Delhi District Court
7 vs Icici Bank Ltd on 29 April, 2019
IN THE COURT OF SH. JOGINDER PRAKASH NAHAR,
ADDITIONAL DISTRICT JUDGE, CENTRAL, TIS HAZARI, DELHI
Suit No.13266/16
Punjab National Bank,
a body Corporate, constituted under
the banking companies (acquisition &
transfer of udnertaking Act, 1970
(Act No.5 of 1970) having its Office at
7, Bhikaji Cama Place, New Delhi - 66
and having amongst other back office
cum service branch at Paharganj, New Delhi. ....Plaintiff
VERSUS
1. ICICI Bank Ltd., a body Corporate
with Perpetual Succession, incorporated and
constituted under Companies Act, 1956, and
a banking company within the meaning of
banking regulation Act, 1949 having its
registered Office at Landmark, Race Course Circle,
Vadodara - 390007 & Regional Processing Centre,
inter alia at E4 Jhandewalan Extension,
New Delhi - 110055 through its Chief Manager
2. Sh. Ashok Kumar,
R/o E4/440, Nand Nagari,
New Delhi - 110095
3. Sh. Hadi Ali
R/o I634, Govindpuram,
Suit No.13266/16
Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 1 of 35
Ghaziabad, U.P. 201013. ..... Defendants
Date of Institution : 12.12.2012
Date of Arguments : 26.04.2019
Date of judgment : 29.04.2019
Suit for Recovery of Rs.6,56,386/ alongwith Costs, Pendente
Lite and Future Interest
JUDGMENT
Brief facts and reasons for decision :
1. The plaintiff has filed the present suit for recovery of Rs.6,56,386/ against the defendants. It is submitted that defendant no.1/ICICI Bank Ltd. had sent a cheque for collection to the back officecumservice branch of the plaintiff bank at Paharganj, New Delhi bearing no.TUT 382673 dated 26.11.2009 for a sum of Rs.4,25,000/. The cheque was drawn by defendant no.3 Sh. Hadi Ali who is account holder at Govind Puram Branch, Ghaziabad, U.P. of the plaintiff bank/PNB Bank and it was drawn in favour of defendant no.2 Sh. Ashok Kumar having account at ICICI Bank. The plaintiff bank believed the cheque being genuine and made the payment through CTS clearing of defendant no.3 Sh. Hadi Ali bearing account no.4039000100009934. On 01.12.2009 defendant no.3 had informed vide a letter that the said CTS clearing and Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 2 of 35 debiting from his saving account in favour of Sh. Ashok Kumar/defendant no.2 is on the basis of false and fabricated cheque. Defendant no.3 did not issue any cheque with the said series and the number is lying blank in his custody and possession. Defendant no.3 demanded back the debited amount. The plaintiff bank lodged a claim with defendant no.1 the PNB Bank vide letters dated 01.12.2009, 16.12.2009, 20.04.2010 and 05.05.2010. It was also requested to defendant no.1 to deliver for verification and record the impugned original cheque in possession of defendant. The cheque was not returned though reply dated 17.12.2009 and 09.06.2010 was given only to delay the proceedings.
2. It is submitted by the plaintiff that defendant no.1 did not dealt carefully with the opening of account of Sh. Ashok Kumar/defendant no.2 for collection of cheques. The cheque was forged on cheque proforma, signatures, cheque number, therefore it was not a mandate of defendant no.3. Defendant no.1 had made false misrepresentation that it was a valid cheque and deceived the plaintiff bank. Recall notice dated 06.06.2012 was also issued to defendant no.1 who did not care to reply neither remitted the amount back. A criminal complaint dated 14.06.2010 was also lodged against defendant no.2 before EOW Crime Branch, New Delhi.
Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 3 of 35Defendant no.3 is proforma defendant. Joint and several liability against defendants no.1 & 2 is claimed alongwith liability for interest. Accordingly, plaintiff has prayed for recovery of the cheque amount alongwith presuit interest, pendente lite and future interest @ 18% p.a. alongwith costs of the suit.
3. Written statement is filed by defendant no.1 in which it is submitted that there was no difference in the apparent tenor of the electronic image and the truncated cheque and therefore the defendant no.1 is not liable. It is submitted that defendant no.2 & 3 had connivance with each other. As per RBI Guidelines the apparent tenor and physical feel if satisfied then there is no liability on defendant no.1. There is no tampering visible to naked eye with reasonable examination. Under Sec.89 (2) of Negotiable Instrument Act and Sec.131 Explanation II of NI Act it is laid down that it shall be duty of the clearing house to ensure exactness of the apparent tenor of the electronic image while truncating and transmitting the image and that the responsibility of collecting bank in CTS is restricted to verify prima facie genuineness. Under 64 (2) of Negotiable Instrument Act the plaintiff bank had opportunity to call for further information before clearing the same. It is duty of the collecting bank to ensure that the image of the cheque transmitted Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 4 of 35 and the actual cheque held on record in truncation do not differ and the image is exact that of physical cheque held with the collecting bank. In fact the plaintiff was not careful and cautious. Hence responsibility continue to rest with the plaintiff bank. There is not appearing apparent deficiency in the said cheque which could be found by ordinary care and naked eye. The plaintiff did not complain about difference in the signature of the customer in its record which is an important feature for clearance of cheque hence no negligence was caused by defendant no.1. It is submitted that the suit is filed after three years of presentment of cheque on 26.11.2009 after a lapse of three years and hence barred by limitation. It is prayed that suit of the plaintiff may be dismissed with costs.
