Shri Rajiv Khanpuri vs Canara Bank
2012 Latest Caselaw 2937 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           RFA No.450/2004

%                                                         3rd May, 2012



SHRI RAJIV KHANPURI                             ..... Appellant
                  Through:               Mr. Jasmeet Singh, Advocate with
                                         Ms. Vatsala Singh, Advocate.

                      Versus


CANARA BANK                                     ..... Respondent

                            Through:     Ms. Rekha Rustagi, Advocate.



CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA


    To be referred to the Reporter or not?



VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal filed

under Section 96 of the Code of Civil Procedure, 1908 (CPC) is by the

appellant/plaintiff to the impugned judgment of the trial Court dated

5.6.2004 decreeing the suit of the respondent/plaintiff-bank for recovery of

` 1,67,900/- with interest @ 12% per annum and proportionate costs, which

was filed as the appellant/defendant failed to repay the amount of a

dishonoured cheque which he had withdrawn.

2. The facts of the case are that the appellant/defendant deposited

a cheque of ` 1,50,000/- with the respondent-bank and which was

presented for encashment through clearing on 3.11.1999. The account of

the appellant/defendant was credited on the same date. The cheque in

question was returned unpaid on 4.11.1999, however, the dishonoured

cheque alongwith memo of drawee bank was lost in the transit and

therefore the respondent-bank could not make a debit entry of the sum of `

1,50,000/- for adjusting the credit entry of ` 1,50,000/- which was made

assuming the cheque was cleared. The appellant withdrew the amount and

took benefit thereof. When the respondent-bank received information

about dishonour of the cheque, the appellant/defendant was asked to repay

the amount which he failed to do and therefore the subject suit for recovery

was filed.

3. The appellant/defendant claimed that the respondent-bank did

not intimate the appellant till the end of the year 2001 about dishonour of

cheque in question and allowed him to withdraw the amount of the cheque

whereby the appellant/defendant could not pursue his remedy against the

drawer of the cheque. It was pleaded that the appellant/defendant had

given a loan of ` 1,50,000/- to one Sh. Rajiv Verma and which loan was

returned by the said cheque of Sh. Rajiv Verma which was dishonoured.

The appellant/defendant claimed that it was only vide letter dated

4.12.2001 that it was informed by the respondent/plaintiff to the

appellant/defendant about dishonour of the cheque and the freezing of his

account. A counter claim was also filed by the appellant/defendant

alleging that on account of freezing of his saving bank account by the bank,

he could not arrange for funds for the pilot films/documentaries and lost

several contracts. It was pleaded that he could not deposit cheques which

were received by him as the account was frozen, therefore, a claim of ` 2

lacs was made on loss of professional income which he alleged he would

have earned. A sum of ` 1 lakh was claimed towards damages for breach

of contract and another sum of ` 50,000/- was claimed towards unfair trade

practice.

4. After completion of pleadings, the trial Court framed the

following issues:-

"1. Whether the plaint has been signed and verified and suit has been instituted by duly authorised person?

2. Whether the subject matter of the suit was settled as alleged in P.O. no.2?

3. Whether the pltf is entitled to the suit amount alongwith interest @ 18% p.a.?

4. Whether the deft is entitled to ` 3,50,000/- towards professional loss, breach of contract and trust, deficiency in service, mental agony as claimed in counter claim?

5. Whether the deft is entitled to interest @ 24% p.a. on the amount

of damages, if awarded?

6. Relief."

5. There are two main issues urged before this Court on behalf of

the appellant/defendant. The first issue is that the appellant/defendant

suffered a loss because of the fact that information of dishonour of the

cheque was only received on 4.12.2001 and therefore he could not sue to

recover the amount of cheque from the said Sh. Rajiv Verma. The second

argument is related to the first in that the appellant/defendant has wrongly

been denied the counter claim which was allowable.

6. As regards the first point in question the same was subject

matter of issue No.3 as to whether the respondent-bank was entitled to the

suit amount, and with respect to which the trial Court has held as under:-

"12. Admittedly, one cheque of Rs.1,50,000/- was deposited by the defendant in his account with the plaintiff bank and it was sent in clearing on 3.11.99 and account of the defendant was credited on the same day. As stated by PW1, the amount of the cheque is received by the bank in routine on the next day. The bank is not in a position to know the fate of the cheque on the day it is sent to clearing and the amount is credited to the account of the customer.

