Calcutta High Court
Shree Shankar Saw Mill (P) Ltd & Anr vs United Bank Of India & Ors on 6 December, 2017
W.P. No. 351 of 2017
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Original Side
Shree Shankar Saw Mill (P) Ltd & Anr.
Vs.
United Bank of India & Ors.
For the Petitioners : Mr. Rudraman Bhattacharyya, Advocate
Mr. Debanjan Mukherjee, Advocate
Mr. Asish Chiranewala, Advocate
For the UBI : Mr. Krishnaraj Thaker, Advocate
Mr. Varun Kedia, Advocate
Mr. Kumardeep Majumder, Advocate
Hearing concluded on : November 27, 2017
Judgment on : December 6, 2017
DEBANGSU BASAK, J.:-
The petitioners have sought a direction upon the respondent no. 2
to credit the account of the first petitioner with a sum of Rs.60 Lakhs being the value of 11 several cheques.
Learned Counsel for the petitioners has submitted that, the first petitioner has an account with the respondent no. 2. The first petitioner had deposited 11 several cheques of one L.B. Enterprises drawn on Gandhidham Co-operative Bank of Kutch, Gujarat is aggregating to a sum of Rs.60 Lakhs with the respondent no. 2 for collection. Neither the proceeds of any of these 11 cheques were deposited in the accounts of the first petitioner nor any of those cheques returned to the petitioners by the bank. Five cheques were deposited by the first petitioner on May 6, 2015. Six cheques were deposited on May 16, 2015. By a letter dated June 10, 2015, the petitioners had requested the respondent no. 2 to credit the proceeds of these cheques. The petitioners, however, received an e-mail from the respondent no. 6 informing the petitioners that, the cheques were returned and sent to the respondent no. 2 by Speed Post on June 3, 2015. The respondent no. 2 was immediately requested to hand over the cheques physically to the petitioners. However, the cheques were not made over to the petitioners. The petitioners were ultimately informed that, the cheques were lost. The petitioners had approached the Banking Ombudsman by a writing dated June 29, 2016, the Banking Ombudsman had refused to exercise its jurisdiction. Since the complaint to the Banking Ombudsman was closed under clause 13(c) of the Banking Ombudsman Scheme, 2006, the same is not appealable. The respondent no. 2 having acted negligently, the petitioners are entitled to the proceeds of the 11 several cheques from the respondent no. 2.
Learned Advocate for the petitioners has relied upon a circular dated November 4, 2011 issued by the Reserve Bank of India to All Scheduled Commercial Banks. Referring to such circular he has submitted that, the period of validity of the cheques were reduced from 6 months to 3 months by such circular. He has submitted that, the respondent no. 2 by its action has denied the petitioners' valuable right of approaching the Court under the Negotiable Instruments Act, 1881. It had allowed a period in excess of 3 months to elapse from the date of presentation of the cheques till the information as to the loss of the cheques being supplied. The petitioners had received an intimation on August 17, 2015 by which time a period of 6 months had elapsed. Moreover, the relationship between the first petitioner and the respondent no. 2 is that of a bailee and a bailor. The respondent no. 2 is obliged to take due care of the cheques presented to it for encashment by the first petitioner. The cheques were duly received by the respondent no. 2 from the first petitioner. After receiving all cheques for collection, it is the duty of the respondent no. 2 to ensure that, the proceeds of the cheques are collected and such proceeds are deposited in the bank account of the first petitioner, in accordance with law. The respondent no. 2 has failed to discharge its duty as a bailee. It is obliged to compensate the first petitioner with the value of the 11 several cheques, if nothing else. The respondent no. 2 is liable under Section 77 of the Negotiable Instruments Act, 1881.
Learned Counsel appearing for the respondent no. 2 has submitted that, there was no negligence on the part of the respondent no. 2 in the whole transaction. The cheques, after being received from the first petitioner, were sent to the Kandla Branch of the United Bank of India for payment. The drawer bank had intimated the Kandla Branch of UBI that, the account on which the cheques were drawn was closed before the date of presentation of the cheques. The cheques, therefore, stood dishonoured upon presentation. The cheques, thereafter, were physically dispatched by the Kandla Branch of UBI to the respondent no. 2 through Registered Post. The UBI both at the level of the respondent no. 2 as also the Kandla Branch had exercised due care. The bank had done whatever was within their scope and ambit and had taken due care of the cheques. The cheques were lost in transit and in the custody of the postal authorities. The negligence if any, of the postal authorities cannot be foisted upon the bank. He has submitted that, Section 77 of the Negotiable Instruments Act, 1881 deals with the liability of the drawer banker. In the facts of the present case, the respondent no. 2 is the collecting banker and not the drawer banker. Therefore, Section 77 of the Act of 1881 has no manner of application. The first petitioner ought to have exercised its rights under Section 45A of the Act of 1881. It has not done so. Therefore, the first petitioner cannot be heard to say that, the respondent no.2 is negligent.
