JUDGMENT
Shivaprakash, J.
1. This First Appeal is presented by Vijaya Bank, a nationalised Bank, which was one of the defendants in the suit. The suit was instituted by the Nedungadi Bank for recovery of a sum of Rs. 12,675/-, Rs. 9700/- towards wrongful payment of the amount under a forged Draft on 29.8.1978 to the second respondent (first defendant) and a sum of Rs. 2975/- towards interest thereon at 6% per annum from 29.8.1978 till the institution of the suit.
2. The parties are referred to hereinafter by their respective positions in the trial Court.
3. The facts leading to the institution of the suit by the plaintiff are as follows: The first defendant opened an account on 10.8.1978 with the third defendant Bank which is a branch of the fourth defendant. At the time of opening of the account he deposited an amount of Rs. 100/. On 29.8.1978 the first defendant deposited a Demand Draft for Rs. 9700/- to his account for collection by the third defendant-Bank. The Draft was dated 28.8.1978 drawn in favour of the first defendant. The said Draft purported to have been issued by the Tiruppur Branch of the plaintiff-Bank. The said Draft was sent by the third defendant Bank through the clearing house for realisation. The plaintiff- Bank on whom the Draft has been drawn made payment and the amount realised therefrom was credited to the account of the first defendant. The first defendant withdrew the amount on 31.8.1978 from his account.
4. Since the plaintiff-Bank did not receive any confirmation from its branch at Tiruppur regarding the Draft, a letter was sent informing Tiruppur branch about the Draft for Rs. 9700/- drawn in favour of the first defendant. The Tiruppur branch of the plaintiff-Bank denied having issued such a Draft in favour of the first defendant. On the other hand it informed the plaintiff-Bank that the said Draft bearing No. 2224 was issued favouring one A.K. Traders, Madras for a sum of Rs. 60/- only. On receipt of such a reply the plaintiff Bank got the Draft examined under ultra violet rays and discovered that the said draft had been materially altered. The words and figure Rs. 60/- had been altered to Rs. 9700/-, the payee’s name had been altered showing the name of the first defendant as payee. The plaintiff-Bank was shown as the drawee-Bank by such alteration. The plaintiff Bank alleges negligence on the part of the third defendant Bank in permitting opening of the account in the name of the first defendant.
5. The defence of the third defendant-Bank is that it sent the Draft deposited by the first defendant to his account through the clearing house in the normal course of its business and apparently the Draft did not arouse any suspicion. The third defendant denied the allegation that it had not taken sufficient precaution while opening the account of the first defendant and therefore it was not responsible for any loss caused to the plaintiff Bank. According to the third defendant-Bank the first defendant was permitted to open the account on the introduction given by the second defendant who was its customer since the year 1973. The third defendant Bank relies on Sections 131 and 131A of the Negotiable Instruments Act in its defence against the plaintiff-Bank.
6. Sections 131 and 131A of the Negotiable Instruments Act are extracted below:
“Section 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.
Section 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”.
7. From a reading of the provisions of Sections 131 and 131A of the Negotiable Instruments Act, in my view the provisions of the said Sections could be invoked by the true owner of the Draft, in the event of conversion. In the instant case, there is no allegation of conversion and the claim is not by the true owner of the Draft, The claim is, by a drawee Bank which honoured the Draft, on the allegation that there was negligence on the part of the third defendant Bank in sending for clearance a Draft which is materially altered by fraudulent means.
8. Therefore, the question that arises for consideration is whether the defendant-Bank was negligent in the matter of opening the account of the first defendant to which account he deposited the materially altered Draft for realisation, thus rendering itself liable for the loss caused to the plaintiff-Bank. The first defendant did not enter appearance and he was placed exparte. His whereabouts are not known.
9. On the basis of the pleadings, the trial Court framed the following issues:
"1) Whether defendant-2 proves that he had signed some blank forms for the reasons stated and in the circumstances explained in his written statement and that defendant-1 was a total stranger to him? 2) Whether the plaintiff proves that while opening an account in the name of defendant-1, defendants 3 and 4 Bank have acted carelessly and negligently and thereby caused loss to the plaintiff-Bank as contended in para-8 of the plaint? 3) Is plaintiff entitled to a decree. If so against which of the defendants?"
