VYSYA BANK LTD Vs. INDIAN BANK MADRAS

JUDGEMENT

(1.) The unsuccessful defendant in O.S. 3807 of 1977 on the file of the IV Additional Judge, City Civil Court, Madras, is the appellant in this regular appeal. The respondent herein was the plaintiff in the said suit which was filed for recovery of a sum of Rs. 47,882.86.

(2.) The material allegations in the plaint are as follows - One B.K. Shetty purchased a draft for Rs. 20 bearing Rs. 71.58149 dt. 27-3-1974 from the Ambar Branch of the Indian Bank, the plaintiff. One B. Ramaswami had purchased another draft for Rs. 30 bearing Rs. 727112 dt. 2-11-1974 from the Vaniyambadi branch of the Indian Bank. One S. Ramanathan who has got an account with the south Thambalam branch of the defendant bank namely Vyasya Bank Ltd., appears to have got into possession of these two drafts and those two drafts were materially altered. The name of the payee the amount the name of the branch on which the drafts were issued were all altered. Though the drafts were purchased for payment by the Salem Main Branch of the plaintiff Bank the name of the Branch was altered as Harbour Branch and the amounts were altered as Rs. 15000 and Rs. 21000 respectively. The name of the payee was altered as S. Ramanathan. These two drafts were put in the account of S. Ramanathan, which he had with the defendant bank. These two drafts were presented for collection in the clearing house and they were paid with an endorsement that they were paid without advice pending receipt of the usual protection advice from the issuing branch. Later on the Harbour branch was informed by the Vaniambadi Branch by their letter dt. 8-16-1976 that they did not issue any draft for Rs. 21,000/- so also the Ambar Branch informed that they did not issue any draft for Rs. 15,000. A complaint was given to the Crime Branch of the North Beach police station and the payee could not be traced as it was reported that he was dead. But for the endorsement made by the South Mambalam branch of the defendant Bank, payments would not have been made for these two demand drafts by the plaintiffs Bank. The plaintiff supposes that S. Ramanathan, the customer of the defendant Bank, is a bogus person who has no permanent address. The defendant Bank acted with gross negligence in the matter of opening an account in the name of Ramanathan without proper introduction or making proper enquiries. The immediate withdrawal of substantially the whole amount covered by the two drafts ought to have raised suspicion in the minds of the persons who dealt with the drafts when they were remitted with the defendant Bank. So, the defendant is not entitled to the protection under S.131-A of the Negotiable Instruments Act. Hence the plaintiff has filed the suit for recovery of the total sum of Rs. 36,000 covered by the two drafts together with interest of Rs. 11882.96 all totalling Rs. 47,882.96.

(3.) The appellant defendant resisted the suit and filed a written statement raising the following contentions. On the basis of the allegations made in the plaint, an inference is fairly possible that the drafts were in fact issued for the sum of Rs. 15000 and Rs. 21000 respectively in favour of a genuine person bearing the name of S. Ramanathan. For over ten weeks, the plaintiff Bank failed to intimate the defendant casting any doubt on the genuineness of the drafts. So, it is likely that something must have happened at the plaintiffs bank branches at Ambur and Vaniambadi in respect of the alleged alterations. The plaintiff acted negligently and without reasonable care and caution in having made the payment without the protection advice from the issuing bank. Since, it alleged by the plaintiff Bank themselves that the alterations of the name of the payee, the amount and the name of the drawee Bank were not visible to the naked eyes and they are not capable of arousing any suspicion, there cannot be any justification for the defendant Bank to suspect that its customer was not a true owner, of the drafts or that the drafts were not genuine. The T. Nagar branch of the defendant Bank was opened on 18-3-1974. Thiru S. Ramanathan opened the current account on 21-3-1974 by making a cash deposit. One week later, he deposited the draft for Rs. 15000 for collection and the amount was withdrawn by 4 different cheques. The second draft for Rs. 21000 was deposited on 3-4-1974, and a major portion of the amount was withdrawn in 4 different cheques and there was a balance of Rs. 1310 in the account. Since the account was opened with cash, there was nothing suspicious about the manner in which the account was opened. There was no need or circumstances necessitating any special enquiries to be made about the customer who was duly introduced by another customer of the Branch. Since the first draft was deposited a week later, it cannot be suggested that there was any connection between the opening of the account and the issue of the draft. So, the defendant is entitled to the protection under S.131-A of the Negotiable Instruments Act.