Delhi District Court
Bank Of India vs Punjab National Bank And Ors on 21 October, 2024
IN THE COURT OF DISTRICT JUDGE-05,
CENTRAL DISTRICT, TIS HAZARI COURTS,
DELHI
Presided by:-
Sh. Abhishek Srivastava, DHJS
RCA DJ no. 05/2020
CNR No.- DLCT01-000074-2020
Bank of India,
Branch At Murthal,
District Sonepat, Haryana .........Appellant.
Vs.
1. Punjab National Bank,
Having its office At
7, Bhikaji Cama Place,
New Delhi-110067.
Also At,
Pahar Ganj,
New Delhi-110055.
2. Sh. Anil Kumar,
S/o Sh. Bisarjan Ram,
Village & Post Office Murthal,
District Sonepat, Haryana.
3. Sh. Krishna Lal, Proprietor,
Gehlot Leather Store,
Shop No. 286, B-XIV,
RCA DJ 5/2020
Bank of India Vs. Punjab National Bank & Ors. Page no. 1 of 29
Prem Nagar, Ludhiana. ..........Respondents
Date of Institution:- 07.01.2020 Date of Judgment:- 21.10.2024 Appeal Under Section 96 of the Civil Procedure Code, 1908 against Judgment and Decree dated 20.11.2019 passed by Ld. Administrative Civil Judge Cum Additional Rent Controller, Central District, Tis Hazari Courts, Delhi in CS No. 595228/2016 titled as "Punjab National Bank Vs. Sh. Anil Kumar & Ors".
Judgment
1. This is an appeal under Section 96 of CPC, 1908, challenging the judgment and decree dated 20.11.2019 (henceforth 'impugned judgment'), passed by the Court of Ld. Administrative Civil Judge Cum Additional Rent Controller, Central District, Tis Hazari Courts, Delhi (henceforth 'Ld. Trial Court') in Civil Suit No. 595228/2016, 'Punjab National Bank V/s Sh. Anil Kumar & Others" (henceforth 'subject suit'), whereby, the Suit of the plaintiff (in Suit No. 595228/2016) for recovery of money was allowed.
2. Before the Ld. trial court, the appellant herein was the defendant No. 2, the respondent No. 1 was the plaintiff, respondent No. 2 was the defendant No. 1 and the respondent No. 3 was the defendant No. 3. For convenience, parties are referred to as per their original rankings before the Learned Trial Court.
3. The plaintiff bank filed a Suit for recovery against the defendants wherein the defendant No. 3 was the proforma party. The case of the plaintiff was that the defendant No. 1 was having his savings account with the defendant No. 2 bank. The defendant No. 1, forged and fabricated a cheque bearing No. 668709 dated 09.03.2011 for a sum of Rs. 1,50,000/- (Rs. One Lakh Fifty Thousands Only) by altering the payee's name (by putting a rubber RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 2 of 29 stamp of his name and account number), which was issued by the defendant No. 3 (who was an account holder of the plaintiff) from Ludhiana, to one Sharda Shoe Components, Delhi. The defendant No. 1 after altering the payee's name by putting his name in place of Sharda Shoe Components, Delhi deposited/ presented (on 10.03.2011) the cheque bearing No. 668709 dated 09.03.2011 for a sum of Rs. 1,50,000/- (Rs. One Lakh Fifty Thousands Only) with the defendant No. 2 for realisation at Murthal, Sonepat, Haryana. The defendant No. 1 in order to conceal the alteration made to the original cheque had put a transparent tape on the stamp of his name and account. The defendant No. 2 afterwards sent, through its service branch at Delhi, the cheque for clearance to the plaintiff through CTS (Cheque Truncation System). The plaintiff on the strength of the image of the instrument so presented on 10.03.2011 by the defendant No. 2 through its service branch at Delhi, paid an amount of Rs. 1,50,000/- to the defendant No. 2 through clearing and an amount of Rs. 1,50,000/- was debited from the account of the defendant No. 3.
4. That on 15.03.2011, the defendant No. 3 made a written complaint to the plaintiff regarding wrong debit of his account for a sum of Rs. 1,50,000/-. The plaintiff immediately informed the defendant No. 2 vide its letter dated 15.03.2011 and requested to take necessary steps to freeze the account of the defendant No. 1 and to make available the CCTV footage for identification of the account holder and the details of the defendant No. 1. The plaintiff bank sent several reminders to its letter dated 15.03.2011 to the defendant No. 2, however the defendant No. 2 gave a highly delayed response vide its letter dated 09.06.2011. The plaintiff wrote letters to the defendant No. 2 on various RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 3 of 29 dates viz. 30.08.2011, 07.11.2011, 06.02.2012 and 07.03.2012, seeking informations and details about the defendant No. 1 and also for the refund of Rs. 1,50,000/- to the plaintiff, but the defendant No. 2 neglected to furnish any such information and failed to refund the amount to the plaintiff.
5. It was further stated on behalf of the plaintiff that the account of the defendant No. 1 was opened on 05.03.2011 and the cheque in question was deposited within four/ five days of opening of the account i.e. on 09.03.2011/10.03.2011. That the account of the defendant No. 1 was opened by the defendant No. 2 without taking any introduction and without doing any verification of the address of the defendant No. 1. This all shows negligence on the part of the defendant No. 2.
