abids Circle Branch, Hyderabad to draw manager's
cheques in favour of large number of certificate holders of the plaintiff-
company and the entire requisite amount for the said purpose along with
list of certificate holders in whose favour the cheques were to be made out
were deposited with the UCO Bank, Abids Circle Branch, Hyderabad
sufficiently ahead of the due date and/or the maturity date. The said
branch of the UCO Bank drew several numbers of manager's cheques in
favour of the certificate holders and handed over the same to the plaintiff-
company, which in turn were dispatched to the parties/certificate holders
by way of payment of maturity of their certificates at their respective
recorded addresses by the plaintiff-company. However, it transpired
subsequently that a large number of certificate holders neither did present
the manager's cheques to the bankers for encashment nor did they send
them back to the plaintiff-company for revalidation and the said manager's
cheques remained uncashed for a long period of time and have become
invalid and/or stale and no money can be realized on the basis of the said
manager's cheques. Despite non-encashment of the manager's cheques,
the amount paid by the plaintiff-company to the account of UCO Bank for
purchase of manager's cheques was not debited till date. The total amount
covered by such unpresented/uncashed manager's cheques is
Rs.8,41,500/- covering about 599 instruments/manager's cheques which
was informed by the defendant-Bank. The defendant-bank further
requested the plaintiff-company to present the manager's cheques or
furnish Indemnity Bond of Rs.100/- for payment of the manager's cheques
so that the entire amount can be credited to the current account of the
plaintiff-company, failing which, the amount would be sent to the head
office, since three years have elapsed. The plaintiff-company made a
request to the defendant-Bank for providing the proforma for execution of
Indemnity Bond against claim of Rs.8,41,500/-. However, no such
proforma of Indemnity Bond was provided to the plaintiff-company. By
letter dated 6th September, 2007 once again a request was made to the
Chief Manager of the defendant-bank which was of no avail. Several
communications were sent to the defendant-Bank for such claim together
with interest but no steps were taken by the defendant-Bank. The plaintiff-
company is thus constrained to file the suit for recovery of such claim.
Referring to Section 31 of Negotiable Instruments Act, he submitted that
the defendant-Bank being the drawee of the manager's cheque is under
statutory obligation to pay the cheque amounts when duly required so to
do, in default, of such payment, it must compensate the drawer for any
loss or damage caused by such default. The plaintiff-company being the
drawer of the manager's cheque can sue the drawee-Bank for breach of
contract. In support of his contention, he relied on the decision of Hon'ble
Supreme Court passed in American Express Bank Ltd. versus Calcutta
Steel Co. and Others1.
Further in view of Section 70 of the Contract Act since the plaintiff-
company has lawfully delivered money to the defendant-Bank for issuance
of manager's cheque in favour of the beneficiaries which has been accepted
by the defendant-Bank and the amount has not been paid to the
beneficiaries deeming thereby that the Bank has enjoyed the benefit
thereof, in such circumstances the Bank is bound to make compensation
to the plaintiff-company in respect of the money so paid. The defendant-
Bank cannot be allowed to make unjust enrichment by withholding such
amount to which the plaintiff-company is entitled. The aforesaid provisions
prevent unjust enrichment and it applies as much to the individuals as to
the corporations and Government. To buttress his contentions, he relied
on the following decisions of Hon'ble Supreme Court:
(i) State of West Bengal versus B.K. Mondal and Sons2
1 (1993) 2 SCC 199
2 1961 SCC OnLine SC 76
(ii) Sahakari Khand Udyog Mandal Ltd. versus Commissioner of
Central Excise & Customs3
Moreover, the defence case made out in the written statement has not been
supported by any oral or documentary evidence, rather the evidence of
DW1 has been expunged by the Hon'ble Court on the ground of non-
appearance of the witness on repeated dates. Thus, the defence case
cannot be accepted.
He also indicated that pursuant to order dated 15th June 2011 passed in
GA 324 of 2011, the plaintiff-company has made a fixed deposit with the
defendant-Bank on 29th July 2011 of the amount of Rs.8,41,500/-.
