Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No. 286/2002
th
% 16 August, 2011
CANARA BANK ...... Appellant
Through: Mr.Pradeep Dewan, Sr. Adv.
with Mr. Anupam Dhingra,
Mr. Rahul Jain & Mr. Rajiv
Samiyaar, Advocates.
VERSUS
CITI BANK N.A. & ORS. ...... Respondents
Through: Mr. Sanjay Agnihotri & Mr.
Amiteshwar Singh, Advs. for
the respondent no.1.
CORAM:
HON’BLE MR. JUSTICE VALMIKI J.MEHTA
1. Whether the Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
VALMIKI J. MEHTA, J (ORAL)
1. The challenge by means of this Regular First Appeal under
Section 96 of the Code of Civil Procedure, 1908 is to the impugned
judgment dated 29.1.2002 which has dismissed the suit of the
appellant/plaintiff qua the respondent no.1 herein. The suit was filed for
recovery of amounts of two cheques which were collected by the
RFA No.286/2002 Page 1 of 10
respondent no.1 for its customer/respondent no.2/defendant
no.2/Sh.Kumar Shekhar. It was found subsequently that the signatures
on these two cheques of the customer of the appellant/plaintiff were
forged by the respondent no.2/defendant no.2.
2. The facts of the case are that the defendant
no.3/respondent no.3, M/s. Ramji Lal Ram Saroop had an account with
the appellant/plaintiff. The respondent no.2/defendant no.2 wrongly
obtained two cheques bearing numbers 338587 and 338595 of the
respondent no.3/defendant no.3 and presented it for collection by filling
the amounts of Rs.44,438/- and Rs.48,682/- respectively. When this
fraud was discovered by the customer of the appellant, i.e. defendant
no.3, the appellant was forced to make payment of these amounts to its
customer inasmuch as a forged cheque is no mandate to pay in the
eyes of the law. After paying the amount its customer, the
appellant/plaintiff raised the appropriate demand on the respondent
no.1, which refused to pay the amount, resulting in filing of the subject
suit.
3. The only issue relevant to the disposal of the present appeal
is as to whether the respondent no.1 was guilty in opening and
operating the account of its customer/defendant no.2/respondent no.2.
If there is no negligence in opening the account or in operating the
account then the respondent no. 1 will not be liable, however, in case of
negligence in opening the account or operating of the account, the
respondent no. 1 would be liable.
RFA No.286/2002 Page 2 of 10
4. The only basis by which the respondent no. 1 opened the
account of its customer Sh. K.Shekhar/defendant no.2/respondent no.2
was a letter dated 12.11.1992 allegedly issued by M/s. Punjab National
Bank, G.T.Road Branch, Ghaziabad, UP. This letter has been exhibited
in the Trial Court as Ex.DW1/P6. Learned counsel for the
appellant/plaintiff argued that there was quite clearly negligence of the
respondent no.1 in opening and operating of the account of the
respondent no.2/defendant no.2 on account of the following factors:-
i) The letter exhibited as Ex.DW1/P6 was not addressed to the
respondent no.1 and also was not a letter, as per its contents for
authorization to open a bank account.
ii) It is argued further that even assuming that this letter can
be taken as an introduction for opening of an account in a bank,
yet, the respondent no.1 was bound to have made follow up
inquiries as to the genuineness of this letter, and admittedly,
nothing has been filed on record to show that there was a
confirmation taken in writing from Punjab National Bank, G.T.Road
Branch, Ghaziabad, UP as to the authenticity of this letter.
iii) There was negligence in operating the account because
firstly, the account was opened on 13.11.1992 with a cash deposit
of Rs.6,000/-. Secondly, the first cheque credited in the account
was the forged cheque of a substantial amount Rs.44,438/- and
which amount was withdrawn in one go by withdrawing a cash of
Rs.45,000/- within three days on 17.11.1992. Thirdly, it is argued
RFA No.286/2002 Page 3 of 10
that even the second cheque was deposited immediately thereafter
on 20.11.1992 and more or less the entire amount of this cheque
was again withdrawn on 23.11.1992 i.e. by withdrawing a cash
amount of Rs.47,000/-. It was therefore concluded that opening of
the account by cash deposit, immediate deposit in the account of a
large amount disproportionate to the amount by which the account
was opened, withdrawal of the entire amount of the first cheque
deposited, again deposit of a cheque of a large amount within 3
days thereafter and withdrawing of the amount of even of this
second cheque immediately on the said amount being credited in
the account, are all such circumstances which show that the
respondent no.1 ought to have been put to caution, but it failed to
exercise prudence and is therefore negligent thus making it liable
to the appellant/plaintiff.
iv) The account opening form shows that though the account
was opened and allowed to be operated from 13.11.1992, however,
confirmation with regard to operation of the account was endorsed
later on 18.11.1992, and by which date the first cheque was
deposited and its amount was withdrawn.
