Gujarat High Court
Gandhidham Mercantile Cooperative ... vs Reserve Bank Of India on 15 July, 2022
Author: Vaibhavi D. Nanavati
Bench: Vaibhavi D. Nanavati
C/SCA/4072/2016 ORDER DATED: 15/07/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4072 of 2016
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GANDHIDHAM MERCANTILE COOPERATIVE BANK LTD
Versus
RESERVE BANK OF INDIA, & 1 other(s)
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Appearance:
MR ASHISH H SHAH(2142) for the Petitioner(s) No. 1
RULE SERVED for the Respondent(s) No. 1
SINGHI & CO(2725) for the Respondent(s) No. 2
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CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 15/07/2022
ORAL ORDER
1. The petitioner is a banking company established under the Gujarat Co-operative Societies Act, 1961 and is governed by the banking laws; More particularly, Banking Regulation Act, 1949. It is stated that the petitioner bank has an account with the respondent no.2 bank and the petitioner is provided with the cheque book by the respondent no.2 bank. The petitioner Bank is empowered to issue a Demand Draft (bankers cheque) as facilitated by the respondent no.2 bank and for issuing such Demand Draft, the respondent no.2 has provided its cheque book to the respondent no.1 bank.
2. It is further stated that one Shri Anil Patel had Page 1 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 approached the petitioner Bank and had obtained the Demand Draft by depositing cash of Rs.500/- in favour of one Mr.P.K.Solanki drawn on Vapi branch of the respondent no.2 bank bearing Demand Draft No. 818969, dated 10.10.2012. It is also stated that Shri Anil Patel and the beneficiary of the Demand Draft in collusion with some of the officers of the respondent no.2 bank tempered with the said Demand Draft and fraudulently encashed Rs.8,75,500/ instead of Rs.500/-. It is stated that said amount came to be deducted from the account of petitioner Bank by the respondent no.2 bank. It is stated that the officers of the respondent no.2 bank without verifying the authenticity of the Demand Draft and without checking the Demand Draft under the ultraviolet lamp as mandated by law, proceeded to complete the transaction thereby fraudulently debiting Rs.8,75,500/- from the account of petitioner's bank. It is stated that the petitioner Bank by Communication dated 29.10.2012 informed the respondent no.2 bank regarding the fraudulent act committed by the respondent no.2 bank. The respondent no.2 bank by Communication dated 05.12.2012, replied and informed the petitioner Bank that the Page 2 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 respondent no.2 bank had filed police complaint with the Jaipur Police and awaiting the investigation to be completed and that thereafter necessary action would be taken. It is stated that the petitioner Bank was constrained to send legal notice to the respondent no.2 Bank and on 28.12.2012 calling upon the respondent Bank to give credit of Rs.8,75,500/- being amount, which was paid by the respondent no.2 bank against fake /tempered instrument which was never issued by the petitioner Bank. The petitioner Bank also lodged a complaint and informed the Reserved Bank of India - respondent no.1 herein, with regard to aforesaid fraudulent transaction by letter dated 22.01.2013. The Reserve Bank of India, the respondent no.1 by Communication dated 24.01.2014 informed the petitioner Bank that the respondent no.1 can be approached after investigation in the aforesaid matter is completed. The petitioner Bank by Communications dated 18.07.2014 and 03.08.2015 reiterated its request to the respondent Bank to reverse the amount / entry of Rs.8,75,500/-, which was paid by the Jaipur Branch of the Vijaya Bank in favour of one Shri Pravin Ajmera. The respondent no.2 Bank by Communication Page 3 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 dated 28.08.2015, informed the petitioner Bank that the alteration in the cheque / Demand Draft was not visible to the naked eyes and also under ultraviolet lamp consequently the cheque no.818969 was cleared by the respondent no.2 bank. It was further informed that the petitioner Bank's cheque of Rs.8,75,500/- was collected by the Vijaya Bank, Jaipur branch for its customer i.e. Pravin Ajmera from Mira Road, Thane. It was the Vijaya Bank who did not exercise (avail) due diligence. It is stated that the respondent no.1 Reserve Bank of India by Communication dated 04.09.2015 informed the petitioner Bank that complaint filed was treated as closed in view of the response given by the respondent no.2 bank.