6. That the plaintiff settled the claim of the defendant No. 3 on 25.09.2012 by crediting the amount of Rs. 1,50,000/- in his account. Therefore, the plaintiff had got right to recover the said amount from the defendant No. 1 and 2 alongwith interest @18% per annum from the date of payment of Rs. 1,50,000/- till the filing of suit which comes to Rs. 78,898/-, thus totalling to an amount of Rs. 2,28,898/-. The plaintiff accordingly filed the present Suit for recovery of said amount from the defendant No. 1 and the defendant No. 2.
7. Summons of the Suit were duly served upon the defendants. Since the defendant No. 1 and the defendant No. 3 failed to appear, they were proceeded ex-parte vide order dated 28.11.2018 and 10.07.2015 respectively. The defendant No. 2, however, duly contested the Suit by filing the written statement. In the written statement it was inter-alia pleaded that the plaintiff had no locus standi to file the present suit against the defendant No. 2 as the defendant No. 1 presented the cheque in question in his account maintained RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 4 of 29 with the defendant No. 2 and the cheque was scanned and sent to the plaintiff through CTS for clearance which was cleared by the plaintiff without any protest and the amount was transferred to the account of the defendant No. 1 from the account of the defendant No. 3; that the defendant No. 2 took every steps to ensure that there was no fraud, alteration, fabrication or forgery in the cheque in question and since no fraud or forgery was detected at the time of accepting the same, it was sent to the plaintiff for clearance, and if there was any doubt regarding genuinity of the cheque in the mind of the plaintiff, the same should not be cleared by the plaintiff; that the defendant No. 1 acted upon every letter of the plaintiff and duly replied every letter and always cooperated with the plaintiff; that as soon as it came to the knowledge of the defendant No. 2 about the forgery committed by the defendant No. 1 with the plaintiff and the defendant No. 3, it lodged the FIR bearing FIR No. 152 dated 24.06.2011 at PS Murthal, Sonepat, Haryana against the defendant No. 1 under Section 420/467/468/471 IPC; that the defendant No. 2 opened the account of the defendant No. 1 as per norms and banking rules; and as such the defendant No. 2 was not liable to pay any amount to the plaintiff.
8. Plaintiff thereafter filed the replication wherein averments made in the plaint were reiterated and contents of written statement were denied.
9. On the basis of the pleadings of the parties, the following issues were settled by the Ld. Trial Court vide order dated 09.12.2015:-
i) Whether the plaintiff is entitled to a decree for a sum of Rs. 2,28,898/-
alongwith pendente lite and future interest @ 18% per annum, compounded quarterly against the defendants No. 1 and 2, jointly and severally, as prayed for? OPP.
RCA DJ 5/2020Bank of India Vs. Punjab National Bank & Ors. Page no. 5 of 29
ii) Whether the plaintiff has no locus standi to file the present suit against the defendant No. 2? OPD2.
iii) Whether the plaintiff is not having any cause of action against the defendant No. 2? OPD2.
iv) Relief.
10. In order to substantiate its case, the plaintiff examined one witness namely Sh. B.R. Birdi, Senior Manager of the plaintiff bank as PW1. On the other hand, from the side of the defendant No. 2, four witnesses were examined. Sh. Suresh Rai Sharma, Senior Branch Manager as D2R1, Sh. Ramesh Chander Dhawan, Retired Senior Branch Manager as D2R2, Sh. Mahender Singh Dahiya, Retired Manager as D2R3 and Sh. Devender Kumar, Deputy Record Keeper, Judicial Record Room, District Court, Sonepat, Haryana as D2R4.
FINDINGS OF LEARNED TRIAL COURT
11. After hearing arguments on behalf of both the parties and upon appreciation of evidence led on their behalf, Ld. Trial Court vide impugned judgment dated 20.11.2019, while deciding all the three issues in favour of the plaintiff, decreed the Suit of the plaintiff. Findings of Ld. Trial Court may be summarised as follows:-
(a) By mere looking at the copy of the cheque, it is apparent that the name of payee of the cheque is written/ put by way of stamp alongwith his account number which in itself is a very dubious/ suspicious thing, that too in respect of a personal saving bank account.
(b) The forgery and tampering in the cheque in question is apparent on the face of it and could have been verified with ordinary care RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 6 of 29 and due diligence on the part of the receiver bank which was having the original cheque. Whereas, it was difficult for the drawer's bank to ascertain the suspicious circumstances viz.
alteration in the payee's name, that the payee's name and account was written/put by way of stamp, and that a cello tape was placed over the stamp, from looking at the scanned copy of the cheque.
(c) D2R3 Sh. Mahender Singh Dahiya himself stated that the addition/ alterations or interpolation in the cheque is visible in the scanned image as well as in the original cheque. Thus, even from the testimony of a defence witness, it is clear that the additions/ alterations or interpolation are there in the check in question.
(d) The facts, that the saving bank account of the defendant No. 1 was opened without any introduction just few days prior to presentation of cheque in question i.e. on 05.03.2011, the cheque in question was cleared on 11.03.2011 and thereafter the entire amount was withdrawn by the defendant No. 1 by 14.03.2011, show that there was negligence on the part of the defendant No. 2.
(e) That the plaintiff has a locus standi to file the present Suit and is having a valid cause of action against the defendant No. 1 and the defendant No. 2.
