Bangalore District Court
Information Technology Park vs Mr.Aravind Kumar on 29 July, 2016
TITLE SHEET FOR JUDGMENTS IN SUITS
IN THE COURT OF XXXIII ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE AT BENGALURU CITY.
CCH 33
PRESENT:
Sri. D.Y. BASAPUR, B.Com., LL.B (Spl.)
XXXIII ADDL. CITY CIVIL AND SESSIONS
JUDGE, BENGALURU.
DATED: THIS THE 29TH DAY OF JULY 2016
O.S.No.2152/2003
Plaintiff : Information Technology Park
Limited, A company registered
under the Companies Act having its
office at International Tech Park,
Whitefield Road, Bangalore 560066.
Represented by its authorised
Signatory Mr.Dinesh Gopalan
(Rep. by Sri LKN, Advocate.)
V/S.
Defendants: : 1. Mr.Aravind Kumar, No.45,
Mathru Krupa, 4th Main, II
Cross, Srinidhi Layout,
Konanakunte Post,
Bangalore - 52.
No.525, 22nd Cross, 13th A Main,
Bananashankari II stage,
Bangalore - 70.
2. Union Bank of India, having its
branch at 30th Cross, 4th Block,
Jayanagar, Bangalore-11.
2
3. HDFC Bank, having its branch
at retail Mall, International Tech
Park, Whitefield Road,
Bangalore - 66.
4. Canara Bank, Having its branch
at Trinity Circle Branch,
Mahatma Gandhi Road,
Bangalore - 560 001.
(D1 by Sri YHP, Adv.)
(D2 by Sri MVK, Adv.)
(D3 by Sri VA/TS, Adv.)
(D4 by Sri SKMS)
Date of Institution of the suit: 24.3.2003
Nature of the Suit (Suit for pronote,
suit for declaration and possession,
Suit for injunction, etc,) : Money Suit
Date of the commencement of 3.8.2010
recording of the Evidence:
Date on which the Judgment 29.7.2016
was pronounced:
Total Duration : Year/s Month/s Day/s
13 04 05
(D.Y. BASAPUR)
XXXIII ADDL. CITY CIVIL & SESSIONS
JUDGE
BANGALORE.
CCH-33
3 OS.2152/03
JUDGMENT
Plaintiff has filed this suit for recovery of money for a sum of Rs.2,46,28,376/- from defendant Nos.1 and 2 jointly and severally. Defendant No.3 jointly and severally liable with defendant Nos.1 and 2 a sum of Rs.38,96,932/- and defendant No.4 jointly and severally liable with the defendant Nos.1 and 3 a sum of Rs.1,09,68,431/- with interest at the rate of 24% p.a.
2. Brief facts of the plaint are as under:
As per the resolution dated 15.3.2000 and 23.10.2000, authorised signatories in respect of cheques not exceeding Rs.5 lakhs during the relevant period June 2000 to March 2001 including the Chief Executive Officer, Finance Director, Sr.Manager, General Manager-Operations, Finance and Company secretary, General Manager-Marketing. Plaintiff had given instructions to the defendant Nos.2 to 4. First defendant was required to perform various functions in the Finance department. He was reporting to the Sr. Manager-Finance 4 from the date of joining till 14.11.2000. Thereafter to Sr.Manager Finance and Company Secretary including functions 1 to 10 as mentioned in the plaint. Plaintiff had explained the procedure as (a) to (c) in para-9 of the plaint. The plaintiff was using an accounting software called "Tally" to take care of the accounting/finance functions. It would have individual accounts for all the incomes, expenses, liabilities as and when vendor bill is certified by the user department. The same will be accounted for by debiting such accounts. When the payment is made, that is once the cheques are signed, based on the pink copy of the voucher, the payment entry will be made by debiting the vendor account and crediting the bank account. In case of advance payment also, similar accounting entries are required to be made. First defendant was playing fraud or that he was involved in any illegal or unethical activities. Owing to the deficiencies, the plaintiff did not confirm the appointment of the first defendant. The probation was extended by further period of six months. During the internal audit, it was noticed that there was an unusually large credit balance in the account of Indian Oil CCH-33 5 OS.2152/03 Corporation. The credit balance appeared to be about Rs.1,16,00,000/-. Immediately plaintiff suspected that a fraud has been played on it and requested its Statutory auditors to do a complete check of the accounts and in particular to enquire into payments in excess of Rs.2,00,000/-. It revealed that funds to the tune of about Rs.1,58,61,176/- has been embezzled from the plaintiff's account with the various banks being the banks listed. On enquiry regarding the encashment of the cheques with the 3rd and 4th defendants and also the HDFC Bank and ICICI Bank, where the plaintiff had accounts, it was discovered that all these cheques, which had been purportedly issued to Indian Oil Corporation and Voltas had been encashed by two entities "Fabricana and "ESKAYBEE developments at their respective accounts at the 2nd defendant's branch. The plaintiff had certain transactions with the two entities. On enquiry the said agencies had not received any of the monies of the cheques mentioned in the schedule and had not opened any account with the 2nd defendant bank. First defendant who was entrusted with the responsibility of preparing the vouchers, filling out the cheques 6 and making entries in the accounts by himself or in conjunction with some others perpetrated fraud on the plaintiff. It is evident that first defendant has perpetrated the fraud and forgery as mentioned in para-16(a) to (i). First defendant has forged/got forged signatures of the authorised signatories on the cheques and issued the forged cheques as mentioned in Sl.Nos.1 to 3 in para-17 of the plaint. Cheques in view of forgery of the signatures, there was no mandate to pay at all and in view of the fact that the cheques were converted/forged the paying banker being defendant No.3 is jointly and severally with the 1st and 2nd defendant liable to pay the plaintiff sums represented by these cheques along with interest. Signatures of Mr.Ramesh Avadhani on the cheques are forged as shown in Sl.No.1 to 25 at para-18 of the plaint. So defendant Nos.3 and 4 are jointly and severally with first and second defendant liable to pay the plaintiff.
First defendant further procured the signature of authorised signatories on cheque mentioned in Para-19 for his own use and encashed the cheques in the accounts opened by CCH-33 7 OS.2152/03 him at 2nd defendant's bank. In view of the fraud at the negligence of 2nd, 3rd and 4th defendant banks, defendant Nos.1 and 2 are jointly and severally liable to pay the sum of Rs.1,58,61,176/- along with interest at 24% p.a., which amounts to Rs.87,67,200/-. Third defendant with first and second defendant is jointly and severally liable to pay a sum of Rs.25,00,000/- along with interest in a sum of Rs.68,61,176/-. The plaintiff lodged police complaint in Cr.No.33/01, investigation is pending. Plaintiff got issued letter on 12.6.2002 to 3rd defendant who issued an untenable reply.
Plaintiff also issued letter dated 12.6.2002 to 4th defendant. No reply was received by 4th defendant. The negligence on the part of 2nd defendant in failing to notice the suspicious circumstances pervading the opening and operating of the two accounts in the name of two fictitious agencies has facilitated and perpetrated fraud. Similarly, negligence on the part of the 3rd and 4th defendants to honour the said cheques. 2nd defendant has been grossly negligent in the discharging of its duties and obligations as a collecting banker. 3 and 4 defendants have a duty under law and also by virtue of the 8 contract with the plaintiff to exercise reasonable care and skill in carrying out their actions. Hence, filed the suit.
3. In response of service of summons, Defendants 2 to 4 appeared through their respective counsel and filed their written statements. Defendant No.1 though appeared, has not chosen to file written statement.
