Madhya Pradesh High Court
State Bank Of India, Branch, Guna vs M.P.S.E.B., Jabalpur And Ors. on 20 June, 2025
Author: Gurpal Singh Ahluwalia
Bench: G. S. Ahluwalia
NEUTRAL CITATION NO. 2025:MPHC-GWL:12856
1 SA-1313-2005
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE G. S. AHLUWALIA
ON THE 20th OF JUNE, 2025
SECOND APPEAL No. 1313 of 2005
STATE BANK OF INDIA, BRANCH, GUNA
Versus
M.P.S.E.B., JABALPUR AND ORS.
Appearance:
Mr. Sanjay Dwivedi - Advocate for the appellant.
Mr. Narottam Sharma - Advocate for respondent No.1.
JUDGMENT
This second appeal under Section 100 of CPC has been filed against
the judgment and decree dated 26.02.2005 passed by Fourth Additional
District Judge (fast track), Shivpuri in Civil Appeal No.8-B/2005 by which
judgment and decree dated 19.08.2004 passed by Civil Judge, Class-I,
Shivpuri in Civil Suit No.9-B/2002 was set aside.
2. This appeal being arguable is admitted on the following substantial
question of law:-
"(i) Whether the State Bank of India being, the Paying Bank
who was required to clear the cheque on the basis of its validity
by virtue of it's signatory, date of presentation, and balance in the
account; and certification by the collecting Bank, is responsible for
its advantage being taken by some individual other than "Payee" ?
(ii), Whether the Certification seal by collecting Bank on
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the back of the cheque amounted to the certification that the
amount to be credited to the payee's Account under the
Negotiable Instrument Act?"
3. All three respondents were served. Respondent No. 2 is represented,
but none appears for respondent No. 3.
4. This appeal is pending since 2005, i.e., for more than 19 years, and
all the respondents are already served, therefore, it is heard finally.
5. The facts necessary for disposal of the present appeal in short are
that the respondent No. 1 / plaintiff filed a civil suit for recovery of
Rs.31,000/- from the defendants on the ground that a crossed cheque (an
account payee) was issued by the Regional Accounts Officer of the plaintiff
in favour of defendant No. 3. The crossed cheque No. 457968 dated
14.08.1989 was in respect of bank account maintained in the appellant bank /
State Bank of India, Guna Branch (in short "S.B.I."). Defendant No. 3
presented the said cheque for encashment before defendant No. 2 (PNB) in
the month of October, 1989. The Punjab National Bank, Guna Branch (in
short "PNB") / defendant No. 2 received the amount in its account No.
CNI89 dated 12.10.1989 from the appellant/defendant No. 1. Although the
cheque, which was issued by the plaintiff/respondent No. 1, was a cross-
cheque, therefore, it should have been credited in the individual account of
defendant No. 3, but defendants No. 1 and 2 deliberately, and with an
intention to cause financial loss to the plaintiff, credited the amount in the
account of National Stone Manucfacturing, Shivpuri, whereas defendant No.
2 had no authority to credit the amount in the account of National Stone
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Manufacturing. Since the amount was not credited in the account of
defendant No. 3, therefore, defendant No. 3 filed a civil suit No. 3B/1991
against the plaintiff for recovery of Rs.8910/- with interest which was
decreed by judgment and decree dated 26.08.1995 against which, appeal was
filed by the plaintiff, which was registered as Appeal No. 3B/1995 which
was allowed by judgment and decree dated 17.09.1996 and the matter was
remanded back. After the remand, the trial Court once again passed a
judgment and decree dated 27.02.1998 and the plaintiff was directed to pay
an amount of Rs. 8910/- with interest @ 6% per annum to defendant No. 3.
It was claimed that aforesaid decree was suffered by the plaintiff on account
of the mistakes of defendants No. 1 and 2 and, therefore, the defendants No.
1 and 2 are liable to make good the loss sustained by the plaintiff.
6. It is submitted that against the judgment and decree passed by the
trial court, the plaintiff preferred an appeal which was listed as Appeal No.
