Union Bank Of India & Ors. vs Jagannath Radhey Shyam And ...
1999 Latest Caselaw 621 Del

ORDER

S.K. Agarwal, J.

1. This appeal is directed against the judgment and decree dated 17.8.1977 passed by the court of Shri N.L. Kakkar, Additional District Judge, Delhi decreeing the suit of plaintiff/respondents for Rs. 47665.00 with costs and interest at the rate of 18% per annum from the date of filing the suit till the date of realisation, against the appellant-Bank.

2. Respondents filed a suit alleging therein that they were maintaining current account with the Union Bank of India, Chandni Chowk Branch, Delhi; in which they used to deposit substantial amounts; on 27th October, 1974 one cheque book containing 100 cheque forms was obtained by them from the bank; on scrutiny of the statement of account from 1.10.74 to 7.11.74 furnished by the bank it was found that a sum of Rs. 20,000/- was debited to their account on 5.11.74 and another sum of Rs. 25,000/- was debited to their account on 6.11.74; enquiries from the bank revealed that these debit entries were made against the two cheques purported to have been issued from another cheque book issued by the appellant on 5.11.74 to someone else; the respondents never received the said cheque book and had sent no requisition for the same; on 7.11.74 respondents received a letter dated 5.11.74 from the appellant bank stating that the cheque book containing so cheques was issued and asking the same to be acknowledged; on 8.11.74 respondents informed the appellant that no such request was made by them for issuance of cheque book; none of the partners had issued the said two cheques to any one; the signatures on these two cheques, and on the request letter dated 5.11.74 for issuance of the cheque book were forget; that the bank had no right to debit their account and requested the appellant to credit their account along with interest.

3. The appellant/bank filed written statement pleading therein that the account of the respondents was properly debited in the ordinary course of business and the cheques encashed, bore the signatures of Radhey Shyam, one of the partners of the respondent firm, and his signatures tallied with the specimen signatures available in the bank records; bank refuted the allegation of the plaintiffs that no request was made by them for issuance of a cheque book on 5.11.74; and that the officers of the bank acted in good faith and without any negligence, on their part in the matter of encashment of the cheques and issuance of cheque book.

4. The trial court framed the following issues:-

(i) Whether the notice under Section 80 CPC had been issued by the plaintiff? OPP

(ii) Whether letter of request for issuance of cheque books containing the cheques in question had been issued to the defendant by the plaintiff? OPD

(iii) Whether cheques in question i.e. for Rs. 20,000/- dated 5.11.74 and Rs. 25,000/- dated 6.1.74 had been issued by the plaintiff?OPD

(iiiA) Whether the defendants bank paid the amount of these two cheques in question in good faith and without negligence in the ordinary course of its business and if so to what effect?

(iv) Whether the plaintiff is entitled to recover any interest? If so at what rate? OPP

(v) Relief.

5. On the basis of the evidence led by the parties learned trial court decided all the issues in favour of the respondent and against the appel-

lant. WE have heard learned counsel for parties and have been taken through the record.

6. Mr. J. Lal, learned advocate for the appellant referred to various provisions of the Negotiable Instruments Act, 1881 (for short the Act.) Section 10 defines payment in due course, as payment in accordance with the apparent tenor of the instrument in good faith and without negligence, to ant person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned; Section 31 fixes liability of the drawee of cheque and requires the drawee of a cheque, having sufficient funds of drawer in his hands properly applicable to the payment of such cheque, must pay the cheque when required so to do, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default and Section 89 provides payment of instrument on which alteration is not apparent. It is argued that Radhey Shyam was the partner of the firm, who was entitled to operate the account; on 5.11.74 on the basis of his request letter, cheque book containing 50 cheque forms was issued; signatures of Radhey Shyam apparently tallied with the specimen signatures available in the bank; the appellant acted in good faith without any negligence and therefore the findings recorded by the trial court are not sustainable. In support of his submission he relied on the decision of the Supreme Court in Bank of Maharashtra Vs. Automotive Engineering Co. wherein it was held:

