ARUN SAMEER ASSOCIATES PVT.LTD vs REGIONAL MANAGER, S.B.I.

THE Complainant has alleged serious deficiencies in the working of the Opposite Party-State Bank of India in its complaint. Shortly stated the facts are that Shri Arun Madan, Managing Director of the Complainant-Company, Arun Sameer Associates Pvt. Ltd., Amritsar took three cheques dated 26.6.1990 issued by Industrial Cables (India) Limited, Rajpura for Rs. 9,81,201/- to the Opposite Party-Bank for collection of their proceeds on the same day but the latter did not honour the cheques Annexures Rl 1, Rl 2 and Rl 2 A in connivance with the drawer of these cheques and thus deprived it of the amount which was legally due to it. It is alleged that the dishqnoured cheques which constituted the property of the Complainant-Company were not returned to it, despite its repeated reminders and thus deprived its right to legal remedy under the Act. THE Complainant has averred that the dishonouring of these three cheques was negligent act amounting to deficiency of service on the part of the Opposite Party-Bank. THE Complainant on the basis of these averments sought damages of Rs. 9,81,201/- alongwith interest @ 18% p.a. from 26.6.1990 as detailed in paragraph 11 of the complaint.

THE Opposite Party-State Bank of India filed its reply and raised some preliminary objections, which however were not seriously pressed at the threshold. On merits, it was however admitted by the Opposite Party that on 26.6.1990, Shri Arun Madan, Managing Director of the Complainant-Company had presented three cheques in question to it for collection purpose but the payment of those cheques was not made to him as their payment was stopped by the drawer M/s. Industrial Cables (I) Ltd., Rajpura and that on the same day, cheque No. 203633 dated 26.6.1990 was presented by Shri Arun Madan for withdrawing Rs. 9,80,000/- and the same was not entertained by the Bank because he had himself stopped the payment of that cheque earlier. It was denied by the Opposite Party that the Complainant had sent telegram and letters to it asking for the return of those dishonoured cheques. It was however, admitted by the Opposite Party that it had received telegram asking for the return of the dishonoured cheques and it was suggested to the Complainant vide letter Annexure R-14 to collect the cheques in person so that they may not be lost in transit but no reply was received from it. It was averred that vide letter Annexure R-l 7 written by the SHO, Pol ice Station, Rajpura, the Opposite Party was intimated that a complaint from M/s. Industrial Cables (I) Ltd., Rajpura was received against the Complainant and the Bank was directed not to release the cheques in question to the Complainant as the same may be required for investigation purpose and that those cheques were handed over by the Police to the Opposite Party on 17.9.1993 vide letter Annexure R13. It was pleaded by the Opposite Party that the Complainant had made representation to the Regional Manager, State Bank of India against the Manager of the said Bank and the Complainant was advised, vide letter Annexure C 11 dated 12.12.1990 to settle the dispute with the drawer of the cheques. THE Opposite Party denied to have committed any breach of trust or cheated the Complainant by stopping the payment of the cheques in question. On the basis of these averments, the Opposite Party sought the complaint to be dismissed as there was no deficiency in service on its part. In support of its case, the Complainant rested itself content by putting in the affidavit of Shri Arun Madan, Managing Director of the Complainant-Company and the documents Annexures C1 to C11. In rebuttal, the Opposite Party relied upon the affidavit of Shri Harish Kumar Narang, Branch Manager, State Bank of India, Rajpura and the documents Annexures R 1 to R17.

Both the parties were afforded opportunity to adduce any other evidence in support of their case. That, however, was not at all availed of and the Commission was compelled to close their evidence. When the complaint was taken up today, Sh. G.S. Sandhawalia, Advocate for the Complainant stated that he did not wish to adduce any other evidence apart from the one noticed above. On his request, we heard the learned Counsel for the parties and perused the record.

FROM the aforesaid pleadings and the evidence adduced, it is somewhat manifest that the crucial threshold question herein is, whether the Opposite Party had committed any deficiency of service for stopping the payment of the cheques Annexs. R-11,R-12 and R-12A. On the aforesaid issue what first meets the eve is the fact that on 26.6.1990, Shri Arun Madan, Managing Director of the Complainant Company presented three cheques for the amount of Rs. 9,81,201/- issued by M/s. Industrial Cables (I) Ltd., Rajpura to the Opposite Party for collection purpose and the same were credited to the account of the said firm but when the said cheques reached the clearing-desk of the bank, it was found that the payment of the same had been stopped by the drawer-M/s. Industrial Cables (1) Ltd., Rajpura on the same day at about 1.30 p.m. and consequently the payment of those cheques was stopped. It is also an admitted fact that Shri Arun Madan had presented cheque No. 203633 dated 26.6.1990 simultaneously for the withdrawal of the amount of Rs. 9,80,000/- and the payment of that cheque was not made to him as he had himself stopped its payment on 6.2.1990.

