JUDGMENT
Lavande A.P., J.
1. Heard Mr. C.S. Kaptan, learned Counsel for the appellant and Mr. M.N. Ingley, learned Counsel for the respondent.
2. By this appeal, the appellant takes exception to the decree dated 23-8-1991 passed by the IIIrd Additional District Judge, Akola in Regular Civil Appeal No. 1/1988 allowing the appeal filed by the respondent and dismissing the cross-objection filed by the present appellant.
3. The appellant is the original plaintiff in Regular Civil Suit No. 184/77 filed against the respondents in the Court of Civil Judge, Jr. Dn., Akot. The plaintiff filed the suit against the respondent-defendant for mandatory injunction, recovery of the amount, illegally debited and damages.
4. Briefly, the facts which are relevant for the purpose of disposal of this appeal are as follows :
The plaintiff was having Saving Bank Account No. 13721 with Akola District Central Co-operative Bank Ltd., Akola. According to the plaintiff, on 17-1-1977, the balance amount in his account was Rs. 12,758.60/-. On 21-1-1977, he withdrew the amount of Rs. 11,190/- from his account thereby leaving balance of Rs. 1,568/-. On 21-1-1977, he gave a cheque of Rs. 1500/- in favour of the Urban Co-operative Bank Ltd., Akola. On 25-1-1977, the Manager of the Urban Co-operative Bank along with the memo dated 22-1-1977 received from the respondent No. 2, returned the cheque issued by the plaintiff informing him that the cheque was returned unpaid. The memo dated 22-1-1977 mentions the reason for return of cheque as “refer to drawer”. Thereafter, the plaintiff issued communication dated 27-1-1977 to respondent No. 2. However, respondent No. 2/ defendant No. 2 did not give any reply. Thereafter the Notice under Section 161 of the Maharashtra Co-operative Societies Act, 1960 was sent to the District Deputy Registrar, Co-operative Societies, Akola as required under law. Thereafter, on 3-2-1977, the plaintiff received a letter dated 27-1-1977 from defendant No. 2, whereby the plaintiff was informed about the debit entry of Rs. 610/- made in his account at the instance of Sub-Zonal Manager of the Maharashtra State Co-operative Federation and Manager of S.S. P. Society Ltd., Akot. Thereafter, the plaintiff immediately replied denying all the allegations and objecting to the debit entry of Rs. 610/-. According to the plaintiff, the said debit entry was made without consent of the plaintiff and was against the Banking Rules and Regulations. Thereafter the plaintiff/appellant filed the suit against the respondent/defendant claiming reliefs against the defendant to cancel illegal debit entry of Rs. 610/- made in the account of the plaintiff and further to re-credit the entry of Rs. 610/- in his Saving Bank Account and also further directing the defendant to release the payment of debit entry of Rs. 610/- in plaintiff’s account. The plaintiff also claimed damages of Rs. 5000/- so also interest on the amount of Rs. 610/- which was illegally debited from his account. The suit was resisted by filing the written statement by the respondent and upon the pleadings of the parties issues were framed, Both the parties led evidence and after appreciating the evidence led by both the parties, the trial Court partly decreed the suit allowing the claim made by the plaintiff except the claim for damages which was partly allowed to the extent of Rs. 2500/-. The respondent preferred the above mentioned appeal to the District Court which was made over to the Third Additional District Judge, Akola. In the said appeal, the present appellant filed cross-objection claiming damages to the tune of Rs. 5000/ – since the trial Court had awarded damages to the extent of Rs. 2500/- only. The lower Appellate Court after hearing both sides allowed the appeal filed by the respondent herein and dismissed the cross-objection filed by the present appellant holding that the appellant was not entitled to Rs. 2500/- as damages. Aggrieved by the judgment and decree of the lower Appellate Court allowing the appeal filed by the respondent and dismissing the cross-objection filed by the present appellant, the present appeal is filed.
5. The appeal was admitted on 27-4-1992. However, no substantial questions of law were formulated at the time of admission of the appeal as required under Section 100 of the Code of Civil Procedure.
6. When the matter came up for final hearing, after hearing both the sides, the following substantial questions of law are formulated and the appeal is being heard on these questions of law ;
1. Whether the decree passed by the lower Appellate Court is vitiated being contrary to Section 31 of the Negotiable Instruments Act, 1881 ?
2. Whether on an illegal withdrawal of the amount from the account holder, the bank would be liable to pay consequential damages to the account holder?
