IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : .06.2010
CORAM:
THE HON'BLE MR.JUSTICE V.PERIYAKARUPPIAH
A.S.No.291 of 2000
and
C.M.P.No.13490 of 2000
Tamil Nadu Electricity Board
rep.by its Superintendenting Engineer
General Construction Circle
Chennai. .. Appellant/Plaintiff
vs.
Indian Bank
Clock Tower Branch,
Royapeth
Chennai rep.by its
Manager .. Respondent
Appeal filed under Section 96 of C.P.C against the Judgment and Decree of the learned VIII Additional Judge, City Civil Court, Chennai in O.S.No.6469 of 1996, dated 21.12.1998.
For Appellant : Mr. N.Kishorekumar
For Respondent : Mr.Krishna Srinivasan
for M/s. Rama Subramaniam
Associates
J U D G M E N T
This appeal is directed against the Judgment and decree passed by the learned VIII Additional Judge, City Civil Court, Chennai in O.S.No.6469 of 1996 dated 21.12.1998 dismissing the suit with costs.
2. The appellant herein was the plaintiff before the lower Court. The suit was filed by the appellant/plaintiff against the respondent/defendant for recovery of a sum of Rs.4,00,000/- along with interest at 18% p.a. from the date of plaint till the date of realisation and costs. The suit was dismissed with costs and the plaintiff has preferred the present appeal.
3. The brief facts of the case relied upon by the plaintiff before the lower Court would be as follows:-
(i) The plaintiff is holding a current account with the defendant’s Bank which is jointly operated by the Superintending Engineer and Accounts Officer. The defendant made a cash payment of Rs.4,00,000/- to one Rajamani, on presenting a bearer cheque bearing No.161983 dated 27.7.1987 from the account of the plaintiff. But the cheque was not signed by the Superintending Engineer and the Accounts Officer who are authorised to sign the cheques and whose signatures are available with the defendant bank. On 29.7.1987, the plaintiff made a police complaint stating that cheque leaf No.161983 was missing from the cheque book and on the basis of the forged cheque, the defendant had made cash payment to an individual without verifying the signatures.
(ii). On the basis of the complaint given by the plaintiff, one S.Edward, employed as Assistant Accounts Officer of the plaintiff, was arrested. The said Edward had never earlier gone to the defendant’s bank for transactions and he had stolen a cheque leaf from the plaintiff and forged the signatures of the Superintending Engineer and the Accounts Officer, posing himself as one Rajamani and presented the bearer cheque with the Defendant’s Bank and received the cash. The plaintiff states that the defendant had paid the huge amount of Rs.4,00,000/- on presenting a forged cheque. Therefore, by letter dated 30.7.1987, the plaintiff called upon the defendant to credit a sum of Rs.4,00,000/- paid by it. But the defendant declined the said claim as the same was a pre-matured one. The cheque leaf was obtained from the Bank for forensic test and the report was that the signatures contained in the cheque were forged ones.
(iii) In spite of the repeated demands made by the plaintiff, the defendant has not chosen to credit the amount. In fact, the defendant is estopped from denying the liability on the ground that the signatures on the cheque have been forged by the plaintiff’s employee. Therefore, the plaintiff issued a legal notice on 12.6.1989. But no reply was received by the plaintiff. The plaintiff state that the defendant did not take any precaution or care before making payment against the forged bearer cheque. The plaintiff further states that the plaintiff had not earlier withdrawn such a huge amount by bearer cheque. The plaintiff states that the Superintending Engineer and Accounts Officer used to sign only in ink whereas the cheque in dispute was signed in ink as against the column of Superintending Engineer and by ball-point pen as against the column of Accounts Officer. Without verifying the signatures, the defendant honoured the cheque. The defendant states that the disputed cheque is the 83rd leaf of the cheque book while the first 82 cheque leaves have not been used at all. Due to the negligence and serious lapses committed by the defendant’s officials, a huge amount had been paid against a forged cheque. Therefore, the plaintiff has filed the above suit.