5. Counsel for the respondent no.1, on the other hand,
vehemently argued that the respondent no. 1 was not negligent in
opening and operating the account, because it had acted on the letter
of the Punjab National Bank, Ex.DW1/P6.
RFA No.286/2002 Page 4 of 10
6. In my opinion, the arguments as raised by counsel for the
appellant/plaintiff are correct and the appeal has to succeed. The law
with respect to the liability of a collecting bank is contained in Section
131 of the Negotiable Instruments Act, 1881. Under this Section, a
collecting bank has protection only if the collecting bank, in good faith
and without negligence, receives payment of the customer by a cheque,
i.e. if there is negligence in receiving of a cheque on behalf of the
customer, the collecting bank would be liable for negligence.
7. The law in this regard is contained in the decision of the
Supreme Court in the case of Indian Overseas Bank vs. Industrial
Chain Concern 1990 (1) SCC 484. The relevant paragraphs of this
judgment are paras 9 to 11 and 33 which read as under:-
“9. What is the standard of care to be taken by a
bank in opening an account? In the Practice and Law of
th
Banking by H.P. Sheldon, 11 Edn., in chapter 5 at page
64 it is said:
“Before opening an account for a customer who is
not already known to him, a banker should make
proper preliminary inquiries. In particular, he should
obtain references from responsible persons with
regard to the identity, integrity and reliability of the
proposed customer.
If a banker does not act prudently and in
accordance with current banking practice when
obtaining references concerning a proposed
customer, he may later have cause for regret.”
10. M.L. Tannan In Banking Law and Practice in India,
th
18 edn., at page 198 says:
“Before opening a new account, a banker should
take certain precautions and must ascertain by
inquiring from the person wishing to open the
account, if such person is unknown to the banker, as
RFA No.286/2002 Page 5 of 10
to his profession or trade as well as the nature of the
account he proposes to open. By making necessary
inquiries from the references furnished by the new
customer, the banker can easily verify such
information and judge whether or not the person
wishing to open an account is a desirable customer.
It is necessary for a bank to inquire, from responsible
parties, given as references by the customer, as to
the latter’s integrity and respectability, an omission
of which may result in serious consequences not only
for the banker concerned, but also for other bankers
and the general public.”
11. One of the tests of deciding whether the bank was
negligent, though not always conclusive, is to see whether
the Rules or instructions of the banks were followed or
not. We may accordingly consult those instructions. Ex.B-
6 contains the general instructions regarding constituent
accounts for bank. Mark II deals with opening of accounts.
It says:
“Except at large branches where the sub-agent or
accountant may be authorised to open Current
Accounts, no new Current Account shall be opened
without the authority of the agent manager who is
solely responsible for all Current Accounts being opened
in the proper manner. A written application on the
appropriate form must be submitted and will be
initialled by the agent at the top left corner after he has
satisfied himself of the respectability of the applicant(s).
It is important that every party must be introduced to
the Bank by a respectable person known to the Bank,
who must normally call at the Bank and sing in the
column specially provided for the purpose in the
account opening form. In all cases his signature must
be verified with the specimen lodged and attested. The
agent or accountant may introduce constituents to the
Bank provided they are known to him personally and in
such cases he should sign the application form at the
appropriate place in his personal capacity. When the
introduction of any other member of the staff is
accepted, the agent must invariably make independent
inquiry and record his findings on the account opening
form for future reference if the need arises.....”
33. It is thus clear that the question of negligence or
no negligence depends entirely on the facts of each
RFA No.286/2002 Page 6 of 10
individual case and thus makes it difficult to judge in
advance how any particular litigation involving allegations
of negligence will go. In the instant case Sethuraman had
in effect opened another account in the name of the
plaintiff firm and operated it himself as its
proprietor.”(underlining supplied)
8. A reference to the decision in the case of Indian Overseas
Bank (supra) shows that a bank which opens an account is required to
follow up the reference given at the opening of the account. The bank
which opens an account is also required to meticulously examine the
address of the customer which he gives at the time of opening of the
account. Further, it is necessary for the bank depending on each
individual’s case to determine the authenticity of the customer who is
opening the account.