I have heard Mr. C.S. Kaptan, learned Counsel appearing for the appellant and Mr. M.N. Ingley, learned Counsel appearing for the respondent. At the outset, the learned Counsel appearing for the appellant has submitted that the lower Appellate Court has passed the impugned decree contrary to Section 31 of the Negotiable Instruments Act, 1881. According to the learned Counsel, once it is held that the withdrawal of the amount from the account of the appellant was without any authority, the Appellate Court ought to have awarded damages in favour of the appellant. He further submits that having regard to the facts and circumstances of the case, the lower Appellate Court ought to have allowed the cross-objections filed by the present appellant and ought to have allowed the damages to the tune of Rs. 5000/- as claimed by the appellant. The learned Counsel invited my attention to the Section 31 of the Negotiable Instruments Act, 1881 and submitted that the respondent No. 1 bank was not entitled in law to debit the amount of Rs. 610/- at the instance of the Sub-Zonal Manager of the Maharashtra State Co-operative Federation. According to the learned Counsel, in terms of the Banking Rules and Regulations and more particularly Section 31 of the Negotiable Instruments Act, 1881 the respondent No. 1 bank had no authority in law to debit the amount of Rs. 610/- without even getting no objection from the appellant. The learned Counsel has placed reliance on the judgment of the Apex Court reported in A.I.R. 1967 S.C. 540, Jammu and Kashmir Bank Ltd. v. Attar UL-Nisa, and Anr. judgment of Madras High Court reported in A.I.R. 1959 Mad. 153, Messrs The New Central Hall v. The United Commercial Bank Ltd., Madurai. According to the learned Counsel, the observation made in paragraph 8 of the Apex Court judgment, is squarely applicable in the present case and, therefore, the action of respondent in debiting the amount at the instance of the third party, was without any authority and on that count the appellant was entitled to damages. The learned Counsel further submitted that having regard to the law laid down by the Madras High Court in the authority cited (supra) the drawer is liable to pay damages for wrongful dishonour of the cheque and there is no need to prove special loss or damage by the wrongful dishonour of the cheque. The learned Counsel further submitted that even if it is held that the appellant has not suffered any injury to his reputation or has not suffered mental agony still the appellant is entitled to claim general damages from the respondent bank on account of wrongful and illegal debit entry made by the bank and consequent return of the cheque on account of wrongful debit entry made in the account of the appellant.
8. Per contra, Mr. M.N. Ingley, learned Counsel appearing for the respondent submits that the debit entry of Rs. 610/- was made by the bank at the instance of Sub-Zonal Manager of the Maharashtra State Co-operative Federation and with whom the bank had an agreement. The learned Counsel submits that the bank was bound to act as per the instructions given by the Maharashtra State Co-operative federation and since it was represented to the bank that an excess amount of Rs. 610/- was credited in the account of the appellant, the bank was perfectly justified in debiting the amount of the appellant to the extent of Rs. 610/-. The learned Counsel further submitted that there was no mens rea on the part of any of the employees of the bank and the action of debiting the amount was done in good faith and on the representation made by the Federation. He further submitted that the cheque was returned with an endorsement “refer to drawer” since the Federation had represented to the bank that an amount of Rs. 610/- was illegally credited in the account of the appellant. The learned Counsel further submitted that the lower Appellate Court was perfectly justified in allowing the appeal and dismissing the cross-objections filed by the present appellant. The learned Counsel further submitted that having regard to Section 31 of the Negotiable Instruments Act, 1881, the appellant is not entitled to the damages claimed by him.
9. I have considered the submissions made by the learned Counsel for both sides. I have also gone through the judgments relied upon by the learned Counsel for the appellant. In view of the admitted fact that the account of the appellant with the respondent No. 1 was debited to the extent of Rs. 610/- at the instance of the Federation without any prior intimation to the appellant, the question which arises for consideration is whether the respondent No. 1 bank can legally make debit entry in the account of the appellant at the instance of the Federation and whether in the event the bank was not authorised to make said entry, the plaintiff is entitled to claim any damages from the respondent bank? The trial Court after appreciating the evidence on record held that the bank was not entitled to debit the amount without informing the plaintiff and there was no reasonable or probable cause for the bank to dishonour the cheque and the bank had not acted in good faith. After recording this finding, the trial Court awarded Rs. 2500/- as a general damages towards the injuries to the reputation and mental agony. The lower Appellate Court reversed this finding and held that the bank had reasonable and proper cause to dishonour the cheque and the bank had acted in good faith.