3. Being aggrieved by the Communication dated 04.09.2015 by respondent no.1 as well as inaction on the part of the respondent no.1 Reserve Bank of India and respondent no.2, the petitioner is constrained to approach this Court by preferring present writ application under Article 226 of the Constitution of India and the petitioner bank has sought for the following reliefs:-
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C/SCA/4072/2016 ORDER DATED: 15/07/2022 "(A) This Hon'ble Court be pleased to admit and allow the present petition;
(B) This Hon'ble Court be pleased to issue writ of mandamus or any other appropriate writ, order or direction in the nature of mandamus directing the respondent no.1 Reserve Bank of India to initiate action against the respondent no.2 bank and/or its erring officers;
(C) This Hon'ble Court be pleased to quash and set aside the Communication dated 04.09.2015 issued by the respondent no.1;
(D) This Hon'ble Court be pleased to issue any other appropriate writ, order or direction directing the respondent no.1 to direct the respondent no.2 bank to credit the amount of Rs.8,75,500/- with interest in the account of the petitioner Bank; (E) Pending admission, final hearing and disposal of this petition, this Hon'ble Court be pleased to direct the respondent no.1 RBI to initiate inquiry against the erring officer of the respondent no.2 bank;
(F) That ex-parte ad interim relief in terms of the above prayed clause be granted;
(G) This Hon'ble Court be pleased to grant and other and further relief as deemed fit and expedient in the interest of justice."
4. Heard Mr.Darshit D. Thakkar, the learned advocate for Page 5 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 Mr.Ashish H. Shah, the learned advocate appearing for the petitioner and Mr.Shamik Bhatt, the learned advocate appearing on behalf of the respondent no.2. Though served, none appears on behalf of the respondent no.1.
5. Mr.Thakkar, the learned advocate appearing on behalf of the petitioner mainly submitted that the respondent no.1 bank ought to have directed the respondent no.2 bank to take expeditious and quick action for securing interest of the petitioner Bank.
5.1 The respondent Bank no.2 ought to have investigated and inquired into the aspect of tempering with regard to the negotiable instrument and has relied on the communication addressed by the respondent no.2 bank, fore closing the responsibility enjoyed upon it under the provisions of Reserve Bank of India and Banking Regulation Act, 1949. Mr.Thakkar, the learned advocate submitted that the instrument was tempered to the extent that the name of payee, place of collection of amount materially altered and name shown of Mr.P.K.Solanaki payable at Vapi Branch for amount of Rs.500/- Page 6 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022
C/SCA/4072/2016 ORDER DATED: 15/07/2022 however, the said instrument was altered by changing name by Mr.Pravin Ajmera and the said draft was paid at Jaipur Branch for amount of Rs.8,75,500/-. In view of such material alterations in the instrument, which could not have escaped the attention of the bank officers of the respondent no.2 bank. The respondent no.2 bank has shirked from the responsibility by not crediting the amount of petitioner bank despite being directly as well as vicariously liable for the gross and willful fraudulent conduct of the employees. The respondent no.2 bank has not conducted any inquiry or investigation with respect to any officer having involved in the said transaction. The investigation could not reach logical conclusion since the Vijaya Bank did not have any KYC of its customer which is mandatory under the law. Mr.Thakkar, the learned advocate lastly submitted that the respondent no.1 as well as the respondent no.2 have neglected the duties which result in arbitrary action on the part of the respondent Bank and submitted that the present petition be allowed.
6. Heard Mr.Shamik Bhatt, learned advocate appearing for the Page 7 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 respondent no.2 Indusind Bank.