4. The contentions of the defendant before the lower Court are summed up thus:-
(i) The defendant denied the allegations made in the plaint. The suit is not maintainable in view of the non-joinder of the parties, particularly, the plaintiff has not included one Mr.S.Edward as a party in the suit, the person who encashed the cheque of the plaintiff. The plaintiff used to draw large amounts of cash by a self cheque for salary payments and such likes. Likewise, on 25.7.1987, there was a call from the plaintiff informing that the large amount of cash was needed on 27.7.1987 and infact the caller informed that a cheque for a sum of Rs.5,00,000/- was already deposited and that there was sufficient balance available in the account to meet the cash withdrawal. Accordingly, a selfcheque for Rs.4,00,000/- was presented by one of the employees of the plaintiff and the defendant after duly verifying the signature of the Authorised Signatories and adopted the usual procedure, made the payment. But only on the verification of the forensic Department, the defendant came to know that the signatures had been forged.
(ii) On 9.8.1989, the defendant replied the legal notice sent by the plaintiff on 12.6.1987. The defendant further states that the person who presented the cheque told the names of the two persons who were normally deputed to draw cash and stated that as both of them were on leave, he was deputed to collect the cash. The defendant denied the allegation that signatories normally used to sign only in ink and in the forged cheque, ball-point pen was used as against the column meant for Accounts Officer’s signature since, he has not been instructed that a cheque signed using a ball point pen should not be honoured. The allegation that the cheque leaf was 83rd in cheque book is concerned, the defendant has no record as to how many cheques have been issued by the plaintiff and how many cheques were in the custody of the plaintiff unless and otherwise the same is presented for encashment. The defendant denied the allegation that the cheque was passed due to the negligence of the defendant’s employees. In fact the negligence is on the part of the plaintiff only for having left the cheque book easily accessible to the culprit and giving scope for fraud. Therefore, the defendant prays for dismissal of the suit.
5. During the full fledged trial, the lower Court had examined P.W.1 and P.W.2 and marked Exs.A1 to A7 on the side of the plaintiff and D.W.1 was examined and Ex.B1 was marked on the side of the defendant. After appraising the evidence, the lower Court had come to a conclusion of dismissing the suit with costs, aggrieved by the said judgment and decree, the plaintiff has preferred the present appeal.
6. Heard Mr.N.Kishore Kumar, the learned counsel for the appellant / plaintiff and Mr. Krishna Srinivasan, the learned counsel for the respondent / defendant.
7. On a careful perusal of the pleadings, the evidence of both sides produced before the lower Court, the judgment and decree passed by the lower Court, the grounds in the appeal memo and the arguments advanced by the learned counsel for the appellant/ plaintiff and the learned counsel for the respondent/ defendant, this Court could see that the following points are necessarily to be decided in this appeal:-
1.Whether the defendant Bank was negligent in disbursing a sum of Rs.4 lakhs and the plaintiff was at loss due to the alleged negligence of the defendant ?
2. Whether the plaintiff is entitled to the said sum of Rs. 4 lakhs from the defendant’s Bank ?
3.Whether the judgment and decree passed by the lower Court are liable to be set aside ?
4. To what relief the appellant is entitled for ?
8. The learned counsel for the appellant/plaintiff would submit in his argument that the defendant had committed error in making payment on the forged cheque to the tune of Rs.4 lakhs without any usual precautions to be taken by him while passing the cheque. He would further submit in his argument that the lower Court had wrongly fixed the responsibility on the plaintiff for the alleged mis-using of the cheque. He would also submit in his argument that whenever a huge amount was withdrawn by the plaintiff Board, the defendant bank ought to have verified with much care in comparing the specimen signature. He would also submit that the loss happened to the plaintiff’s Board was only due to the lesser degree of care and the negligence on the part of the defendant’s Bank only. He would also submit that the lower Court went wrong in not considering that a stranger approached the defendant’s Bank for encashment of huge amount of cheque from the public institution namely Electricity Board and the Bank should have verified with the plaintiff about the genuinely of the transaction. He would further submit that the circumstances that the cheque leaf at the end of the cheque book was utilized for the purpose of cheating the Bank should have been considered that the negligence on the part of the defendant’s Bank. He would further submit in his argument that the transaction was held for a longer time, since money was arranged from other branches and by that time the defendant’s Bank should have contacted the plaintiff-Board in order to verify the genuineness of the transaction as the amount is withdrawn for a huge sum of Rs.4 lakhs. The lower Court should have considered all the issues in favour the plaintiff but failed to appreciate the case of the plaintiff which has to be set aside and the suit has been decreed by the lower Court and the appeal may be allowed.