In light of his aforesaid submissions, he pressed for passing of a decree in
favour of the plaintiff-company of the amount as claimed.
8. In reply to the aforesaid contentions of the plaintiff-company, Mr.
Sailesh Sharma, learned advocate representing the defendant-Bank at the
outset, submitted that the suit is not maintainable before this court since
the actual claim amount of Rs.8,41,500/- of the plaintiff-company is less
than the minimum value of Rs.10,00,000/- fixed for pecuniary jurisdiction
in the Original Side of this Hon'ble Court. The remaining claim amount
pertains to the interest portion and not the actual claim. Moreso, no case
of loss of interest is made out by the plaintiff-company. Further the
transaction pertaining to issuance of Manager's cheque has taken place in
the UCO Bank, Abids Circle Branch, Hyderabad which beyond the
territorial jurisdiction of this Hon'ble Court.
3 (2005) 3 SCC 738
The plaintiff-company purchased several manager's cheques from the
defendant-Bank in favour of beneficiaries for the purpose of remitting
certain amount of maturity value, of the deposits made with the plaintiff-
company, to the respective beneficiaries which were dispatched to those
beneficiaries. Out of the said manager's cheques, some of them were not
presented to the defendant-Bank for encashment for a long period of time.
The said instrument (manager's cheque) is guaranteed by the bank for its
full value and is a pre-paid negotiable instrument, wherein the drawee
bank undertakes to make payment in full when the instrument is
presented by the payee for payment. In order to obtain payment, the
beneficiary has to either present the instrument directly to the branch
concerned or have it collected by his/her bank through clearing
mechanism. In practice, these instruments are payable at the branch of
issue and are used for payment within the local clearing jurisdiction. Once
the said instrument is handed over to its beneficiary, the issuer bank's
obligation is to pay against such instrument to the beneficiary of the said
instrument and not to the purchaser of the said instrument. The sum of
money which is payable against the said instruments are held by the bank
in trust on behalf of the payees/beneficiaries till the date of encashment of
the said instrument by the respective beneficiaries and the said sum of
money cannot be used by the bank for any other purpose. In case a
manager's cheque is not encashed for a period above three years, as in the
present case, the sum of money which is payable against the said
instruments is to be transferred from the respective bank to its Head Office
for further recourse. The manager's cheques amounting to Rs.8,41,500/-
which were not presented for payment are outstanding in favour of the
respective payees/beneficiaries who have not encashed them, however, the
plaintiff-company wrongfully insisted for payment of the said amount-in-
question to them, without having any written consent of the said
beneficiaries. Once the manager's cheques are handed over/dispatched to
the respective beneficiaries/rightful owners, the payees of such
instruments can only be the beneficiary/rightful owners of such
instruments for the amounts covered by such instruments and the
plaintiff-company shall not get any entitlement to receive the said amount
without the consent of the payees. Therefore, the claim of the plaintiff-
company for recovery of the said amount is not at all sustainable and the
question of making payment to the plaintiff-company does not arise. He
further indicated no consent from the holders of the Manager's cheque
were obtained by the plaintiff-company nor communication has been made
by the plaintiff-company to the beneficiaries informing them of the unpaid
manager's cheque. As per the Circular of Reserve Bank of India dated 1st
July. 2015 under point No. 12.2.3, duplicate of manager's cheque can be
issued in case of loss. However, no case of loss of the manager's cheque
has been made out by the plaintiff-company rather the case of refund of
the money against manager's cheque has been pleaded which the plaintiff-
company cannot claim to be entitled to. At the same time as plaintiff-
company is not entitled to the claimed amount, hence it is not entitled to
any damages and interest. The witness on behalf of the plaintiff company
has admitted that no loss had incurred to the plaintiff-company and the
witness has also deposed that he does not know of any cause of action.
In view of his above submissions, he prayed for dismissal of the suit.