7. Mr.Shamik Bhatt, learned advocate submitted that since the year 1996, the petitioner Bank is maintaining a current account with the Gandhidham branch with Indusind Bank i.e. the respondent no.2 bearing Account no. 200005226691 (formally assigned No. 0066376475060) in order to enable the petitioner bank to carry out transactions in the said account, the petitioner Bank was provided with cheque books in line of standard banking activities.
8. It is the case of the the petitioner bank i.e. GMCB that Mr.Anil Patel had approached the petitioner Bank on 10.10.2012 and had obtained four cheque in the form of Demand Draft by making cash deposit, which reads thus:-
"The petitioner submits that immediately the petitioner Bank vide Communication dated 29.10.2012 informed the respondent no.2 bank regarding the fradulent act committed by the respondent no.2 bank. A copy of the Communication dated 19.02.2013 is annexed and marked as Annexure 'B' to this petition. The petitioner further submits that the name of the payee and the drawee branch was also changed in the demand draft and therefore it was extremely evident that Page 8 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 there has been tampering with the said demand draft. The petitioner Bank sent series of communications requesting the respondent no.2 bank to reverse the debit entry and credit in the current account the amount which has been wrongly debited. Copies of the communications addressed by the petitioner Bank to the respondent no.2 bank are annexed hereto and marked as Annexure 'C' to this petition. The petitioner submits that the respondent no.2 bank vide Communication dated 05.12.2012 informed the petitioner Bank that the respondent no.2 has filed a police complaint with Jaipur Police and is waiting for investigation to be completed and thereafter, necessary actions shall be taken. A copy of the Communication dated 05.12.2012 is annexed hereto and marked as Annexure 'D' to this petition. The petitioner submits that the petitioner Bank was constrained to send a legal notice to the respondent no.2 bank dated 28.12.2012 calling upon to the respondent no.2 bank to give credit of Rs.8,75,500/- being the amount which was paid by the respondent no.2 bank against the fake/tempered instrument which was never issued by the petitioner Bank. A copy of the legal notice dated 28.12.2012 is annexed hereto and marked as Annexure 'E' to this petition."
9. Mr.Bhatt, learned advocate submitted that it is an admitted fact that Mr.Anil Patel was not a customer of the petitioner bank i.e. GMCB. The dispute arises with regard to cheque number 818969, which was issued on 23.10.2012 for Page 9 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 an amount of Rs.500/- (not for Rs.8,75,500/-). On being informed about the same, the Indusind Bank contacted the Vijaya Bank, Mira Road, Thane Branch, to refund the amount collected by them so that the amount can be paid to the petitioner bank i.e. GMCB. Mr.Bhatt, the learned advocate submitted that the Vijaya Bank advised the respondent no.2 bank to take up the matter with former's head office accordingly the respondent no.2 took up the matter to head office of the Vijaya Bank but did not receive any response. The respondent no.2 also exchanged the communication with the Vijaya Bank as and when required. Mr.Bhatt, the learned advocate submitted that the address of Mr.P.K.Ajmera as recorded by the Vijaya Bank was incorrect and that the Vijaya Bank had not maintained any KYC from the said P.K.Ajmera as mandated by law. Mr.Bhatt, the learned advocate submitted that in view of above, the Indusind Bank lodged FIR with Jaipur Police station and shared a copy of the instrument with all details as called by the Jaipur Police.
10. Mr.Bhatt, learned advocate submitted that on the same Page 10 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 date i.e. 31.10.2012, the respondent Bank received information from the petitioner bank i.e. GMCB that the cheque number 819320 was issued for Rs.700 (not for Rs.9,16,400/-). On receiving such information, the respondent no.2 Bank immediately contacted Karur Vysya Bank and requested to stop all the transactions in the concerned account. The Karur Vysya Bank informed the Indusind Bank that the aforesaid amount was blocked by them and the same was refunded by them. Mr.Bhatt, the learned advocate also submitted that it may be noted that the said amount of Rs.9,16,400/- has been refunded back by the Karur Vysya Bank. Mr.Bhatt, the learned advocate submitted that the petitioner bank i.e. GMCB is aware about all the aforesaid facts including immediate steps undertaken by the respondent no.2 herein to counter the fraudulent cheque presented to it. At no point of time in the present petition, the petitioner had denied any of the aforesaid facts.
