1. The present Second Appeal under Section 100 of the Code of Civil Procedure has been preferred by the appellant- original defendant to quash and set aside the impugned judgment and decree dated 15/09/1981 passed by the learned Civil Judge (Junior Division), Anand in Regular Civil Suit No.
245/1977 by which the learned trial Court has decreed the suit preferred by the respondent-original plaintiff by directing the appellant-original defendant to return the amount of Rs. 5,000/- with 6% interest thereon from 30/03/1976 till realization as well as the impugned judgment and order passed by the learned 2nd Extra Assistant Judge, Nadiad dated 27/08/1984 in Regular Civil Appeal No. 134/1981 by which the learned appellate Court has dismissed the said appeal confirming the judgment and decree passed by the learned trial Court.
2. The facts leading to the present Second Appeal in a nutshell are as under;
2.1. One Shri Ashabhai Gokulbhai Patel deposited Demand Draft bearing No. 109 purported to be and alleged to have been issued by the respondent-original plaintiff Thasra Branch, which according to the respondent-original plaintiff was of Rs. 70/- and was altered by Shri Ashabhai Gokulbhai Patel to Rs. 5,000/- payable at Anand Branch instead of Baroda Branch. The said cheque, which was deposited by the appellant-original defendant Bank at Anand Branch, was sent for clearing and the same was cleared and thereafter the appellant-original defendant Bank gave credit of Rs. 5,000/- in the account of Shri Ashabhai Gokulbhai Patel, which subsequently the said Ashabhai Gokulbhai Patel withdrew. It appears that thereafter the respondent-original plaintiff came to know that the Demand Draft of Rs. 70/- was altered to Rs. 5000/- and the same was made payable at Anand Branch instead of Baroda Branch and, therefore, the respondent-original plaintiff instituted Regular Civil Suit No. 245/1977 against the appellant-original defendant in the Court of learned Civil Judge (Junior Division), Anand for recovery of the aforesaid amount of Rs. 5,000/- on the ground that the appellant-original defendant ought to have verified the genuineness of the instrument/Demand Draft and ought not to have credited the amount of Rs. 5,000/- in the account of Shri Ashabhai Gokulbhai Patel, who has committed the fraud. The said suit was resisted by the appellant-original defendant by filing the written statement denying the allegations with respect to the negligence on the part of the appellant-original defendant. It was submitted that due care was taken and even the Demand Draft was sent to the respondent-original plaintiff Anand Branch for clearing and only after the same was cleared by the Anand Branch the same was credited in the account of Shri Ashabhai Gokulbhai Patel. It was also submitted that the suit was liable to be dismissed on the ground of non-joinder of parties in whose account Rs. 5,000/- was given credit. To that the learned trial Court framed the issues at Exh. 10. After considering the evidence on record and solely relying upon the decision of the Madras High Court in the case of Indian Bank Vs. Catholic Syrian Bank reported in AIR 1981 Madras 129 held that there was negligence on the part of the appellant- original defendant Bank in opening the Bank Account of Shri Ashabhai Gokulbhai Patel and, therefore, the appellant-original defendant is not entitled to the benefit under Section 131 of the Negotiable Instruments Act and, therefore, the learned trial Court decreed the suit vide judgment and decree dated 15/09/1981. Being aggrieved and dissatisfied with the impugned judgment and decree passed by the learned trial Court passed in Regular Civil Suit No. 245/1977 the appellant- original defendant preferred Regular Civil Appeal No. 134/1981 before the learned District Court, Nadiad and the learned 2nd Extra Assistant Judge, Nadiad dated 27/08/1984 dismissed the said appeal confirming the judgment and decree passed by the learned trial Court. Being aggrieved and dissatisfied with the impugned judgment and orders passed by both the Courts below in decreeing the suit the appellant-original defendant has preferred the present Second Appeal under Section 100 of the Code of Civil Procedure.
3. Shri H.M. Parikh, learned advocate appearing on behalf of the appellant-original defendant has vehemently submitted that both the Courts below have materially erred in not properly interpreting the benefit of Section 131 of the Negotiable Instruments Act. It is submitted that as such due care was taken by the appellant-original defendant while giving credit of Rs. 5,000/- in the account of Shri Ashabhai Gokulbhai Patel. It is submitted that only after the Demand Draft was cleared by the Anand Branch of the respondent-original plaintiff the amount was given credit in the account of Shri Ashabhai Gokulbhai Patel and, therefore, considering Section 131 of the Negotiable Instruments Act, the learned trial Court ought to have held that the appellant-original defendant is not liable to make the payment, who has given credit in the account of Shri Ashabhai Gokulbhai Patel. It is submitted that in the facts and circumstances of the case, both the Courts below have materially erred in relying upon the decision of the Madras High Court in the case of Catholic Syrian Bank (Supra).