GROUNDS OF APPEAL
12. The aforesaid judgment has been challenged by the appellant/ defendant No. 2 in the present appeal inter alia on the following grounds :-
RCA DJ 5/2020Bank of India Vs. Punjab National Bank & Ors. Page no. 7 of 29 (A) Ld. Trail Court failed to consider that it had no territorial jurisdiction to decide the case of the plaintiff. That the defendant No. 3 was residing at Ludhiana, Punjab and was having an account at Ludhiana. Even the cheque in question was allegedly sent from Ludhiana. The defendant No. 1 was having his account in the branch of the defendant No. 2 at Murthal, Haryana. The cheque was presented by the defendant No. 1 at Murthal, Haryana branch only. As such, no part of cause of action had arisen in the jurisdiction of the Ld. Trial Court. (B) That the original cheque in question was never brought on record by the plaintiff either by itself or through any other witness by summoning the same and as such, any alteration, if any, on the said cheque can not be verified from the copy of the cheque (Ex.PW1/B) on record.
(C) That the Internal Auditor Report dated 11.04.2011 of the plaintiff (Mark D) can not be looked into for proving the negligence on the part of the defendant No. 2 as the same was not proved as per law.
(D) The Ld. Trial Court failed to appreciate the testimony of D2R3 Sh. Mahender Singh Dahiya in a correct perspective. D2R3 had deposed not in reference to the alteration in cheque in question but made a general passing reference which can not be considered as proving negligence on the part of the defendant No. 2.RCA DJ 5/2020
Bank of India Vs. Punjab National Bank & Ors. Page no. 8 of 29 (E) That the Ld. Trial Court failed to consider the bonafide of the defendant No. 2 which can be appreciated from the fact that on receiving information from the plaintiff, the defendant No. 2 immediately lodged the FIR against the defendant No. 1. (F) That the Ld. Trial Court wrongly came to the conclusion that the account was opened on 05.03.2011 without any introduction and the cheque was cleared on 11.03.2011. As per the RBI guidelines issued in Master Circular bearing No. RBI/2010-11/75 (DBOD.
AML. BC. No. 2/14.01.001/2010-11) dated 01.07.2010, there was no requirement of introduction at that point of time for opening of the account.
(G) That the Ld. Trial Court failed to consider that there was negligence on the part of the plaintiff itself as it was the plaintiff who passed the cheque in question on the same date i.e. on 11.03.2011 and had not been able to detect any alteration or fraud in the same. That the defendant No. 2 gave credits and allowed the withdrawal of money to the defendant No. 1 only after receiving the credits from the plaintiff bank and as such there was no occasion for the defendant No. 2 to be suspicious towards the defendant No. 1 who was its customer.
(H) That the Ld. Trial Court conveniently ignored the testimony of PW1 Sh. B. R. Birdi, Senior Manager of the plaintiff who deposed in his cross-examination to the effect as per Ex.PW1/B, no interpolation and addition was visible on the cheque image with naked eyes. It is correct that the Ex.PW1/B is in the name of RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 9 of 29 Sh. Anil Kumar, Defendant No. 1. It clearly shows that there was no alteration in the cheque in question which was visible from the naked eye.
(I) That the Ld. Trial Court failed to appreciate that there is no evidence on the record to show that the defendant No. 3 issued the cheque in question to the M/s Sharda Shoe Components only and not to the defendant No. 1. That the plaintiff failed to prove the complaint dated 15.03.2011 allegedly made by the defendant No. 3 to the plaintiff. Further, the defendant No. 3 neither filed the written statement nor appeared in the Court as a witness. As such the plaintiff failed to show that the cheque was presented by the defendant No. 1 after altering the name of payee.
(J) That the Ld. Trial Court did not specify any specific provision of law under which the defendant No. 2 was held liable to pay the money to the plaintiff.
REPLY
13. No reply to the appeal has been filed on behalf of the respondents. ARGUMENTS
14. Arguments were heard on behalf of the appellant/ defendant No. 2 and the respondent No. 1/ plaintiff which were concluded on 20.09.20024. Ld. counsel for the appellant during arguments questioned the judgment of the Ld. Trail Court on the grounds referred above and prayed for its setting aside. Per Contra, ld. Counsel for the respondent No. 1 submitted that the Ld. Trial Court has rightly decreed the Suit of the respondent No. 1/ plaintiff and prayed for RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 10 of 29 the dismissal of the present appeal with costs. Written submissions has also been filed on behalf of the respondent No. 1.
15. This Court has considered the submissions and material on record. REASONING
16. Let us deal with all the grounds of the appeal one by one.
17. First, the issue of territorial jurisdiction. The plaintiff in its plaint has stated at para 14 that the impugned cheque of Rs. 1,50,000.00 (Rs. One Lac Fifty Thousand Only) was presented in clearing at Delhi (by the service branch of the defendant No. 2, which is situated at Barakhamba Road, New Delhi - 110001) to the back office of the plaintiff bank situated at Pahar Ganj, New Delhi - 110055 and the payment thereof was made at Delhi. As such, this Court has got jurisdiction to entertain and decide the present Suit. The defendant No. 2 in its written statement in reply to para 14 of the plaint has stated that the contents of para No. 14 of the plaint as stated are legal. Clearly, the defendant No. 2 had not controverted the facts alleged by the plaintiff in para 14 of the plaint, regarding the territorial jurisdiction of the Court. The defendant No. 2 had absolutely no objection, not even legal, to the territorial jurisdiction of the Court. As can be seen, no issue and rightly so, was framed in this regard by the Ld. Trial Court. Section 21 (1) of CPC, 1908 provides that if the defendant waives the objection regarding territorial jurisdiction, then subsequently he can not be allowed to take any such objection before the appellate court. Accordingly, the appellant is precluded to raise objections regarding lack of territorial jurisdiction of the Ld. Trial Court to decide the case of the plaintiff at this stage.
