THE CHETTINAD MERCANTILE BANK, LTD., BY ITS AGENT AND SECRETARY T. SUBRAMANIA AYYAR Vs. PL.A. PICHAMMAI ACHI AND ANR.

JUDGEMENT

(1.) THE second defendant in the suit appeals against the decree of the District Judge of Ramnad making it liable to pay a sum of Rs. 4,000 and interest thereon to the plaintiff. The plaintiff -respondent had two cheques given to her by the Harvey Mills, Madura, both drawn on the Imperial Bank, one for Rs. 20,900 and another for Rs. 18,682 -8 -0. The plaintiff endorsed both these cheques in favour of the first defendant. We are not concerned with the cheque for Rs. 20,000. As regards the cheque for Rs. 18,682 -8 -0, the plaintiff's case is that she gave definite instructions that the first defendant should pay a sum of Rs. 5,000 odd due to the second defendant Bank by the plaintiff in respect of some pledge of jewels made on her behalf by the first defendant, that he should take Rs. 3,000 as a loan and execute a promissory note for that sum to the plaintiff, that a draft for Rs. 3,000 should be taken in the plaintiff's name payable on the Kulitalai Bank to be utilised for her own purposes, that Rs. 3,000 odd should be paid to the plaintiff in cash and lastly that a draft for Rs. 4,000 should be obtained from the appellant Bank in the name of the plaintiff payable in Madras. The first defendant cashed the cheque in the appellant Bank on the 10th August, 1937. Of the directions given by the plaintiff to the first defendant, all but the last were duly fulfilled. The sum due to the appellant Bank was paid and the jewels redeemed. A sum of Rs. 3,000 was taken by the first defendant and a promissory note executed for that amount. A draft for Rs. 3,000 odd was obtained in plaintiff's name payable on Kulitalai Bank and Rs. 3,000 odd was obtained and paid in cash to the plaintiff. But the direction that a draft for Rs. 4,000 payable at Madras should be obtained in the name of the plaintiff was not complied with. The first defendant admittedly got a draft for Rs. 4,000 payable at Madras but it was obtained in his own name. The plaintiff alleges that when the defendant paid her Rs. 3,000 in cash and returned her jewels he gave also the draft for Rs. 4 000, that being illiterate she did not then know that it had been taken in the name of the first defendant, that later on when she attempted to present it and get the money on it, she discovered that it had been taken in the name of the first defendant", that she thereafter made demands on the first defendant to endorse it over to her and that he refused to do so. The plaintiff then gave notice of her claim to the appellant Bank, which however gave no reply. Thereupon the present suit was filed for a declaration that the plaintiff was entitled to the beneficial interest in the draft and for such other relief as the Court may think fit.

(2.) VARIOUS defences were raised by the appellant who is the second defendant in the suit. The main defence is that the first defendant owes large sums of money to the appellant Bank and that the appellant is entitled to adjust the sum represented by the draft against the sums due by the first defendant. This claim was presented in the arguments before me as either one of banker's lien or a right of set off. The trial Court dismissed the suit but on appeal the District Judge of Ramnad granted a decree against the appellant. Elaborate arguments have been addressed to me by the learned advocates on the question of when the banker's lien and right of set off come into existence and how they can be exercised.

(3.) ON these facts is the plaintiff entitled to demand that the appellant Bank should pay her the amount of the draft? It may be mentioned that the draft was drawn on the appellant's branch at Madras. But this would not make any difference because even if the Bank had given a draft on another banking institution, payment of the draft could be countermanded in which case the amount represented by the draft can be claimed only from the appellant Bank. If the appellant Bank has a lien for the other amounts due to it by the first defendant or if the Bank can set off the amount of the draft against the indebtedness of the first defendant, the plaintiff must fail. At one stage it appeared as though the question could be disposed of shortly on the ground that the indebtedness of the first defendant in respect of which the lien or set -off was claimed arose subsequent to the receipt by the Bank of the plaintiff's notice, Ex. P -2 dated the 31st October, 1938. The plaint in O.S. No. 69 of 1940, as stated above, ended in a decree for over Rs. 5,000 and that is the amount in respect of which the lien or set -off is claimed. It appears from Ex. P -4 (c) that the suit was in respect of four hundis all dated the 29th December, 1938. If these hundis were all fresh transactions it 'is clear that with notice of the plaintiff's claim to the draft in question, the Bank advanced fresh monies to the first defendant. In that case, the question would be easy to answer and the case of the appellant would stand on a very slender basis. If with notice of an adverse claim to the draft in question, the appellant Bank went on advancing fresh amounts to the first defendant it would be doing so with its eyes wide open and cannot complain if it turned out that the amount due under the draft really belonged to the plaintiff. With a view to clarify the position, I directed the appellant to produce its accounts. That was done and Mr. Gopalaswami Ayyangar, learned Counsel for the respondent, went through them and stated quite fairly that all these hundis were really renewals of earlier hundis. On this statement it was unnecessary to have the accounts formally exhibited. There is one statement made by Mr. Gopalaswamj Ayyangar which I must here record that even the accounts produced do not show that the -first defendant was indebted to the appellant Bank on the 10th August, 1937.