4. Brief facts of the written statement filed by 2nd defendant is as under:
2nd defendant denied the various allegations of the plaint averments. It is submitted that this bank is acted in good faith as per the banking norms maintained by the first defendant with them. This defendant being a collecting bank and if any amounts are paid by the paying banks, this defendant is not responsible for the negligence if any of the paying banks. This defendant is not aware of the alleged fact that first defendant was employee of plaintiff and he played fraud. It is not the case of the plaintiff that this defendant is also involved in the CCH-33 9 OS.2152/03 alleged fraud. There is no privity of contract between the plaintiff and this defendant. Suit is also bad for non joinder of necessary parties. It is not the case of the plaintiff that first defendant has drawn/written the schedule mentioned cheques in the name of Indian Oil Corporation or Voltas. The principal officer of the plaintiff, knowingly has signed the plaint schedule cheques which were drawn in the respective name of either "Fabricana" or "ESKAYBEE Developments" as payees and collected in the respective accounts. Cheques are not drawn in the names of either "Fabricana Exhibition system and Interior Decorators" or "ESKAYBEE Developments Private Ltd. The alleged regular suppliers of plaintiff and are drawn in the names of either "Fabricana" or ESKAYBEE Developments Private Ltd. This defendant is a stranger to the plaintiff to pay the schedule amount. Plaintiff specifically alleged that the money allegedly collected by the first defendant by way of alleged conversion of cheques is being diverted to M/s.Karnataka Industrial Gases and deliberately failed to implead the said firm. There is no negligible and breach of duty by this defendant. Hence, prays for dismissal of the suit. 10
5. The brief facts of the written statement filed by the defendant No.3 is as under:-
Defendant No.3 submits that the averments made by the plaintiff show that the alleged fraud against the plaintiff by defendant No.1 is solely on account of the negligence of the plaintiff in operating its fiancés and bank accounts. Plaintiff is estopped from alleging negligence on the part of this defendant as this defendant has only followed the instructions/mandate given by the plaintiff for operation of its account. Defendant No.3 admitted that plaintiff had opened a current account bearing No.3080640005001 on 25.5.1998 with Times Bank Ltd. The application form duly filled in specimen signatures of the plaintiff's authorised signatories and as per Board Resolution authorised various directors/officers of the plaintiff to operate the said account. After the change in the management of the Bank, current account being held by the plaintiff was changed to 0772050000109. All the specimen signatures of the authorised signatories of the plaintiff were scanned and stored with the bank. Each time a cheque was CCH-33 11 OS.2152/03 drawn on the 3rd defendant by the plaintiff, this defendant followed the mandate set up by the plaintiff with regard to the operation of the account. In the ordinary course of its business it received 5 cheques each duly signed by two officers of the plaintiff. The said cheques were drawn in favour of ESKAYBEE Developments and were presented at the Union Bank. Defendant No.3 after verifying the signatures on the said cheques cleared all the 5 cheques and made payments. Signature of Mr.Ramesh N Avadhani matches with the specimen signature available with the 3rd defendant. Moreover, the staff of the bank were familiar with his signature as he was maintaining a savings account. The cheques were in possession of the plaintiff and the same could not have been presented for payment without the knowledge of the plaintiff. If the said cheques have been presented without the knowledge of the plaintiff it can only be said that the plaintiff was negligent enough to leave blank signed cheques with third parties who have taken advantage of the plaintiff's negligence. Hence, prays for dismissal of the suit against this defendant. 12
6. The brief facts of the written statement filed by the defendant No.4 is as under:-
4th defendant submits that there is no cause of action against this defendant as he paid the cheques drawn on it as per apparent tenor of the instruments in the ordinary course of business without negligence and as per the mandate of the authorised signatories to operate the account. Payment of the cheques were made to collecting bank on their certificate that payees account will be credited and an implied indemnity, indemnifying this defendant against claim or loss that may arise due to payment of the cheques. This defendant denies the various allegations made in the plaint averments. Hence, prays for dismissal of the suit against this defendant.
7. On the basis of above pleadings, following issues are framed:-
ISSUES
1. Whether the plaintiff proves that first defendant has committed fraud in raising cheques in the name of fabricated firm "FABRICANA" and CCH-33 13 OS.2152/03 "ESSKEYBEE DEVELOPMENTS" to the extent of Rs.1,58,61,176/- as pleaded in the plaint?
2. Whether the second defendant has exercised required diligence in accepting the cheques presented by first defendant and allowed it to be honoured and thereby not liable for suit claim?
3. Whether the plaintiff proves that third defendant has not acted diligently in honouring cheques for Rs.25,00,000/- raised on plaintiff by first defendant?
4. Whether the plaintiff further proves that fourth defendant has not acted diligently in honouring cheques worth of Rs.68,61,176/- raised on plaintiff by first defendant?
5. Whether defendant Nos.3 and 4 prove that they have acted diligently in honouring cheques presented on behalf of first defendant?
6. Whether the second defendant is protected under Section131 of N.I. Act as pleaded in the written statement?
7. Whether plaintiff has got cause of action to file suit against d1 as pleaded?
8. Whether the suit is bad for non-joinder of necessary parties?14
9. Whether the plaintiff is entitled for suit claim?
10. What order or decree?
8. To prove the case of the plaintiff, its authorised signatory got examined as P.W.1 and got marked the documents Exs.P.1 to P.15. On behalf of the first defendant, he himself got examined as D.W.1 and got marked documents Exs.D.1 to D.8.
9. Learned counsel for plaintiff, defendant Nos.2 to 4 have filed their written arguments. Heard arguments on both sides.
10. My findings on the above issues are as under:
Issue No.1: In the affirmative Issue No.2: In the negative Issue No.3: In the affirmative Issue No.4: In the affirmative Issue No.5: In the negative CCH-33 15 OS.2152/03 Issue No.6: in the negative Issue No.7: in the affirmative Issue No.8:In the negative Issue No.9: Partly in the affirmative Issue No.10: See the final order, for the following:
REASONS
11. Issue No.1, 2, 6 & 7: All these Issues are interlinked to each other. Hence, taken up together for consideration in order to avoid repetition of facts.
12. On careful perusal of the material placed by the court, P.W.1 has filed affidavit in lieu of his chief examination and reiterated the contents of the plaint averments. He has stated that plaintiff company started joint venture between the Govt., of Karnataka, Tata Group of Companies and Singapore Consortium. First defendant was playing fraud or that he was involved in any illegal or unethical activities. Owing to the deficiencies, the plaintiff did not confirm the appointment of the first defendant. the probation was extended by further 16 period of six months. During the internal audit, it was noticed that there was an unusually large credit balance in the account of Indian Oil Corporation. The credit balance appeared to be about Rs.1,16,00,000/-. Immediately plaintiff suspected that a fraud has been played on it and requested its Statutory Auditors to do a complete check of the accounts and in particular to enquire into payments in excess of Rs.2,00,000/-. It revealed that funds to the tune of about Rs.1,58,61,176/- has been embezzled from the plaintiff's account with the various banks being the banks listed. On enquiry regarding the encashment of the cheques with the 3rd and 4th defendants and also the HDFC Bank and ICICI Bank, where the plaintiff had accounts, it was discovered that all these cheques, which had been purportedly issued to Indian Oil Corporation and Voltas had been encashed by two entities "Fabricana and "ESKAYBEE developments at their respective accounts at the 2nd defendant's branch. The plaintiff had certain transactions with the two entities. On enquiry the said agencies had not received any of the monies of the cheques mentioned in the schedule and had not opened any account CCH-33 17 OS.2152/03 with the 2nd defendant bank. First defendant who was entrusted with the responsibility of preparing the vouchers, filling out the cheques and making entries in the accounts by himself or in conjunction with some others perpetrated fraud on the plaintiff. it is evident that first defendant has perpetrated the fraud and forgery as mentioned in para-16(a) to (i). first defendant has forged/got forged signatures of the authorised signatories on the cheques and issued the forged cheques as mentioned in Sl.Nos.1 to 3 in para-17 of the plaint. Cheques in view of forgery of the signatures, there was no mandate to pay at all and in view of the fact that the cheques were converted/forged the paying banker being defendant No.3 is jointly and severally with the 1st and 2nd defendant liable to pay the plaintiff sums represented by these cheques along with interest. Signatures of Mr.Ramesh Avadhani on the cheques are forged as shown in Sl.No.1 to 25 at para-18 of the plaint. So defendant Nos.3 and 4 are jointly and severally with first and second defendant liable to pay the plaintiff. First defendant further procured the signature of authorised signatories on cheque mentioned in Para-19 for his own use 18 and encashed the cheques in the accounts opened by him at 2nd defendant's bank. In view of the fraud, at the negligence of 2nd, 3rd and 4th defendant banks, defendant Nos.1 and 2 are jointly and severally liable to pay the sum of Rs.1,58,61,176/- along with interest at 24% p.a., which amounts to Rs.87,67,200/-. Third defendant with 1st and 2nd defendants is jointly and severally liable to pay a sum of Rs.25,00,000/- along with interest in a sum of Rs.68,61,176/-. The plaintiff lodged police complaint in Cr.No.33/01, investigation is pending. Plaintiff got issued letter on 12.6.2002 to 3rd defendant who issued an untenable reply. Plaintiff also issued letter dated 12.6.2002 to 4th defendant. No reply was received by 4th defendant. The negligence on the part of 2nd defendant in failing to notice the suspicious circumstances pervading the opening and operating of the two accounts in the name of two fictitious agencies has facilitated and perpetrated fraud. Similarly, negligence on the part of the 3rd and 4th defendants to honour the said cheques. 2nd defendant has been grossly negligent in the discharging of its duties and obligations as a collecting banker. 3 and 4 defendants have a duty under law CCH-33 19 OS.2152/03 and also by virtue of the contract with the plaintiff to exercise reasonable care and skill in carrying out their actions.