11. In view of above, Mr.Bhatt, learned advocate relied on the affidavit-in-reply filed by the respondent no.2 bank, which reads thus:-
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C/SCA/4072/2016 ORDER DATED: 15/07/2022 "11. I state and submit that GMCB is aware of the aforesaid facts, including the immediate steps taken by Indusind to counter the fraudulent cheques, presented to it. At no point of time, including in the writ petition, has GMCB denied any of the said facts.
(a) I reiterate that cheque no.818995 was returned by Indusind with reasons 'Fraudulent cheque'.
(b) The amount debited to GMCB's account in view of cheque no.819320 was blocked by Karur Vysya Bank- the collecting bank on instructions of Indusind Bank, and the same has been refunded.
(c) The amount under cheque no.818969 i.e.
Rs.8,75,500/- has been debited to GMCB's
account and the said amount of Rs.8,75,500/- was credited to account no.509501011001484 of Mr.Pravin Kailashbhai Ajmera in Vijaya Bank, Mira Road, Thane Branch. Although Indusind contacted Vijaya Bank, no response has been received from Vijaya Bank - the collecting bank.
Indusind has already filed FIR witht eh Jaipur Police in respect of the said fraudulent cheque no.818969.
12. In view of the aforesaid, it becomes evident that Indusind has acted promptly and diligently on becoming Page 12 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 aware about fraudulent nature of the cheques. In the writ petition, grievance has been raised by GMCB only in respect of the cheque no.818969 for Rs.8,75,500/-. The contention of GMCB that the officers of Indusind have fraudulently debited Rs.8,75,500/- to the account of GMCB, without verifying the authenticity of the cheque and without checking the same under Ultraviolet lamp, is baseless and unsubstantiated. On the basis of the aforesaid bald allegation, which are not supported by any evidence whatsoever, GMCB has been demanding that the aforesaid transaction be reversed by Indusind and that an amount of Rs.8,75,500/- be credited to the account of GMCB has filed a complaint with the Reserve Bank of India thereby seeking a direction to Indusind Bank to credit the amount of Rs.8,75,500/- to the account of GMCB.
13. In view of the aforesaid facts, wherefrom it becomes clear that Indusind has taken all the necessary steps in respect of the fraudulent transactions, and in view of the pending police investigation of the Jaipur Police, the Reserve Bank of India by its Communication dated 04.09.2015 closed the complaint filed by GMCB.
14. It is in the said circumstances that GMCB has filed the writ petition. However, GMCB has failed to demonstrate as to which provision of law it is seeking to Page 13 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 invoke to seek direction to Reserve Bank of India against Indusind. I state and submit that there is not even a whisper in the writ petition as to under which provision did GMCB file a complaint before Reserve Bank of India against Indusind. Furtehr, the bald allegations of GMCB that Indusind had not verified the authenticity of the cheque in question and not tested it under Ultraviolet lamp are not supported by any evidence worth the name. I state and submit that Indusind had examined the authenticity fo the cheque in question under the ultraviolet lamp, but the alleged alterations were not visible either to the naked eye or under the ultraviolet lamp. In any case, examination of each and every cheque under ultraviolet lamp is not mandatory and alleged failure to carry out such examination cannot be said to negligence on the part of paying bank as held by Hon'ble Supreme Court of India in the case of Bank of Maharashtra vs. Automatic Engineering Company reported in (1993) 2 SCC 97. In fact, it becomes very evident from the record that it is GMCB and Vijaya Bank, who have acted negligently. It is an admitted position that GMCB has issued cheques drawn on Indusind Bank as Demand Draft to 'walk-in customer' i.e. to customers who do not hold an account with GMCB. I state and submit that the said action of GMCB is in fact against the standard banking practice. Further, it appears that Vijaya Bank has Page 14 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 opened the bank account of Mr.Pravin Ajmera without following the KYC guidelines, in as much as the said Mr.Pravin Ajmedra was not available at the address recorded with Vijaya Bank. Furtehr, it is evident that Vijaya Bank did not follow due diligence when a cheque of a large amount was deposited in respect of a newly opened account, more particularly when such amount was withdrawn by the customer immediately upon clearance. It is an admitted position that such negligence on the part of Vijaya Bank has hindered the police investigation as well. In any case, Vijaya Bank being the collecting bank had the first opportunity of examining the cheque. Moreover, the amount of Rs.8,75,500/- has been deposited in Vijaya Bank, an it is Vijaya Bank that is required to refund such amount (as was done by Karur Vysya Bank in case of cheque no.818995). However, surprisingly, GMCB has neither filed a complaint against Vijaya Bank nor joined Vijaya Bank as a party to the present petition."