10. The trial Court has held that the second defendant did introduce the first defendant to the defendant-Bank at the time of opening of the account and the pleading of the second defendant that the first defendant was a total stranger to him and that he signed the blank account opening form introducing the first defendant at the instance of one of the officers of the defendant-Bank cannot be accepted. In so far as negligence on the part of the third defendant Bank is concerned, the trial Court has held that the third defendant Bank has acted negligently in opening the account of the first defendant. The trial Court has decreed the suit in part. Defendants 1, 3 and 4 are directed to pay Rs. 9700/- along with interest thereon at 6% per annum from the date of suit till the date of payment. The suit against second defendant is dismissed. No cost is awarded.
11. The plaintiff-Bank has preferred Cross-objections in so far as disallowing of costs.
12. P.W.1 who was the Manager of the plaintiff-Bank during the relevant period has deposed that Ex.P.1 which is the Bank Draft in question issued by the Tiruppur Branch of the plaintiff-Bank was presented through the clearing house on 29.8.1978 by the third defendant Bank and the Accountant of the plaintiff-Bank passed the Draft for payment of Rs. 9700/-. He has stated that according to the Banking practice whenever a Draft is drawn on another branch, the issuing Bank will send a letter of confirmation to the branch on which Draft was drawn. He has stated that no letter of confirmation was received from Tiruppur branch regarding issue of Ex.P.1. He has deposed that according to the Banking practice normally the Draft when presented will be passed for payment without waiting for letter of confirmation from the issuing branch and in the instant case since it had no doubt about the genuineness of the Draft he had no reason to withhold payment of Ex.P.1. However, since no letter of confirmation was received at all he wrote a letter to Tiruppur branch, followed by reminders in response to which the Tiruppur branch informed him by letter dated 21.11,1978 that no Draft had been issued on the plaintiff-Bank in a sum of Rs. 9700/-. On the other hand, the Draft presented and realised was the one issued by Tiruppur Branch on Madras branch favouring A.K. Traders. It is only thereafter P.W.1 got the Draft examined under ultra violet rays which was available with Deena Bank, J.C. Road and after examination it was found that the original amount of Rs.60/- had been altered to Rs.9700/-; the name of the payee altered from “A.K. Traders” to “M. Rangarajan” and the drawees’s office altered from Madras to Bangalore. Subsequently he got in touch with the third defendant-Bank which furnished the address, as found in its books, of the first defendant. It appears a Police complaint was also lodged in this context on 7.12.1978 by P.W.1. He has asserted that while opening the account of defendant-1, the third defendant-Bank had not taken sufficient care and therefore was negligent enabling the first defendant to commit fraud.
13. On behalf of the third defendant-Bank, the Branch Manager who was working at the relevant point of time has been examined as D.W.1. He has stated that the first defendant was introduced by second defendant who was a customer of the Bank since the year 1973 and that first defendant opened the S.B. Account on 10.8.1978. He has spoken about the procedure regarding opening of the account and that the said procedure was strictly followed while opening the account of first defendant. The application of first defendant for opening of the account is marked as Ex.D.1. From Ex.D.1 which is dated 10.8.1978, it could be seen that the first defendant deposited a sum of Rs.100/- in cash on that day and that he was introduced by the second defendant. The first defendant has given his address as No. 18, Uttara Mutt Lane, Bangalore-560053. He has not given his occupation. D.W.1 in his evidence has deposed that it is the responsibility of the drawee Bank to ascertain the genuineness of a negotiable instrument before making payment and as a collecting Bank whenever an instrument is deposited the same will not be examined for the purpose of detecting whether there has been any material alteration in the instrument. D.W.1 has deposed that after opening the account the first defendant deposited a further sum of Rs.35/- in cash and that on 31.8.1978, withdrew money by two cheques – one was a self cheque and another was drawn in favour of one G.C. Gangadhar. On 2.9.1978 first defendant withdrew some more money by drawing cheque favouring one P. Hussain. Subsequently, the account is not operated by the first defendant.
14. In cross-examination he has deposed that the application form for opening the account of first defendant was filled up and signatures obtained in his presence and that after obtaining the orders of the Manager he opened the account. He has stated that he did not know what business second defendant (the account holder who introduced defendant-1) was doing at the time when first defendant opened his account. He has also stated that he did not enquire about the business first defendant was doing. He has further stated that except opening the account of first defendant, with the introduction of defendant-2, he did not have any further talk with them. He has also stated that he did not verify the address of first defendant to ascertain whether it was correct.