9. Per contra, Mr. Karmakar, learned advocate for the plaintiff-company
submitted that no challenge to the jurisdiction has been made by the
defendant-Bank more particularly no application under Order VII Rule 10
of the Civil Procedure Code (hereinafter referred to as the 'Code') was made
for return of the plaint. Referring to Section 21 of the Code is submitted
that the objections related to the place of suing or the competence of a
court must be raised at the earliest possible opportunity and if a party fails
to raise objection as aforesaid then they are generally considered to have
been waived. Further section 34 of the Code does not provide for
requirement of any evidence for awarding interest in decrees for the
payment of money. The total claim amount in the present suit is more
than 10,00,000/- and as per notification no.158 JL dated 20th March,
2020, this court has the pecuniary jurisdiction to entertain the instant
suit. Moreover, the grounds taken in the written statement cannot be
considered since no evidence has been adduced by the defendant-Bank in
support of the defence case.
10. Having heard the learned advocates for the respective parties, let me
now examine the issues involved in the present suit in the light of the
submissions advanced on behalf of the respective parties as follows.
11. ISSUE No. 1: With regard to the territorial jurisdiction of this court, it
has been pressed into service by the learned advocate for the defendant-
Bank that since the transaction pertaining to issuance of manager's
cheque has taken place in UCO Bank, Abids Circle Branch, Hyderabad
hence this court has got no territorial jurisdiction to entertain the suit.
Further this court lacks pecuniary jurisdiction since the actual claim
amount of Rs.8,41,500/- of the plaintiff-company is less than the
minimum value of Rs.10,00,000/- fixed for pecuniary jurisdiction in the
Original Side of this Hon'ble Court. Per contra, it has been strenuously
argued on behalf of the plaintiff-company that such challenge to territorial
jurisdiction or pecuniary jurisdiction has not been made at the earliest
point of time and as per Section 21 of the Code such challenge is
considered to have been waived. Moreover, the amount claimed by the
plaintiff-company in the suit is more than 10,00,000/- and therefore this
court has pecuniary jurisdiction to entertain the suit.
In order to appreciate the aforesaid issue, it would be apposite to
reproduce the relevant provisions under Section 21 of the Code as
hereunder:
"Section 21 -Objections to jurisdiction.-(1) No objection as to
the place of suing shall be allowed by any Appellate or Revisional
Court unless such objection was taken in the Court of first instance
at the earliest possible opportunity and in all cases where issues
are settled at or before such settlement, and unless there has been
a consequent failure of justice.
(2) No objection as to the competence of a Court with reference to
the pecuniary limits of its jurisdiction shall be allowed by any
Appellate or Revisional Court unless such objection was taken in
the Court of first instance at the earliest possible opportunity, and,
in all cases where issues are settled, at or before such settlement,
and unless there has been a consequent failure of justice.
(3) No objection as to the competence of the executing Court with
reference to the local limits of its jurisdiction shall be allowed by
any Appellate or Revisional Court unless such objection was taken
in the executing Court at the earliest possible opportunity, and
unless there has been a consequent failure of justice."
Bearing in mind the aforesaid provision, upon going through the written
statement filed by the defendant-Bank it is found that the defendant bank
has raised the issue in the written statement that this Hon'ble Court lacks
both territorial and pecuniary jurisdiction to try and entertain the suit.
Thus, admittedly the objection pertaining to territorial jurisdiction and
pecuniary jurisdiction has been raised prior to settlement of the issues.
Therefore, the argument advanced on behalf of the plaintiff-company that
the objection to the territorial or pecuniary jurisdiction has been waived by
the defendant-bank does not stand to reason. Furthermore, the aforesaid
provisions clearly stipulate that no objection as to the place of suing or as
to the competence of a Court with reference to the pecuniary limits of its
jurisdiction, shall be allowed by any Appellate or Revisional Court unless
such objection was taken in the Court of first instance at the earliest
possible opportunity, and in all cases where issues are settled, at or before
such settlement, and unless there has been a consequent failure of justice.
Needless to say that the embargo and/or restriction to raise the objection
with regard to territorial jurisdiction or pecuniary jurisdiction is created by
the provisions at the stage of appeal or revision and not before the court of
first instance. Therefore, the argument on behalf of the plaintiff-company
that the objection to territorial or pecuniary jurisdiction stood waived in
view of Section 21 of the Code falls short of merit.