9. A single Judge of the Kerala High Court in the case of
Central Bank of India Ltd. vs. V. Gopinathan Nair & Ors. AIR
1970 Kerala 74 has exhaustively dealt with the earlier judgments with
respect to Section 131 including the decisions of the Bombay High Court
in the cases of Sanyasilingam vs. Exchange Bank of India AIR
1948 Bombay 1 and Bapulal Pemchand vs. Nath Bank Ltd. AIR
1946 Bombay 482 while dealing with the point of the negligence of a
bank at the time of opening and operation of the account. While
referring to the case of Sanyasilingam (supra), the learned single
Judge of the Kerala High Court had approved the ratio that where the
payment which is made by a bank in an account is or is not without
negligence has to be considered in the light of the facts and
RFA No.286/2002 Page 7 of 10
circumstances of the case as to whether such payment is out of the
ordinary course so as to cause the banker to make an inquiry. While
referring to the decision of the privy council in the case of
Commissioners of Taxation vs. English Scottish & Australian
Bank AIR 1920 PC 88 , a reference is made to the fact that a bank
must sit up and take notice when suspicion is caused on account of
cheques of unusual large sums being credited and withdrawn from the
account.
10. If we refer to the facts of the present case it is shown that
firstly the account was opened by means of deposit of an amount in
cash and not by deposit of a cheque. Ordinarily, banks do insist, and
rightly so, that accounts are opened by means of crediting of an amount
in cheques or at least partially in cheque, if partially also in cash.
Further, it is unusual that immediately after opening of account on
13.11.1992, immediately on the next date, a cheque of a huge amount
of Rs.44,438/- was deposited in the account for collection, and which
amount of the cheque was immediately withdrawn when the same was
credited to the account on 17.11.1992. In fact the amount of the
cheque credited in the account was Rs.44,438/- and the amount
withdrawn was Rs.45,000/-. This again is out of the ordinary course of
conduct in a newly opened account by which the bank should have been
immediately put to caution, considering the fact that the account was
not opened in a normal manner by introduction of an another customer
but was opened by a letter from another banker, and which itself was
RFA No.286/2002 Page 8 of 10
not verified as is dealt with by me later on. There remains no doubt as
to negligence in opening and operation of the account because the
second cheque of Rs.48,682/- was again deposited barely within two
days of the first cheque being encashed on 17.11.1992 and even this
cheque was for a large amount of Rs.48,682/-. This amount was also
withdrawn immediately on being credited to the account for an amount
of Rs.47,000/-. The supervening aspect to be noted is that there is
nothing proved on the record by the respondent no.1 during trial that it
took any steps to follow up with the Punjab National Bank, G.T.Road
Branch, Ghaziabad, UP as to the authenticity of Ex.DW1/P6, inasmuch
as there is no document proved on record of Punjab National Bank of
G.T. Road Branch, Ghaziabad, UP that it had ever issued any such letter.
I agree with the argument of the learned counsel for the
appellant/plaintiff that the substance of the letter shows that the same
was only for attesting of the signatures of the defendant no.2 and it had
nothing to do with opening of an account inasmuch as the letter
Ex.DW1/P6 does not make any mention with respect to the same being
an introduction for opening of an account in a bank. Curiously, this
letter of introduction was given at the time of opening of the account on
13.11.1992 and which account itself was verified for operation on
18.11.1992, and by which date one of the disputed cheques was not
only deposited and collected, but its large amount, withdrawn.
11. In view of the aforesaid, I hold that there was negligence of
the respondent no.1 both in opening of the account as also its
RFA No.286/2002 Page 9 of 10
operation. Once there is negligence of the respondent no.1, it is not
entitled to the benefit of Section 131 of the Negotiable Instruments Act,
1881 and in fact, by virtue of the said Section, liability is bound to be
imposed upon the respondent no. 1 on account of having caused the
fraudulent withdrawal of the two amounts of the two disputed cheques.
12. Accordingly, the appeal is accepted. Suit of the
appellant/plaintiff bank for a sum of Rs.1,66,706/- is decreed alongwith
interest @ 7 ½ % per annum simple pendent lite and future till
payment. Decree sheet be prepared. Trial Court record be sent back.
Appeal is disposed of accordingly.
