Document Fragment View

Matching Fragments

4. This question has been dealt with in three decisions of Courts other than this Court. The first of them, in chronological order, is the decision of a Division Bench of the Lahore High Court in the case of Malik Barkat Ali v. Imperial Bank of India. AIR 1945 Lah 213. The facts of that case were that one Malik Barkat Ali was selected as Provincial Manager of the Crown Brand Tea Company at Dacca, and he was required to deposit a certain amount by way of security money by means of a bank draft. His father accordingly purchased a draft for Rs. 5,000/- made out in favour of the Crown Brand Tea Company by the Imperial Bank of India on its Dacca Branch, and instructed that Bank to debit the amount of that draft to his current account, which was done on the 19th of December 1940. Malik thereafter proceeded to take charge of his post, but as soon as he arrived at Dacca, he formed the impression that the company was a bogus concern and he accordingly sent a telegram to his father the same evening that payment of the draft should be stopped "anyhow". His father accordingly sent a telegram to the Dacca Branch of the Imperial Bank asking them to stop payment which reached that Branch on the 23rd of December 1940. On the morning of the same day Malik's father went personally to the office of the Imperial Bank in Lahore and asked them to arrange for their Dacca Branch to stop payment of the draft explaining the reasons for doing so. The Bank hesitated at first, but ultimately agreed to his request, but before payment could be stopped by Lahore Branch sending an intimation to the Dacca Branch, the draft had already been cleared that afternoon. Malik's father who was the purchaser of the draft thereupon sued the Imperial Bank on the ground that they had acted negligently in refusing to stop payment on being asked to do so for the reasons given to them at that time. In a lucid and well-considered judgment, it was held (at page 214. Col. 2-215, Co. 1) that the issue of a draft is regarded in banking practice as a matter of purchase, the person at whose instance the draft is issued, being regarded as the purchaser, and that the question that fell to be decided was what were the conditions in which a bank could stop payment of a draft after it had reached the hands of the person, in whose favour it was drawn, and whether it could do so at the instance of the purchaser. The law in regard to the question was laid down in the said case in the following terms:-

It was, therefore, held in Barket Ali's case AIR 1945 Lah 213 that, since the Bank had no reasonable grounds for supposing that the person presenting the draft was not entitled to receive payment of the amount thereof, the Bank was discharged under the provisions of the Negotiable Instruments Act, and the dismissal of the plaintiff's suit by the lower Court was confirmed by the High Court. I am in entire agreement with the law as laid down by the Lahore High Court in Barkat Ali's case. In Barkat Ali's case, Lahore High Court was, however, concerned only with the situation of the stopping of payment by the purchaser of a draft after it had reached the hands of the payee thereof, and the question as to whether the purchaser of the draft has any right to stop payment of it prior to the stage at which the draft reaches the hands of the payee has not been considered in the said case. That question has been deal with in two other cases to which I will now refer.

7. Both these cases were considered by a single Judge of the Allahabad High Court in the case of Sidh Nath v. Punjab National Bank, in which the facts were that on the 10th of Sep., 1947 the plaintiff purchased a draft for Rs. 6,000/- from the Nayagani Branch of the defendant bank in the city of Manpur in the name of one Ram Narain of Lucknow, but the plaintiff retained the Lucknow, but the plaintiff retained the draft with himself and had not yet handed it over to the said Ram Narain when he informed the defendant bank that the draft should be cancelled and the money paid back to him and offered to furnish and indemnity bond for the amount of the draft. The defendant bank, however, refused to pay back the amount to the plaintiff, and the plaintiff, therefore, filed a suit to recover the same with interest. It was sought to be contended on behalf of the defendant bank that the plaintiff had no authority to cancel the instructions already acted upon, and that it was only Ram Narain in whose name the draft had been prepared who could claim the amount. Dealing with that contention, it was held by Srivastavs, J. (Para. 13) that it was not as if a draft could never be countermanded or its payment stopped in any circumstances, but that the difficulty in countermanding or stopping payment of a draft could arise only when the draft had already passed into the hands of the payee or had been endorsed in favour of another person. It was stated that it was only after delivery that the payee of the draft could claim any rights in respect of it and become entitled as a holder to receive or recover its amount. Shrivastava, J. laid down that before the draft was delivered to the payee, it was therefore, open to the purchaser to get the draft cancelled and to instruct the bank not to pay the amount to any one else, but to return it to him, ad the purchaser could treat the bank which had issued the draft as his own debtor and could, as a creditor demand the amount from the bank, and the bank would be liable to satisfy that demand. Srivastava, J. further laid down that the only thing that the bank could insist on was that the draft should be handed back to it so that there might be no chance left of any other person making a claim on its basis and that it was only after the draft had been delivered to the payee and his rights had come in, that the purchaser's right to claim the money and to stop the payment became "disputable". It was held that at that stage the bank could reasonably say that stage the bank could reasonably say that in order to have an effective discharge from liability it was necessary to have the consent of the payee before the amount could be paid to the purchaser.