13. The only contention of defendant Nos.2 to 4 that they have acted as per the mandate of the plaintiff and operating as per the rules. They have not committed any negligence. However, defendant Nos.2 to 4 contend that first defendant has not committed any fraud or cheated the plaintiff. The first issue is framed on the contention raised by the defendant Nos.2 to 4. If plaintiff succeeds to prove the first issue then liability of other defendants will arise.
14. So far as Issue No.1 is concerned plaintiff has to establish that defendant No.1 played fraud and cheated the plaintiff by forging the signature of authorised signatories. Defendant No.1 even though appeared through his counsel has not chosen to file his written statement and contest the suit. So the evidence of plaintiff against first defendant remains unchallenged and unrebutted. The original documents were 20 summoned by this court, after marking the said documents and retaining the certified copies of the same, sent back the originals Ex.P1 to P106 to Criminal Court wherein case is pending against defendant No.1 and others.
15. Defendant No.1 opened account in the name of Fabricana and ESKAYBEE Developments Private Ltd., in the 2nd defendant's branch. 2nd defendant has not obtained any address proof or phone No., of first defendant as the address was mentioned in the account opening application Ex.P57 and P59. Further, on the same day defendant No.1 also introduced another concern by name Karnataka Industrial Gases for opening of the 3rd fictitious account as per Ex.P61 and P65. Ex.P39 Audit Report dated 17.4.2001, it is evident that there has been fraud and misappropriation of funds of the plaintiff company. Ex.P39 reveals that funds to the tune of about Rs.1,58,61,176/- had been embezzled from the plaintiff's account with various banks. To prove the said fraud and forgery, plaintiff relied on Ex.P75, opinion of the handwriting CCH-33 21 OS.2152/03 expert in the corresponding criminal proceedings in CC.No.11701/2005. In Ex.P75 expert opined that signature of Sim Boon Khoon was found to be forged at Q2 to Q5, Q8, Q11, Q14, Q16,Q19, Q23, QW26, Q32, Q34, Q45, Q50, Q53, Q56, Q59, Q62, Q64, Q67, Q70, Q74, Q77, Q80, Q83, Q85, Q88, Q91 & Q94. Signature of Mr.S Chandrashekar was found to be forged at Q38, Q41 and Q44. signature of Mr.William Seet was found to be forged at Q35. signature of Mr.Ramesh Avadhani was found to be forged at Q22, Q25, Q28, Q31, Q37, Q40, Q43, Q46, Q49, Q52, Q55, Q58, Q61, Q675, Q68, Q71, Q73 and Q76. The signatures at 3, 6, 9, 12, 15, 18, 21, 24, 27, 30, 33, 36, 39, 42, 45, 48, 51, 54, 57, 60, 63, 66, 69, 72, 75, 78, 81, 84, 87, 90 and 93 were found to be forged by the defendant No.1.
16. Further, expert opined that standard writing and signatures of the first defendant and the disputed signatures on the cheques in question, there are similarities in the formation of characters. Writing style of specific character, the 22 finding of the expert is that the similarities observed between the questioned and standards are significant and sufficient to express positive opinion regarding the authorship of the questioned writing and signatures. So, opinion of expert has corroborated the oral and documentary evidence.
17. Of course, author of Ex.P75, Expert is not examined as he is dead. Plaintiff filed IA No.20 to appoint Expert for issuance of 2nd opinion. Said application came to be rejected wherein this court observed that the hand writing report Ex.P75 clearly shows the forgery and fraud committed by the defendant No.1. Such being the case, the defendants have not challenged the reports and have not filed application for seeking 2nd opinion. None of the defendants have challenged the above order. Or course, evidence of the expert is not a conclusive proof of evidence. however, court can consider expert opinion along with other reliable corroborative evidence. Even, court itself has the power U/s.73 of Indian Evidence Act to compare the signatures and arrive at a conclusion.
CCH-33 23 OS.2152/03 However, original documents are not available before this court as they have sent back to the Criminal Court.
18. Further, ledger extracts of Fabricana Exhibition Systems and Interior Decorators for the period between 1.4.2000 to 31.3.2001 vide Ex.P43 and P81 as well as the ledger extracts of ESKAYBEE Developments Private Ltd., for the period between 1.4.2000 to 31.3.2001 vide Ex.P44, P83 reveal that none of the payments that were purportedly made to the above entities by way of the disputed cheques, were actually received by them.
19. For the above, it could be gathered that first defendant has fraudulently deceived the plaintiff company by creating bogus vouchers for payments alleged to be made to the above entities, and has misappropriated these funds into accounts of the fictitious entities. The amounts in question were credited to these accounts and then either withdrawn in cash or transferred to the account of Karnataka Industrial 24 Gases and then withdrawn in cash vide Ex.P58, P60 and P66. the same has been admitted by DW.2 in his cross examination. Ex.P58 reveals that on 26.5.2000 a sum of Rs.1,51,394/- is credited and then withdrawn over the next 2-3 days between 27.5.2000 to 30.5.2000. Similarly large amounts have been credited into the account on 29.6.2000, 29.7.2000 and 11.8.2000. Defendant No.2 has failed to recognize that these were the only transactions being carried out in the said account. Every time a large deposit was made, it was immediately followed by series of cash with drawls. The same method has been adopted by the second defendant even with respect to the other two fictitious accounts opened and operated by first defendant. Ex.P60 and P66 reveal that on 19.8.2000 a sum of Rs.10 lakhs was credited and then immediately transferred to account No.21084 which is that of Karnataka Industrial Gases. Similarly, on 26.8.2000 Rs.10 lakhs was transferred to the said account. Thus, defendant No.1 has forged the signature on some cheques and has fraudulently induced the authorised signatories to affix their signatures on some of the cheques.