9. The learned counsel for the respondent / defendant would submit in his argument that the defendant’s Bank had carefully verified the cheque issued by the Board and after verifying two authorised signatures allowed the passing of cheque and paid the money and it is for the plaintiff to be careful in respect of the safety of its cheque leaves in its office. He would further submit in his argument that the employee of the plaintiff Board had stolen the cheque leaf and had forged the cheque and it could not be possible for the Bank people to find out the forged signature while verifying with the specimen signature and it could be possible only hand writing expert of forensic department to find out the genuineness of the signatures. He would further submit that the cheque was written in one of the leafs given to the plaintiff’s Board and therefore, on verification of the signatures, the Bank people cannot doubt the genuineness of the cheque and it was also phoned up from the Electricity Board by one of the person for paying the said money and to arrange it without fail and on that basis only the Bank people had acted upon and therefore, no question of negligence be attached with the Bank people. He would further submit in his argument, when the signatures found in the disputed cheque, when compared, there cannot be any difference between the specimen signatures and the signatures found in the cheque is tallied on seeing in a naked eye and it would be possible for the experts to find out the truth and therefore the degree of care explained in Section 131 of Negotiable Instruments Act have been applied for and the protection there from is available from the Bank persons. He would further submit in his argument that the degree of care which would have been maintained by the Bank have been explained in the judgment of this Court reported in AIR 1988 Madras 256 in between The Vysya Bank Ltd., Madras Vs. Indian Bank, Madras and the Bank persons will not come under the guilty of negligence as per the said judgment. The Hon’ble Apex Court reported in 1990 (1) SCC 484 between Indian Overseas Bank Vs. Industrial Chain Concern, for the effect that the Bank people should have disturbed for the fault of others and if the degree of care is spoken as per section 131 have been followed no negligence can be attached on the Bank for any transactions in which other parties were found guilty. He would further submit in his argument that the Bank had done everything in order and therefore, the Bank will not be liable for the crime committed by the own employee of the plaintiff. He would further submit that the Police have registered a case against the employee of the plaintiff’s Board and investigated the matter, charge sheets filed and the case was taken on file in C.C.No.9066 of 1988 and judgment was delivered on 07.06.1994, found him guilty. The complaint was given by the plaintiff and the F.I.R would incriminate the said employee of the plaintiff Board only and there is no delegation adverse to the Bank and no negligence has been spoken in the said proceedings before the criminal court. Therefore, he would request the Court that the judgment and decree passed by the lower Court, in the claim of plaintiff up held and the appeal may be dismissed.
10. I have given anxious thoughts to the arguments advanced on either side. It is always good to apply the arguments levelled by both sides on point wise.