4. Replication is filed by the plaintiff in which plaintiff has reaffirmed the averments made in the plaint and denied the averments of the defendant.
5 On the pleadings of the parties and averments made the following issues were framed on 14.07.2015 which are reproduced as under:
1) Whether the plaintiff is entitled for recovery of suit amount of Rs.6,56,386/ alongwith an interest @ 18% p.a., as per prayer (a) or if any, what amount with what interest, at Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 5 of 35 what rate and for what period? OPP.
2) Whether the suit is not maintainable within the provisions of Negotiable Instruments Act and that the defendant no.1 was not responsible for fault of defendant no.2 & 3 who are having connivance with each other and with the plaintiff ? OPD1
3) Relief.
6. Defendants no.2 is exparte vide order dated 18.04.2015 who was served by way of publication in the newspaper 'The statesman' dated 11.02.2015. Defendant no.3 was proceeded ex parte vide order dated 21.05.2014 who was found duly served and had also filed reply as reflected in order dated 27.05.2013.
7. Plaintiff has got examined PW1 Sh. B.R. Birdi the sole witness for the plaintiff and PE was closed vide separate statement of Ld. Counsel for plaintiff on 02.08.2018. The only witness in defence of defendant no.1 is DW1 Sh. Abhishek Saxena, the Legal Manager in ICICI Bank whose documents are Ex.DW1/1 to Ex.DW1/3, Account Opening Form is Mark A (colly.). Vide separate statement of AR of the defendant, the DE was closed on 22.01.2019.
Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 6 of 358. Arguments heard and record perused.
9. The issue wise findings are as under:
10. Issue No.1 - Whether the plaintiff is entitled for recovery of suit amount of Rs.6,56,386/ alongwith an interest @ 18% p.a., as per prayer (a) or if any, what amount with what interest, at what rate and for what period? OPP.
10.1 The burden of proof of the present issue is upon the plaintiff. It is deposed by PW1 that the genuineness of the cheque was believed on the strength of truncated image sent by defendant no.1. It is submitted that the defendant no.1 is negligent in opening bank account of defendant no.2 without verifying his KYC details. Only on photocopies and without verification and also without any introducer to open the account facility was granted to defendant no.2. The forgery in the cheque Ex.DW1/2 in the number "8" bearing cheque no.382673 could have been detected easily by defendant no.1 but only due to their negligence. 10.2 The Ld. Counsel for defendant has submitted that the plaintiff has not produced original of Ex.DW1/2 if available with the defendant no.3 to show that if it was with connivance with defendant Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 7 of 35 no.3 only. The PW1 has deposed that the genuine cancelled blank cheque is Ex.PW1/2. The plaintiff bank has settled the amount with defendant no.3 having paid it to him and therefore required to recover it from defendant no.3 at whose negligence it was paid to defendant no.2. It is submitted by the plaintiff that the misrepresentation on Ex.DW1/2 is on the face of it and defendant no.1 has not carefully scrutinized the cheque. Complaint was also given to Economic Offence Wing, Delhi Police on 14.06.2010 vide Ex.PW1/10.
10.3 It is submitted by Ld. Counsel for plaintiff that the defendant bank is negligent in opening the account as complete KYC formalities had not been done in its part. Ld. Counsel for plaintiff has pointed out the statement of account of defendant no.2 at the time of opening of his account with defendant no.1 which is at page no.10 Mark A (colly.) that when only very few transactions are there in the account then the defendant no.1 was required to make further enquiries. It is noted that the account was opened on 18.06.2008 and the cheque in question bears date of 06.11.2009 which was encashed on 26.11.2009. Hence there is considerable gap in the date of opening of the account and presentment and encashment of the cheque. In fact the account represents to bouncing of cheques in the said period of the year 2009. However Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 8 of 35 there is a gap of long time in the opening of account and the encashment of the cheque. The plea of KYC could have been taken had there been close proximity in the opening of account and in the encashment of the cheque. There has to be sufficient connection between opening of account and the negligence alleged. For determination of liability what is relevant is not the negligence in opening the account of the customer/defendant no.2 but negligence in connection of the relevant cheque unless opening of account and deposit of the cheque form part and parcel of one scheme. The collecting bank is not liable where it acts reasonably and does not indulge in any negligence respecting the transaction concerning wrongful presentation on receipt of value of forged instrument. Even if there is negligence in opening of account that ipsofacto would not result in loss to the true owner of the cheque collected and the negligence has to be proved in respect of the specific transactions when there is considerable distance in the encashment of the cheque and opening of the account. In the present case the gap in encashment of the cheque and opening of the account is of near about a year and therefore there is no close proximity to the alleged fraud committed by defendant no.2. Hence it cannot be said that the defendant no.1 had acted negligently in opening the account of defendant no.2. The law discussed above is laid down in case titled Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 9 of 35 Axis Bank Vs. PNB & anr. from Hon'ble High Court of Delhi in WP(C) No.6201/2014 (DB) dated 28.03.2015 at relevant para - 26, 28, 33, 35, 36, 39, 41 & 42 which are reproduced here as under : "26. The appellant claims protection under Section 131 of Negotiable Instruments Act which reads as under:
131. Nonliability 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 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."