CCH-33 25 OS.2152/03
20. P.W.1 admitted that first defendant has forged/got forged the signatures of the authorised signatories, has procured the signatures of the authorised signatories on some cheques by fraud by inducing them. it is true that all cheques are signed by two authorised signatories. However, defendant No.1 obtained signature of one of the authorised signatories and forged the signature of another signatory. Further P.W.1 has admitted that initially when the authorised signatories were shown the signatures, Mr.Sim Boon Koon felt that signatures appearing on some of the cheques purporting to be his appeared to be his. Mr.William Seet also felt that his signature appearing on one of the cheques purporting to be his, appeared to be his. It is true that initially above signatories stated that signatures on cheques appear to be of them. Later on the report of Auditor and opinion of Expert, the said signatories denied their signatures on cheques. While dealing in huge transactions and issuing number of cheques and putting signatures on various cheques, it may be difficult to ascertain whether the signatures are forged or not themselves by seeing the same. Merely, two authorised 26 signatories at initial stage have not denied the purporting signature is not a ground to believe that first defendant has not committed fraud.
21. According to plaintiff, first defendant made out cheques in the names of ESKAYBEE developments Pvt., Ltd., and Fabricana. Particularly in ESKAYBEE Developments Pvt., Ltd., because number of payments was made to ESKAYBEE Developments Pvt., Ltd., on regular basis and plaintiff was also dealing with Fabricana decorators. In the year 2000, amount of Rs.42 lakhs paid to ESKAYBEE Developments Pvt., Ltd. First defendant filling the cheques in the names of payees and amounts, in favour of ESKAYBEE DEVELOPMENTS Pvt., Ltd., and Fabricana and forged signature of the authorised signatories on some cheques and has procured the signatures of authorised signatories on some cheques by playing fraud by inducing them to act on the basis that the cheques were ad- hoc payments to ESKAYBEE Developments Pvt., Ltd., and Fabricana by using deceptive names and has converted the CCH-33 27 OS.2152/03 said cheques for his own use by depositing the cheques in the accounts opened by him with the 2nd defendant. first defendant has made out vouchers and made entries in the accounts showing as if cheques has been made out in favour of IOCL and Voltas. First defendant has committed forgery and fraud got the cheques encashed at accounts opened by him. Subsequently, he resigned by giving letter on 9.3.2001 to the plaintiff. Plaintiff has clearly mentioned in the plaint in page- 15 and 18 details of cheque Nos., date, Bank, authorised signatories. In all Rs.1,58,61,176/- has been misappropriated by the first defendant.
22. The learned counsel for the plaintiff in his written arguments submitted that defendant No.1 being an employee of the plaintiff company with an intention to gain himself, played fraud by forging signatures and misappropriated huge funds. Defendant No.2 was also negligent in opening 3 fictitious accounts without verifying and ascertaining the address and back ground of defendant No.1. defendant Nos.3 28 and 4 have also acted negligently without verifying the signatures on cheques with specimen signatures.
23. The learned counsel for the plaintiff relied on a decision reported in (2004) 2 SCC 425 in the Kerala State Co-operative Marketing Federation Vs., State Bank of India and others wherein Hon'ble Apex Court while referring to a decision of the Hon'ble High Court of Karnataka in Syndicate Bank Vs., United Commercial Bank and others, (1991) 71 Complainant Cas 270 (Kar) has held that the burden is on the banker to establish that he has acted in good faith and without negligence in order to be entitled to protection under S.131 of the NO Act, 1881 has upheld the following principles governing the liability of the collecting banker in para 11 of the decision (i) to (ix). On careful reading of (i) to (ix) principles, the facts and circumstances of the above decision is applicable to the case on hand.
CCH-33 29 OS.2152/03
24. Further relied on the decision reported in AIR 2009 AP 89 Canara Bank Vs., Nalgonda Co-operative Central Bank Ltd., wherein it is held that since it had failed to take proper and necessary care which amounts to negligence and demonstrates a lack of good faith. That the mere fact that the plaintiff contributed by its negligence to the fraud and the fact that the defendant bank could not have detected the alteration through a simple examination, does not resolve the matter, under Sec.131 of NI Act, protection is afforded to a banker who acts in good faith and without negligence in an instrument conversion.
Further relied on a decision reported in ILR 2014 Kar 6292 in State Bank of Mysore Vs., The Karnataka Industrial Co-operative Bank ltd., wherein it is held that the initial burden is always upon the collecting banker which takes up the plea of having acted bonafidely without any negligence.
30The facts and circumstances of the above decisions are applicable to the case on hand.
25. Defendant No.2 has filed affidavit in lieu of his chief examination and reiterated the contents of the written statement. Defendant No.2 has submitted that this bank is acted in good faith as per the banking norms maintained by the first defendant with them. This defendant being a collecting bank and if any amounts are paid by the paying banks, this defendant is not responsible for the negligence if any of the paying banks. This defendant is not aware of the alleged fact that first defendant was employee of plaintiff and he played fraud. It is not the case of the plaintiff that this defendant is also involved in the alleged fraud. There is no privity of contract between the plaintiff and this defendant. Suit is also bad for non joinder of necessary parties. It is not the case of the plaintiff that first defendant has drawn/written the schedule mentioned cheques in the name of Indian Oil Corporation or Voltas. The principal officer of the plaintiff, CCH-33 31 OS.2152/03 knowingly has signed the plaint schedule cheques which were drawn in the respective name of either "Fabricana" or "ESKAYBEE Developments Private Ltd., as payees and collected in the respective accounts. Cheques are not drawn in the names of either "Fabricana Exhibition system Narcotic Drug Interior Decorators" or "ESKAYBEE Developments Private Ltd. The alleged regular suppliers of plaintiff and are drawn in the names of either "Fabricana" or "ESKAYBEE Developments Private Ltd. This defendant is a stranger to the plaintiff to pay the schedule amount. Plaintiff specifically alleged that the money allegedly collected by the first defendant by way of alleged conversion of cheques is being diverted to M/s.Karnataka Industrial Gases and deliberately failed to implead the said firm. There is no negligible and breach of duty by this defendant. In the cross examination of D.W.2/defendant No.2 stated that defendant No.1 had to open account for transactions of his firms. At the time of opening the account, defendant No.1 was not known to him. he was introduced by one of the old customers of the bank. He has stated that he has not obtained any Resolution, authority 32 letter or other documents like CSI, PAN card, permission, electricity bill etc at the time of opening the account in the name of both firms. Further D.W.2 stated that in the head office at Mumbai there are rules framed for opening the account. He has stated that he obtained Ex.D4 and D5 to show that introducer of defendant No.1 is one of the customers of their bank. D.W.2 stated that defendant No.1 informed that he is doing fabrication and real estate management. D.W.2 stated that as per the address mentioned in Ex.P65 the obtaining of address proof was not required at that time and he came to know that address mentioned in Ex.P59 and 65 are one and the same. D.W.2 answered for each suggestion that at the time of opening the account by first defendant, obtaining of address proof and details were not required. When Main office framed the rules and regulations for opening the account, it is the duty of the bank to obtain necessary address proof and other relevant documents. when first defendant opened two accounts in the same bank within a span of 3 to 4 months and that too, in the same address, D.W.2 ought to have ascertained the address proof of the first defendant. Defendant No.1 even CCH-33 33 OS.2152/03 though working in the company of the plaintiff and entrusted cash transactions, cheques and other responsibilities, he has to maintain correct account. Even though he is an employee under Plaintiff Company, he opened 2 accounts in the name of 2 firms that too giving the same address to both the firms. So, negligence of D.W.2 is also found at the time of opening the account by first defendant.
26. Further, D.W.2 admits that as per Ex.P70, 3 deposits kept in Karnataka Industrial Gases. On 23.9.2000 transferred Rs.10 lakhs, on 21.10.2000 transferred Rs.5 lakhs to Karnataka Industrial Gases current account. In Ex.P66 on 18.8.2000 Rs.10 lakhs, on 26.8.2000 Rs.10 lakhs were also transferred to the current account of Karnataka Industrial Gases. As per Ex.P66 and P67 cash transactions from ESSKAYPEE Developments Pvt., Ltd., A/c., to Karnataka Industrial Gases current account. D.W.2 stated that he has not enquired when huge amounts credited in the name of first defendant within a short period. He has stated that after 34 notice Ex.P50 and 52 received by the bank, he wrote a letter to regional office to take further action. He do not know whether any action taken to that effect. He admits that both accounts opened by first defendant are closed at once on the request of defendant No.1.