Now let it be examined whether this Court has territorial jurisdiction to
entertain the suit. It is not in dispute that the managers' cheque in
question was issued in between 2002 and 2003 by UCO Bank, Abids Circle
Branch, Hyderabad which does not fall within the territorial jurisdiction of
this court. Be that as it may, it has been categorically pleaded by the
plaintiff-company that despite several communications with the defendant-
Bank at its office at Hyderabad since no intimation was received, as such
on 19th September, 2008, the Director (Operations) of the plaintiff-
company from its registered office wrote a letter to the Chairman and
Managing Director, UCO Bank at its Head Office at 10, Biplabi Trailakhya
Maharaj Sarani, 8th Floor, Kolkata- 700001 for credit of Rs.8,41,500/- in
account of the plaintiff-company. Similarly, on 11th November, 2008
another letter was issued by plaintiff-company from its registered office to
the Head Office of the defendant-Bank. The Head office of the defendant-
Bank falls within the territorial jurisdiction of this court. Thus, part cause
of action arose within the territorial jurisdiction of this court. At this
juncture, it would be profitable to reproduce the relevant provisions of
Section 20 of the Code as hereunder for convenience of discussion.
"Section 20. Other suits to be instituted where defendants
reside or cause of, action arises.-Subject to the limitations
aforesaid, every suit shall be instituted in a Court within the local
limits of whose jurisdiction-
(a) the defendant, or each of the defendants where there are more
than one, at the time of the commencement of the suit, actually and
voluntarily resides, or carries on business, or personally works for
gain; or
(b) any of the defendants, where there are more than one, at the
time of the commencement of the suit, actually and voluntarily
resides, or carries on business, or personally works for gain,
provided that in such case either the leave of the Court is given, or
the defendants who do not reside, or carry on business, or
personally work for gain, as aforesaid, acquiesce in such
institution; or
(c) the cause of action, wholly or in part, arises."
Keeping in mind the aforesaid provision, since the part of cause of action
has arisen within the jurisdiction of this court, it can be said that this
Court has territorial jurisdiction to entertain the suit.
With regard to pecuniary jurisdiction, it is found that although the total
amount of the managers' cheque is Rs.8,41,500/- but the amount claimed
by the plaintiff-company is Rs. 14,01,732/- which includes the interest
over the actual amount for default in making payment. As per the
notification no. 158 JL dated 20th March 2020 which provides that
pecuniary jurisdiction in terms of value of commercial disputes, in case of
Commercial Courts within the territorial jurisdiction of City Civil Court at
Calcutta of an amount (i) not less than rupees three lakh and not more
than rupees ten lakh exclusively; and (ii) exceeding rupees ten lakh but
not exceeding rupees one crore, concurrently with the Commercial Division
of the High Court, Calcutta. Thus bearing in mind the total claimed
amount in the suit, it manifest that this court has also the pecuniary
jurisdiction to entertain the suit.
Hence this issue is decided in favour of the plaintiff-company.
12. ISSUE No.2: Although in the written statement it has been pleaded
by the defendant-Bank that the suit is barred by laws of limitation,
however nothing has been pressed into service during hearing argument
on behalf of defendant-Bank regarding the suit being barred by limitation.
Be that as it may, it is the specific case of the plaintiff-company that after
several communications made with the defendant-Bank, ultimately by an
advocate's letter dated 5th March, 2009 the plaintiff-company demanded
such amount and the interest and the learned advocate for UCO Bank,
Mubarak Bazar, Abids Circle Branch, Hyderabad by its letter dated 26th
May, 2009 informed that the defendant-Bank cannot consider the claim of
the plaintiff-company in the absence of furnishing original manager's
cheques and without written consent of the holders of the manager's
cheques as the validity periods of the said cheques have expired and that
the defendant-Bank has no obligation to proceed the manager's cheques to
the purchaser, when the same were not encashed by the beneficiary, in the
absence of furnishing original or consent from the beneficiary. As per
Article 22 of the Limitation Act, for money deposited under an agreement
that it shall be payable on demand, including money of a customer in the
hands of his banker, the period of limitation is three years from the date
when the demand is made. The demand for money is made on 5th March
2009. Thus, the cause of action to file the instant suit finally arose on and
from 5th March, 2009 upon the defendant-Bank when the demand is made
by the plaintiff-company. The suit has been filed on 24th December, 2010,
which is within three years of such demand. Thus, the suit is filed within
the prescribed period of limitation.