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18. As already noted, the allegations by the plaintiff are that the defendant No. 1 was having his savings account with the defendant No. 2 bank and that the defendant No. 1 after forging and fabricating a cheque by altering the payee's name (by putting a rubber stamp of his name and account Number and in order to conceal the alteration, had put a transparent tape on the stamp of his name and account), deposited/ presented the same with the defendant No. 2 for realization and that the defendant No. 2 sent the said cheque to the plaintiff bank for collection through CTS (Cheque Truncation System) and that the plaintiff on the strength of the image of the instrument so presented by the defendant No. 2 paid the amount to the defendant No. 2. So, the assertion is that the plaintiff under the mistaken belief that the cheque was genuine, made payment of the amount of cheque to the defendant No. 2 and that the plaintiff is entitled to recover the amount from the defendant No. 2.
19. The defendant No. 2 has contested the suit stating that there is no negligence on the part of the defendant No. 2 as it had collected the cheque in good faith and without any negligence on its part. It is stated that defendant No. 1 presented the cheque in question in his account maintained with the defendant No. 2 and the cheque was scanned and sent to the plaintiff through CTS for clearance which was cleared by the plaintiff without any protest and the amount was transferred to the account of the defendant No. 1 from the account of the defendant No. 3. It is further stated that the defendant No. 2 took every step to ensure that there was no fraud, alteration, fabrication or forgery in the cheque in question and since no fraud or forgery was detected at the time of accepting the same, it was sent to the plaintiff for clearance, and if RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 12 of 29 there was any doubt regarding genuinity of the cheque in the mind of the plaintiff, the same should not be cleared by the plaintiff.
20. It is an admitted fact that in the present case the plaintiff has paid the amount on the basis of an electronic image of a truncated cheque sent by the defendant No. 2 through the Cheque Truncation System (CTS). So, a few things about CTS. In the traditional banking system of cheque clearance, one has to present a cheque to his bank, which will send that cheque to a clearing house, upon clearance of drawee bank, the money was credited to the account. It usually took 3 days on an average to clear cheques as it involved physical movement of cheques. Cheque truncation is the conversion of a physical cheque into a substitute electronic form for transmission to the paying bank. Cheque truncation eliminates cumbersome physical presentation of the cheque and saves time and processing costs. Under the CTS system, the collecting/ presenting bank first verifies and satisfies itself as to the genuineness of the cheque and then takes its image and sends the image for collection through CTS clearing. The original cheque is truncated and remains in possession of the collecting/ presenting bank. The payee bank makes the payment on the basis of image.
21. At this stage, we can deal with this argument advanced on behalf of the appellant/ defendant No. 2 that since the original cheque in question was never brought on record by the plaintiff either by itself or through any other witness (by summoning the same), any alteration, if any, on the said cheque can not be verified from the copy of the cheque (Ex.PW1/B) on record.
RCA DJ 5/2020Bank of India Vs. Punjab National Bank & Ors. Page no. 13 of 29
22. The plaintiff examined Sh. B.R. Birdi, Senior Manager of its bank as PW1. He deposed (by way of his evidence affidavit Ex.PW1/1) to the effect that;
"4. That the defendant No. 1 is having its saving account with Defendant No. 2. The defendant No. 1 deposited a forged and fabricated cheque/ instrument bearing no. 668709 dated 09.03.2011, for a sum of Rs. 1,50,000/- (Rs. One Lac Fifty Thousand Only) and deposited the same with the Defendant No. 2 for realization and it was only on the strength of the image of instrument so presented on 10.03.2011 by the Defendant No. 2 through its service branch at Delhi, an amount of Rs. 1,50,000/- (Rs. One Lac Fifty Thousand Only) was paid by the Plaintiff Bank to Defendant No. 2 through clearing and accordingly the account of the Proforma Defendant No. 3 was debited with Rs. 1,50,000/- (Rs. One Lac Fifty Thousand Only).
Copy of the scanned copy of the cheque in this respect is Ex.PW1/B. T he plaintiff unknowingly and mistakenly took the image of the forged and fabricated cheque to be a legal and valid instrument since the same came through clearing and under Cheque Truncation System as paying bankers, the Plaintiff dealt with the image of the instrument on the implied undertaking of the presenting bankers i.e. the Defendants No. 2, that it has ensured, verified and checked the genuineness of the instrument before lodging and presenting the same through image based on presentation. The plaintiff as a paying banker could only verify and cross check the signatures, cheque number which was found matching and bearing valid unpaid cheque number issued to the account holder."
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23. What transpires from the testimony of PW1 that the plaintiff bank made the payment to the defendant No. 2 after seeing the image of the cheque in question. It further appears from the testimony of PW1 that the original cheque was lying with the defendant No. 2 itself. No suggestion was given to PW1 in his cross-examination on behalf of the defendant No. 2 that the original cheque was with the plaintiff.