15. In this context the question that arises for consideration is the degree of care a Bank should exercise before permitting opening of an account by a prospective customer. In the instant case, as deposed by D.W.1, the first defendant was permitted to open the account on the introduction given by second defendant. It is not the case of the third defendant-Bank that the standing of second defendant as account holder with the Bank was such that there was no need to verify any further particulars of first defendant.
16. Several Decisions have been cited by the learned Counsel appearing for the plaintiff and the defendants in support of their respective contentions. Before considering the same let me examine what the trial Court has found on the aforesaid points.
17. The trial Court has found that as a matter of fact the second defendant did introduce the first defendant for the purpose of opening of the account by him on 10.8.1978. The account opening form, Ex.D.1, discloses that a sum of Rs. 100/- in cash was tendered by the first defendant for being credited to the new account. The application is signed by the first defendant and also by the second defendant in token of the introduction. The second defendant has also given his account number in the application form. The application has been verified and in token of the same the application bears the seal and the signature of one of the officers of the third defendant-Bank. On the basis of the above, the trial Court has held that the first defendant was introduced by the second defendant and the account was opened in the manner indicated above.
18. On the second issue regarding the negligence on the part of the third defendant-Bank, the trial Court has found that the whereabouts of the first defendant are not known and that he was not traceable at the address given by him in the account opening form and defendants were unable to trace the first defendant by ascertaining his correct address. The trial Court has held that the third defendant was only a collecting banker and that it simply forwarded the draft to the plaintiff-Bank through the clearing house. The trial Court has found that the third defendant Bank was in possession of ultra violet lamp and if only the draft had been examined under the ultra violet rays the forgery could have been detected by the third defendant-Bank. The trial Court has also noticed that whenever a draft is issued by a bank drawn on another branch, a written intimation is sent to the drawee Bank giving the particulars of the draft, the amount of the draft and the person to whom it has to be paid, The trial Court has found that generally it is expected of the drawee Bank to make payment only after receiving intimation from the issuing bank. In the instant case, the plaintiff-Bank made payment even before receiving any intimation from its branch at Tiruppur which issued the draft. The trial Court, therefore, has held in doing so “undoubtedly the plaintiff-Bank has acted negligently”, The trial Court has held that the plaintiff-Bank did not make any effort to find out whether there was any alteration or forgery in the draft before making payment, Having so held, the trial Court states that on that count alone the claim of the plaintiff-Bank should not fail.
19. The trial Court has found that the only negligence which could be attributed to the third defendant-Bank while collecting the draft was that though it had ultra violet lamp it did not examine the draft under the said lamp before sending it to the clearing house. However, the trial Court has held that as a collecting bank, it was under no obligation to find out whether the draft was a genuine one or was altered or forged. It was not the drawee-Bank and hence it was under no such obligation. The trial Court, therefore, proceeds to hold that defendants 2 and 3 have not acted negligently while collecting the draft.
20. Even on the question of permitting the first defendant to withdraw the money soon after realisation of the draft, the trial Court has found that the third defendant allowed the first defendant to withdraw the money since it was bound to honour the cheques issued by the first defendant after the draft was realised since there was sufficient funds in the account of the first defendant. The trial Court clearly holds that the defendant-Bank “cannot be held to have acted negligently or mala fide either in collecting the draft or in making payment to the first defendant on self and bearer cheques after realisation of the draft”.
21. In A.I.R. (33) 1946 Bombay 482, Bapulal Premchand v. Nath Bank ltd., Chagla J., as he then was, has considered in great detail the question of liability of Banker for conversion of cheque and whether the failure of Bank to make enquiries about respectability of new customer invariably constitutes negligence. He had the following to say which is reproduced below at length, since I find many factual similarities with the instant case.