Hence this issue is decided in favour of the plaintiff-company.
13. ISSUE No. 3,4 & 5: Before delving into the aforesaid issues, it would
be appropriate to reproduce the relevant admitted facts as follows:
(i) In between 2002 and 2003, the plaintiff-company had requested the
UCO Bank, Abids Circle Branch, Hyderabad to draw manger's cheques in
favour of large number of certificate holders of the plaintiff company for
the purpose of payment maturity value of their certificates. The entire
requisite amount for the purpose of issuance of manager's cheques along
with list of certificate holders in whose favour the cheques were to be made
out were deposited and the said branch of the UCO Bank drew several
numbers of manager's cheques in favour of the certificate holders and
handed over the said manager's cheques to the plaintiff-company.
(ii) The said manager's cheques were dispatched to the parties/certificate
holders by the plaintiff-company by way of payment of maturity of their
certificates at their respective recorded addresses.
(iii) Subsequently, it transpired that a large number of certificate holders
did not present the manger's cheques, 599 in numbers, to the bankers for
encashment nor did they send them back to the company for revalidation
and the said manager's cheques have remained uncashed for a long period
of time and have become invalid and/or stale and no money can be
realized on the basis of the said manager's cheques. The total amount
covered by such unpresented/uncashed manager's cheques is
Rs.8,41,500/-.
13.1. Now the pertinent question which needs examination is whether the
plaintiff-company is entitled to receive or claim the amount of the
managers' cheque issued by the defendant-Bank to the certificate-holders
which has not been encashed by the beneficiaries. It has been strenuously
argued on behalf of the plaintiff-company that several communications
were made from the side of the plaintiff-company with the defendant-Bank
for crediting such amount and complain was lodged with the Head Office.
Be that as it may, it is of common parlance that a party is entitled to such
amount which in law he establishes belongs to him and none else. From
the admitted facts as enumerated above, the amount which the plaintiff-
company claims in the present suit belongs to the beneficiaries, who are
supposed to receive the maturity amount against which the managers'
cheque were issued. There cannot be any quarrel that a manager's cheque
is guaranteed by the bank for its full value and is a pre-paid negotiable
instrument and by such instrument the drawee bank undertakes to make
payment in full when the instrument is presented by the payee for
payment. In order to obtain payment, the beneficiary has to either present
the instrument directly to the branch concerned or have it collected by
his/her bank through clearing mechanism. Once the instrument is handed
over to its beneficiary, the defendant-Bank is under obligation to pay
against such instrument to the beneficiary of the said instrument and not
to the purchaser of the said instrument. Moreover, the Bank holds the
sum of money which is payable against the said instruments on behalf of
the payees or beneficiaries, as the case may be, in trust till the date of
encashment of the said instrument by the respective beneficiaries and the
said sum of money cannot be used by the bank for any other purpose. This
court finds substance in the submissions of learned advocate for the
defendant-Bank in this regard. Therefore, the Bank cannot be held to be
obligated to pay such amount to the plaintiff-company which has
purchased the managers' cheque from the defendant-Bank for making
payment of maturity amount belonging to the certificate
holders/beneficiaries. Admittedly none of the holders of the managers'
cheque in question has approached the defendant-Bank for its
encashment.
