STATE BANK OF INDIA Vs. GULAB BASHA ADVOCATES

JUDGEMENT

(1.) FOR the The defendants are the appellants. The plaintiff filed the suit for recovery of the amount.

(2.) THE case of the plaintiff is as follows : THE plaintiff was working as an executive officer of Pammal Town Panchayat. THE said panchayat has a sub-treasury account payable at State Bank of India, Saidapet Branch at Nandanam. THE cheque leaves are issued for operating the account of the panchayat by the treasury officer. Except cheques issued to third parties, the cheques for office administration used to be drawn in favour of self. THE executive officer used to sign the cheque as "drawer" with his seal on the reverse, and he will make two endorsements, one for discharge of cheque and another for attesting the signature of the person who used to draw the amount and such person will be the employee of the panchayat. A protection endorsement has to be made in red ink in the nearest rupee. In the course of employment of the plaintiff, as executive officer, a cheque was drawn on the defendants particularly on the second defendant on November 16, 1976, bearing Cheque Book No. 9250, Cheque No. 924952 for a sum of Rs. 19, 962.10. THE plaintiff came to know of the drawing of such cheque, when he saw the sub-treasury pass book on December 14, 1976, and was shocked to find the entry for such a large sum. Immediately, the plaintiff filed a complaint and it was registered as Crime No. 29 of 1976 and investigation was made. THE plaintiff did not sign the cheque as drawer.

(3.) THIS defendant is neither concerned nor was aware as to what was the practice that is being followed by the plaintiff with regard to cheques issued either to third parties or self. It may or may not be true that two endorsements are used to be made by the drawer one for discharge of the cheque and another for attesting the signature of the person. As far as the bank is concerned, as the instrument is governed by the provisions of the Negotiable Instruments Act, they would see if the payee/holder has discharged the cheque by making an endorsement on the reverse of the cheque. It is nowhere stated under any provision of law that the protection entry has to be made in red ink to the nearest rupee. Even if such an entry is not in red ink it would not be open to the bank to refuse payment. Till forgery is proved it should not lie in the mouth of the plaintiff to say that debiting the said amount is illegal. What is the procedure that is being followed by the Panchayat was not communicated at any time to the defendants' bank. If the cheque was honoured, the defendant used to make payment in good faith after observing the formalities.