27. Counsel for the 2nd defendant in his written arguments submits that plaintiff was aware that defendant No.1 had himself or in conjunction with others perpetrated a fraud and forgery. The amounts involved have infact not received by any contractor/supplier that the plaintiff deals with. But the names of fake entities are so deceptively similar so as not to cause any suspicion in the minds of the authorised signatories.
28. 2nd defendant-bank has also not produced any documents to show that bank has not acted negligently or carelessly. Except oral evidence of D.W.2, no material placed by the 2nd defendant to show that bank acted as per mandate CCH-33 35 OS.2152/03 of the plaintiff. 2nd defendant was made aware of the fraud by the plaintiff, 2nd defendant allowed the operations of the aforesaid accounts even after coming to know about the fraud. The 2nd defendant has a duty to ensure that accounts opened and operated with them are not used to perpetrate frauds. They have allowed accounts to be opened in the name of fictitious entities by the same person without proper verification. Bank officials have been negligent in completely disregarding the very suspicious nature of opening and operation of the accounts including that they were opened by the same person, that opening was simultaneous with deposit of cheques for a huge sum, that cheques were largely from the same source and the signatures on them varied, that the cheques were all for same sum and that, monies were being transferred to another account which was also introduced by the same person. 2nd defendant if really had acted with bonafide and care, the fraud would have been prevented. The 2d defendant having come into possession of converted cheques and utilizing the same to collect the monies on behalf of the 1st defendant from the plaintiff and also in view of 36 negligence, 2nd defendant is liable to pay the sum of Rs.1,58,61,176/- to the plaintiff.
29. The learned counsel for the defendant No.2 in his written argument submitted that suit is bad for non joinder of necessary parties. There is no specific pleading with regard to the details of particular manner of the fraud U/O.6 Rule 4 of CPC and 2nd defendant acted bonafidely and opened the accounts and bank has privilege U/s.131 of NI Act.
30. The learned counsel for 2nd defendant relied on a number of decisions reported in 2006(3) KLJ 177 (DB) Ranganayakamma and another Vs., KS Prakash (deceased) by LRs., and others wherein it is held that U/O.6 Rule 4 CPC., general allegation without particulars regarding fraud, misrepresentation, undue influence not sufficient. Each misrepresentation, its date and whether it was made in writing or verbally, occasion thereof, must be stated. Requirement of giving particulars is mandatory CCH-33 37 OS.2152/03 and object is to enable opposite party to know in advance what case he has to meet.
The facts and circumstances of the above decision is not similar to the case on hand as plaintiff has specifically pleaded in the plaint regarding fraud and forgery committed by the first defendant.
Further he relied on the decision reported in (1990) 1 SCC 484 Indian Overseas Bank Vs., Industrial Chain Concern wherein it is held that U/s.131 of NI Act bank's negligence to be determined by the standard of reasonable care and current banking practice, extent of caution required and enquiry to be made. Suspicions arising under normal circumstances should put the bank on guard.
The facts and circumstances of the above decision is not similar to the case on hand as 2nd defendant bank has acted negligently by opening the accounts within short period in the same address without ascertaining the address proof. 38
In another decision 1995 AIHC 1701 Andhra Bank Vs., Kurnool District Co-operative Central Bank ltd., wherein it is held that opening of account is different from collecting drafts/cheques to be considered separately and not as single act while dealing with aspect of good faith or negligence. Colleting banker had taken all precautions and acted in good faith and without negligence. There was negligence of paying banker. Collecting bank entitled to protection.
The facts and circumstances of the above decision is also not applicable to the case on hand as 2nd defendant was negligent in dealing with the first defendant.
1995 AIHC 382 Vijaya Bank and another Vs., Nedungadi Bank Ltd., and another wherein it is held that plea of negligence in opening account by collecting bank cannot be taken to fasten liability on collecting bank for the loss incurred by drawee bank due to its own negligence.
CCH-33 39 OS.2152/03 The facts and circumstances of the above decision is not similar to the case on hand as collecting bank defendant No.2 and drawee bank defendant Nos.3 and 4 have also acted negligently.
31. Further, defendants Nos.2 to 4 contend that there is negligence on the part of plaintiff in supervising its employees. When plaintiff dealing in huge transactions, entrust particular job to employees in good faith, it is not possible to detect the fraud immediately. When the plaintiff found major discrepancy in their accounts, on investigation of their accounts, they came to know about the major fraud played by the first defendant in the year January 2001. immediately, plaintiff issued notice to first defendant as well as defendant Nos.2 to 4 vide Ex.P50 and P51 after obtaining report of Auditor, then plaintiff filed this suit. So there is no delay or negligence found with the plaintiff after coming to know the alleged fraud.
40
32. For the above, plaintiff has proved that first defendant intentionally forged the signatures and cheated the plaintiff by playing fraud.
33. 2nd defendant has also failed to prove that bank has exercised required diligence in opening the account in the name of first defendant and accepting the cheques and allowed it to be honoured and also 2nd defendant failed to prove that bank is protected U/s.131 of NI Act. Accordingly, I answer Issue No.1 in the affirmative, Issue No.2 in the negative, Issue No.6 in the negative and Issue No.7 in the affirmative.
34. Issue No.3: The case of the plaintiff is that in spite of cheques cleared by the 3rd and 4th defendants, in view of forgery of the signature as both banks being the paying bankers are jointly and severally liable with defendant Nos.1 and 2.
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35. DW.3 has filed affidavit in lieu of his chief examination and reiterated the contents of the written statement. He has submitted that the averments made by the plaintiff show that the alleged fraud against the plaintiff by defendant No.1 is solely on account of the negligence of the plaintiff in operating its fiancés and bank accounts. Plaintiff is estopped from alleging negligence on the part of this defendant as this defendant has only followed the instructions/mandate given by the plaintiff for operation of its account. Defendant No.3 admitted that plaintiff had opened a current account bearing No.3080640005001 on 25.5.1998 with Times Bank Ltd. the application form duly filled in specimen signatures of the plaintiff's authorised signatories and as per Board Resolution authorised various directors/officers of the plaintiff to operate the said account. After the change in the management of the Bank, current account being held by the plaintiff was changed to 0772050000109. All the specimen signatures of the authorised signatories of the plaintiff were scanned and stored with the bank. Each time a cheque was drawn on the 3rd defendant by the plaintiff, this defendant 42 followed the mandate set up by the plaintiff with regard to the operation of the account. In the ordinary course of its business it received 5 cheques each duly signed by two officers of the plaintiff. The said cheques were drawn in favour of ESKAYBEE Developments and were presented at the Union Bank. Defendant No.3 after verifying the signatures on the said cheques cleared all the 5 cheques and made payments. Signature of Mr.Ramesh N Avadhani matches with the specimen signature available with the 3rd defendant. Moreover, the staff of the bank were familiar with his signature as he was maintaining a savings account. The cheques were in possession of the plaintiff and the same could not have been presented for payment without the knowledge of the plaintiff. if the said cheques have been presented without the knowledge of the plaintiff it can only be said that the plaintiff was negligent enough to leave blank signed cheques with third parties who have taken advantage of the plaintiff's negligence. In the cross examination of D.W.3 has stated that he has no personal knowledge of any of the events that transpired during the said period and the evidence of D.W.3 is not more than CCH-33 43 OS.2152/03 hear say. D.W.3 is not even aware of who the authorised signatories of the plaintiff company were during the said period. D.W.3 admitted that 3rd defendant's Head office had issued guidelines regarding clearing of cheques for payments. However, the 3rd defendant has not produced any such documents in evidence to establish that such procedures were established. Admittedly, Ramesh Avadhani one of the signatories of the plaintiff company, after opening the account of the plaintiff company, changed his signature at Ex.D9 and new signature is at Ex.D12(a). It is not in dispute that it was the signature at Ex.D9(a) that was scanned and up loaded on to the computer system. DW.3 himself admits that signatures on the cheques were only compared with the scanned specimen card which had been uploaded to the computer system. At one breath D.W.3 asserts that both the signatures at Ex.D9(a) and Ex.D12(a) were compared before clearing the cheques for payment. At another breath he states that Ex.D9(a) was compared with the signature on the cheques at Ex.P9 to P13 before clearing. Again D.W.3 states that both the signatures Ex.D9(a) and D12(a) were compared before clearing 44 payments for cheques Ex.P10 to P12, while only the signature at Ex.D9(a) was compared before clearing the cheque at Ex.P9. According to D.W.3 cheques have been clearing by comparing signatures at Ex.D12(a) and it is clear that EX.D12(a) is not the specimen signature of Mr. Ramesh Avadhani. Evidence of D.W.3 lack any credibility whatsoever and are made only with intent to cover up the negligence on the part of 3rd defendant in clearing the cheques. Again D.W.3 admits that signature at Ex.D12(a) is the latest signature of Ramesh Avadhani and signatures at Ex.D9(a) and Ex.D12(a) are different. Further D.W.3 categorically admits that there is differences between Ex.D9(a) and signature at Ex.P9 to P13. this would mean that it be of no use at all in comparing the cheques at Ex.p9 to P13. it goes to show that the negligence and absolute lack of care and caution on the part of 3rd defendant. 3rd defendant has not produced documents which are in the possession of the bank. An adverse inference has to be drawn against the 3rd defendant.