13.2. At this juncture a question which crops up as to what happens to
such unclaimed amount. Relying on the decision of Hon'ble Supreme
Court in B.K Mondal and Sons (supra) and Sahakari Khand Udyog Mandal
(supra) it has been strenuously argued on behalf of the plaintiff-company
that the defendant-Bank cannot be allowed to make unjust enrichment by
withholding such amount to which the plaintiff-company is entitled, which
is prevented by Section 70 of the Contract Act. Accordingly, it is to be seen
whether the amount held by the defendant-Bank resulted in unjust
enrichment. At the outset, it is found that the defendant-Bank has made
specific pleading that in case a manager's cheque is not encashed for a
period above three years, as in the present case, the sum of money which
is payable against the instrument is to be transferred from the respective
bank to its Head Office for further recourse. As per DBR-Master Circular
on Customer Service 2015 circulated by the Reserve Bank of India,
produced before this court by learned advocate for defendant-Bank, it is
found under point no.24 that series of procedure/guidelines have been laid
down in respect of unclaimed deposits/inoperative accounts in Bank.
13.2.1. Moreover, pursuant to the enactment of the Banking Laws
(Amendment) Act, 2012, Section 26A has been inserted in the Banking
Regulation Act, 1949 which, inter alia, empowers the Reserve Bank to
establish a Depositor Education and Awareness Fund (DEAF). DEAF will
be credited with the amount to the credit of any account in India with a
banking company which has not been operated upon for a period of ten
years or any deposit or any amount remaining unclaimed for more than
ten years within a period of one month from the expiry of ten years. DEAF
shall be utilized for promotion of depositors' interest and for such other
purposes considered necessary for the promotion of depositors' interests as
specified by the Reserve Bank from time to time. However, the provisions
of Section 26A do not prevent a depositor from claiming his/her deposit or
operating his/her account or deposit after the expiry of the period of ten
years and the banking company should pay the deposit amount and claim
refund of such amount from DEAF. The Reserve Bank of India, in exercise
of the powers conferred by sub-sections (1) and (5) of Section 26A of the
Banking Regulation Act, 1949 (10 of 1949) and of all the powers enabling
it in this behalf, has introduced the scheme called Depositors Education
and Awareness Fund (DEAF) vide its notification No. DBOD No. DEAF
Cell.BC.114/30.01.002/2013-14 dated May 27.05.2014. Any amount lying
unclaimed at the branches either in deposit accounts or nominal accounts
for a period of more than 10 years has to be transferred to the Fund along
with interest accrued, if any, on monthly basis. However, despite being
transferred to the DEA Fund, the depositor (or their nominee/legal heir)
can still claim the amount from the bank, including any accrued interest.
The RBI has also launched the UDGAM portal to help depositors locate
their unclaimed deposits, including those from manager's cheques.
13.2.2. From the above guidelines been framed, the applicability of
doctrine 'unjust enrichment' cannot and does not arise in the facts and
circumstances of the case and at the same time the proposition of the
decisions in B.K Mondal and Sons (supra) and Sahakari Khand Udyog
Mandal (supra) relied upon by the plaintiff-company also does not apply to
this case.
13.3. Relying on the decision in American Express Bank Ltd (supra) and
referring to Section 31 of the Negotiable Act it has been pressed into
service on behalf of the plaintiff-company that the defendant-Bank being
the drawee of the manager's cheque is under statutory obligation to pay
the cheque amounts when duly required so to do, and, in default of such
payment, must compensate the drawer for any loss or damage caused by
such default. Be that as it may, since it has already been held that the
amount claimed belongs to the beneficiaries, the Bank cannot be obligated
to make payment to the plaintiff-company who only purchased those
cheques on behalf of the beneficiaries entitled to the maturity amount.
Hence such argument advanced on behalf of the plaintiff-company falls
short of merit.
In light of the above discussion these issues are decided against the
plaintiff-company.
14. ISSUE Nos. 6,7 & 8: In view of the discussion made in the foregoing
paragraph since it is held that the plaintiff-company is not entitled to the
amount claimed, the aforesaid issues are also decided against the plaintiff-
company.
15. In the light of the above discussion, the suit be and the same is
hereby dismissed on contest. No order as to costs.
16. The plaintiff-company is granted liberty to withdraw the amount
deposited along with accrued interest, with the defendant-Bank pursuant
to order of this court dated 15th June, 2011 passed in GA 324 of 2011.
17. All connected applications, if any, stand disposed of.
18. Interim orders, if any, stand vacated.
19. Accordingly, the suit is disposed of.
(Bivas Pattanayak, J.)