[emphasis supplied] xxxxxxxxxxx In order to secure payment against such instruments, they are commonly presented in the usual course of business by the payee to the drawee bank through the bank where the payee holds an account. The bank which is bound to pay against the Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 10 of 35 instrument is the agent of its drawer. Similarly, the collecting bank which presents the instrument on behalf of its customer acts, for purposes of collection, as an agent of the latter. In that capacity, the collecting bank is entitled to all the rights of an agent against his principal and, thus, can claim indemnity from the customer on whose behalf it may have presented the instrument which is returned dishonoured such that it can debit him to the extent of value of the dishonoured instrument or with any amount for which it has been found liable to a true owner. The collecting bank is not liable where it acts reasonably and does not indulge in any negligence respecting the transaction concerning wrongful presentation or receives value of a forged instrument.
28. As mentioned earlier, by virtue of Section 131A, the aforequoted provision contained in Section 131 (falling in Chapter XIV) applies to a case of demand draft as well, "as if the draft were a cheque". Section 131 is a protection meant for a collecting bank. Since the collecting bank generally acts as an agent of its customer, it is not expected to take a direct responsibility for the negotiable instrument deposited with it for presentation to the bank on which it is drawn. Nonetheless, it is expected to be vigilant against forgery or attempts to deceive or defraud. In order to show that the collecting bank acted in good faith and was not negligent, it must be in a position to confirm the genuineness of the identity of the customer on whose behalf it purports to collect. Generally speaking, such scrutiny of the identity of the customer would be undertaken when his request for account to be opened is entertained. Though the second explanation to Section 131 quoted above Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 11 of 35 relates to cheques presented electronically, it provides some guidance as to the extent of scrutiny of the negotiable instrument presented through it. To fasten the responsibility for cheating on account of fabrication, the forgery or tampering must be such as can be detected from the face of the instrument by applying ordinary care and diligence.
33. In the appeal before the Supreme Court, the appellant bank claimed immunity on the ground that it had not been negligent either at the stage of opening of the account or when the cheques were presented for collection. The court ruled on the issue of "standard of care" at the stage of opening an account in the following manner: "26. We have already observed that the principle enunciated in the Commissioners of Taxation v. English Scottish and Australian Bank [1920 AC 683] is that the opening of the account is material as shedding light on the question whether there was negligence in collecting a cheque does bring out the true position that there must be sufficient connection established between the opening of the account and the collection of the cheque before a defence under section 131 could be held to be barred. The question would then be one of facts as to how far the two stages can be regarded as so intimately associated as to be considered as one transaction. ... Even if there was negligence in opening of the account that act ipso facto would not result in loss to the true owner of the cheque collected. While collecting the cheque for a customer the bank is under obligation to present it promptly so as to avoid any loss due to change of position. When it receives the money collected then also there is no direct loss to the true owner. It is only when the amount is paid or Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 12 of 35 withdrawn by the customer that the loss results. During this period what is important to note is that at every step in collection of the money and making payment the banker is bound by the banker customer relationship and rights and obligations flowing therefrom. Even so, if there was anything to rouse suspicion regarding the cheque and ownership of the customer the banker may find itself beyond the protection of section 131. The scope or ambit of possible suspicion will depend on various situations that may have prevailed between the drawer of the cheque and the customer..."
27... It is a settled law that the test of negligence for the purpose of section 131 of the Act is whether the transaction of paying in any given cheque coupled with the circumstances antecedent and present is so out of the ordinary course that it ought to arouse doubts in the banker's mind and cause him to make inquiries. ... The banker is bound to make inquiries when there is anything to rouse suspicion that the cheque is being wrongfully dealt with in being paid into the customer's account. However, the banker is not called upon to be abnormally suspicious ..."