CCH-33 45 OS.2152/03
36. The learned counsel for 3rd defendant in his written arguments submitted that there is no negligence on the part of 3rd defendant. Ex.p9 to P13 drawn after ascertaining the signature of authorised signatories. Of course, plaintiff has not examined its authorised signatories whose signatures appear on Ex.P2 to P27. when documentary evidence speaks regarding the alleged forged signature, non-examination of authorised signatories is not a ground to disbelieve the available evidence of the plaintiff.
37. The learned counsel for the 3rd defendant relied on a decision reported in (1975) 3 SCC 529 Mitthulal and another Vs., State of Madhya Pradesh and AIR 2015 SC 3389 K Nanjappa Vs., RA Hameed and another wherein it is held that each case must be decided on the weight of the evidence led by the parties. Of course, opinion of the expert obtained in criminal case and all the original documents produced are sent back to criminal court. however, issues and facts before this court and criminal court are in respect of the 46 same matter. Hand writing report obtained in respect of documents produced in both cases. So opinion of expert submitted in criminal court is admissible and relevant in civil case. It is pertinent to note here that report submitted in criminal court is not different from documents in this case. Suppose if the report is obtained in criminal court in different case, then only said report cannot be admissible in this case. The facts and circumstances of the above decisions are not similar to the case on hand.
38. In the written arguments, learned counsel for 3rd defendant submitted that decisions relied by the counsel for plaintiff in (2004) 2 SCC 425 The Kerala State Co-operative Marketing Federation Vs., State Bank of India and others, is not similar to the case on hand. However, 9 principles laid down in the above decision is to be followed by the banks. So, the submission of counsel for the defendant No.3 is not sustainable.
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39. For the above, plaintiff proved that 3rd defendant has not acted diligently in honouring the cheques for Rs.25 lakhs. Accordingly, I answer Issue No.3 in the affirmative.
40. Issue No.4: according to the plaintiff, 4th defendant has not acted diligently in honouring the cheques worth Rs.68,61,176/-. Defendant No.4 bank examined D.W.1 and DW.4.
41. D.W.1 has filed affidavit in lieu of his chief examination and reiterated the contents of the written statement. He has submitted that there is no cause of action against this defendant as he paid the cheques drawn on it as per apparent tenor of the instruments in the ordinary course of business without negligence and as per the mandate of the authorised signatories to operate the account. Payment of the cheques were made to collecting bank on their certificate that payees account will be credited and an implied indemnity, indemnifying this defendant against claim or loss that may 48 arise due to payment of the cheques. This defendant denies the various allegations made in the plaint averments.
42. Defendant No.4 has only got marked GPA in favour of D.W.1 at Ex.D1 and Ex.D2 is the reply issued to the legal notice sent by the plaintiff. Ex.D4 authorization letter in favour of D.W.4. 4th defendant has not produced the account opening form and specimen signature card of the plaintiff company which they ought to have produced in order to show that they were diligent in comparing the signatures before clearing the cheques for payments. The learned counsel for 4th defendant submits in its written arguments that opening form has been handed over to police for criminal investigation. However, defendant No.4 bank not explained as to why they were not in a position to obtain the certified copies from the records in CC.No.11701/2005. In the cross examination of D.W.1 stated that he has no personal knowledge of the events that transpired in the 4th defendant bank during the year 2000-01. D.W.1 is not able to answer any of the specific CCH-33 49 OS.2152/03 questions put to him and claims that he is unable to answer the same without looking at the documents.
43. D.W.1 in his affidavit has claimed that there is an implied indemnity in favour of a paying banker under the Uniform regulations and rules for Bankers Clearing house. Nothing has been said as to what is the exact nature of indemnity, who will indemnify, etc., under the above rules. In the cross examination of D.W.1 stated that signatures on the cheques would have to be compared as per Uniform Regulations and Rules, but he does not set out exactly what that means or what is to be done. D.W.1 admits that documents pertaining to the authorised signatory are available with the 4th defendant bank, however, they have not been produced. D.W.1 admits that signature at Q50 in Ex.P18 and the signature at Q53 in Ex.P19 are different in terms size, Q50 is smaller than Q53. D.W.1 admits that if the authority compares the signature once and makes payment that is the end of the matter. This clearly suggests that there were no 50 cheques and balances in the bank and that the task of comparing signatures was left to the arbitrary discretion of a single person and was not verified by anyone else. In the cross examination of D.W.4, he states that he compared the signatures, checked the date and the type of cheque and then cleared the same. Further, D.W.4 states that he did not suspect any thing at all in terms of the signatures on the cheques at Ex.P14 to P27. He voluntarily states that he used to clear hundreds of cheques for payment in the same day. He also admits that only when there was a problem regarding the signature on the cheque, he used to compare it with the authorised signature and then make the payment.
44. For the above it goes to show that only one person used to check the signatures in the 4th defendant bank that he used to clear hundreds of cheques in the same day, that only when there was a problem regarding the signature on the cheques, he used to compare it with the authorised signature and then make the payment and that, once the person had CCH-33 51 OS.2152/03 compared the signature, it was the end of the matter. D.W.4 also admits that in case where there was no suspicion he used to verify the date, value sign, words and figures and whether the account had sufficient funds and then proceed to clear the cheque for payment. It would be gathered that signatures were not always compared for every cheque with specimen signature. D.W.4 stated that he never suspected any thing in respect of cheques at Ex.P14 to P27. it clearly goes to show that D.W.4 has not properly compared the signature on the above cheques before clearing. Even D.W.4 stated that he is not aware if Ramesh Avadhani made a request for change of signature. He is also not sure whether he provided the new signature to the defendant No.4. D.W.4 states that his supervisors did not give him any specific instructions/guidelines regarding comparing of signatures. He did not look at the board resolution of the plaintiff company for every single cheque before making payment. 52
45. Learned counsel for the 4th defendant in his written arguments submits that 4th defendant bank acted in good faith by comparing the signature of cheques before clearing. In the written arguments contended that lab report was marked subject to objection. The said report cannot be admitted in evidence and cannot be referred and relied upon. Of course, all the documents produced by plaintiff are marked with subject to objection raised by the defendant Nos. 2 to 4. Mere marking of documents is not a proof. The plaintiff has to prove the documents as they are not disputed by the defendants. Lab report reveals that signature on the cheques is not signed by the signatories on the cheques. Signatures were compared with the specimen signature lodged with the paying banks. In written arguments submitted that Ex.P7 item No.10 and 15 red enclosed signature said to be of Sim Boon Khoon on specimen signature card of Canara Bank marked as S87. any how, defendants have not challenged the said report. Such being the case, the contention of defendant No.4 bank is not sustainable.
