State Bank Of India vs The United Commercial Bank Ltd. ...
2002 Latest Caselaw 1262 Del

JUDGMENT

R.C. Jain, J.

1. State Bank of India has filed this appeal against the judgment and decree dated 7th July, 1976, passed by the learned Additional District Judge, Delhi, thereby dismissing the suit filed by the bank for the recovery of Rs.40,550/- against the United Commercial Bank Ltd. and nine others.

2. Case of the plaintiff/appellant Bank is that the Land Acquisition Collector, Delhi was maintaining a current account with its Tis Hazari branch since 1959. They had issued a cheque book to the Land Acquisition Collector. On 29th December, 1964, defendant No. 1 presented a cheque bearing No. OC/16-383576 dated 12.12.1964 in the sum of Rs. 40,550/-, apparently drawn by the Land Acquisition Collector, Delhi in favor of a certain Ram Avtar son of Ram Chander for clearing and the plaintiff made the payment of the said amount to the defendant No. 1 Bank. However, on or about January 18, 1965 the plaintiff received a communication from the Land Acquisition Collector, Delhi, that the cheque leaf bearing the aforesaid cheque No, among others, had been stolen by some one. On enquiry, the plaintiff discovered that the payment of cheque in question taking it to be genuine had been made by mistake to the first defendant and, therefore, the plaintiff was entitled to recover the amount from the first defendant under the provisions of Section 72 of Indian Contract Act., 1872 or in the alternative from defendant No. 2 if the defendant No. 1 had paid the amount to defendant No. 2 bank. It was also alleged that the cheque in question was endorsed by the third defendant frauduently in the name of and signing as Ram Avtar pursuant to common design/conspiracy with defendant Nos. 4 to 10 in order to defraud the plaintiff bank."

3. Defendant No. 1 Uco Bank contested the suit primarily on the ground that the alleged mistake under which the plaintiff claimed to have made the payment of the cheque in clearing was not elucidated. Defendant No. 1 denied its liability to pay any amount to the plaintiff and explained that the defendant No.2 who is a sub-member of clearing presented the cheque in question to defendant No. 1 which in turn presented for clearing after affixing its stamp and as such there was no responsibility of defendant No. 1 because there was no occasion or means for defendant No. 1 to find out if the cheque purported to be drawn by the Land Acquisition Collector, Delhi, was not a genuine one. In any case the amount of the cheque so collected had been remitted to defendant No. 2. It was denied that the cheque in question was stolen or was not genuine."

4. Defendant No. 2 also contested the suit almost on the identical defense as defendant No. 1 and denied that the cheque in question was not genuine or there was any negligence or misconduct on the part of the answering defendant in dealing with the account of Ram Avtar who had deposited the cheque in question. It was also stated that the defendant was protected under the provisions of law and the plaintiff was not entitled to recover the suit amount by invoking the provisions of Section 72 of the Indian Contract Act.

5. Defendant No. 3 to 10 in their separate written statement refuted the entire allegations of the plaint and denied the allegations of conspiracy or that any attempt was made by them to defraud the plaintiff bank.

6. On the pleadings of the parties, the learned trial court framed the following 13 issues:-

1. Whether the plaint has been properly singed and verified by a duly authorised and competent person?"

2. Whether the suit is within time?

3 Whether the Land Acquisition Collector is necessary and proper party?"

4 Whether the plaintiff is estopped from claiming the suit amount?" (Onus objected to)"

5 Whether there is a privity of Contract between the plaintiff and defendants 3 to 10, if so, its effect?

6 Whether any fraud has been committed in getting the cheque in question encashed? if so, which of the defendants has committed the same?

7. Whether the cheque in question has been encashed by the plaintiff by mistake and can the plaintiff bring suit on that basis?

8 Whether there has been any conspiracy of the defendant as alleged by the plaintiff? if so, its effect?

9   Whether  the 1st and the IInd defendants had acted  recklessly  thereby,   plaintiff  was induced  to pay the amount of the cheque and whether  the  plaintiff is entitled  to  the    refund of the amount?
 

10        Whether  the particulars of fraud have  been given  in the plaint and what is the  effect of the same?
 

 11.       Whether the plaintiff has been negligent in encashing  the  cheques?   If  so,,   whether plaintiff can take benefit of the same? 
 

12        To  what  amount, if any, is  the  plaintiff entitled to recover and against whom? 
 

13.       Relief. 
 

7. Parties relied mostly on the oral evidence of witnesses. From the side of plaintiff bank officials of the Bank were examined. The evidence led on behalf of defendant Nos. 1 and 2 comprised of its officers and a handwriting expert-Land Acquisition Collector., Delhi and its1 officials were examined as court witnesses.

