IRINJALAKUDA BANK LTD Vs. PORUTHUSTERY PANCHAYAT

JUDGEMENT

(1.) The plaintiff in the suit, the Irinjalakuda Bank Ltd., discounted a cheque issued by the second defendant who was the executive officer of the first defendant Panchayat. Subsequently on presenting the cheque to the Treasury at Mukundapuram, on which the cheque was drawn, payment was not made, as, in the meanwhile, the Panchayat Inspector appears to have advised the treasury not to make such payment. A notice was issued by the bank: to the defendant Panchayat and the amount due under the cheque having not been paid, the suit was instituted. The second plaintiff is the peon of the bank in whose name first defendant is alleged to have endorsed the cheque for the purpose of collection only. The plaintiffs got a decree against both defendants 1 and 2 in the Trial Court. The appellate court vacated the decree so far as it concerned the first defendant holding that the first defendant would not be liable for the plaint claim for various reasons. It was held by the appellate court that what has been issued by the second defendant is not a cheque within the meaning of Negotiable Instruments Act, that the second defendant was not competent to issue such a cheque and that the notice of dishonour is only that of the first plaintiff and not of the second plaintiff and, therefore also, the suit as 'against the first defendant would not lie. It is this that has been challenged in revision by the plaintiff bank.

(2.) A cheque is defined in S.6 of the Negotiable Instruments Act 26 of 1881 as follows:

(3.) Ex. P1, the cheque which has been discounted by the plaintiff Bank, was issued by the second defendant as Executive Officer of the first defendant. It was drawn on the treasury at Mukundapuram and was in favour of self or order. This was for sum of Rs. 608/-. It is seen signed by the second defendant as Executive Officer of the Panchayat. Ex. P1 itself mentions it as a cheque and gives the cheque number. Therefore, on the face of it Ex. P1 purports to be a cheque drawn on the treasury at Mukundhapuram. The lower court has held that a Government treasury cannot be a Bank and therefore Ex. P1 cannot be said to be a bill of exchange drawn on a specified banker. If it is not a bill of exchange drawn on a specified banker, then it would not come within the definition of 'cheque'. In support of the case that a Government treasury is not a bank the decision in Rengaswami Pillai v. Sankaralingam Ayyar (ILR XLIII Madras 816) is relied on by the court below. I have now to examine this question.