CCH-33 53 OS.2152/03
46. Learned counsel for defendant No.4 relied on a decision reported in 2007 (5) MhLj 496 SB Panchal and Co., Vs., Saraswat Co-operative Bank ltd., wherein it is held that respondent could not have been called upon to prove that the payments was made in accordance with the apparent tenure of the instrument in good faith, unless until petitioner proves that the cheques in question were stolen and the signatures thereon were forged by the payee. The facts and circumstances of the above decision is not similar to the case on hand as 4th defendant failed to produce rebuttal evidence that bank acted in good faith without negligence.
47. For the above, plaintiff proves that 4th defendant has not acted diligently in honouring cheques. Accordingly, I answer Issue No.4 in the affirmative.
48. Issue No.5: As per plaintiff, defendant Nos.3 and 4 are the paying bankers in whose branches the plaintiff 54 company had accounts. Both bankers had negligently cleared payment of monies as per the forged cheques deposited in the fictitious bank accounts being operated by the 1st defendant. D.W.3 was not working in the 3rd defendant bank branch during 2000-01 and he has made several admissions during the course of cross examination which clearly shows the negligence on the part of the 3rd defendant in discharging its duties as a paying banker. D.Ws.1 and 4 who examined on behalf of 4th defendant have also made admissions during their cross examination. Without looking and comparing the specimen signatures cleared the cheques.
49. Learned counsel for plaintiff relied on a decision reported in AIR 1987 SC 1603 Canara Bank Vs., Canara Sales Corporation and others wherein Hon'ble Apex Court has laid down 4 principles as under:
i) if the signature on the cheque is not genuine, there is no mandate on the bank to pay and the question of any negligence on the part of the customer would afford no defence to the bank.
CCH-33 55 OS.2152/03
ii) Bank can escape from liability only if it can establish knowledge of the customer of forgery in cheques.
iii) A paying banker is protected only if he pays the amount in due course, in accordance with the apparent tenor of the instrument and in good faith, without negligence.
iv) Onus of proving good faith and absence of negligence is on banker claiming protection under the Negotiable Instruments Act, 1881. In this context, the Hon'ble Supreme Court observed as follows at Para 42 of the judgment:
"there is always an element of trust between the bank and its customer. The bank's business depends upon this trust. Whenever a cheque purporting to be by a customer is presented before a bank it carried a mandate to the bank to pay. If a cheque is forged there is no such mandate. The bank can escape liability only if it can establish knowledge to the customer of the forgery in the cheques. Inaction for continuously long period cannot by itself afford a satisfactory ground for the bank to escape liability."
Facts and circumstances of the above decision and principles are applicable to the case on hand as defendant Nos.3 and 4 56 have not made out a case that plaintiff had knowledge of the forgery. It is not open to take up the defence that there was negligence on the part of the plaintiff. for the above defendant Nos.3 and 4 have failed to prove that they have acted diligently in honouring the cheques presented on behalf of first defendant. Accordingly, I answer Issue No.5 in the negative.
50. Issue No.8: Defendant Nos.3 and 4 contended that suit is bad for non joinder of necessary parties as ICICI Bank and HSBC Bank are not made parties. The claims/amounts that the plaintiff has against said ICICI Bank and HSBC banks have not been included in the present suit claim. The presence of said banks are not at all necessary for the effective disposal of the present suit. The plaintiff claim against each of the defendant banks is separate and distinct. So suit is not bad for non-joinder of parties as ICICI bank and HSBC banks are neither proper nor necessary parties. Accordingly, I answer Issue No.8 in the negative.
CCH-33 57 OS.2152/03
51. Issue No.9: The reasons stated in the above issues, plaintiff has proved that first defendant has forged the signatures of the authorised signatories of cheques and played fraud. Further plaintiff proves that defendant No.2 bank acted negligently by opening the accounts in the name of first defendant in 3 fictitious accounts without obtaining address proof. So also proved that defendant Nos.3 and 4 acted negligently without comparing the signatures with the specimen signature, so plaintiff has proved that defendant Nos.1 and 2 jointly and severally liable to pay a sum of Rs.1,58,61,176/- out of which 3rd defendant is liable to pay along with defendant Nos.1 and 2 a sum of Rs.25 lakhs and 4th defendant is liable to pay a sum of Rs.68,61,176/-.
52. Plaintiff further claimed interest at 24% p.a., in a sum of Rs.87,67,200/- in all claiming Rs.2,46,28,376/-. Of course, plaintiff paid entire court fee on the said amount. However, in the absence of contracted obligation, plaintiff is not entitled for the interest prior to filing of the suit as per 58 General Clause Act. plaintiff is not entitled for previous interest. However, plaintiff is entitled for interest from the date of suit till realisation of decreetal amount. Plaintiff claiming 24% p.a., is on higher side. He is not claiming interest as per the norms of RBI. Plaintiff is entitled for reasonable interest as per the norms of RBI at 9% p.a., from the date of suit till realisation. In the result, I answer Issue No.9 partly in the affirmative.
53. Issue No.10: In the result, I pass the following:-
ORDER The suit filed by the plaintiff U/S.26 R/w.Order 7 Rule 1 of CPC., is hereby partly decreed with proportionate costs.
The plaintiff company is entitled for a sum of Rs.1,58,61,176/- with interest at 9% p.a., from the date of suit till realisation.
Defendant Nos.1 and 2 are jointly and severally liable to pay the decreetal amount.
CCH-33 59 OS.2152/03 Further defendant No.3 bank is jointly and severally liable to pay a sum of Rs.25,00,000/- with proportionate costs and interest along with defendant Nos.1 and 2.
Further defendant No.4 bank jointly and severally is liable to pay a sum of Rs.68,61,176/- with proportionate costs and interest along with defendant Nos.1 and 2.
Draw decree accordingly.
[Dictated to the stenographer, transcribed and computerised by her, corrected, signed and then pronounced by me in Open Court on this the 29th day of July, 2016.] (D.Y.BASAPUR) XXXIII ADDL. CITY CIVIL JUDGE, BANGALORE CITY.60
ANNEXURE
1. List of witnesses examined for the:
(a) Plaintiff:
P.W.1 Gurudatt Prabhakar
(b) Defendant :
D.W.1 : Sri G Srinivasa Rao
D.W.2 : K.A.Subbarao
D.W.3 : Pantalors Sugunan
D.W.4 : Bandinarayan
2. List of documents exhibited for the:
(a) Plaintiff:
Ex.P.1 Resolution extract
Ex.P2 to 33 Cheques
Ex.P.34 Incorporation (copy)
Ex.P.35 True copy of minutes of meeting dt:
15/3/2000
Ex.P.36 True copy of minutes of meeting dt:
23/10/2000
Ex.P.37 Minutes of the Meeting
Ex.P.38 Certified true copy of extract of minutes
of meeting dt: 12/7/1999
Ex.P.39 Annexures
Ex.P.40 Copy of letter dt: 14/12/2004
CCH-33
61 OS.2152/03
Ex.P.41 Ledger account extract from 1/4/2000 to 22/2/2001in respect of Voltas Ltd.
Ex.P.42 Ledger account extract from 1/4/2000 to 31/3/2001 in respect of M.A.Abletech Electro Engineering Pvt.Ltd., Ex.P.43 Ledger account extract maintained by plaintiff from 1/4/2000 to 31/3/2001 in respect of Fabricana Interior Decorators Ex.P.44 Ledger account extract from 1/4/2000 to 31/3/2001 in respect of ESSKAYBEE Development Pvt. Ltd.