“6. Therefore what I have to determine in this case is whether in collecting the cheque belonging to customer Gandhi the bank acted without reasonable care in reference to the interest of the plaintiff, the true owner of the cheque. The Privy Council in (1920) A.C. 683 laid down the principle which ought to guide the Courts in considering the question whether a bank is guilty of conversion in having been negligent in collecting a cheque on behalf of a customer which in fact did not belong to him. In that case one A. Friend of Sydney; put a cheque drawn by himself on the Australian Bank of Commerce for £ 786.18.3 into an envelope, along with some other cheques drawn by other members of his family, and addressed the envelope to the Commissioners of Taxation, George Street North, Sydney. This cheque was in payment of an assessment for income-tax. It was crossed with the word “Bank”, that is to say, generally not specially. This cheque was stolen by some person unknown and was never cashed by the Commissioners of Taxation. On the following day a man who gave his name as Stewart Thallon entered the head office of the respondents’ bank at Sydney and stated that he wished to open an account. The accountant took his name and address which this man gave at certain well-known residential chambers in Sydney. He then handed in a sum of £20. The Accountant filled up the “paid-in” slip and the account was duly opened and a cheque book issued to Thallon. On the following day the stolen cheque was handed in by Thallon; and on the next day Thallon withdrew three sums of £ 483.16.6, £260.10.0 and £ 50.12, by cheques drawn by himself. Thallon was never seen again and it was found that no person of that name lived at the address he had given. The Commissioners of Taxation then filed an action from which the appeal went to the Privy Council against the bank for conversion of the cheque. The Supreme Court for New South Wales held that the bank was not guilty of negligence. In discussing the question of negligence, their Lordships of the Privy Council are at pains to point out that the negligence with which the Court was concerned was not in opening the account but “in collecting the cheque” though the circumstances connected with the opening of an account may shed light on the question of whether there was negligence in collecting the cheque, and the test of negligence which their Lordships adopted was whether the transaction of paying in any given cheque coupled with the circumstances antecedent and present was so out of the ordinary course that it ought to have aroused doubts in the bankers’ mind and caused them to make inquiry. Their Lordships emphasized that negligence was a question of fact and they rejected the argument of the learned Chief Justice of the Supreme Court that the care that the bankers should take should not be less than a man invited to purchase or cash such a cheque for himself might reasonably be expected to take. Their Lordships thought that that was an inapposite standard for the simple reason that it was no part of the business or ordinary practice of individuals to cash cheques which were offered to them, whereas it was part of the ordinary business or practice of a bank to collect cheques for their customers. The argument that was presented to the Board was that the bank was negligent in collecting the cheque for a customer who was of recent introduction and about whom the bank knew nothing. Their Lordships then pointed out that there was nothing suspicious about the way the account was opened; they were of the opinion that there was nothing suspicious in the fact that a cheque was paid into that account for collection one day after the account had been opened; they further pointed out that if it was laid down that no cheque should be collected without a thorough inquiry as to the history of the cheque, it would render banking business as ordinarily carried on impossible; customers would often be left for long periods without available money. But their Lordships do say that if the cheque had been for some unusually large sum, perhaps suspicion might have been aroused; but whether the cheque is or is not for an unusually large sum is really a question of degree. Their Lordships finally point out that in the cheque presented by Thallon there was no note of alarm or of warning which could have aroused the suspicion of the bank. Under the circumstances their Lordships dismissed the appeal and held that the bank was not negligent. I have taken some pains to reproduce at some length the reasons of the Privy Council in coming to the conclusion they did because both the decision and the observations of their Lordships are of considerable assistance in deciding the case before me and also of applying the test which the Privy Council did in the case before them”.
22. After discussing the evidence, the learned Judge proceeds to hold thus;
“12. Having considered the various contentions of the plaintiff and having reviewed the evidence on the various points, I should now like to consider, in view of the authorities, what is the true and correct approach to the facts of this case. Primarily, inquiry as to negligence must be directed in order to find out whether there is negligence in collecting the cheque and not in opening the account. If there was anything suspicious about the cheque of Rs. 4,000 which Gandhi paid in to the credit of his account, there can be no doubt that it would have been the duty of the bank to make the necessary inquiries before they cashed the cheque. To use the language of the Privy Council, if there had been any note of warning or alarm on the cheque itself, then if the bank had collected it disregarding the note of warning or alarm it would have done so at its own peril. But in this case the cheque is a perfectly innocuous document. It is made out in the name of the plaintiff or bearer and, as I have said, it is generally crossed and it is drawn by two partners of the firm of Ramchandra Ramgopal; and it is not seriously disputed by Mr. Tendolkar that there is nothing on the face of the cheque which should put the bank on inquiry. Therefore, prima facie, the bank was not negligent in collecting this cheque which on the face of it did not in any way arouse its suspicion. But it is not sufficient that the cheque itself should not arouse the suspicion of the bank. If there is any antecedent or present circumstance, again to use the language of the Privy Council, which aroused the suspicion of the Bank, then it would be the duty of the bank before it collected the cheque to make the necessary inquiry and undoubtedly one of the antecedent circumstances would be the opening of the account. Now it is important to bear in mind that there is no connection whatever in this case between the opening of the account and the stealing of the cheque. The cheque did not come into existence till 5th February 1945, and the account was opened on 26th January 1945. It is impossible to believe that Gandhi or whoever opened the account on 26th January had the remotest idea that on 5th February Messrs. Ramchandra Ramgopal would make out a cheque in favour of the plaintiff on 5th February and that the plaintiff would post it to his commission agent Suratvala and he would get an opportunity to steal the cheque and get his bank to collect it, But apart from there being no connection whatever between the stealing of the cheque and the opening of the account, was there any suspicious circumstance at all about the opening of the account? As I have pointed out, the account was opened with cash. There was a reference by the cashier and that reference was sufficient according to the practice followed by the bank. The manager made the necessary inquiries and the account was opened. But what Mr. Tendolkar contends for is that it is the duty of the bank to make inquiries about the respectability of an intended customer in every case although there may not be the least suspicious circumstance attendant upon the opening of the account and, according to Mr. Tendolkar, proper and sufficient inquiries were not made in this case by the bank about the respectability or the integrity of Gandhi, their customer.