35. In Kerala State Cooperative Marketing Federation v. State Bank of India & Ors., II (2004) BC 1 (SC), the facts were similar to those of the case at hand. The bank account had been opened with the respondent bank by a fictitious person. A cheque stolen during postal transit had been altered so as to be read as payable to the accountholder. The cheque was deposited whereupon amount was collected by the respondent bank. When the fraud came to light, the balance in the account in question was restored by the bank to the plaintiff. In due course, the drawee bank sued for recovery to the Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 13 of 35 extent of wrongful loss. The collecting bank contested, inter alia, pleading protection under Section 131 of Negotiable Instruments Act. This plea was upheld by the High Court. The claimant carried appeal before the Supreme Court, inter alia, alleging that the collecting bank had not discharged its burden so as to show it had acted in good faith and without negligence. The Supreme Court culled out the principles governing the liability of a collecting banker (in Para 10 of the reported judgment) as under: "(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 whom 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 fulfills 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.
(4) The standard of care to be exercised by the collecting banker to escape the charge of negligence depends upon the general practice of bankers 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 Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 14 of 35 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 of 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 nonexisting 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.
(8) The question of good faith and negligence is to be judged from the stand point 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 Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 15 of 35 common law.
(9) Allegation of contributory negligence against the paying banker could provide no defence for a collecting banker who has not collected the amount in good faith and without negligence."
[emphasis supplied]
36. In the case of Kerala State Cooperative Marketing Federation (supra), on facts, it was held that the bank was liable since the transactions concerning the opening of the account, deposit of the forged instrument and its withdrawal took place in close proximity of each other so as to be treated as "all part of the same transaction", in that the accountholder had given an absolutely vague address; the bank had made no inquiry in such regard or as to the creditworthiness of the account holder, and further, no inquiry was made by the bank with the introducer after the forgery had been brought to light and notice for stop payment issued.
39. It is pertinent to note that in Industrial Chain Concern (supra) while holding the bank to be "not negligent", the Supreme Court (in Para 37) observed thus: "37...that expansion of the banker's liability and corresponding narrowing down of the banker's protection under the provision of section 131 of the Act may make the banker's position so vulnerable as to be disadvantageous to the expansion of banking business under the ever expanding banking system. This is because a commercial bank, as distinguished from a Central bank, has the following characteristics, namely (a) that they accept money from, and collect cheques for, their customers and place them to their credit; (2) that they honour cheques or orders drawn on them by their customers Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 16 of 35 when presented for payment and debit their customers accordingly; and (3) that they keep current account in their books in which the credits and debits are entered. The receipt of money by banker from or on account of his customer constitute it the debtor of the customer. The bank borrows the money and undertakes to repay it or any part of it at the branch of the bank where the account is kept during banking hours and upon payment being demanded. The banker has to discharge this obligation and normally the banker would not question the customer's title to the money paid in. Applying the above principles of law to the facts of the instant case we are not inclined to hold that the Bank was negligent either in collecting the cheques and drafts or allowing Sethuraman to withdraw the proceeds."
41. Whilst we agree that the appellant had been negligent in allowing account to be opened, we are unable to locate on the record any material to show that it had failed to exercise due care in presenting the two demand drafts for collection to PNB. There is no proximate connection between the opening of the account or the deposits of the forged instruments so as to treat the said events as intimately associated with each other. There is no undue hurry shown by the fraudster in making the withdrawals. It is not the case of PNB that the forgery could have been detected by the collecting bank from the face of the instruments. The fact that the forgery could not be detected by the Centralized Draft Payable Centre of PNB itself shows that the collecting bank could not have entertained any doubts as to the genuineness at the time of receiving the drafts from the customer or for making them over to the drawee bank for Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 17 of 35 collection. The DRAT has found PNB also to have been negligent in these transactions. There is reference to evidence indicating that draft forms had been lost by PNB in some incident of dacoity. With this as the backdrop, the officials at the clearing house representing the PNB would have been on guard and, thus, clearly neglected their responsibility of due scrutiny. The hurried manner in which remittances were made to the appellant bank on the same date as of the respective presentation of the two forged instruments speaks volumes as to the failure of claimant PNB to exercise appropriate standards of care.
42. It needs to be noted that the appellant bank gave credits and allowed withdrawal of the money only after receiving the credits from PNB. With no input available to the collecting bank as to the possibility of forgery, there was no reason for it to be abnormally suspicious or to question the customer as to his title to the money represented by the demand drafts. In receiving the demand drafts from the customer and in presenting it to the bank on which they purported to have been drawn, it was only acting in the course of its banking business as the agent for such customer. In absence of any nexus between the two stages of the process, negligence cannot be attributed to the appellant in the context of collection of the 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."