Points. 1 & 2:
The admitted facts available through the pleadings and evidence adduced on either side would be that the plaintiff is the Electricity Board and the defendant is the Nationalised Bank and the plaintiff has got an account in the defendant’s Bank and the account was handled by the Superintending Engineer and Accounts Officer of the Board and for issuing a cheque, both officers have to sign on the cheque and only on the basis, the cheque will be encashed by the payee of the cheque from the defendant’s Bank. According to the evidence of the plaintiff the cheque books were in the custody of the Accounts Officer and it could not be taken away by any other person. Whenever, money has to be drawn a cheque has been issued and a person from the plaintiff Board, would go to the Bank for collection of money. In the course of such business, the defendant’s Bank had paid a sum of Rs.4 lakhs on the foot of a cheque said to have been issued by the Superintending Engineer and Accounts Officer of the plaintiff’s Board, produced as Ex.A6 on 27.07.1983. Subsequently, it was found by the plaintiff’s Board that a cheque leaf was stolen from the office of the plaintiff’s Board and the said cheque leaf was found fabricated by putting the signature of the Superintending Engineer and Accounts Officer and it was presented before the defendant’s Bank and the same was encashed by a staff namely Rajamani. The Superintending Engineer of the plaintiff had given a complaint and the cheque was verified by the forensic expert and found to have been forged one and on the basis of which a complaint and F.I.R has been registered in Ex.B1 in Crime No.887 of 1983 on the file of Central Crime Branch, Egmore against M.Rajamani, Accountant of the plaintiff Board. Based on the said F.I.R., investigation was conducted and a charge sheet was filed against the said Rajamani and the case was taken on the file in C.C.No.9066 of 1988 and the same was disposed on 07.06.1994, finding Edward as the accused, who posed as Rajamani at the time of Commission of Crime and he was sentenced to imprisonment. Immediately, after the launching of criminal case against the staff of the plaintiff’s Board namely Edward, the plaintiff had written letter to the defendant asking for Bank the loss of Rs.4 lakhs from the defendant’s Bank. The said claim was replied by the defendant’s Bank and the correspondence were produced as Exs.A1 to A4. The plaintiff had also sent a notice through his counsel to the defendant’s Bank through Ex.A5. However, in the said reply made by the defendant’s Bank it is stated that due care was taken by its staff in disbursing money for cheque issued by the plaintiff and the criminal case launched was awaited for its result.
11. No doubt the criminal case was ended conviction against the accused who is the employee of the plaintiff Board. The evidence would categorically show that the cheque leaf was bearing No.83 in its serial number and prior to the cheque leaf, 82 cheque leaves were not issued by Superintending Engineer. Therefore, the plaintiff’s employee ought to have stolen it with pre-planning and the same was found by the criminal Court, and convicted the said person. The said complaint was given by the Superintending Engineer against his own employee. In the said complaint there was no whisper against any connivance or any conspiracy by the staff of the defendant Bank with the said culprit namely Edward. The said case was also ended against the employee of the plaintiff Board. The Court did not find any reason to incriminate or implead the staff of the Bank during the course of trial on finding that there is some connivance or conspiracy with the accused.
12. The admitted case would be that the signature of the Superintending Engineer and the Accounts Officer were forged. The circumstances under which the defendant’s Bank person who have been very much careful was that it is the 83rd cheque leaf and without 82 cheque leaves were issued and the person who used to sign in the cheque would do it in the ink pen and not in ball point pen and the amount was very huge and some other person not to an employee of the plaintiff Board had gone to get the money and therefore, all these facts would have been verified by the Bank with the plaintiff before the disposal of the money.
13. For the degree of care to be adopted in the judgment of this Court reported in AIR 1988 Madras 256 in between The Vysya Bank Ltd., Madras Vs. Indian Bank, Madras. The relevant portion of the judgment would be thus:-
“Para.13: Learned counsel for the appellant argued that the standard of care of a banker in collecting cheque cannot be put at a very high pedestial since there cannot be a rule that a Bank should not collect cheques without a through enquiry as to the history of such cheques. According to him, if a bank has acted without apparent negligence, he could discharge his liability and his action must be protected under Sec.131 of the Negotiable Instruments Act. In support of his contention, learned counsel relied on the decision reported in Commr. Of Taxation v. E.S.&.A. Bank, AIR 1920 PC 88, where in the following principle was laid-
“Negligence is a question of fact and each case must be decided on its own merits. And the standard of care of a banker in collecting cheques is not that of an individual invited to purchase or cash such cheques for it is no part of the business and ordinary practice of Bank to collect cheques.