"Under Section 31 of the Negotiable Instruments Act, the appel lant-Bank had a liability to honour the cheque and make payment, if the cheque was otherwise in order. `Payment in due course' under Section 10 of the Act means payment in accordance with the apparent tenor of the instrument in good faith and without negli-

gence. In the facts of the case, there was no occasion to doubt about the genuineness of the cheque from the apparent tenor of the instrument. Nor is there any evidence showing that the payment of the said cheque had not been made in good faith.Although no strait-jacket formula can be laid down to cover each case of negligence of a banker and the question of negligence requires to be decided in the facts and circumstances in each case, but the appellant-bank cannot be held to be guilty of negligence simply because an ultraviolet ray lamp was not kept in the branch and the cheque in question was not subjected under the ultraviolet ray lamp."

7. Mr. Y.K. Jain, learned senior advocate for the respondents brought to our notice the statement of PW 8, Radhey Shyam, partner of the respondent firm who has stated that on 27.10.74 they had received a cheque book containing 100 cheque forms and the same was not exhausted and therefore, there was no occasion in writing another letter on 5.11.74 Exhibit DW 7/1 asking for the issuance of another cheque book; Anil Malhotra was never in their employment; his signatures on the request letter and the cheques were forged and same was apparent to the naked eye; even signatures of Anil Malhotra at two places on the said request letter were substantially different. He also referred to the evidence of N.R. Nehra, hand writing expert, Forensic Science Laboratory of questioned writings showing that the signatures on the letter DW7/1 as well as on the cheques in question were not that of Radhey Shyam for reasons detailed by him in his report. He argued that in this case, the signatures on the letter as well as on the cheques were materially different and the forgery was apparent on the tenor of the instruments and that the bank did not act in good faith; the appellant bank wrongly debited respondent's account. He relied on Supreme Court decisions in Canara Bank Vs. Canara Sales Corporation & Ors. and Bihar Cooperative Development and Cane Marketing Union Ltd. & Anr. Vs. Bank of Bihar & Ors., AIR 1967 SCF 389.

8. No strait jacket formula can be laid down to cover each case on negligence or absence of good faith of the bank and the question of negligence is to be decided on the facts of each case as held by the Supreme Court in Bank of Maharashtra case (supra). In the case at hand the evidence on record clearly reveals that only on 27.10.74 a cheque book containing 100 cheque forms was issued by the bank to the respondent and the same was not fully utilised and on 5.11.74 the bank entertained another letter of request for issuance of cheque book and without any verification fresh cheque book was issued; on the same day a cheque of Rs. 20,000/- was debited to the account of the respondent and another cheque of Rs. 25,000/- was debited on the subsequent day. If the bank officials had exercised the diligence and remained slightly vigilant, they could have at least checked with the respondents before issuance of the said cheque book on 5.11.74 rather than sending a letter and seeking acknowledgement on 7.11.74 DW 1 Avinash Chander, working as Special Assistant stated that Mr. J.K. Gautam was the officer of the bank who was entrusted with the job of verifying signatures on cheques in the current account department, who was on leave on 5th and 6th November, 1974 and he was deputed in his place, and he claimed to have verified the signatures on the request letter as well as on the disputed cheques. DW 5, Y.K. Sethi, who was working as a token clerk in the bank stated that it was his first working day after transfer from another branch and the cheques in question were being above Rs. 10,000/- the same were got initiated by the Branch Manager. He further admitted that the cheque Exhibit D2 was accepted at 2.15 PM on that day. Above facts clearly show, that the bank failed to discharge successfully the ones placed on it regarding the plea of good faith or absence of negligence on their part. The learned trial court rightly concluded that the bank has to suffer for its lapse.

9. The appeal has no merit and is dismissed with costs. On 21.5.1982 the respondents were permitted to withdraw the decretal amount on furnishing bank guarantee to the satisfaction of the trial court for restitution of the amount. Since the appeal has been dismissed the bank guarantee furnished by the respondents stands discharged.