In the facts of the present case, according to the learned Advocate for the respondent no. 2, there is no negligence on the part of the petitioners. Even if there is any negligence, no loss was caused to the petitioners by any action of the respondent no. 2. Even if there is a loss, as a Writ Court, it need not enter into such disputes to quantify such losses as it would involve taking of evidence of such loss. He has relied upon 2009 Volume 7 Supreme Court Cases page 330 (Postgraduate Institute of Medical Education and Research, Chandigarh v. Jaspal Singh & Ors.) in support of the contention that, negligence as understood by the legal fraternity does not exist in the facts of the present case. Relying upon 2007 Volume 2 Maharashtra Law Journal page 406 (Anil Balasaheb Murde v. Adinath Trimbak Bodkhe) he has submitted that, the first petitioner did not suffer any loss, as the first petitioner could have initiated proceedings under Section 138 of the Negotiable Instruments Act, 1881 notwithstanding the non-availability of the cheques in the physical form. The first petitioner did not do so. A tort of negligence is not available in the writ jurisdiction. He has relied upon 2004 Volume 3 Supreme Court Cases page 415 (Pramod Malhotra & Ors. v. Union of India & Ors.) in support of such contentions. Relying upon 1990 Volume 1 Supreme Court Cases page 484 (Indian Overseas Bank v. Industrial Chain Concern) and 2009 Volume 2 C.P.C. page 679 (Branch Manager, Federal Bank Ltd. v. N.S. Sabastian) learned Advocate for the respondent no. 2 has submitted that, the respondent no. 2 had exercised requisite level of care in dealing with the transactions. Therefore, no liability should be foisted upon the respondent no. 2.
In reply, learned Advocate for the petitioners has submitted that, Pramod Malhotra & Ors. (supra) is one under Section 131 of the Negotiable Instruments Act, 1881 and that, the facts of the present case are absolutely different. He has distinguished the other authorities cited on behalf of the respondent no. 2. He has submitted that, Section 45A of the Act of 1881 is not attracted in the facts of the present case.
Two sections which are relevant in the context of the present case are Section 45A and Section 77 of the Negotiable Instruments Act, 1881, and they are as follows:-
"45A. Holder's right to duplicate of lost bill.-- Where a bill of exchange has been lost before it is over-due, the person who was the holder of it may apply to the drawer to give him another bill of the same tenor, giving security to the drawer, if required, to indemnify him against all persons whatever in case the bill alleged to have been lost shall be found again.
If the drawer on request as aforesaid refuses to give such duplicate bill, he may be compelled to do so."
"77. Liability of banker for negligently dealing with bill presented for payment.-- When a bill of exchange, accepted payable at a specified bank, has been duly presented there for payment and dishonoured, if the banker, so negligently or improperly keeps, deals with or delivers back such bill as to cause loss to the holder, he must compensate the holder for such loss."
In the facts of the present case, the petitioners had presented 11 several cheques on two dates with the respondent no. 2 for collection. All the cheques were drawn on Gandhidham Co-operative Bank. The cheques were sent by the respondent no. 2 to the Kandla Branch of UBI for collection. Kandla Branch of UBI had presented all the 11 cheques with Gandhidham Co-operative Bank for payment. Gandhidham Co- operative Bank had informed the Kandla Branch of UBI that, the account on which the cheques were drawn stood closed prior to the date of presentation of the 11 several cheques. All the 11 cheques were, therefore, dishonoured on presentation. The Kandla Branch of UBI, thereafter, had dispatched all the cheques through Registered Post for onward transmission to the respondent no. 2. The respondent no. 2 did not receive the cheques. The cheques were apparently lost in transit through Post. The question is whether the respondent no. 2 is liable for the loss of the cheques in facts of such case or not.
Section 45A of the Act of 1881 allows the person holding a Bill of Exchange to a duplicate copy of the lost bill. In the present case, the petitioner could have obtained a duplicate cheque from the drawer thereof. However, the petitioners have claimed that, they were not in the know of the loss of the cheques before the expiry of the validity period of the cheques. The respondent no. 2 contends otherwise these are disputed question of facts which would require further evidence for consideration. A Writ Court need not enter such arena.