If the cheque deposited in an account is dishonoured the bank debits the amount of cheque in the account. If however, due to some reason, the bank does not receive information about dishonour of the cheque, it will not debit the amount of the cheque in the account. In the present case also, as per its practice the bank credited the amount of the cheque in account of the defendant on the day the cheque was sent for clearing. Had the bank received information about dishonour of the cheque it would have debited

the amount in the account and the defendant would not have been able to withdraw it. But, having withdrawn the amount the defendant is liable to repay it to the bank once it transpired that the cheque deposited by him was dishonoured. The defendant cannot be allowed to enrich himself by retaining the amount withdrawn by it when the cheque deposited by him has been dishonoured for want of funds. Section 72 of Contract Act specifically provides that a person to whom money has been paid or anything delivered by mistake must repay or return it. The payment by mistake in Section 72 of Contract Act refers to payment which was not legally due and which could not have been enforced. The mistake is in thinking that the money paid was due when in fact it was not due. In the present, as cheque of Rs.1,50,000/- was dishonoured, the payment of this cheque was not legally due to the defendant and could not have been enforced by him. The bank committed a mistake by thinking that the cheque has been dishonoured. Therefore, the case squarely falls in the four corners of Section 72 of the Contract Act. The payment under mistake of fact cannot be regarded as a voluntary payment and therefore is recoverable under Section 72 of the Contract Act (AIR 1940 Madras 600) „the rule governing the recovery of money paid under a mistake of fact, however ignorant he may be and however forgetful he may have been is entitled to recover the money unless he has at any time waived his claim or has been stopped by reason of conduct by which the payee has altered his position by parting with money.‟ In the case before madrs high court (supra) tax was paid to panchyat board under a mistaken notion that the property for which tax was paid, lay within jurisdiction of Board. It was held that payment was under mistake of fact and could be recovered under Section 72 of contract Act. In a decision reported as „[AIR 1987 Karnataka 236‟ a mistaken entry of credit was made by the bank in the account of the person. The account holder utilized the amount. It was held that he was to repay or return the amount in view of Section 72 of Contract Act. It was further held that the account holder would also be liable to pay interest under interest Act till the date of filing of the suit and

further interest from the date of the suit till the date of realization under Section 34 of CPC. The legislative intent behind section 72 of Contract Act is to prevent unjust enrichment and ensure refund or return of the amount. The principle of unjust enrichment requires first, that the defendant has been „enriched‟ by the receipt of a „benefit‟. Secondly, that the enrichment is „at the expense of the plaintiff and thirdly, that the retention of enrichment be unjust. This satisfies restitution. (AIR 1990 SC 313). In the present case there is no dispute that the cheque in question was dishonoured when presented in clearing. The cheque is Ex PW1/D1. This is nowhere the case of the defendant that the cheque was honoured when presented to the bank on which it was drawn.

13. It was contended by the ld. Counsel for the defendant that the bank did not come to court before Nov. 2002 and therefore, he could not take steps for recovery of money from the person by whom this cheque was issued to him. In my view, there is no merit in this contention. Firstly, if the defendant did not take legal step against the drawer of the cheque even after receiving written notices from the bank about dishonour of the cheque, he has to blame only himself for it and the plaintiff bank is not entitled for this lapse on his part. It would be pertinent to mention here that admittedly the defendant was informed about dishonour of the cheque prior to 4.12.2002 when letter dated DW1/1 was written to him seeking reimbursement of amount of Rs.1,50,000/- alogn with interest. Had the defendant filed the suit against the drawer of the cheque at that time it would have been well within limitation. If the defendant kept on making complaint against the bank, but did not take steps to recover the money from the drawer of the cheque, he has to suffer for his inaction, in case he has not actually received the amount of the cheque from his drawer. It would be pertinent to mention here that the defendant has not produced the drawer of the cheque to prove that the amount of the cheque has not been recovered/realised from him by defendant. In fact for the purpose of claim of the plaintiff it is absolutely immaterial whether the defendant could have realised the amount of the cheque from its drawer or not.

Once it is proved that the cheque was dishonoured and the defendant was allowed to with draw the amount of the cheque on account of bonafide mistake on the part of the bank, he has to return the amount of the cheque to the bank." (underlining is mine)

7. A reference to the aforesaid paras shows that the trial Court

has relied upon Section 72 of the Contract Act, 1872 which provides that

when a person makes a payment under a mistake, the person to whom

payment is made because of the mistake is bound to refund the same. In

my opinion, this finding of the trial Court cannot be faulted with because

admittedly the credit entry of ` 1,50,000/- in favour of the

appellant/defendant was made by the bank under a mistake that the cheque

which was deposited by the appellant/defendant was cleared and not

dishonoured, however, it subsequently came to light that the said cheque

was dishonoured and therefore the appellant could not withdraw the

amount of a cheque which was dishonoured and amount of which was

credited in his account. Further, the trial Court is correct in dismissing the

contention raised on behalf of the appellant/defendant that since the bank

did not come to the Court before November, 2002 therefore the

appellant/defendant could not take steps for recovery against the person

whose cheque was dishonoured i.e. Sh. Rajiv Verma. Trial Court has in

this regard rightly held that it was for the appellant/defendant to take steps

against the drawer of the cheque once he received the written notice from

the bank on 4.12.2001 and if the suit would have been filed against the

drawer of the cheque in December, 2001, the suit would have been within

limitation as against the drawer of the cheque. The trial Court has further

rightly held that merely making repeated complaints to the bank without

taking any steps against the drawer of the cheque results in the conclusion

that it is the appellant/defendant who is guilty of inaction and must take the

necessary consequences. Trial Court has also correctly made pertinent

observations that the appellant/defendant did not summon the drawer of the

cheque to show that in fact he has not recovered the amount of the cheque

from the drawer of the cheque.

Accordingly, I reject the contention on behalf of the appellant

and affirm the findings and conclusions of the trial Court with regard to

issue No.3.