24. A witness namely Sh. Devender Kumar, Deputy Record Keeper, Judicial Record Room was summoned from the District Court, Sonepat, Haryana. He was examined as D2R4 on behalf of the defendant No. 2. He had brought the summoned record pertaining to Case titled as State V/s Shankar @ Anil bearing FIR No. 152 dated 24.06.2011, U/s 406/420/468/471 IPC registered at PS. Murthal which was decided by the Court of Ld. JMIC, Sonepat. It appears that a seizure memo was prepared in FIR No. 152, as per which the IO of the said FIR seized the original cheque bearing No. 668709 from Sh. Ramesh Dhawan, Manager, Bank of India (examined as D2R2). Further, from reading testimony of Sh. Devender Kumar (D2R4) it is evident that the said witness has brought the original cheque which was seen and returned by the Ld. Trial Court, and its certified copy was exhibited as Ex.D-2/R-4/B.
25. So, from the testimony of PW1 and D2R4, three things are clear. First, that the plaintiff can not produce the original cheque on record as it never was with the plaintiff as the payee bank/ plaintiff made the payment on the basis of an image sent by the defendant No. 2. Secondly, that the original cheque was with the defendant No. 2 from which it was seized by the IO in the FIR No. 152. And, lastly, that the original cheque was RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 15 of 29 produced in this case by one of the defendant's witnesses i.e. D2R4 which was seen and returned to the witness by the Ld. Trial Court.
26. Now, coming to the main issue. The main issue which is to be decided is whether the defendant No. 2 as collecting bank was negligent and did not act in good faith in presenting the cheque in question to the plaintiff bank for encashment ?
27. For this, it is necessary to refer to Section 131 of the Negotiable Instrument Act, 1881. Section 131 of the Act applies when the collecting bank is sued by the true owner or on behalf of the true owner. Section 131 of the Act provides a protection and shield to the collecting bank which had received the payment from the paying bank and thereafter made the payment to its customer. Since the collecting bank acts as an agent of its customers/ clients, it is not expected to take direct responsibility for the cheque crossed, generally or specially, to the true owner, when it acts in good faith and without negligence. In such cases the collecting bank is not liable to the true owner by reason of only having received payment.
28. Section 131 of the Negotiable Instrument Act, 1881 reads as under:-
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 I.-- A banker receives payment of a crossed cheque for a customer within the meaning of this section notwithstanding that he RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 16 of 29 credits his customer's account with the amount of the cheque before receiving payment thereof.
Explanation II.--It shall be the duty of the banker who receives payment based on an electronic image of a truncated cheque held with him, to verify the prima facie genuineness of the cheque to be truncated and any fraud, forgery or tampering apparent on the face of the instrument that can be verified with due diligence and ordinary care.
29. The law with respect to the liability of the collecting banker, considering the provisions of Sections 131 and 131A of the Negotiable Instrument Act, 1881, is contained in the judgment of Hon'ble Supreme Court reported as Kerala State Co-operative Marketing Federation V/s. State Bank of India, 2004 (2) SCC 425. Relevant para of the judgment where the law has been stated is para 11 and which reads as under:-
"11. The principles governing the liability of a collecting banker have also been extracted in the impugned judgment. They read as follows:
(1) As a general rule the collecting banker shall be exposed to his usual liability under common law for conversion or for money had and received, as against the "true owner" of a cheque or a draft, in the event the customer from who he collects the cheque or draft has no title or a defective title.
(2) The banker, however, may claim protection from such normal liability provided he fulfils strictly the conditions laid down in Section 131 or Section 131A of the Act and one of those conditions is that he must have received the payment in good faith and without negligence.
(3) It is the banker seeking protection who has on his shoulders the onus of proving that he acted in good faith and without negligence.
RCA DJ 5/2020Bank of India Vs. Punjab National Bank & Ors. Page no. 17 of 29 (4) The standard of care to be exercised by the collecting banker to escape the charge of negligence depends upon the general practice of banker which may go on changing from time to time with the enormous, spread of banking activities and cases decided a few decades ago may not probably offer an unfailing guidance in determining the question about negligence today.
(5) Negligence is a question of fact and what is relevant in determining the liability of a collecting banker is not his negligence in opening the account of the customer but negligence in the collection of the relevant cheque unless, of course, the opening of the account and depositing of the cheque in question therein from part and parcel one scheme as where the account is opened with the cheque in question or deposited therein so soon after the opening of the account as to lead to an inference that the depositing the cheque and opening the account are interconnected moves in a integrated plan. (6) Negligence in opening the account such as failure to fulfill the procedure for opening an account which is prescribed by the bank itself or opening an account of, an unknown person or non-existing person or with dubious introduction may lead to a cogent, though not conclusive, proof of negligence particularly if the cheque in question has been deposited in the account soon after the opening thereof. (7) The standard of care expected from a banker in collecting the cheque does not require him to subject the cheque to a minute and microscopic examination but disregarding the circumstances about the cheque which on the face of it give rise to a suspicion may amount to negligence on the part of the collecting banker.
RCA DJ 5/2020Bank of India Vs. Punjab National Bank & Ors. Page no. 18 of 29 (8) The question of good faith and negligence is to be judged from the standpoint of the true owner towards whom the banker owes no contractual duty but the statutory duty which is created by this section and it is a price which the banker pays for seeking protection, under the statute, from the otherwise larger liability he would be exposed to under common law.
(9) Allegation of contributory negligence against the paying banker could provide no defence for collecting banker who has not collected the amount in good faith and without negligence."