13. For this proposition reliance was particularly placed on (1914) 111 L.T. 43. In that case the plaintiffs, who were a firm of bookmakers, had as one of their clients an undergraduate at Oxford University by the name of Robert Howard Jobson. This undergraduate won some money on a bet and the plaintiffs, intending to pay him, drew a cheque for £75.11s. 3d upon the National Bank, Limited, This cheque was stolen and the young man who stole it went to the defendant’s bank and said that he wanted to open an account with the assistance of that cheque. He gave his name as Richard Henry Jobson and his address at the University College, Oxford. The defendant accepted the cheque and opened the account. After the cheque was cleared, this customer drew a cheque for £ 65. On that, the defendant was held liable for conversion to the plaintiffs. Now two important facts with regard to this case must be borne in mind. The first is that no reference was taken of any sort whatever with regard to the customer by the defendant and, secondly, the account was opened with a stolen cheque and no inquiry was made about the cheque at all. Strong reliance is laid on an observation of Bailhache J., who decided this case to the effect that (p.44) it is true that banks are willing to take cheques, but before they allow them to be operated upon they must be satisfied as to the respectability of the intended customer. A little before he made this observation in the judgment, Bailhache J., expressed his own opinion that if he had been left without any evidence on the point he should have been disposed to think that the defendant was under no obligation to make any inquiries in the absence of anything to make him suspicious; but he relied on the evidence on the practice of banks, namely, that it is usual to make inquiries. He further adds that inquiries as to the respectability of the intended customer can be done by references and sometimes by an introduction through a customer. In the Privy Council case, (1920) A.C. 683, curiously enough the case was cited at the bar by Mr. Romer K.C. on behalf of the appellants not on the question of negligence but on the question of what is sufficient to constitute a person a customer of the bank, and in the judgment of their Lordships this case is not referred to at all and when one turns to the facts of the Privy Council case, which I have already set out in some detail above, it will be remembered that Thallon, the customer of the bank in that case, was given no reference. The bank know nothing about him and yet the Privy Council, far from imposing upon the bank any necessity for making an inquiry about this customer, held that the bank was not negligent because there was nothing suspicious about the way the account was opened. It is true that in Ladbroke & Co. v. Todd, atleast in the judgment as reported in (1914) 111 LT. 43, Bailache J., does say that there was nothing suspicious in the opening of the account by Jobson and yet he took the view that it was incumbent upon the bank to make the inquiries about the respectability of the customer. In view of the Privy Council decision, it is difficult for me to hold that the principle of law enunciated in (1914) 111 L.T. 43 is the correct law. According to the Privy Council, as I read the judgment, if a customer opens an account with cash and there is nothing suspicious about the manner in which the account is opened, the fact that the bank made no inquiries about the customer would not disentitle the bank to the protection given to it by Section 131, Negotiable Instruments Act”.
23. The learned Judge after elaborate discussion of number of cases concludes thus:
“24. In my opinion, there is no absolute and unqualified obligation on a bank to make inquiries about a proposed customer. I agree that modern banking practice requires that a customer should be properly introduced or, in other words, that the bank should act on the reference of some one whom it could trust. Therefore, perhaps in most cases it would be wiser and more prudent for a bank not to accept a customer without some reference. But I am not prepared to go so far as to suggest that after a bank has been given a proper reference with regard to a proposed customer and although there are no suspicious circumstances attendant upon the opening of the account, it is still incumbent upon the bank to make further inquiries with regard to the customer”.