9. Turning to the facts of the present case, in the light of this legal position, the first and the most important question which arises is, when was the draft in the present case delivered to the plaintiff who was the payee thereof, or to this agent. The learned trial Judge has come to he conclusion, that, having regard to the evidence of the plaintiff's son, it is clearly established that the plaintiff had not received the draft before its payment was stopped by Dundage, the purchaser of the draft. In my opinion, that finding is, however, not correct. It is common ground that the draft, in the present case, was sent by Dundage to the plaintiff by post and indeed, having regard to the fact that the parties were in two different towns, in the normal course of business, it would ordinarily not be sent otherwise. The subsidiary question which, therefore, arises is, whether on that admitted position, it could be said that the post office was the agent of the plaintiff, for if that be the position, once the draft was posted by Dundage, it must be held to have been delivered to the plaintiff's agent and, therefore, to the plaintiff himself. In the case of Shri Jagadish Mills Ltd. v. L-T. Commr., AIR 1959 SC 1160, after considering a previous decision of its own, the Supreme Court came to the conclusion (Para. 13) that in the normal course of affairs, it could not be imagined that cheques drawn in Delhi would be sent by a messenger to Baroda, so that they might be delivered personally at Baroda, and that the only reasonable and proper way of dealing with such a situation was that the payment would be made by cheques which Government would send to the appellant at Baroda by post which would be in accordance with the course of business usage in general. In short, the Supreme Court, on the facts before it, took the view that where parties were at two different towns separated by some distance, "there was imported by necessary implication in implied request ............. to send the cheques by post ........ thus constituting the Post Office its (payee's) agent for the purposes of receiving those payments." That is precisely the position in the present case. The independent and unchallenged evidence of the agent of the Kolhapur Branch of the Defendant Bank shows that Shankeswar and the payee of the draft was at Kolhpur are separated by a distance of 38 miles. The evidence shows that the purchaser of the draft was at Shankeshwar and the payee of the draft was at Kolhpur. Under those circumstances, in accordance with the course of business usage in general, the only reasonable inference that the Court can draw is that there was an implied request by the plaintiff that the draft should be sent to him by post by Dundage, for it would be hard to conceive of personal delivery of the draft being contemplated in the course of a routine commercial transaction of this nature when parties are located in two different towns at some distance from each other. I, therefore, hold that the post office in the present case was the agent of the payee, and when Dundage who had purchased the draft from the Defendant Bank's Office at Shankeshwar, posted that draft at Shankeshwar on 19th August 1965, the act of posting itself amounted to delivery of the draft to the plaintiff. In that view of the matter, it must be held that the draft in question has reached the payee before payment thereof was purported to be stopped by Dundage between 11 a. m. and 12 noon on 20th August 1965. It is common ground that there was no dispute raised by Dundage being in regard to the consideration for the said draft. As held by the Lahore High Court in Barkat Ali's case AIR 1945 Lah 213. Dundage was not entitled to ask the Defendant Bank to stop payment on the account, and the Defendant Bank was not entitled to refuse to pay the amount of that draft to the plaintiff, as it has done. Since there was no dispute in regard to the title of the plaintiff, the payment of the draft to him by the Defendant Bank would, in my opinion, amount to payment in due course within the terms of S. 10 of the Negotiable Instruments Act, and the Defendant Bank would be discharged from liability on the basis of the principle embodied in Section 85A of the Act. I would, therefore, make the Rule absolute, set aside the dismissal of the plaintiff's suit by the trial Court, and pass a decree in favour of the plaintiff for Rs. 683.94 P., with interest at the rate of 6% per annum from the date of the filling of the suit till payment, and with costs in both the Courts.