30. Let us appreciate the evidence coming on record in light of the above-noted exposition of law.
31. PW1 Sh. B.R. Birdi, Senior Manager of the plaintiff bank in his examination in chief has deposed to the effect that;
"8. That it would not be out of place to mention here that as per the admitted version of the defendant No. 2, the account by the defendant No. 1 was opened on 05.03.2011 and the cheque in question was deposited within 4 days i.e. on 09.03.2011 and further no introduction is taken in the account nor the verification of the address of the account holder has been done by the bank and all these factors clearly shows and proves negligence on the part of the defendant No. 2. Furthermore as per report dated 11.04.2011, copy Mark D given by Internal Senior Auditor of the plaintiff Bank to the effect that "seeing the original cheque it appears that payee's name is altered and a stamp in the name of alleged payee is affixed to conceal the alteration. A transparent tape is fixed/ pasted on the altered payee's name. Putting the stamp in front and back side and fixing the tape on the name of the payee clearly creates doubt while receiving the cheque for collection.RCA DJ 5/2020
Bank of India Vs. Punjab National Bank & Ors. Page no. 19 of 29 It is not in the practice to fix the tape on cheque and especially on the payee's name" and as such gave his finding that erring bank is collecting bank as per amended section 131 of the Negotiable Instrument Act, 1881."
32. The relevant portion of cross-examination of PW1 is reproduced herein below:-
"...As per Ex.PW1/B, no interpolation and addition was visible on the cheque image with naked eyes. It is correct that the Ex.PW1/B is in the name of Sh. Anil Kumar, Defendant No. 1...It is correct that Ex.PW1/O was not conducted and investigated in my presence by the Officer of the RBI...It is wrong to suggest that the procedures were followed by the defendant No. 2 at the time of the disbursement of the cheque amount to the defendant No. 1. It is wrong to suggest that the defendant No. 2 followed all the procedures while opening the bank account of the defendant No. 1. It is wrong to suggest that the bank officials/officers of the defendant No. 2 fully cooperate with the plaintiff bank and respond to all the correspondence of the plaintiff bank. It is correct that RBI did not specifically passed any order against the defendant No. 2 to pay cheque amount to the plaintiff or the defendant No. 3..."
33. At the outset, we can deal with one of the objections raised by the Ld. Counsel for the defendant No. 2. It is evident that the PW1 is relying on the Internal Auditor Report dated 11.04.201, Mark D. It was argued on behalf of the defendant No. 2 that the Internal Auditor Report dated 11.04.2011 of the plaintiff (Mark D) can not be looked into for proving the negligence on the part of the defendant No. 2 as the same was not proved as per law. This is an RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 20 of 29 internal auditor report prepared on behalf of the plaintiff. PW1 was not cross- examined on this report at all. Neither, any objection was raised on behalf of the defendant No. 2 at the time of receiving the same in the evidence. However, as is apparent that the Internal Auditor Report dated 11.04.2011 (Mark D) is fundamentally a self-serving document and as such it should be excluded for proving the negligence on the part of the defendant No. 2. This Court is accordingly discarding the document Mark D from the reading of evidence.
34. One more objection of the defendant No. 2 can be dealt with here itself. An argument was made on behalf of the defendant No. 2 that the matter was earlier referred to the National Clearing Cell of the Reserve Bank of India (RBI) and the RBI did not pass any order against the defendant No. 2, to pay cheque amount to the plaintiff or the defendant No. 3. The said order dated 17.01.2014, Ex. PW1/O (though written Mark O over the document) was filed on behalf of the plaintiff. The matter was referred before the RBI panel by the plaintiff bank and the same was attended by the plaintiff as well as the defendant No. 2. A perusal of Ex.PW1/O shows that since the original cheque was not made available to the RBI panel, the panel had returned the case. As such, the said order was not based on merit and as such the order can not act like res judicata for the present Suit. The argument of the defendant No. 2 as such is liable to be rejected and is rejected.
35. As per the plaintiff (considering the testimony of PW1 quoted herein above), the negligence of the defendant No. 2 lies in the fact, in the opening of the account of the defendant No. 1 without following the due procedure, and in sending the cheque in question to the plaintiff bank for collection without RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 21 of 29 examining that the payee's name was written by putting a rubber stamp of payee's name and his account Number and that a transparent tape was affixed on the stamp of his name and account.
36. There is no cross-examination of PW1 (not even a suggestion to PW1) on behalf of the defendant No. 2 that the payee's name and his account number was not written by putting a rubber stamp on the cheque in question or that there was no transparent tape affixed on the stamp of payee's name and account number. Meaning thereby, the defendant No. 2 is not denying these facts. Rather, its case is that this (using a rubber stamp and affixing a transparent tape over it) is a normal banking practice.
37. Sh. Suresh Rai Sharma was the Senior Branch Manager of the concerned branch of the defendant bank in the year 2017 (when examined as witness as DW2R1). In his cross-examination he deposed to the effect that;
"...I am having banking experience of 33 years. In 5-7% of the cases cheques are received for clearance wherein the name of the payee and his account number are put by rubber stamp of the name and account number of the payee.
Ques: How many cheques with the rubber stamp of name and account number of payee were passed by your branch at Sonepat during the period from 01.01.2017 till date ?
Ans: I do not recall at present.
Ques: Can you produce any such cheque pertaining to year 2017 ? Ans: I can not say whether such type of cheque has been presented for payment to defendant No. 2 during this period or not.