2B/1998 and by judgment and decree dated 29.11.1999, said appeal was
dismissed. The judgment passed by the Appellate Court was challenged by
the plaintiff before the High Court by filing Second Appeal No. 199/2000,
which too was dismissed by judgment and decree dated 19.04.2002. It is the
case of the plaintiff that since the plaintiff had issued an account payee
cheque in favor of defendant No. 3 - Iqrar Khan, therefore, defendants No. 1
and 2 were under an obligation to deposit the amount in the individual
account of Iqrar Khan, but instead of doing that, defendant No. 2 deposited
the amount in the account of National Stone Manufacturing, Shvpuri, which
resulted in financial loss to the plaintiff. Thus, the suit was filed for recovery
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of Rs. 31,000/-, which is inclusive of principal amount with interest as well
as the litigation expenses.
7. The appellant filed its written statement and claimed that it was not
a party to the suit which was instituted by defendant No. 3 and, therefore, the
judgment passed in the said suit/appeal is not binding on defendant No.
1/appellant. It was further claimed that the suit filed by the plaintiff was
barred by time and the court had no territorial jurisdiction. It was further
claimed that the cheque issued by the plaintiff was sent by defendant No. 2
to defendant No. 1 for collection purposes and the aforesaid cheque was
received in the SBI for clearance purposes. Since the plaintiff had sufficient
amount in its account, and there was no defect in the cheque, therefore, the
cheque was cleared by defendant No. 1. The cheque was deposited by
defendant No. 3 in the PNB for collection purposes. Since the drawer of the
cheque had sufficient amount in its account, therefore, the amount was
deposited in the account of PNB. It was not the duty of defendant No.
1/appellant to ensure as to whether the amount is ultimately credited in the
account of the correct person or not, but it was the duty of the collecting
bank, i.e., defendant No. 2.
8. Defendant No. 2 also filed its written statement and raised the
objection with regard to the period of limitation as well as the territorial
jurisdiction. It was claimed that defendant No. 2/PNB has credited the
amount in the correct account, i.e., National Stone Manufacturing, Shivpuri.
It was further pleaded that since defendant No. 2 was not a party in the civil
suit, which was instituted by defendant No. 3 against the plaintiff, therefore,
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the findings recorded in the said civil proceedings are not binding on
defendant No.2.
9. The trial Court, after framing issues and recording evidence,
dismissed the suit.
10. Being aggrieved by the judgment and decree passed by the trial
Court, respondent No. 1 preferred an appeal which has been decreed by
judgment and decree dated 26.02.2005 passed in RCA No.8B/2005 and the
judgment and decree passed by the trial Court was set aside and it was held
that the defendants No. 1 and 2/appellant and respondent No. 2 respectively
are jointly and severely responsible to pay Rs. 31,000/- to the plaintiff along
with interest @ 10% per annum.
11. Being aggrieved by the judgment and decree passed by the
appellate court, defendant No. 2/PNB filed S.A. No. 1117/2005, whereas
defendant No. 1/SBI preferred the present appeal.
12. It is not out of place to mention here that S.A. No.1117/2005 filed
by PNB was ultimately withdrawn by it by order dated 31.01.2025 passed in
S.A. No.1117/2005.
13. Now the only question for consideration is that whether the
withdrawal of the second appeal by PNB will have any adverse effect on the
rights of defendant No. 1/appellant or not?
14. The undisputed facts are that an account payee cross-cheque was
issued by respondent No. 1 in favour of defendant No. 3 - Iqrar Khan. The
said cheque was presented before the PNB because Iqrar Khan had his
account in PNB. M.P.S.E.B. had its account in SBI/appellant bank and the
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cheque, which was issued by respondent No. 1, was of SBI. Accordingly,
PNB sent the cheque to SBI for clearance purposes.
15. It is the case of SBI that since the drawer of the cheque had
sufficient amount in its account and there was no defect in the cheque,
therefore, the amount mentioned in the cheque was credited in the account of
PNB and it was the duty of the collecting bank to insure that the amount is
credited in the correct account. If the PNB had credited the amount in the
account of National Stone Manufacturing, Shivpuri, then it was the mistake
on the part of PNB, for which SBI cannot be held liable. It is the case of the
appellant that the duty of the appellant was to ensure as to whether the
drawer of the cheque had sufficient amount in its account or not, and if there
were no defects in the cheque, then the amount was to be deposited in the
account of the collecting bank. Accordingly, it is submitted that the cheque
amount was credited in the account of PNB.