3.1. Shri Parikh, learned advocate appearing on behalf of the appellant-original defendant has further submitted that though there was no issue with respect to opening of the Bank Account of Shri Ashabhai Gokulbhai Patel both the Courts below have materially erred in holding the negligence of the appellant- original defendant by observing that no proper care was taken while opening the Bank Account of Shri Ashabhai Gokulbhai Patel. It is submitted that while considering Section 131 of the Negotiable Instruments Act it was immaterial whether the Bank Account of Shri Ashabhai Gokulbhai Patel was opened after taking due care or not. It is submitted that what was required to be considered was whether at the time of giving credit of the amount in the account of Shri Ashabhai Gokulbhai Patel on the basis of the instrument/Demand Draft due care was taken by the appellant-original defendant or not?
3.2. Shri Parikh, learned advocate appearing on behalf of the appellant-original defendant has relied upon the decision of the Hon'ble Supreme Court in the case of Indian Overseas Bank Vs. Industrial Chain Concern reported in (1990) 1 SCC 484 (paragraph 25). Making the above submissions and relying upon the above decision, it is requested to allow the present Second Appeal.
4. Ms. Nalini Lodha, learned advocate appearing on behalf of the respondent-original plaintiff has tried to support the impugned judgment and orders passed by both the Courts below. It is submitted that both the Courts below have rightly relied upon the decision of the Madras High Court in the case of Catholic Syrian Bank (Supra). It is submitted that the facts of the case before the Madras High Court squarely applies to the facts and circumstances of the present case and, therefore, no illegality has been committed in decreeing the suit.
5. Heard the learned advocates appearing on behalf of the respective parties at length. At the outset, it is required to be noted that admittedly the amount of Rs. 5,000/- was credited in the account of Shri Ashabhai Gokulbhai Patel and there are allegations of fraud and altering the instrument/Demand Draft against Shri Ashabhai Gokulbhai Patel and still the amount was credited in the account of Shri Ashabhai Gokulbhai Patel and the respondent-original plaintiff did not join Shri Ashabhai Gokulbhai Patel as party defendant. Under the circumstances, as such the learned trial Court ought to have dismissed the suit on the ground of non joinder of proper parties.
6. Even otherwise, it is required to be noted that the Demand Draft was produced by the said Shri Ashabhai Gokulbhai Patel and presented, which was sent to the respondent-original plaintiff Anand Branch and only after the same was cleared by the Anand Branch the same was given credit by the appellant-original defendant in the account of Shri Ashabhai Gokulbhai Patel. If the Anand Branch would not have cleared the Demand Draft, in that case, the appellant-original defendant would not have given credit of the amount in the account of Shri Ashabhai Gokulbhai Patel. Considering the aforesaid facts and circumstances of the case and considering Section 131 of the Negotiable Instruments Act both the Courts below have materially erred in decreeing the suit and directing the appellant-original defendant to return the amount of Rs. 5,000/-, which was given credit in the account of Shri Ashabhai Gokulbhai Patel. From the impugned judgment and orders passed by both the Courts below, it appears that the learned trial Court has not given the benefit of Section 131 of the Negotiable Instruments Act solely on the ground and observing that no proper care was taken by the appellant-original defendant in opening the Bank Account of Shri Ashabhai Gokulbhai Patel. The aforesaid was not properly interpreted while considering the benefit of Section 131 of the Negotiable Instruments Act.
7. Identical question came to be considered in the case of Industrial Chain Concern (Supra) and in paragraph 25 the Hon'ble Supreme Court has observed and held as under;
“25. To enable a bank to avail the immunity under Section 131 as a collecting banker he has to bring himself within the conditions formulated by the section. Otherwise he is left to his common law liability for conversion or for money had and received in case of the person from whom he took the cheques having no title or defective title. The conditions are;
(a) that the banker should act in good faith and without negligence in receiving a payment, that is, in the process of collection, (b) that the banker should receive payment for a customer on behalf of him and thus acting as a mere agent in collection of the cheque and not as an account holder, (c) that the person for whom the banker acts must be his customer and (d) that the cheque should be one crossed generally or especially to himself. The receipt of payment contemplated by the Section is one from the drawee bank. It is settled law that the onus of bringing himself within the Section rests on the banker. In Capital and Counties Bank Vs. Gordon, as we have seen, the conception of a collecting banker was that of “receiving the cheque from the customer, presenting it and receiving the money for the customer, and then, and not till then, placing it to the customer's credit, exercising functions strictly analogous t those of a clerk of the customer sent to a bank to cash an open cheque for his employer.” If the banker performs these functions in course of his business, in good faith and without negligence he will be withing Section 131 of the Act.”
8. In view of the above and for the reasons stated hereinabove, the impugned judgment and decree dated 15/09/1981 passed by the learned Civil Judge (Junior Division), Anand in Regular Civil Suit No. 245/1977 confirmed by the learned appellate Court cannot be sustained and the same deserves to be quashed and set aside.
9. In view of the above the impugned judgment and decree dated 15/09/1981 passed by the learned Civil Judge (Junior Division), Anand in Regular Civil Suit No. 245/1977 as well as the impugned judgment and order passed by the learned 2nd Extra Assistant Judge, Nadiad dated 27/08/1984 in Regular Civil Appeal No. 134/1981 are hereby quashed and set aside and the present Second Appeal is allowed to the aforesaid extent. No cost.
(M.R. SHAH, J.) siji