It is wrong to suggest that I am intentionally avoiding the proper answer of the question because in normal practice no cheques with RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 22 of 29 rubber stamp of name and account number of payee are presented for encashment..."
38. Above deposition clearly shows that witness DW2R1 was evasive in answering on the aspect of banking practice of presenting cheques wherein the name of the payee and his account number were put by a rubber stamp. A bare perusal of Ex.PW1/B (or Ex.D-2R-4/B) shows that name of the payee of the cheque is written/ put by way of stamp alongwith his account number.
39. Under aforesaid circumstances, in the considered view this Court, the Ld. Trial Court was/ is right in its conclusion that;
"26. ...In the present matter, the forgery and tampering in the cheque in question was apparent on the face of it and could have been verified with ordinary care and due diligence on the part of receiver bank which is having original copy of the cheque. Per contra, it was difficult for the drawer's bank to ascertain from the scanned copy the factum of alteration in the name of payee, putting stamp and placing cello tape on the stamp, while it was quite easy for the payee's bank to ascertain these suspicious circumstances."
40. However, this Court is in agreement with the submission of the Ld. Counsel for the defendant No. 2 that the Ld. Trial Court misread the testimony of D2R3 Sh. Mahender Singh Dahiya. Ld. Trial Court gave a finding that the D2R3 Sh. Mahender Singh Dahiya himself stated that the addition/ alterations or interpolation in the cheque is visible in the scanned image as well as in the original cheque. Thus, even from the testimony of a defence witness, it is clear that the additions/ alterations or interpolation are there in the check in question . D2R3 had deposed in his cross-
RCA DJ 5/2020Bank of India Vs. Punjab National Bank & Ors. Page no. 23 of 29 examination that the addition/ alterations or interpolation, if any in the cheque is visible in the scanned image as well as in the original cheque . What the D2R3 wanted to convey was that even if it was presumed that there were some additions/ alterations or interpolation over the cheque, the same should also be visible to the plaintiff in the scanned image of the cheque sent to it by the defendant No. 2. This becomes further clear from the very next line of the cross-examination of D2R3 which he deposed in response to a suggestion put to him. D2R3 states that it is wrong to suggest that additions/ alterations or interpolation, if any is more clearly visible in the original cheque instead of scanned image.
41. As such, this court while concurring with the conclusion arrived at by the Ld. Trial Court is not relying on the alleged admission of D2R3. Rather, this Court, for holding that the defendant No. 2 as collecting bank was negligent and did not act in good faith in presenting the cheque in question to the plaintiff bank for encashment is relying on two circumstances; firstly, defendant's not giving any suggestion to the PW1 or not asking any question to PW1 on the facts that the payee's name and his account number was written by putting a rubber stamp on the cheque in question and that there was a transparent tape affixed on the stamp of payee's name and account number, thereby, pursuing the Court to consider this (using rubber stamp and affixing a transparent tape over it) as regular banking practice, and Secondly, yet, being hesitant in producing any such proof showing this as regular banking practice as is evident from the cross- examination of DW2R1 Sh. Suresh Rai Sharma.
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42. So far as argument of the defendant No. 2 that its bonafide should be inferred from the fact that the moment it came to its knowledge that the defendant No. 1 played a fraud with the plaintiff and the defendant No. 3, it got lodged a FIR against the defendant No. 1, is concerned, it being a post event conduct would not absolve the defendant No. 2 of its negligence in presenting the cheque to the plaintiff bank for encashment.
43. It is further argued on behalf of the plaintiff that the defendant No. 2 was also negligent in opening the account of the defendant No. 1. The account of the defendant No. 1 was opened on 05.03.2011 without taking any introduction and without doing any verification of the address of the defendant No. 1. The cheque in question was deposited within four/ five days of opening of the account i.e. on 09.03.2011/ 10.03.2011 which was cleared on 11.03.2011 and thereafter the entire amount was withdrawn by the defendant No. 1 during 11.03.2011 and 14.03.2011. Per contra, it was argued on behalf of the defendant No. 2 that as per the RBI guidelines issued in Master Circular bearing No. RBI/2010-11/75 (DBOD. AML. BC. No. 2/14.01.001/2010-11) dated 01.07.2010, there was no requirement of introduction at that point of time for opening of the account.
44. DW2R2 Sh. Ramesh Chander Dhawan was posted as the Senior Branch Manager of the concerned branch of the defendant No. 2 bank at the relevant time. In his cross-examination, he deposed to the effect that;
"...It is correct that account of the defendant No. 1 was opened on 05.03.2011 by the defendant No. 2. It is correct that at the time of opening of new account of the customer, the bank has to take PAN Card, one residence proof and one photo ID (Vol. Sometime item no. 2 and 3 are covered in one document like driving licence). Since ours RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 25 of 29 was a new branch therefore we did not press for the introducer and as such we opened the account without any introduction as per the RBI Guidelines. It is wrong to suggest that the account of defendant no. 1 was opened by the defendant no. 2 as per the RBI guidelines...We had verified the photocopy of DL and PAN card with the original retained by the defendant no. 1 while opening the account with the defendant no. 2. There is no process of verification of documents from the agency which had issued the said document. It is wrong to suggest that the bank is bound to get documents verified from the agency. It is correct that the proceeds of the cheque in question through clearing was received by the defendant no. 2 on 11.03.2011 itself on which date the entire amount of Rs. 150000/- was withdrawn by the defendant no. 1 on 11.03.2011. It is wrong to suggest that the bank was supposed to see the such type of transaction with suspicion..."