BEFORE adverting to the controversy betwixt the parties, it may be highlighted herein that on 26.6.1990 M/s. Industrial Cables (I) Ltd., Rajpura had issued three cheques for the amount of Rs, 9,81,201/- to Shri Arun Madan, Managing Director of the Complainant-Company and on the same day, the drawer of the cheques wrote a letter Annexure R 1 to the Opposite Party instructing it to stop the payment of those cheques in the following terms:- "Reference our cheque No. 441353 dated 26.6.90 for Rs. 4,29,758/-, cheque No. 441354 dated 26.6.90 for Rs. 37,513/- and cheque No. 441355 dated 26.6.90 for Rs.5,13,930/- issued today in favour of M/s. Arun Sameer Associates (P) Ltd, Please stop payment of the above cheques and do not make payment on their basis. The payment of the aforesaid cheques is being stopped because the same have been procured by Mr. Arun Madan, Managing Director of M/s. Arun Sameer Associates (P) Ltd. by misrepresentation and fraud, telling us that trucks load with requisite supply of material ordered by us have arrived at the Octroi Post and he induced us to make payment against the same. On verification it was found that the material had not arrived as represented by him. You are requested to take suitable action immediately."

The Opposite Party also placed on record a copy of the complaint dated 27.6.1990 (Annexure R 2) allegedly made by the General Manager, Industrial Cables (India) Limited, Rajpura alleging therein that Shri Arun Madan, Managing Director of the complainant-company had obtained 3 cheques from it for the amount of Rs. 9,81,201/-dishonestly by misrepresentation and fraud and the Manager, State Bank of India had been instructed to stop the payment of those cheques. The sheet anchor of the complainant''s case is that the opposite-party had stopped the payment of the cheques in question in connivance with the drawer of the cheques and thus, deprived it of the amount which was legally due to it. In support of its plea, the complainant company has done nothing more than putting in the interested affidavit of its Managing Director, Sh. Arun Madan on the lines of averments in the complaint. No other evidence meaningfully directed to the crucial issue was placed on the record. What is, however, surprising is that Sh. Arun Madan who is the Managing Director of the complainant-company has not chosen to support his claim in the witness-box. Obviously he was the best witness to depose directly with regard to the allegations made in the complaint. Even otherewise, somewhat tenuous testimony of Sh. Arun Madan stands considerably eroded by the aforementioned documents Annexures Rl and R2 of the opposite-party. Once it is held above, the conclusion is inevitable that there is no material worth the name to hold in favour of the complainant-company.

APART from the inherent weakness in the complainant''s case, the opposite-party has virtually established its stand that the instructions from the drawer for stopping the payment of the cheques in question were received by it on the same day and the payment of those cheques was stopped in compliance with those instructions. Letter Annexure R1 and the complaint Annexure R2 are the unchallenged documents in favour of the Opposite Party''s stand. The responsibilty of a banker in respect of a cheque by a customer has been discussed in Tahnan''s Banking Law and Practice in India (18th Edition, at P. 306). It has been observed by the learned author relying on various authorities, as under:- "A Bank could be sued as much for failing to honour a cheque as for cashing a cheque that had been stopped." (Hilton v. Westminster Bank, (1927) 43 TLR 124). "A stopped cheque becomes a piece of waste paper in the hands of payee."(Lord Ellenborough in Weanfield v. Spitta, (1813) 3 Camp 377)."

"After the receipt of unequivocal notice to stop payment, a bank as the agent of the drawer must carry out his instructions and pay at its peril." (Gata v. Windsor Bank, 251 Ny 167 NE 203).

IN Bansi Lal Abinchand v. Sadasheo Bhopatti, (1942) 12 Camp Cas 116 (Nagpur), it has been observed that if the banker is under an obligation to honour the customer''s cheque, he is equally under an obligation not to cash it, if he receives in good time express instructions of the customer countermanding the payment. Having regard to the dictum laid down in the aforementioned authorities and in the circumstances of the case, we are unable to accept the plea of the Complainant-Company that the act of the Opposite Party in stopping the payment of the cheques Annexures R11, R12 and R12A is a negligent act, which amounted to deficiency in service.

In the result, therefore, this complaint fails and is dismissed. We make it clear that the dismissal of the complaint shall not operate to the prejudice of the Complainant-Company in the matter of its pursuing any remedy that it may have under law before the ordinary Civil Court. No costs. Complaint dismissed.