10.4 The Ex.DW1/P1 & P2 which are photocopies of PAN card and Voter ID card bear stamp of defendant no.1 that at the time of Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 18 of 35 opening of account the original had been seen i.e. verification was done with the original. The KYC report is Ex.DW1/P4. The statement of bank account of another bank account of defendant no.2 is Ex.DW1/P3 which is for a period of last six months. 10.5 Ld. Counsel for plaintiff has submitted that the cheque Ex.DW1/2 produced in original by defendant no.1 bears no.382673. The digit number '8' is otherwise slightly different from other number in the cheque. The cheque is perused. It is noted that digit number '8' as such bears dark impression at lower end. However same is the case with digit number 3 & 4 in the same line. Therefore from naked eye it cannot be said or found that the cheque is forged and fabricated document. In fact the plaintiff has claimed that the original of cheque was already available with defendant no.3. Defendant no.3 is exparte in the present case. The plaintiff before refunding the amount to defendant no.3 if had taken the said cheque from defendant no.3 then the said cheque should have produced before the present Court . In the present case the plaintiff has failed to prove that the cheque Ex.DW1/2 is not the same cheque which it had issued to defendant no.3. Had it been the same cheque then the finding and conclusions has to be different. When the plaintiff has not produced the original cheque before the present Court after collecting it from its customer bearing the same serial number and Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 19 of 35 before refunding the cheque amount to defendant no.3 therefore the plaintiff has failed to discharge onus upon him. Plaintiff was in a better position to produce the said cheque before the present Court. Therefore it cannot be said that it is the same cheque or a different cheque which plaintiff had issued to defendant no.3. In fact during course of evidence and in crossexamination of DW1 it has come on record that the cheque was passed through scanner. DW1 has deposed that only in case of failure the MICR test report is generated and not otherwise when there is success. According to plaintiff even when there is success the MICR report should have been generated. However, different banks follow different rules and plaintiff has failed to produce any such mandatory requirement or even part of its own rules that in case of success of cheque through scanner any MICR report is generated. DW1 has also deposed that the UV lamp test was also conducted on the cheque in question which bears report alongwith stamp logo on back side of Ex.DW1/2. It is deposed by DW1 that where the instrument fails the test then MICR failure report is generated in such cases. In case titled Axis Bank (supra) it is laid down at para no.35 (7) that 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. It must be proved by the plaintiff that there is disregard Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 20 of 35 of circumstances about the cheque on the face of it giving rise to suspicion and which are not enquired then it may amount to negligence on the part of collecting bank. In fact in the present case except pointing out the number '8' on the cheque Ex.DW1/2 the plaintiff has failed to point out any other forgery on the cheque on the face of it. Ld. Counsel for defendant has pointed out that when the truncated image of the cheque is sent to the plaintiff bank then it could be enlarged and could be verified by the plaintiff bank. Colour copy is sent. The plaintiff bank itself failed to find out any deficiency in the image sent which shows that the fraud or forgery as such on the alleged cheque cannot be found on the face of it. The digit "8" on the cheque Ex.DW1/2 is already discussed above in detail wherein it is already held that on the face of it by reading such digit "8" it cannot be said that the cheque in question is forged and fabricated.
10.6 Ld. Counsel for plaintiff has submitted that the account was opened in the name of Sh. Ashok Kumar. However in Ex.DW1/P2 Voter ID the name is mentioned as Ashok only. It is already noted above that there is no proximity in the opening of account of defendant no.2 and encashment of the cheque in question. Even when there is negligence in opening of the bank account it cannot be said that this has proximity to the transaction Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 21 of 35 relating to the cheque in question to override immunity available to the defendant no.1. Under Sec.131 of Negotiable Instrument Act, 1881. On this account even in absence of personal visit at home of defendant no.2 at the time of opening of account does not take away the immunity available to defendant no.1.
10.7 In reference to reply to legal notice vide Ex.P5 it is argued by Ld. Counsel for plaintiff that the negligence is admitted by defendant no.1 in that there is minor alteration on the face of the cheque. It is replied at para1 of Ex.DW1/P5 that the said minor alteration visible on the face of cheque Ex.DW1/2 as to number on cheque is suspected to be altered by someone. It is replied on cheque Ex.DW1/2. It was a finding at a later date and not during examination of cheque. Further as per the said cheque Ex.DW1/2 it is submitted by defendant no.1 that the cheque is original. It is denied by plaintiff. Hence the plaintiff has to admit the statement as such. However case of the plaintiff is that the original cheque is already available with defendant no.3. Therefore on the face of the cheque it cannot be said that it is not a original cheque. Further the said reply in Ex.DW1/P5 does not mention that how such doubt has arose and who has such doubt in the cheque. It is nowhere stated by defendant no.1 that what is suspected to be altered in Ex.DW1/5. The case of the plaintiff is not based upon such doubt which has neither come on record factually Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 22 of 35 nor in evidence but the case of the plaintiff is based upon negligence of the defendant for which plaintiff must prove want of due and reasonable care on behalf of defendant no.1. Hence no benefit can be given to the plaintiff for such observation in Ex.DW1/P5. 10.8 Ld. Counsel for the plaintiff has submitted that vide Ex.DW1/P4 and the account statement of defendant no.3 shows that there are insufficient funds on 04.03.2004 and therefore the defendant no.1 should have become suspicious of such large transaction in the account of defendant no.1. Therefore defendant no.1 should not have paid the cheque amount. Therefore defendant no.1 is negligent. However plaintiff is required to show that defendant no.2 was in unreasonable hurry in encashment of the cheque which is different from the date of opening of the account. The circumstances present and antecedent must be so out of ordinary course that it ought to arise doubts in the banker's mind and cause him to make enquiries. However such doubt must be relating to the fact of the cheque being wrongfully dealt with and the banker cannot be called to be abnormally suspicious. It was so laid down in para no.33 of the case titled Axis Bank (supra). Hence the question revolves around the circumstances as existed at the time of encashment of the cheque which must arise from the cheque itself and circumstances present at that time when there are no input Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 23 of 35 available to the collecting bank as to possibility of forgery. When there is no reason for it to be abnormally suspicious or to question the customer as to his title to the money. This was laid down at para no.41 of the case titled Axis Bank (supra).