To lay down that no cheque should be collected without a thorough enquiry as to the history of the cheque would render banking business impossible and that the fact in this case of a cheque being paid into the account, the next day after the account was opened being in no way unusual was not such as to put the Bank on enquiry and there was no negligence on the part of the bank in collecting that cheque.”
14. The judgment of the Hon’ble Apex Court as cited by the learned counsel for the respondent / defendant in 1990 (1) SCC 484 between Indian Overseas Bank Vs. Industrial Chain Concern would be thus:-
“Para:37. While arriving at the above conclusion we have borne in mind the standard of reasonable care and the banking practices and its trend in a developing banking system in the country. Any stricter lability may not be conductive. It will also be observed that expansion of the banker’s liability and corresponding narrowing down of the banker’s protection under the provision of Section 131 of the Act may make the banker’s position so vulnerable as to be disadvantageous to the expansion of banking business under the ever-expanding banking system.”
The aforesaid judgment would categorically referred to the degree of care to be followed by the Bank, while dealing with the receipt of the payment of cheque. The same principle is applicable to the disbursement of money in respect of the cheque. The evidence of DW1 would go to show that the Bank cannot do own enquiry in each and every cheque regarding the signature of the drawer and it can compared the specimen signature with that of the signatures found in the cheque and thereafter to pass the cheque and the forgery of the cheque cannot be seen through naked eye. The evidence of DW1 would further disclose that a fore plan has been received from plaintiff’s Board a sum of Rs.4 lakhs is necessary for withdrawal and a cheque for a sum of Rs.5 lakhs was credited a day prior to the said date and therefore, it ought to have been ready. The further evidence would disclose that there was no money with the Bank for disbursement and they have obtained the money from the chest and disburse the amount to the person. No doubt, the cheque was drawn as self. The un-impeachable evidence on DW1 that phone call has been received from the plaintiff’s Board would go to show that the person, who disburse the money could not doubt about the person, who was receiving the money from the Bank. The signatures cannot be found forged by a Bank employee while passing such cheque for disbursement. The said person could very well compare the signatures and if they are found similar he has to necessarily pass the cheque, as the Bank stood in a fiduciary capacity to pay the money to the person, as ordered in the cheque by its customer.
In the aforesaid circumstances, the evidence of DW 1 would show that the Bank had taken due care in disbursing the money in accordance with the judgment of the Hon’ble Apex Court and this Court referred supra.
15. As pointed out by the learned counsel for the defendant Bank, the mistake of the plaintiff’s Board to kept the cheque book available to every person, is a cause for the commission of crime by the employee. If the plaintiff would have been diligently kept the cheque book in safe custody, there would not be any mishap as happened now. Therefore, nothing wrong in finding of the lower Court that the mistake is on the part of the plaintiff Board. However, the case has been launched against a claim committed by the plaintiff’s employee nothing was whispered against the Bank people either they were conniving the said accused or conspired with the said accused for disbursement of money. In the aforesaid circumstances, the defendant’s Bank could not be held responsible for the crime committed by the plaintiff’s employee or for any negligence committed by defendant bank. Therefore, both the points are decided against the plaintiff.
Point No.3:
16. In view of the discussions held in the previous points that the defendant’s Bank was not responsible for the payment of money to the plaintiff’s employee and the plaintiff is not entitled to recover the money from the defendant’s Bank. The judgment and decree passed by the lower Court in the same line need not be set aside and there is no reason to interfere with the judgment and decree of the lower Court.
Therefore, the appeal preferred by the plaintiff is not liable to be allowed. This point is also decided against the appellant / plaintiff.
Point No.4:
17. In view of the findings reached in previous points, the judgment and decree passed by the lower Court are confirmed and the appeal preferred by the plaintiff is liable to be dismissed. Accordingly, liable to be dismissed.
In the result, the appeal is dismissed with costs confirming the judgment and decree passed by the lower Court. Consequently connected miscellaneous petition is also dismissed.
ssn
To
The VIII Additional Judge,
City Civil Court,
Chennai