45. So this is the state of evidence and this was the state of incidents surrounding the transaction of opening of the account, deposit of forged cheque, and withdrawal of money. The opening of account, the deposit, and the withdrawals, thus appear to be so connected in terms of the timings that there is necessary inference that they are part of the same transaction of fraud. The defendant No. 2 while dealing with the opening of the account and the collection of the cheques, and its payment, did not care to be cautious and dealt with the whole affair as a routine.
46. The Ld. Counsel for the defendant No. 2 has relied on one judgment of Hon'ble Delhi High Court passed in a Case titled as Axis Bank V/s Punjab National Bank & Anr. (WP(C) 6201/2014) , decided on 20.03.2015 . In this case the Hon'ble High Court held that in the absence of any nexus RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 26 of 29 between the two stages of the process, negligence can not be attributed to the appellant in the context of collection of money against the forged instrument only on the basis of the fact that there had been negligence on its part in allowing the account to be opened. Clearly, this case pressed into service in support of defendant No. 2's claim is distinguishable from the present case as in the present case this court has already held that the defendant No. 2 as collecting bank was negligent and did not act in good faith in presenting the cheque in question to the plaintiff bank for encashment and that the opening of account, the deposit, and the withdrawals, appear to be so connected in terms of the timings that there is necessary inference that they are part of the same transaction of fraud.
47. It was contended on behalf of the defendant No. 2 that there was negligence on the part of the plaintiff itself as it was the plaintiff who passed the cheque in question on the same date i.e. on 11.03.2011 and had not been able to detect any alteration or fraud in the same. It was further contended that PW1 Sh. B. R. Birdi, Senior Manager of the plaintiff deposed in his cross-examination to the effect as per Ex.PW1/B, no interpolation and addition was visible on the cheque image with naked eyes. It is correct that the Ex.PW1/B is in the name of Sh. Anil Kumar, Defendant No. 1, which clearly shows that there was no alteration in the cheque in question which was visible from the naked eye. The defendant No. 2 gave credits and allowed the withdrawal of money to the defendant No. 1 only after receiving the credits from the plaintiff bank and as such there was no occasion for the defendant No. 2 to be suspicious towards the defendant No. 1 who was its customer.
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48. This argument of the defendant No. 2 in the considered opinion of this Court is liable to be rejected in view of para 11(9) of the judgment of Hon'ble Supreme Court in Kerala State Co-operative Marketing Federation supra that an allegation of contributory negligence against the paying banker does not provide any defence to the collecting banker who has not collected the amount in good faith and without negligence. The mere fact that the collecting bank has made a payment to its customer who deposited the forged cheque does not raise an estoppel against the paying bank if later on it is found that the cheque is forged. The collecting bank can not escape its liability of returning the money, so collected, to the paying bank.
49. It was lastly argued on behalf of the defendant No. 2 that there is no evidence on the record to show that the defendant No. 3 issued the cheque in question to the M/s Sharda Shoe Components only and not to the defendant No. 1. The plaintiff has failed to show that the cheque was presented by the defendant No. 1 after altering the name of payee. This argument of the defendant No. 2 is liable to be rejected for the simple reason that the defendant No. 2 itself had lodged a complaint against the defendant No. 1 with the police and a FIR No. 152 was lodged at PS Murthal, Sonepat, Haryana. Further, the DW2RI deposed in his examination in chief that the defendant No. 1 was convicted in the said FIR.
50. From the above discussion, this Court concludes that the defendant No. 2 as a collecting bank was negligent and did not act in good faith in presenting the cheque in question to the plaintiff bank for encashment and RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 28 of 29 that the opening of account, the deposit, and the withdrawals, were so connected in terms of the timings that there is necessary inference that they were part of the same transaction of fraud. This Court further holds that the plaintiff, under the mistaken belief that the cheque was genuine, made the payment of the amount of cheque to the defendant No. 2 and thereafter, settled the claim of the defendant No. 3 on 25.09.2012 by crediting the amount of Rs. 1,50,000/- in his account. As such, since the credit for money obtained from erroneous remittance being a wrongful gain, it is the liability of the defendant No. 2 to return it to the plaintiff, in terms of Section 72 of the Indian Contract Act, 1872.
51. In the considered opinion of this Court, the suit of the plaintiff was rightly decreed by the Ld. Trial Court and there is no error in the impugned judgment and decree dated 20.11.2019. The present appeal is thus liable to be dismissed being devoid of any merit. The present appeal is thus dismissed and the impugned judgment and decree dated 20.11.2019 passed by Ld. Administrative Civil Judge Cum Additional Rent Controller, Central District, Tis Hazari Courts, Delhi in Suit No. 595228/2016 is upheld. Parties to bear their own costs.
52. Decree sheet be prepared accordingly.
Digitally signed by ABHISHEKABHISHEK SRIVASTAVA Announced in the open court on this 21st day of October, 2024. SRIVASTAVA Date:
This Judgment consists of Twenty Nine number of signed pages. 2024.10.21 16:45:13 +0530 (Abhishek Srivastava) District Judge-05 Central, THC, Delhi RCA DJ 5/2020 Bank of India Vs. Punjab National Bank & Ors. Page no. 29 of 29