10.9 Ld. Counsel for plaintiff has relied on citation titled Indian Overseas Bank Vs. HDFC Bank Ltd. & anr. II(2018) BC 301 (Delhi) wherein at para no.6 & 8 Hon'ble High Court of Delhi has relied on citation titled Kerala State Cooperative Marketing Federation Vs. SBI & anr. I (2004) SLP 826 = (2004) 2 SCC 425. The above citation is also relied and referred by Hon'ble High Court of Delhi in case titled Axis Bank (supra). The principles governing the liability of collecting banker in respect of opening of account are already discussed above. Therefore it has to be seen that whether the circumstances existing in the opening an account are so proximate and connected to shed light on the question of negligence in collecting a cheque. It is already held above that the proximity in opening of the account is not available in the present case with the encashment of the disputed cheque and ipsofacto it does not make the defendant no1 liable for encashment of the cheque in question on the said ground of opening of account.
10.10 The copy of the genuine cheque produced by plaintiff is Mark B. It was required upon the plaintiff to produce original of the Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 24 of 35 same to compare with the original of Ex.DW1/2 if the two documents make out for any difference on the face of it. The burden of proof was on the plaintiff to show that there is such difference in the above two documents which can be made out on the face of it. The sample signatures of defendant no.3 should have also been taken with report of Handwriting Expert/FSL to prove that such signature on Ex.DW1/2 does not pertain to the account holder. It is important to note that the cheque Mark B bears the same serial number which is mentioned in Ex.DW1/2. When the plaintiff has not produced the original of Mark B to prove that there is such defect in Ex.DW1/2 which can be seen on the face of it by a person of ordinary prudence then it cannot be said that there was negligence on the part of defendant no.1 on such account. The difference with the original cheque with defendant no.3 needs to be proved. 10.11 Ld. Counsel for plaintiff has submitted that the bank account statement of Bank of Baroda taken from defendant no.2 pertains to period of about three months only which is at page 9 & 10 of Mark A (colly.). It is submitted that the bank account statement should have been taken for a period of six months atleast. However no mandatory provision as such is shown by the plaintiff in this account or that the defendant no.1 has given a go by to prescribed rules of procedure. In absence of which negligence as such in Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 25 of 35 favour of plaintiff cannot be attributed to defendant no.1. 10.12 The account statement of defendant no.2 with defendant no.1 is Ex.DW1/P3 from 04.06.2009 till 30.12.2013. The account was opened with ICICI Bank on 18.06.2008 which is mentioned on the first page. The cheque in question was encashed on 26.11.2009 in the account of defendant no.2. There are ten transactions in between 26.11.2009 and 27.11.2009 and lastly on 27.11.2009 the complete amount was withdrawn by defendant no.2 from his account. However conduct of defendant no.2 has to be seen before encashment of the cheque in question. It is noted that since the opening of account of defendant no.2 on 18.06.2008 there were several transactions of small amount and the maximum amount accumulation in the account was Rs.69,630/ on 09.06.2009. However the opening of account on 18.06.2008 and the encashment of cheque in question on 26.11.2009 is quite a long period to connect at all the negligence if any of the defendant with the opening of account or to suspect the conduct of defendant no.2 in submitting documents of his identity. Hence on this account defendant no.1 is not found negligent.