8. The issue with respect to whether the appellant/defendant

suffered various losses as asked for in the counter claim, the same was

subject matter of issue Nos.4 and 5, which have been dealt with by the trial

Court in paras 10 and 11 of the impugned judgment which read as under:-

"10. The defendant has claimed Rs.2 lakhs as professions losses and Rs.1 lakh for breach of contract and deficiency in service and unfair trade practices and Rs.50,000/- as mental agony and loss of reputation. On account of the act of the plaintiff in freezing his account. His case is that due to freezing

of his account he could not arrange funds for pilots which he used to prepare for media agencies/Government. However, the defendant has failed to prove any actual loss to him due to of his SB account. He has not told the court as to how he suffered the alleged loss of Rs.2 lakhs. A perusal of Ex.PW.1/D1 which is the statement of account of the defendant would show that there was a balance of Rs. 906 in his account 5.10.01. balance of Rs.20906 on 5.12.01 balance of Rs.21055/- on 1.2.02 and a balance of Rs.555 on 18.4.02. The defendant has not told the court as to when he received order for preparation of pilots, from where the order was received and how much money was required by him for preparation of pilot. He has also not told the court that he has no money except the balance in his account, for the purposes of preparing the pilots. In any case, he has not been able to prove that profit, if any, he would have earned, had he been able to operate the account and prepare the pilots. In order to succeed, it was imperative for the defendant to prove that he received a particular order to prove the profit he would have earned on that order. However, no such attempt has been made by the defendant. As regards FDR, there is no proof of the bank having withheld its encashment. The defendant has not told the court when had it matured and when the bank did not allow him to encash it. In fact, the letter Ex.DW1/5 indicates that the bank did not intend to encumber the FDR of defendant anywhere that he made attempted to encash the FDr for the purpose of his business and had he been able to encash the FDR he would have earned a particular profit in his business. Therefore, it cannot be said that the defendant suffered loss of Rs.2 lakh on account of freezing of his account by the bank. In any case the FDR was obtained from the amount of dishonoured cheque in which the deft has no legal right.

11. The plaintiff has claimed rs.1 lakh towards breach of contract and trust and deficiency in services. He has however, failed to prove any loss or damage to him on account of freezing of his account. I, therefore hold that he is not entitled to the

amount of Rs.1 lakh claimed by him. I failed to appreciate how freezing of account by the bank for a short period on account of failure of the defendant to repay the amount of Rs.1,50,000/- amounts to any mental agony or loss of reputation. It was contended by the ld counsel for the defendant that on account of freezing of account he could not deposit cheques in his account. The plaintiff bank is not the only bank in the city and therefore the defendant could have opened the account in any other bank and could have deposited the cheques in that account. Therefore no loss could have been suffered by him on account of his not being able to deposit his cheques in his account with the plaintiff bank. The defendant was equally and morally bound to repay the amount of Rs.1,50,000/- to the bank when the cheque deposited by him was dishonoured. He could have persued legal remedy against the person whose cheque was dishonoured. But he was legally obliged to repay that amount to the bank. The bank freezed the account of the defendant on account of breach of this obligation on his part. In these circumstances, I am of the considered opinion that the defendant is not entitled to any amount as damages on account of freezing of account. Issues are decided in favour of the plaintiff and against the defendant." (underlining added)

9. A reference to the aforesaid paras shows that the trial Court

has correctly arrived at a conclusion that it is not possible to believe that

merely by freezing of an account a person‟s business will suffer inasmuch

as surely the appellant/defendant could have opened accounts in other

banks for encashing other cheques which may have been issued in his

favour and it is not as if no other account could be opened by the appellant

except the subject account with the respondent-bank. Further, the trial

Court has rightly held that before claiming loss of profits the

appellant/defendant was bound to prove by leading evidence as to what was

the profit he would have earned with respect to his pilot

films/documentaries and other contracts. Accordingly, the trial Court has

rightly concluded that it cannot be said that the appellant/defendant

suffered a loss of ` 2 lacs on account of freezing of the account by the

bank. The claim of ` 1 lakh made by the appellant towards the alleged

breach of contract and trust and deficiency in service has also been rightly

rejected by the trial Court by arriving at a finding that freezing of an

account for a very short period cannot cause any mental agony or loss of

reputation as pleaded by the appellant/defendant. Once, it was found that

the appellant/defendant was legally bound to refund the amount which was

paid by the respondent-bank, it cannot be said that the respondent-bank was

not entitled to the amount and that the respondent-bank was liable.

10. An appellate Court does not interfere with the findings and

conclusions of the trial Court, unless, the findings and conclusions are

grossly illegal or perverse. In my opinion, not only there is no illegality

or perversity but the trial Court has arrived at findings/conclusions

correctly both so far as the facts as also the law are concerned. The suit of

the respondent-bank was therefore rightly decreed and the counter claim of

the appellant/defendant was rightly dismissed.

11. In view of the above, I do not find any merit in the appeal

which is accordingly dismissed, leaving the parties to bear their own costs.

VALMIKI J. MEHTA, J MAY 03, 2012 Ne