AUGUST 16, 2011 VALMIKI J. MEHTA, J.
ak
RFA No.286/2002 Page 10 of 10
+ RFA No. 286/2002
th
% 16 August, 2011
CANARA BANK ...... Appellant
Through: Mr.Pradeep Dewan, Sr. Adv.
with Mr. Anupam Dhingra,
Mr. Rahul Jain & Mr. Rajiv
Samiyaar, Advocates.
VERSUS
CITI BANK N.A. & ORS. ...... Respondents
Through: Mr. Sanjay Agnihotri & Mr.
Amiteshwar Singh, Advs. for
the respondent no.1.
CORAM:
HON’BLE MR. JUSTICE VALMIKI J.MEHTA
1. Whether the Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
VALMIKI J. MEHTA, J (ORAL)
1. The challenge by means of this Regular First Appeal under
Section 96 of the Code of Civil Procedure, 1908 is to the impugned
judgment dated 29.1.2002 which has dismissed the suit of the
appellant/plaintiff qua the respondent no.1 herein. The suit was filed for
recovery of amounts of two cheques which were collected by the
RFA No.286/2002 Page 1 of 10
respondent no.1 for its customer/respondent no.2/defendant
no.2/Sh.Kumar Shekhar. It was found subsequently that the signatures
on these two cheques of the customer of the appellant/plaintiff were
forged by the respondent no.2/defendant no.2.
2. The facts of the case are that the defendant
no.3/respondent no.3, M/s. Ramji Lal Ram Saroop had an account with
the appellant/plaintiff. The respondent no.2/defendant no.2 wrongly
obtained two cheques bearing numbers 338587 and 338595 of the
respondent no.3/defendant no.3 and presented it for collection by filling
the amounts of Rs.44,438/- and Rs.48,682/- respectively. When this
fraud was discovered by the customer of the appellant, i.e. defendant
no.3, the appellant was forced to make payment of these amounts to its
customer inasmuch as a forged cheque is no mandate to pay in the
eyes of the law. After paying the amount its customer, the
appellant/plaintiff raised the appropriate demand on the respondent
no.1, which refused to pay the amount, resulting in filing of the subject
suit.
3. The only issue relevant to the disposal of the present appeal
is as to whether the respondent no.1 was guilty in opening and
operating the account of its customer/defendant no.2/respondent no.2.
If there is no negligence in opening the account or in operating the
account then the respondent no. 1 will not be liable, however, in case of
negligence in opening the account or operating of the account, the
respondent no. 1 would be liable.
RFA No.286/2002 Page 2 of 10
4. The only basis by which the respondent no. 1 opened the
account of its customer Sh. K.Shekhar/defendant no.2/respondent no.2
was a letter dated 12.11.1992 allegedly issued by M/s. Punjab National
Bank, G.T.Road Branch, Ghaziabad, UP. This letter has been exhibited
in the Trial Court as Ex.DW1/P6. Learned counsel for the
appellant/plaintiff argued that there was quite clearly negligence of the
respondent no.1 in opening and operating of the account of the
respondent no.2/defendant no.2 on account of the following factors:-
i) The letter exhibited as Ex.DW1/P6 was not addressed to the
respondent no.1 and also was not a letter, as per its contents for
authorization to open a bank account.
ii) It is argued further that even assuming that this letter can
be taken as an introduction for opening of an account in a bank,
yet, the respondent no.1 was bound to have made follow up
inquiries as to the genuineness of this letter, and admittedly,
nothing has been filed on record to show that there was a
confirmation taken in writing from Punjab National Bank, G.T.Road
Branch, Ghaziabad, UP as to the authenticity of this letter.
iii) There was negligence in operating the account because
firstly, the account was opened on 13.11.1992 with a cash deposit
of Rs.6,000/-. Secondly, the first cheque credited in the account
was the forged cheque of a substantial amount Rs.44,438/- and
which amount was withdrawn in one go by withdrawing a cash of
Rs.45,000/- within three days on 17.11.1992. Thirdly, it is argued
RFA No.286/2002 Page 3 of 10
that even the second cheque was deposited immediately thereafter
on 20.11.1992 and more or less the entire amount of this cheque
was again withdrawn on 23.11.1992 i.e. by withdrawing a cash
amount of Rs.47,000/-. It was therefore concluded that opening of
the account by cash deposit, immediate deposit in the account of a
large amount disproportionate to the amount by which the account
was opened, withdrawal of the entire amount of the first cheque
deposited, again deposit of a cheque of a large amount within 3
days thereafter and withdrawing of the amount of even of this
second cheque immediately on the said amount being credited in
the account, are all such circumstances which show that the
respondent no.1 ought to have been put to caution, but it failed to
exercise prudence and is therefore negligent thus making it liable
to the appellant/plaintiff.
iv) The account opening form shows that though the account
was opened and allowed to be operated from 13.11.1992, however,
confirmation with regard to operation of the account was endorsed
later on 18.11.1992, and by which date the first cheque was
deposited and its amount was withdrawn.