12. In view of above, the aforesaid contentions as raised by the respondent no.2 in the affidavit-in-reply, Mr.Bhatt, the learned advocate submitted that the Indusind Bank i.e. the respondent no.2 bank and its officers properly verified the cheques presented to it and examined the cheques under the Page 15 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 ultraviolet lamp, however, since no alterations were visible either through naked eye or the ultraviolet lamp and the cheques were cleared on the apparent tenure in due course.
13. The petitioner Bank has failed to produce any evidence except mere allegations that the officers of the respondent no.2 bank have colluded with Anil Patel or beneficiary of the alleged demand draft. The Vijaya Bank has not made a party respondent by the petitioner Bank inspite of knowledge that the cheque was collected by the Vijaya Bank.
14. In view of above, Mr.Bhatt, learned advocate submitted that the petitioner is not entitled to any reliefs as sought for and the petition be dismissed in limine.
15. Mr.Bhatt, the learned advocate submitted that the Cheque no. 818969 was collected by the Vijaya Bank, Jaipur for its customer one Mr.Pravin Kailashbhai Ajmera maintaining an account no. 509501011001484 with the Mira Road Thane branch of Vijaya Bank. The abovementioned cheque was presented to the respondent no. 2 bank, no such alterations on Page 16 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 the said cheque as alleged by the petitioner Bank i.e. GMCB were neither visible to the naked eye nor under the ultra violet lamps.
16. On being informed by the petitioner bank i.e. GMCB on 23.10.2012 the Indusind Bank contacted Vijaya Bank to refund the amount of cheque collected by them so that the amount could be paid to the petitioner bank i.e. GMCB.
17. On being advised by the Vijaya Bank, the respondent no. 2 bank took up the matter with the head office of the Vijaya Bank but did not receive any response there from. Mr.Bhatt, the learned advocate submitted that the Vijaya Bank has not even maintained the KYC form of Mr.Pravin Kailashbhai Ajmera as mandated by the law.
18. Respondent no.2 bank has also lodged FIR with the Jaipur police and shared a copy of the instrument and all the details called upon by the Jaipur Police. The petitioner bank has not filed any complaint against the Vijaya Bank nor joined Vijaya Bank as a party to the present petition. Mr.Bhatt, the Page 17 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 learned advocate lastly submitted that the Indusind Bank acted promptly and diligently on becoming aware about fraudulent nature of the cheque in question being Cheque No.818969, which was collected by Vijaya Bank, Jaipur.
19. Heard the learned counsels appearing for both the parties.
20. On the basis of abovementioned discussion, it is admitted fact that on 10.10.2012 one Mr.Anil Patel had approached the petitioner bank and had obtained a demand draft by depositing cash of Rs. 500 in favour of Mr.P.K. Solanki drawn on Vapi Branch of the respondent no. 2 bearing demand draft no. 818969. The amount under this cheque has been debited to the petitioner bank i.e. the petitioner bank i.e. GMCB's account and the amount was credited to account no. 509501011001484 of one Mr.Pravin Kailashbhai Ajmera in Vijaya Bank, Mira Road, Thane Branch.