Ex.P.45 Copy of letter dt: 18/6/2004 addressed by plaintiff to Mr. Meghannavar, Dy.S.P. and its Annexures consisting of 44 pages Ex.P.46 Copy of letter dt: 15/12/2004 addressed by plaintiff to Mr. Meghannavar, Dy.S.P. along with enclosures consisting of 10 pages Ex.P.47 Copy of letter dt: 10/04/2004 addressed by plaintiff to Mr. Meghannavar, Dy.S.P. along with enclosures consisting of 22 pages Ex.P.48 Copy of letter dt: 10/04/2002 addressed by plaintiff to Mr.Sanjay Sahay, IPS Ex.P.49 Copy of letter dt: 20/02/2004 addressed by plaintiff to Mr. Meghannavar, Dy.S.P. along with enclosures consisting of 119 62 pages Ex.P.50 Copy of letter dt: 27/03/2001 addressed by plaintiff to the Manager, Union Bank of India Ex.P.51 Letter dt: 7/4/2001 addressed by Union Bank of India to plaintiff Ex.P.52 Copy of letter dt: 29/03/2001 addressed by plaintiff to the Manager, Union Bank of India Ex.P.53 Copy of letter dt: 12/01/2005 addressed by plaintiff to Mr. Meghannavar, Dy.S.P. along with enclosures consisting of 8 pages Ex.P.54 Copy of letter dt: 22/11/2004 addressed by plaintiff to Mr. Meghannavar, Dy.S.P. along with enclosures consisting of 2 pages Ex.P.55 Copy of letter dt: 7/01/2005 addressed by plaintiff to Mr. Meghannavar, Dy.S.P. along with enclosures consisting of 4 pages Ex.P.56 Letter addressed to COD by Union Bank of India Ex.P.57 Certified xerox copy of account opening form in the name of Fabricana in Union Bank of India.
Ex.P.58 Account Extract of Fabricana maintained in Union Bank of India Ex.P.59 Certified copy of account opening form in the name of ESSKAYBEE CCH-33 63 OS.2152/03 developments in Union Bank of India.
Ex.P.60 Statement of accounts in the name of ESSKAYBEE developments in Union Bank of India.
Ex.P.61 Letter addressed by Union Bank of India to COD dt: 14/2/2004 Ex.P.62 Account statement in respect of EssKayBee developments for the period 23/2/01 to 313/01 maintained in Union Bank of India Ex.P.63 letter addressed by Union Bank of India to COD dt: 08/12/2004 Ex.P.64 Copy of letter addressed by Union Bank of India to COD Ex.P.65 Account opening form in the name of Karnataka Industrial Gases with Union Bank of India.
Ex.P.66 Account statement in respect of Karnataka Industrial Gases for the period from 1.8.00 to 1.8.00 Ex.P.67 Account statement in respect of Karnataka Industrial Gases for the period from 1.4.00 to 31.3.01 Ex.P.68 Account statement in respect of Karnataka Industrial Gases for the period from 7.5.01 to 31.3.02 Ex.P.69 Account statement in respect of Karnataka Industrial Gases for the period from 1.4.02 to 26.1.03 64 Ex.P.70 Account statement in respect of Karnataka Industrial Gases for the period from 1.9.00 to 31.3.01 Ex.P.71 Account statement in respect of Karnataka Industrial Gases for the period from 15.1.01 to 31.3.01 Ex.P.72 Account statement in respect of Karnataka Industrial Gases for the period from 1.4.01 to 30.6.01 Ex.P.73 Letter addressed by Union Bank of India to COD Ex.P.74 Letter dt: 15/3/2004 addressed by Sri. A.S.Meghannanavar, DCP,COD to F.S.L for examining disputed documents with Annexures (consisting of 9 pages) Ex.P.75 Report issued by F.S.L authorities (kept in polythene cover) Ex.P.76 Certified true copy of ledger account of IOCL maintained in IT Park Ltd., for the period from 1.4.00 to 22.2.2001.
Ex.P.77 Copy of letter dt: 14/12/04 written by Deputy Superintendent of Police COD to Mr. Swapan Ghosh of Voltas.
Ex.P.78 Reply given by Voltas Ltd., to COD. Ex.P.79 Copy of letter dt: 14/12/2004 written by Deputy Superintendent of police COD to Proprietor, Able TECK.
Ex.P.80 Reply dt: 22/12/2004 given by ABLE TECK to COD CCH-33 65 OS.2152/03 Ex.P.81 Copy of letter addressed by DY.S.P., COD to MD, Fabricana Exhibition System.
Ex.P.82 Reply by Fabricana to COD Ex.P.83 Copy of the letter dt: 9.6.01 written by ESKEYBEE Developments Pvt Ltd., to IT Park Ltd., Ex.P.84 Copy of letter dt: 7.1.05 addressed by Dy.S.P., COD to Vijaya Bank Ex.P.85 Reply of Vijaya Bank to Dy.S.P.,COD Ex.P.86 Copy of letter dt: 12.2.04 addressed by Dy.S.P.,COD to Union Bank of India Ex.P.87 Copy of letter dt: 14.2.04 addressed by Dy.S.P.,COD to Union Bank of India Ex.P.88 Copy of letter dt: 14.2.04 addressed by Dy.S.P.,COD to Union Bank of India Ex.P.89 Copy of letter dt: 12.2.04 addressed by Dy.S.P.,COD to Union Bank of India Ex.P.90 Copy of letter dt: 14.2.04 addressed by Dy.S.P.,COD to Union Bank of India Ex.P.91 Copy of letter dt: 19.5.04 addressed by Dy.S.P.,COD to Standard Chartered Bank.
Ex.P.93 Copy of letter addressed by COD to Ravindu Motors Ex.P.94 Letter dt: 3.6.04 addressed by Ravindu 66 motors to COD Ex.P.95 Copy of letter addressed by COD to Sagar Automobiles Ex.P.96 Letter dt: 19.11.04 addressed by Sagar Automobiles to Dy.S.P.,COD Ex.P.97 Copy of letter dt.20/1/05 addressed by Dy.S.P., COD to M/s Sea rock Precision Ex.P.98 Reply dt.20.1.05 addressed by M/s Sea rock Precision to Dy.S.P.COD Ex.P.99& 100 2 letters dt:3.2.05 addressed by Municipal Office, Bommanahalli to Ex.P.101 Letter dt.14.12.2004 addressed by HDFC Bank to Dy.S.P., COD along with Annexures(totally) 6 Ex.P.102 Letter dt.10.12.2004 addressed by Syndicate Bank to Dy.S.P. COD along with Annexures (totally 14 pages) Ex.P.103 Letter dt. 9.12.2004 addressed by NCB to Dy.S.P., COD along with Annexures (totally 11 pages).
Ex.P.104 Copy of letter dt.6.12.2004 addressed by Dy.S.P., COD to SBI.
Ex.P.105 Letter dt.13.1.2005 addressed by SBI to COD with Annexures (totally 10 pages).
Ex.P.106 FSL Report 22.1.2005
(b) Defendants:
CCH-33
67 OS.2152/03
Ex.D.1 : Copy of GPA
Ex.D.2 : Copy of Requisition
Ex.D3 : Letter of Authorisation
Ex.D.4 : Account Extract
Ex.D.5 : Application form of Indian Bank Ex.D.6 : Letter dt. 12.11.99 Ex.D.7 : Letter of dt.20.11.99 Ex.D.8 : Santosh advice Ex.D9 : Account opening form Ex.D10 : Legal notice 26.8.2002 Ex.D11 : Legal Notice 24.10.2002 Ex.D12 : Copy of Account opening form Ex.D13 : Specimen Card Ex.D14 : Statement of Accounts Ex.D15 : Letter (D.Y. BASAPUR) XXXIII ACC & SJ & SPL.JUDGE (NDPS) BANGALORE.
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