24. The third defendant-Bank permitted the opening of the account by the first defendant on the introduction given by the second defendant who was an account holder in the Bank for over five years. The account opened was a Savings Bank Account. The account was opened on 10.8.1978 with cash deposit of Rs. 100/-. The Draft in question was deposited into the account for collection 19 days later i.e., 29.8.1978. The first defendant withdrew the amount on 31.8.1978. On the face of it, the Draft could not be said to have been materially altered. There is no dispute on this question. It was found to be materially altered under ultra violet rays examination. In the circumstances could it be said that there was such negligence on the part of the third defendant-Bank in sending the Draft for collection by relating it to the alleged lapse on its part in not making sufficient enquiry regarding the first defendant at the time of opening of the account? Supposing the third defendant-Bank had as a matter of fact made enquiries regarding the first defendant at the time of opening of the account in respect of his residence and occupation, would the position be different regarding its liability? Is it possible for any Bank to function, if it is required to hold an investigation into the antecedents of every prospective customer before permitting him to open an account?
25. It is in evidence that the usual Banking practice for opening of a Savings Bank Account by a prospective customer is by proper introduction. Accordingly, the first defendant has been introduced by the second defendant and on the said introduction the Savings Bank Account was opened and there was no reason for the third defendant-Bank to suspect the intention of the first defendant in opening the account.
26. The witness for the plaintiff-Bank, P.W.1 who was the Manager of the plaintiff-Bank at the relevant time, in his evidence, has stated that “The practice in opening an account in a Bank is the same in all the Banks. A person known to the Bank should introduce the person who intends to open the account. If the person introducing the customer is customer of the Bank, that is sufficient”. He has deposed in his cross-examination for a naked eye Ex.P.1 will appear to be proper and correct, The payee-Bank has to verify and check the draft before payment on draft is made”. He has further stated that “When instrument is presented to the collecting Bank, it will pass on the instrument to payee- Bank. The duty of examining the instrument is on payee-Bank”.
27. If the duty is that of the drawee-Bank to examine the instrument before making payment, why did the plaintiff-Bank fail to do so in the instant case is not explained by P.W.1. What was done at a later stage by the plaintiff-Bank in having the instrument examined under ultra violet rays could have been done before making payment, more so in view of the fact that no advice had been received from its branch at Tiruppur which issued the Draft. Besides, in view of the non-receipt of advice, the plaintiff-Bank could have contacted its branch at Tiruppur on telephone to ascertain the genuineness of the Draft.
28. From Ex.P.4, dated 7.12.1978, which is a copy of complaint given to the police by P.W.1, it could be seen that the plaintiff-Bank, for the first time wrote a letter dated 5.10.1978 to its Tiruppur Branch regarding the Draft, even though it had made payment on 29.8.1978 itself before receipt of any advice from the issuing branch. It has taken more than 35 days to initiate steps to safeguard its interest. Since no reply was received from the Tiruppur Branch reminders were sent by letter dated 20.10.1978, followed by another reminder dated 17.11.1978. It is only then Tiruppur Branch by its letter dated 21.11.1978 informed the plaintiff-Bank that it had not issued any such draft for Rs. 9700/- drawn on plaintiff-Bank. It is only thereafter P.W.1 has contacted the third defendant Bank to make enquiries.
29. In the circumstances, taking into consideration the serious laches on the part of the plaintiff-Bank, this is not a case for fastening the liability on the third defendant-Bank for the loss incurred by the plaintiff-Bank because of its own negligence. The claim of the plaintiff-Bank should fail on this count.
30. The Division Bench Judgment of this Court in R.F.A. No. 509/1987 (D.D. 23.2.1988)Syndicat Bank v. United Commercial Bank on which reliance was placed by the learned Counsel for the first Respondent (Plaintiff-Bank) on the facts of this case cannot be of any assistance in sustaining the judgment under appeal.
31. In the result, the Appeal is allowed. The judgment and decree of the trial Court in O.S.No. 7924 of 1980 are set aside. The suit instituted by the plaintiff-Bank (the first respondent herein) stands dismissed. Consequently, the Cross-Objections in this appeal filed by the first respondent is also dismissed.
No order as to costs.