Section 77 of the Act of 1881 deals with the liability of a banker for negligently dealing with the bill presented for payment. Gandhidham Co- operative Bank would be liable under the provisions of Section 77 of the Act of 1881, if it had acted negligently in dealing with the cheques presented for payment. In the facts of the present case, Gandhidham Co-operative Bank had returned the subject cheques to the Kandla Branch of UBI, immediately upon finding that the account on which the same were drawn, was closed. The respondent no. 2, therefore, cannot be held responsible under Section 77 of the Act of 1881 as such provisions are not attracted to the respondent no. 2 in the facts of the present case.
Indian Overseas Bank (supra) has held that, in a situation as obtaining in the facts of the present case, where a person presents a cheque for collection with his banker such bank acts as an agent or conduit pipe to receive payment of the cheques from the banker on whom they are drawn and to hold the proceeds at the disposal of its customer. It is the action of the respondent no. 2 as a collecting agent or a conduit pipe to receive payment of the cheques that has to be adjudged in the facts of the present case.
The conduct of the respondent no. 2 as noted above does not allow an inference to be drawn that it has acted negligently. It has taken due and reasonable case for the purpose of collecting the proceeds of the 11 several cheques that it had received from the first petitioner for collection. The respondent no. 2 has no control over the postal authorities. The Supreme Court in Branch Manager, Federal Bank Ltd. (supra) has considered a scenario where the cheques were lost in transit and has held that, the bank which had acted as the collecting bank was not liable in negligence. Negligence has been explained by the Supreme Court in Postgraduate Institute of Medical Education and Research, Chandigarh (supra) as follows:-
"13. The term negligence is often used in the sense of careless conduct. Way back in 1866 in Grill vs. General Iron Screw Collier Co., Wills J. referred to negligence as:
" ......... the absence of such care as it was the duty of the defendant to use."
Browen L.J. in Thomas v. Quatermaine stated: (QBD p. 694) " ......... idea of negligence and duty are strictly correlative, and there is no such thing as negligence in the abstract; negligence is simply neglect of some care which we are bound by law to exercise towards somebody."
14. In Donoghue v. Stevenson, Lord Macmillan with regard to negligence made the following classic statement: (AC pp. 618-
19) "The law takes no cognizance of carelessness in the abstract. It concerns itself with carelessness only where there is a duty to take care and where failure in that duty has caused damage. In such circumstances carelessness assumes the legal quality of negligence and entails the consequences in law of negligence..... The cardinal principle of liability is that the party complained of should owe to the party complaining a duty to take care, and that the party complaining should be able to prove that he has suffered damage in consequence of a breach of that duty."
15. In Jacob Mathew this Court while dealing with negligence as tort referred to the Law of Torts, Ratanlal and Dhirajlal, (24th Edn., 2002 edited by Justice G.P. Singh) and noticed thus:
"Negligence is the breach of a duty caused by the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do. Actionable negligence consists in the neglect of the use of ordinary care or skill towards a person to whom the defendant owes the duty of observing ordinary care and skill, by which neglect the plaintiff has suffered injury to his person or property. ... the definition involves three constituents of negligence: (1) A legal duty to exercise due care on the part of the party complained of towards the party complaining the former's conduct within the scope of the duty; (2) breach of the said duty; and (3) consequential damage.
Cause of action for negligence arises only when damage occurs; for, damage is a necessary ingredient of this tort."
16. Insofar as civil law is concerned, the term negligence is used for the purpose of fastening the defendant with liability of the amount of damages. To fasten liability in criminal law, the degree of negligence has to be higher than that of negligence enough to fasten liability for damages in civil law.
17. In Syed Akbar v. State of Karnataka, this Court dealt with in details the distinction between negligence in civil law and in criminal law. It has been held that there is a marked difference as to the effect of evidence, namely, the proof, in civil and criminal proceedings. In civil proceedings, a mere preponderance of probability is sufficient, and the defendant is not necessarily entitled to the benefit of every reasonable doubt; but in criminal proceedings, the persuasion of guilt must amount to such a moral certainty as convinces the mind of the Court, as a reasonable man, beyond all reasonable doubt.
18. In Bhalchandra Waman Pathe v. State of Maharashtra, this Court held that while negligence is an omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do."
As a Writ Court, I need not enter into the arena as to what steps the petitioners could have taken for realizing the cheques or the proceeds thereof from the respondent no. 2 or from that matter any of the persons that may be liable for the proceeds of the 11 several cheques. Therefore, Anil Balasaheb Murde (supra) and Pramod Malhotra & Ors. (supra) are not required to be discussed.
In the facts of the present case, therefore, a claim on account of the negligence cannot be sustained against the respondent no. 2.
W.P. No. 351 of 2017 is dismissed. No order as to costs.
[DEBANGSU BASAK, J.]