21. On 23.10.2012, the petitioner bank i.e. GMCB informed Indusind bank about fraudulent transaction with respect to Page 18 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 abovementioned cheque. The Indusind bank respondent no.2 contacted Vijaya Bank, Mira Road, Thane Branch to refund the amount of cheque collected by the Vijaya bank so as to facilitate that the said amount be refunded to the petitioner's bank i.e. GMCB. On being advised by the the petitioner bank i.e. GMCB, Indusind bank took up the matter before head office of Vijaya Bank, but did not receive any response therefrom. Induslnd bank the respondent no.2 lodged FIR with the Jaipur Police in respect of the said fraudulent cheque as stated above.
22. In view of the pending police investigation at the Jaipur Police, the RBI by its communication dated 04.09.2015, closed the complaint filed by the petitioner bank i.e. GMCB. The petitioner bank i.e. GMCB has failed to demonstrate as to under which provision of law it is seeking to invoke the directions of RBI against Indusind bank.
23. In the facts of the present case, it is apposite to refer Section 87 of the Negotiable Instrument Act, which reads thus: Page 19 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022
C/SCA/4072/2016 ORDER DATED: 15/07/2022
87. Effect of material alteration. --Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties;
Alteration by indorsee.--And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof. The provisions of this section are subject to those of sections 20, 49, 86 and 125.
24. In the case of Govindaraj And Company Vs The Nedungadi Bank Limited, Madras High Court while considering Section 87 of the N.I.Act, held in Para-18, which reads as follows:
18. A difference can normally be drawn between a Demand Draft being paid at the counter to a person in possession thereof and a Demand Draft being paid to Page 20 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 another Bank who sought collection for one of its customers. In a case like this where the Demand Draft was placed before the drawee Bank by the collecting Bank, the drawee Bank can act with reliance and assurance that the collecting Bank would have discharged the duty of careful scrutiny of the said instrument and satisfied itself about the title of its customer over the said Draft. Hence, when a Demand Draft is placed for encashment at the counter of a Bank by an unknown person, the Bank has to exercise a better degree of care and discharge its duty in scrutinising and satisfying itself.
But, one cannot expect and the law would also not demand the same degree of care and caution, when the Draft is placed for encashment by way of collection by another Bank. In the instant case, it was the Canara Bank, who sent the instrument in question to the plaintiff Bank for collection. Hence, the contention of the appellants' side that the staff of the plaintiff Bank was grossly careless and negligent in passing the Demand Draft cannot be countenanced. Having encashed a materially defective, altered, tampered and void instrument, the defendants 1 and 2 who had no title over the said Demand Draft, cannot at all be permitted to raise a defence stating that the plaintiff Bank was negligent and careless in passing the said instrument. Thus, the Court is unable to see any merit in the appeal so as to interfere with the judgment of Page 21 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 the Court below. Therefore, the judgment of the lower Court has got to be sustained, and the appeal is liable to be dismissed.