10.13 Ld. Counsel for defendant no.1 has submitted that the suit is not duly instituted as PW1 has failed to prove the attorney on record from the plaintiff bank. Ld. Counsel for defendant no.1 has Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 26 of 35 submitted that the authorization must be from the Chief Manager and not below that however there is no basis for the same with defendant no.1 in this respect. PW1 has deposed that he has brought original power of attorney Ex.PW1/A dated 25.07.1984 as executed by special committee of Board of Directors in his favour. He has further deposed that the power of attorney executed in favour of the Chief Manager Sh. P.K. Pathak is dated 24.01.1999. It is admitted that no power of attorney has been executed in favour of PW1 after his retirement however Chief Manager C.D.P.C. authorized him to do acts on behalf of plaintiff bank vide authorization Ex.PW1/X1. The defendant no.1 has failed to rebut the due execution of PW1/1 in favour of PW1. The ld. Counsel for the plaintiff is appearing since very beginning and there is no dispute to the fact of due authorization of ld. Counsel. Hence there is both implicit and explicit authority in favour of PW1 by the plaintiff bank. The plaintiff bank has also ratified the act of deposition of PW1 when the duly authorized counsel has appeared and document of plaintiff bank were produced by PW1 which can only be in custody of plaintiff bank. Order XXIX Rule 1 CPC has to be read with Order VI Rule 14 CPC. In view of citation titled United Bank of India Vs. Naresh Kumar & ors. (1996) 6 SCC 660, the PW1 is found to have sufficient implicit and explicit authority to depose in the present case Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 27 of 35 and that the suit is duly instituted by Mr. P.K. Pathak, the Chief Manager of the plaintiff Bank. In fact there is no dispute that Mr. P.K. Pathak was not Chief Manager of the plaintiff bank. Hence the suit is found to be duly instituted by Mr. P.K. Pathak and PW1 is witness of the plaintiff bank.
10.14 In view of the above it is held that plaintiff has failed to prove negligence on the part of defendant no.1 to entitle him for recovery of due amount alongwith interest. However plaintiff bank is also not entitled to recovery against defendant no.3 when the plaintiff bank has failed to prove complicity or contributory negligence on part of defendant no.3 in such encashment of Ex.DW1/2. It is not the case of plaintiff bank that defendant no.3 had defrauded them. The plaintiff bank has not produced the original cheque pertaining to Ex.DW1/2 which was available with defendant no.3. Hence defendant no.3 is held not liable. 10.15 However defendant no.2 was proceeded exparte in the matter on 18.04.2015 who has not appeared despite service and therefore defendant no.2 has deemed to have admitted the claim of the plaintiff and defendant no.3 that the cheque does not bear signature of defendant no.3 and that original of Ex.DW1/2 is available with the plaintiff. The evidence of plaintiff is unrebutted, consistent and unimpeached qua defendant no.2. Hence defendant Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 28 of 35 no.2 on such unrebutted and proved evidence of plaintiff/PW1 is held liable to reimburse the said amount of Rs.4,25,000/ to the plaintiff for its wrongful withdrawal from the account of defendant no.3. Hence the present issue is decided in favour of the plaintiff and against defendant no.2 and further that the present issue is decided against the plaintiff and in favour of defendant no.1 & 3. Hence the plaintiff is held entitled to recover the amount of Rs.4,25,000/ only against the defendant no.2 and not against defendant no.1 & 3. Plaintiff is further held entitled to interest on the due amount @ 6% p.a. under Sec.34 CPC as it was a savings account and not a commercial account and not for a commercial transaction. Accordingly present issue is decided in favour of the plaintiff and against defendant no.2 and not against defendant no.1 & 3. The present issue is also decided in favour of defendant no.1 & 3 and against the plaintiff.
11. Issue no.2 - Whether the suit is not maintainable within the provisions of Negotiable Instruments Act and that the defendant no.1 was not responsible for fault of defendant no.2 & 3 who are having connivance with each other and with the plaintiff? OPD1 11.1 This findings under issue no.1 are equally applicable Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 29 of 35 under the present issue and be read as part of the present issue. The same are not repeated herein for the sake of brevity. 11.2 It is submitted by Ld. Counsel for defendant no.1 that he had transferred the electronic image of truncated cheque which was not reflected in any material deficiency and therefore it is not liable. Sec.89(2) of Negotiable Instruments Act, 1881 is relied upon which is reproduced here as under : "Where the cheque is an electronic image of a truncated cheque, any difference in apparent tenor of such electronic image and the truncated cheque shall be a material alteration and it shall be the duty of the bank or the clearing house, as the case may be, to ensure the exactness of the apparent tenor of electronic image of the truncated cheque while truncating and transmitting the image"
11.3 The Ld. Counsel of defendant no.1 has also relied on Sec.131 of Negotiable Instruments Act, 1881 that the defendant no.1 has acted in good faith without any negligence and therefore not liable to true owner of the said cheque. The relevant provision under Sec.131 of Negotiable Instruments Act, 1881 is reproduced here as under : "Nonliability of banker receiving payment of cheque - A banker who has in good faith and without negligence received payment for a Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 30 of 35 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."