8. Preliminary issue with regard to the locus standi of the plaintiff to file the suit was earlier answered in affirmative. The learned trial court on a consideration of the evidence and the material brought on record, answered issue Nos. 1 and 2 in affirmative and in favor of the plaintiff, Issue No. 3 "Whether the Land Acquisition Collector is necessary and proper party?" was answered in negative holding that the suit could be effectively decided even in the absence of the Land Acquisition Collector. Issue Nos. 4,7, and 11 were answered appropriately but against the plaintiff thereby holding that the plaintiff had failed to prove that the cheque in question was not genuine or they had made the payment of the amount of cheque under some mistake believing the same to be a genuine one. The court dealt in detail the question of liability of defendant Nos. 1 and 2 to reimburse the plaintiff with the amount on the strength of Section 72 of the Indian Contract Act. On the face of the evidence led by the defendant, the court came to the conclusion that there was nothing to suggest that defendant Nos. 1 and 2 banks had in any way acted negligently either at the time of opening of the account of Ram Avtar or in obtaining the payment of cheque in question and by crediting the same in the account of Ram Avtar, Issue Nos. 5,6,8 and 10 were also answered against the plaintiff.

9. Though in the memorandum of appeal, several grounds have been urged for assailing the judgment of the learned trial court but at the time of hearing of the appeal, Mr. Pradeep Mahajan, learned counsel for the appellant confined his attack only to the following grounds:-

(i) On the face of the facts, circumstances and material brought before the learned trial court it was satisfactorily established that the cheque in question deposited in the, account of Ram Avtar with defendant No. 2 was not a genuine cheque bearing the signature of the drawer viz. Land Acquisition Collector, Delhi :

(ii) Defendant Nos.1 and 2 failed to exercise requisite care and were in fact negligent and reckless in not verifying the genuineness of the account holder Ram Avtar and presenting a forged cheque in clearing to the plaintiff;

(iii) The plaintiff having made the payment of the amount of the cheque under a mistake in clearing believing the same to be genuine, are entitled to refund of the amount to defendant No. 1 or defendant No. 2 if the former had passed on the money to the later.

10. Learned counsel for the appellant has taken us through the evidence of witnesses more particularly the testimony of Mohd. Mustafa who was examined as a court witness in order to show that the leaf of the cheque in question was stolen when it was blank and the entries therein and the signatures thereon had been forged. The learned trial court had discussed the entire evidence in this behalf and on the strength of the evidence of the hand writing expert Shri V.K. Sakhuja and on its own examination of the cheque Ex. P-3 came to the conclusion that the plaintiff had failed to establish that the cheque in question was not genuine. The learned trial court found striking similarities in the signature appearing on the cheque and the specimen signature of the witness Mohd. Mustafa. As against the above evidence of the expert no evidence was led in rebuttal from the side of the plaintiff. Having regard to the totality of the facts and circumstances, we are in full agreement with the conclusion drawn by the learned trial court in this behalf. It was submitted by the learned counsel for the appellant that some persons who were responsible for hatching the conspiracy and 'Committing forgery on the cheque leaves in order to defraud the plaintiff bank by obtaining undue monetary gain were prosecuted and convicted by a criminal court but we find no material on record as none was produced before the trial court in this regard. In the absence of any evidence forth-coming, no presumption can be raised in regard to the cheque in question being not genuine.

11. Learned counsel for the appellant has then urged before us that on the face of the facts, circumstances., the plaintiff is within its rights to invoke the provisions of Section 72 of Indian Contract Act for seeking the refund of the amount paid by it. In this connection he has heavily relied upon the judgment of a Single Judge of this court in the case of State Bank of India v. Punjab National Bank 57 (1994) DLT 55 decided on 13-12-1994. According to the learned counsel for the appellant, the said suit was based on identical facts as in the present case inasmuch as the other cheque leaf stolen from the office of Land Acquisition Collector,, Delhi, was used by, the defendant Nos. 4 to 10 herein for obtaining the payment of Rs. 80,605/- from the plaintiff after making forged entries and signatures In the said cheque leaf and opening an Ingenuine bank account with the Punjab National bank (defendant in that case). In that suit the lamed Single Judge, on the face of the facts, circumstances and evidence brought on record, decreed the suit of the plaintiff against the collecting Bank., viz,, Punjab National Bank. The considerations which had weighed with the learned Single Judge in decreeing the suit were that the plaintiff had successfully established on record that the cheque format was genuine but everything else was forged and, therefore, it. was not a cheque within the meaning of Negotiable Instrument Act and did not contain a mandate of payment arid,, therefore., the payment of the cheque amount by the plaintiff bank to Punjab National Bank was under a mistake and the plaintiff was entitled to the refund of the amount paid by It in clearing to the said defendant. The learned Single Judge also returned a finding of fact that the defendant Punjab National Bank had not exhibited the requisite caution In its dealings with their customer/account holder Shri Durlabh Singh. It was further held that the protections as envisaged by Section 131 of the Negotiable Instrument Act was not available to the defendant Punjab National Bank, collecting bank, as there was lack of bonafide on the part of the collecting bank.