25. As far as the negligence on the part of the respondent no. 2 in scrutinizing the instrument is concerned, the Honourable Supreme Court held in the case of Bank Of Maharashtra Vs M/S Automotive Engineering Company reported in (1993) 2 SCC 97, Para No. 11, which reads thus:
11. After considering the relevant facts and circumstances of the case and the contentions made by the learned Counsels for the parties, it appears to us that the court of appeal below has categorically come to the finding that on visual examination no sign of forgery or tampering with the writings on the cheque could be detected. There is also evidence on record which has not been upset by the court of appeal below that the then agent of the bank had taken the care to verify the serial number of the cheque, the signature on the cheque with the specimen signature of the constituent, namely, the defendant and on a scrutiny of the cheque visually no defect could be detected Page 22 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 by him. It also transpires from the evidence that the defendant had sufficient amount in the bank to cover the said payment of Rs. 6,500/- at the relevant date when the cheque was presented for payment. Under Section 31 of the Negotiable Instruments Act, the appellant-Bank had a liability to honour the said cheque and make payment if the cheque was otherwise in order. 'Payment in due course' under Section 10 of the Negotiable Instruments Act means payment in accordance with the apparent tenor of the instrument in good faith and without negligence. In the facts of the case, there was no occasion to doubt about the genuineness of the cheque from the apparent tenor of the instrument. There is nothing on record from which it can be held that the payment of the said cheque has not been made in good faith. Although no straight-
jacket formula can be laid down to cover each case of negligence of a banker and the question of negligence requires to be decided in the facts and circumstances in each case, it does not appear to us that the appellant bank can be held to be guilty of negligence simply because an ultraviolet ray lamp was not kept in the branch and the cheque in question was not subjected under the ultraviolet ray lamp. It has not been established in evidence that invariably the other branches of the appellant bank or the other commercial banks had been following a practice of scrutinising each and every cheque Page 23 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 under the ultraviolet ray lamp or there was any prevalent practice to scrutinise cheques involving a particular amount under such lamp by way of extra precaution. In such circumstances, it cannot be contended as a correct legal proposition that the bank, in order to get absolved from the liability of negligence, was under an obligation to verify the cheque for further scrutiny under advanced technology or for that matter under ultraviolet ray lamp apart from visual scrutiny. The cost of the ultraviolet ray lamp was only nominal and it might have been desirable to keep such lamp in the branch in question to take aid in appropriate case. But even then, it cannot be contended that although no forger could be detected on visual scrutiny on the apparent tenor of the cheque in question and the reasonable care by way of scrutiny of the cheque with reference to its serial number, verification of the specimen signature of the signatory of the cheque had been made, the bank officials should have resorted to scrutiny of the cheque under ultraviolet ray lamp by way of additional precaution and by not taking such extra precaution the bank may be held guilty of negligence. We do not think that there was any justification for the courts below to proceed to the footing that the Bank had failed to take reasonable care in passing the cheque for payment. Without subjecting it for further scrutiny under ultraviolet ray lamp because the branch was on the outskirt of the Page 24 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 metropolitan city of Bombay and in an industrial area where such forgery was rampant, particularly when other branches of the appellant-Bank were provided with such lamp. We, therefore, allow this appeal, set aside the judgment and decree passed in the suit since affirmed by the court of appeal below and also by the High Court. In the facts of the case, we, however, decree the suit only for the principal amount without any interest on the same. There will be, however, no order as to costs.
26. In view of aforesaid ratio laid down by the Honourable Supreme Court, it cannot be said that scrutiny with the help of ultraviolet lamp is mandatory. In the present case, the respondent no.2 used ultraviolet lamp but no alterations were marked.
27. In view of above, this Court is not inclined to grant prayers as prayed for by the petitioner.
28. More particularly, in view of the above facts, it appears that the respondent no.2 bank has acted with due diligence by communicating to the Vijaya Bank to return the amount of Rs.8,75,500/- with respect to disputed cheque to the Page 25 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022 C/SCA/4072/2016 ORDER DATED: 15/07/2022 respondent no.2 to facilitate the respondent no.2 bank to refund the said amount to the petitioner Bank. It is also noticed by this Court that the Vijaya bank is not a party to the present petition. Further, the police complaint is also filed by the respondent no.2 Indusind bank and it appears that the investigation is pending. The respondent no.2 bank has also checked the disputed cheque under the ultraviolet lamp however since there were no visible alteration marked either through naked eye or under ultraviolet lamp, the cheque came to be honoured by the respondent no.2 bank.
29. In view of above no case is made out to exercise the extraordinary jurisdiction under Article 226 of the Constitution of India.
30. Accordingly, the present petition fails.
(VAIBHAVI D. NANAVATI,J) K.K. SAIYED Page 26 of 26 Downloaded on : Sat Jul 16 20:38:30 IST 2022