The Explanation II of Sec.131 of Negotiable Instruments Act, 1881 provides for duty of the banker who receives payment on an electronic image of a truncated cheque held by him to verify prima facie genuineness of the cheque. The test is of due diligence and ordinary care. Sec.64(2) of Negotiable Instruments Act, 1881 provides that notwithstanding anything contained in Sec.6 of Negotiable Instruments Act, 1881 the drawee bank is entitled to demand any further information from the bank holding the cheque in case of reasonable suspicion about genuineness of the apparent tenor of the instrument. The relevant provision is reproduced is reproduced here as under : "Notwithstanding anything contained in section 6, where an electronic image of a truncated cheque is presented for payment, the drawee bank is entitled to demand any further information regarding the truncated cheque from the bank holding the truncated cheque in case of any reasonable suspicion about the genuineness of the apparent tenor of instrument, and if the suspicion is that of any fraud, forgery, tampering or destruction of the instrument, it is entitled to Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 31 of 35 further demand the presentment of the truncated cheque itself for verification:
Provided that the truncated cheque so demanded by the drawee bank shall be retained by it, if the payment is made accordingly."
11.4 Hence under Explanation II of Sec.131 of Negotiable Instruments Act, 1881 it is duty of defendant no.1 to prima facie verify the genuineness of the truncated cheque and if any fraud, forgery or tampering apparent on the face of the instrument can be verified with due diligence and ordinary care. Hence the presumption lies in favour of the plaintiff and against the defendant no.1 in this respect and therefore the onus lies on defendant no.1 to prove that he has exercised due diligence in this respect. The only witness of defendant no.1 is DW1. DW1 in crossexamination has deposed at page no.5 that the tampering or alteration can be verified in case it is visible through naked eye, touch feel of the instrument.
If in case there is minor alteration on the date field column or payee name field and endorsed by issuer of cheque while doing cross signature then such cheque can be presented to the other bank for honour. It is admitted that the MICR test (Magnetic Ink Character Recognition Report) can give such date on instruments as to tampering or alteration not read during scanning of cheques. The UV stamp report is on back side of Ex.DW1/2 with stamp logo. It is Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 32 of 35 deposed by DW1 that the cheque has passed through scanner. It is deposed by DW1 that the MICR report was not raised had the cheque was never part of MICR report if there was no MICR failure and hence such report was not generated for the cheque in question. It is deposed by DW1 that there is not bifurcation of the said MICR success report both for failure and success. Only in case of MICR failure the report are generated.
11.5 It is noted that the protection as available under Negotiable Instruments Act, 1881 with the defendant no.1 is not a blanket protection. It only raises a protection and presumption in favour of defendant no.1/the banker. The presumption is rebuttable and the availability of protection is a question of fact which therefore does not make the case of plaintiff exfacie barred. It is a mixed question of law and evidence. Hence, even in view of such protection under Negotiable Instrument Act, 1881 in favour of defendant no.1, it has to decided after leading of evidence and the suit held not exfacie barred. Hence afore plea of defendant no.1 is rejected.
11.6 The defendant no.1 under the present issue is claiming protection under Sec.131 of Negotiable Instrument Act, 1881 on the ground that defendants no.2 & 3 are having connivance with each other. The burden of proof is on defendant no.1 to prove the same Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 33 of 35 with evidence. The only witness of defendant no.1 is DW1. DW1 has deposed in para no.2 that it appears that plaintiff and defendants no.2 & 3 are in connivance with each other to take money from defendant no.1. However such connivance has to be proved by necessary evidence. For this defendant no.1 is required to show in pleading that there was such factual connivance. Except merely a bald statement there is no such factual connivance brought on record by defendant no.1. Under Rule 4 of Order VI CPC the pleadings have to be specific. The pleadings of defendant no.1 are not specific as to facts and date, month and year in this respect and therefore bad under law in this account. Hence merely bald submission does not make any pleading which cannot be replied effectively and specifically by the opposite party and no evidence can be led in absence of any pleadings. Hence the present issue fails against defendant no.1 both due to absence of pleadings and necessary evidence in this respect. Therefore it is held that defendant no.1 has failed to prove burden of proof levied upon him on this account and present issue is accordingly decided against the defendant no.1 and in favour of plaintiff.
12. Relief.
In view of the findings under Issue no.1 and 2 above, the Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 34 of 35 plaintiff is held entitled to recover the amount of Rs.4,25,000/ only against the defendant no.2 and not against defendant no.1 & 3. Plaintiff is further held entitled to interest on the due amount @ 6% p.a. under Sec.34 CPC as it was a savings account and not a commercial account or for a commercial transaction.
Decree sheet be prepared accordingly.
File be consigned to the record room.
Announced in the open court on 29.04.2019 (JOGINDER PRAKASH NAHAR) ADDL. DISTRICT JUDGE04, CENTRAL TIS HAZARI COURTS DELHI Suit No.13266/16 Punjab National Bank Vs. ICICI Bank Ltd. & Ors. Page 35 of 35