12. We are unable to endorse the view of the learned Single Judge in the above referred decision and apply the same to the case in hand more particularly in view of the finding of facts reached by the learned Single Judge in the said case and the finding of fact reached by the learned trial court on the basis of evidence and material brought in the case in hand being totally different. Section and 131(a) of the Negotiable Instrument Act 1981 which speak about, the protection available to the collecting banks is in the following terms :-

131. Non-liability of banker receiving payment of cheque. A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such payment.

(Explanation. - A banker receives payment of a crossed cheque for a customer within the meaning of this section notwithstanding that he credits his customer's account with the amount of the cheque before receiving payment thereof)

131A. Application of Chapter to drafts.- The provisions of this Chapter shall apply to any draft, as defined in section 85A, as if the draft were a cheque.

13. In the case in hand, the defendant Nos. 1 and 2 banks led cogent and reliable evidence to show that they had acted in good faith and without negligence in collecting the payment of the cheque from the plaintiff. Learned counsel for the appellant has assailed the finding of the learned trial court in this regard and urged that no land belonging to any person by the name of Ram Avtar was acquired by Government and no compensation was payable to any Ram Avtar and that in facts a person by the name of Jhuman Singh defendant No. 9 was allowed to open a bank account as impostor in the name of Ram Avtar with defendant No. 2 bank without proper verification and deposited a cheque for a high value (in those times i.e. in 1960's) in his said account and withdrew the amount quickly on its receipt would show that the bank-defendant No. 2 had acted negligently and recklessly and, therefore, they are not entitled to protection as envisaged by Section 131 of the Negotiable Instrument Act. We see no merit in this contention because the finding of the learned trial court to the above effect are based on correct appreciation of the evidence brought on record and it cannot be faltered.

14. As noted earlier, the learned Single Judge had decreed the suit basically on the finding that the entries and signature of the drawer appearing on the format of the cheque were forged. On the face of evidence and material brought on record and particularly the observations of the learned trial court with which we have no reason to differ,, it is not possible to arrive at the same finding. Apart from this, as per the plaintiffs own showing the officer of the plaintiff had made the payment of the amount of the cheque believing the same to be genuine. It would reinforce the finding of the learned trial court that the plaintiff failed to prove that the cheque was not genuine. The plaintiff must be in possession of the specimen signature of the Land Acquisition Collector and they were under a bounden and legal duty to compare the signature appearing on the cheque in question with the specimen signatures of the account holder before clearing the same for payment. It appears to us that for the negligence of their own officers and that of the officers of Land Acquisition Collector, the plaintiff bank wants to make defendant Nos. 1 and 2 liable for the refund of the amount paid by them. We fail to understand as to why the theft of the cheque leaves from the office of the Land Acquisition Collector, was not reported to the police for more than a month after the alleged theft and under what circumstances, the plaintiff bank reimbursed the Land Acquisition Collector, of the amount related to the alleged forged cheque. In our opinion for the negligence of the plaintiff or the Land Acquisition Collector, no liability can be enfastened on defendant Nos. 1 and 2 Banks on the strength of Section 72 of the Indian Contract Act. The learned trial court was fully justified in holding that there was no question of the plaintiff having made the payment of the amount of cheque under mistake. As per their own showing, plaintiff had made the payment believing the cheque in question to be a genuine one.

15. In support of his contention that the plaintiff bank is entitled to recover the amount from defendant Nos. 1 and 2, the learned counsel for the appellant has cited the decision of the Supreme Court In the case of Mahabir Kishore and Ors. v. State of Madhya Pradesh AIR 1990 SCC 313 wherein the court dealt with the question of unjust enrichment and held that the restitution would be justified if the plaintiff established that the defendant has been enriched by the receipt of benefit and that the enrichment is at the expense of the plaintiff and that the restitution of the enrichment would be unjust. In the case in hand it is not disputed case that the defendant No. 1 and 2 on collection of the money had paid the same to the holder of the account and, therefore, the money is not either in the hands of defendant No-1 or defendant No. 2. Therefore, there is no question of unjust enrichment and they cannot be asked to refund the amount.

16. Counsel for the appellant did not press its claim against the remaining respondent Nos. 3 to do. In any case no cogent evidence was led by the plaintiff bank about the culpability of these defendants in the alleged episode.

17. No other point was pressed before us. For the foregoing reasons, we find no merit in the present appeal. The appeal is accordingly dismissed leaving the parties to bear their own costs.