10. Upon perusal of the judgment given by the lower Appellate Court, and after considering the evidence led by the parties, I am of the opinion, that the finding given by the lower Appellate Court is contrary to the evidence on record and also contrary to law. At this stage, it would be proper to refer to Section 31 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “Act”) on which heavy reliance has been placed by the learned Counsel appearing for the respondent. Section 31 of the Act reads as under :
“31. Liability of drawee of cheque.
The drawee of a cheque having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque must pay the cheque when duly required so to do, and, in default of such payment must compensate the drawer for any loss or damage caused by such default.”
11. I am unable to accept the submissions made by the learned Counsel appearing for the respondent that the funds in the account of the appellant to the extent of Rs. 610/ – cannot be said to be the funds with the bank “properly applicable” to the payment of the cheque in terms of Section 31 of the Act and, therefore, the bank was entitled to debit the amount of Rs. 610/- from the account of the appellant. I find considerable force in the submission of the learned Counsel appearing for the appellant to the effect that in an action for damages by account, holder proof of special loss is not required and if the bank wrongfully dishonoured the cheque, the Account Holder is entitled to damages without proof of special loss or damages. The ratio of the judgment reported in A.I.R. 1959 Madras 153 (supra) is squarely applicable in the present case and I am in respectful agreement with the view taken by the Madras High Court in the aforesaid judgment. The Madras High Court in paragraph 3 of the judgment has considered and analysed the law regarding damages in case of wrongful dishonour of cheque of the account Holder. I also find considerable force in the submission of the learned Counsel appearing for the appellant. When the places reliance on paragraph 8 of the judgment of the Apex Court (supra) in which the Apex Court has observed that as soon as the money is credited into the account of the constituent, even though the person paying in may have paid it by mistake, it becomes the money of the constituent, and the bank can not pay it back to the person who paid it to the account of the constituent on his representation that it was paid by mistake, without obtaining the consent of the constituent. In the present case, it is the case of the bank that according to the Federation an amount of Rs. 610/- was wrongful paid to the appellant which was credited by the appellant in his account in the bank. This being position, the ratio of the judgment of the Apex Court is squarely applicable to the present case. The bank was not entitled to make debit entry in the account of the appellant without obtaining his consent. Even assuming that the argument advanced by the learned Counsel for the respondent that the amount of Rs. 610/- was wrongfully paid by the Federation to the appellant is correct, still the fact remains that the bank could not have unilaterally decided that the amount of Rs. 610/- was wrongfully paid by the Federation to the appellant. The bank was not concerned with the dispute which the Federation was having with the appellant about the excess payment of Rs. 610/-. That being the position and having regard to the ratio of law laid down by the Apex Court and by the Madras High Court in the judgment relied upon by the learned Counsel for the appellant, the appellant is definitely entitled to claim general damages without proof of any special loss or damages and on this count the trial Court was perfectly justified in awarding the damages in favour of the appellant. I find myself unable to accept the submission made by the learned Counsel for the respondent that in view of Section 31, the bank cannot be held liable to pay damages. As stated above the very fact that the bank without any authority from the appellant made the debit entry of Rs. 610/- from his account entitles the appellant to claim damages from the respondent bank.
12. The next question which arises for consideration is as to what extent the appellant is entitled to damages. The trial Court had granted damages of Rs. 2500/-. The lower Appellate Court has allowed the appeal filed by the present respondent and dismissed the cross-objection filed by the present appellant claiming damages to the extent of Rs. 5000/-. That the trial Court after appreciating the evidence led by the parties and having regard to the facts and circumstances of the case had quantified the damages to the tune of Rs. 2500/-. Having regard to overall facts and circumstances of the case, I am of the opinion, that the trial Court was absolutely justified in awarding general damages of Rs. 2500/- which the appellant was entitled on account of wrongful debit entry made by the respondent bank and consequent dishonour of the cheque issued by him. I am unable to accept the submission of the learned Counsel appearing for the appellant that the lower Appellate Court ought to have awarded damages to the tune of Rs. 5000/- in favour of the appellant.
13. In the result, therefore, the appeal is partly allowed. The substantial questions of law framed are answered in favour of the appellant. The impugned decree dated 23-8-1991 passed by the IIIrd Additional District Judge, Akola in Regular Civil Appeal No. 1/88 is hereby quashed and set aside. The decree passed by the trial Court dated 3-11-1987 is maintained.
14. Having regard to the facts and circumstances of the case, I am of the opinion that the appellant is entitled to the reasonable costs in the present appeal in addition to the costs awarded by the trial Court which are quantified at Rs. 2000/-. The appeal is disposed of in the aforesaid terms. Decree be drawn accordingly.