5. Counsel for the respondent no.1, on the other hand,
vehemently argued that the respondent no. 1 was not negligent in
opening and operating the account, because it had acted on the letter
of the Punjab National Bank, Ex.DW1/P6.
RFA No.286/2002 Page 4 of 10
6. In my opinion, the arguments as raised by counsel for the
appellant/plaintiff are correct and the appeal has to succeed. The law
with respect to the liability of a collecting bank is contained in Section
131 of the Negotiable Instruments Act, 1881. Under this Section, a
collecting bank has protection only if the collecting bank, in good faith
and without negligence, receives payment of the customer by a cheque,
i.e. if there is negligence in receiving of a cheque on behalf of the
customer, the collecting bank would be liable for negligence.
7. The law in this regard is contained in the decision of the
Supreme Court in the case of Indian Overseas Bank vs. Industrial
Chain Concern 1990 (1) SCC 484. The relevant paragraphs of this
judgment are paras 9 to 11 and 33 which read as under:-
“9. What is the standard of care to be taken by a
bank in opening an account? In the Practice and Law of
th
Banking by H.P. Sheldon, 11 Edn., in chapter 5 at page
64 it is said:
“Before opening an account for a customer who is
not already known to him, a banker should make
proper preliminary inquiries. In particular, he should
obtain references from responsible persons with
regard to the identity, integrity and reliability of the
proposed customer.
If a banker does not act prudently and in
accordance with current banking practice when
obtaining references concerning a proposed
customer, he may later have cause for regret.”
10. M.L. Tannan In Banking Law and Practice in India,
th
18 edn., at page 198 says:
“Before opening a new account, a banker should
take certain precautions and must ascertain by
inquiring from the person wishing to open the
account, if such person is unknown to the banker, as
RFA No.286/2002 Page 5 of 10
to his profession or trade as well as the nature of the
account he proposes to open. By making necessary
inquiries from the references furnished by the new
customer, the banker can easily verify such
information and judge whether or not the person
wishing to open an account is a desirable customer.
It is necessary for a bank to inquire, from responsible
parties, given as references by the customer, as to
the latter’s integrity and respectability, an omission
of which may result in serious consequences not only
for the banker concerned, but also for other bankers
and the general public.”
11. One of the tests of deciding whether the bank was
negligent, though not always conclusive, is to see whether
the Rules or instructions of the banks were followed or
not. We may accordingly consult those instructions. Ex.B-
6 contains the general instructions regarding constituent
accounts for bank. Mark II deals with opening of accounts.
It says:
“Except at large branches where the sub-agent or
accountant may be authorised to open Current
Accounts, no new Current Account shall be opened
without the authority of the agent manager who is
solely responsible for all Current Accounts being opened
in the proper manner. A written application on the
appropriate form must be submitted and will be
initialled by the agent at the top left corner after he has
satisfied himself of the respectability of the applicant(s).
It is important that every party must be introduced to
the Bank by a respectable person known to the Bank,
who must normally call at the Bank and sing in the
column specially provided for the purpose in the
account opening form. In all cases his signature must
be verified with the specimen lodged and attested. The
agent or accountant may introduce constituents to the
Bank provided they are known to him personally and in
such cases he should sign the application form at the
appropriate place in his personal capacity. When the
introduction of any other member of the staff is
accepted, the agent must invariably make independent
inquiry and record his findings on the account opening
form for future reference if the need arises.....”
33. It is thus clear that the question of negligence or
no negligence depends entirely on the facts of each
RFA No.286/2002 Page 6 of 10
individual case and thus makes it difficult to judge in
advance how any particular litigation involving allegations
of negligence will go. In the instant case Sethuraman had
in effect opened another account in the name of the
plaintiff firm and operated it himself as its
proprietor.”(underlining supplied)
8. A reference to the decision in the case of Indian Overseas
Bank (supra) shows that a bank which opens an account is required to
follow up the reference given at the opening of the account. The bank
which opens an account is also required to meticulously examine the
address of the customer which he gives at the time of opening of the
account. Further, it is necessary for the bank depending on each
individual’s case to determine the authenticity of the customer who is
opening the account.