16. Considered the submission made by counsel for the appellant.
17. From the record of the trial court, it is clear that the appellant/SBI
did not enter in the witness box. On 15.06.2004, the plaintiff closed its
evidence, and the case was fixed for 15.07.2004. On 15.07.2004, defendant
No. 2/PNB examined its witness Neeraj Chaturvedi as DW-1 and on the said
date, the defendants closed their right and the case was fixed for final
arguments. Defendants No. 1 and 2, i.e., SBI and PNB were being
represented by a single lawyer. Thus, it is clear that the SBI did not enter in
the witness box to defend its case.
18. Under these circumstances, when the SBI did not lead any
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evidence in support of its case, then only question of consideration is as to
whether the submissions made by counsel for the appellant with regard to
liability of the SBI can be considered or not?
19. The plaintiff has relied upon a communication sent by PNB,
Exhibit P-7. in which it was admitted by defendant No. 2/PNB that it had
received the cheque amount from the clearing bank/SBI and the PNB has
credited the said amount in Current Account No. 1748 of National Stone
Manufacturing, Shivpuri. The plaintiff has also relied upon the evidence of
Yogesh Kumar Tiwari, Chief Manager, S.B.I., Guna as Exhibit P-9, which
was recorded in Case No.3B/1991 (instituted by defendant No. 3 against the
plaintiff). In that case, Yogesh Kumar Tiwari had stated that the cheque
amount of Rs. 8910/- was credited by the SBI in the account of PNB, Guna
on 12.10.1989 and the statement of account was also produced in the said
suit as Exhibit D-8. Thus, it is clear that although appellant / defendant No. 1
might not have entered in the witness box, but it is the case of the plaintiff
itself that the cheque amount was deposited by the SBI in the account of
PNB and it was PNB who wrongly credited the amount in the current
account of National Stone Manufacturing, Shivpuri.
20. Under these circumstances, this Court is of the considered opinion
that SBI was the clearing bank and there is no allegation that the cheque was
wrongly cleared by the SBI. It is the case of the plaintiff that it was having
sufficient amount in its account and it was rightly cleared by the SBI, but
ultimately, it was wrongly credited by the PNB in the current account of
National Stone Manufacturing, Shivpuri instead of in the individual account
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of Iqrar Khan. Thus, it is held that there was no lapse on the part of the SBI
in clearing the account payee cheque which was issued by the plaintiff in
favour of defendant No. 3/respondent No. 3, but it was PNB who wrongly
credited the said amount in the current account of National Stone
Manufacturing, Shivpuri instead of in the individual account of Iqrar Khan,
as a result, the MPSEB suffered a decree in a suit instituted by Iqrar Khan.
21. PNB has already withdrawn its second appeal. It was informed by
counsel for the parties that the appeal was withdrawn by PNB on the ground
that the decreetal amount has already been paid by the PNB to the
plaintiff/respondent No. 1.
22. Be that whatever it may.
23. Upon withdrawal of the second appeal by PNB, the decree against
PNB has attained finality. Since the role of the appellant/defendant No. 1 was
completely different and it had nothing to do with the credit of amount in the
account of the payee and it was for the PNB to ensure that the amount is
credited in the account of the payee, and on account of mistake by PNB, the
amount was credited in the account of National Stone Manufacturing,
Shivpuri, this Court is of the considered opinion that the appellate court
committed a material illegality by holding that appellant is also jointly and
severely responsible for payment of amount as claimed by respondent No.
1/plaintiff.
24. Accordingly, the judgment and decree dated 26.02.2005 is partially
modified and it is held that only PNB/respondent No. 2 is responsible for
payment of the decreetal amount to respondent No. 1.
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25. With aforesaid modification, the judgment and decree dated
26.02.2005 passed by Fourth Additional District Judge (fast track), Shivpuri
in Civil Appeal No.8-B/2005 is hereby affirmed.
26. The appeal succeeds and is hereby allowed to the extent mentioned
above.
(G. S. AHLUWALIA)
JUDGE
AKS