9. A single Judge of the Kerala High Court in the case of
Central Bank of India Ltd. vs. V. Gopinathan Nair & Ors. AIR
1970 Kerala 74 has exhaustively dealt with the earlier judgments with
respect to Section 131 including the decisions of the Bombay High Court
in the cases of Sanyasilingam vs. Exchange Bank of India AIR
1948 Bombay 1 and Bapulal Pemchand vs. Nath Bank Ltd. AIR
1946 Bombay 482 while dealing with the point of the negligence of a
bank at the time of opening and operation of the account. While
referring to the case of Sanyasilingam (supra), the learned single
Judge of the Kerala High Court had approved the ratio that where the
payment which is made by a bank in an account is or is not without
negligence has to be considered in the light of the facts and
RFA No.286/2002 Page 7 of 10
circumstances of the case as to whether such payment is out of the
ordinary course so as to cause the banker to make an inquiry. While
referring to the decision of the privy council in the case of
Commissioners of Taxation vs. English Scottish & Australian
Bank AIR 1920 PC 88 , a reference is made to the fact that a bank
must sit up and take notice when suspicion is caused on account of
cheques of unusual large sums being credited and withdrawn from the
account.
10. If we refer to the facts of the present case it is shown that
firstly the account was opened by means of deposit of an amount in
cash and not by deposit of a cheque. Ordinarily, banks do insist, and
rightly so, that accounts are opened by means of crediting of an amount
in cheques or at least partially in cheque, if partially also in cash.
Further, it is unusual that immediately after opening of account on
13.11.1992, immediately on the next date, a cheque of a huge amount
of Rs.44,438/- was deposited in the account for collection, and which
amount of the cheque was immediately withdrawn when the same was
credited to the account on 17.11.1992. In fact the amount of the
cheque credited in the account was Rs.44,438/- and the amount
withdrawn was Rs.45,000/-. This again is out of the ordinary course of
conduct in a newly opened account by which the bank should have been
immediately put to caution, considering the fact that the account was
not opened in a normal manner by introduction of an another customer
but was opened by a letter from another banker, and which itself was
RFA No.286/2002 Page 8 of 10
not verified as is dealt with by me later on. There remains no doubt as
to negligence in opening and operation of the account because the
second cheque of Rs.48,682/- was again deposited barely within two
days of the first cheque being encashed on 17.11.1992 and even this
cheque was for a large amount of Rs.48,682/-. This amount was also
withdrawn immediately on being credited to the account for an amount
of Rs.47,000/-. The supervening aspect to be noted is that there is
nothing proved on the record by the respondent no.1 during trial that it
took any steps to follow up with the Punjab National Bank, G.T.Road
Branch, Ghaziabad, UP as to the authenticity of Ex.DW1/P6, inasmuch
as there is no document proved on record of Punjab National Bank of
G.T. Road Branch, Ghaziabad, UP that it had ever issued any such letter.
I agree with the argument of the learned counsel for the
appellant/plaintiff that the substance of the letter shows that the same
was only for attesting of the signatures of the defendant no.2 and it had
nothing to do with opening of an account inasmuch as the letter
Ex.DW1/P6 does not make any mention with respect to the same being
an introduction for opening of an account in a bank. Curiously, this
letter of introduction was given at the time of opening of the account on
13.11.1992 and which account itself was verified for operation on
18.11.1992, and by which date one of the disputed cheques was not
only deposited and collected, but its large amount, withdrawn.
11. In view of the aforesaid, I hold that there was negligence of
the respondent no.1 both in opening of the account as also its
RFA No.286/2002 Page 9 of 10
operation. Once there is negligence of the respondent no.1, it is not
entitled to the benefit of Section 131 of the Negotiable Instruments Act,
1881 and in fact, by virtue of the said Section, liability is bound to be
imposed upon the respondent no. 1 on account of having caused the
fraudulent withdrawal of the two amounts of the two disputed cheques.
12. Accordingly, the appeal is accepted. Suit of the
appellant/plaintiff bank for a sum of Rs.1,66,706/- is decreed alongwith
interest @ 7 ½ % per annum simple pendent lite and future till
payment. Decree sheet be prepared. Trial Court record be sent back.
Appeal is disposed of accordingly.
AUGUST 16, 2011 VALMIKI J. MEHTA, J.
ak
RFA No.286/2002 Page 10 of 10