CANARA BANK vs SREERAM SRINIVAS

THE opposite parties 1 to 4 in C.D. 54 of 1989 i.e. the Canara Bank and its Officials are the appellants, in this appeal. THE sole respondent herein is the complainant in the C.D. No. 54/89.

THE complainant filed a complaint alleging that he was S.B. Account holder bearing No. 313 since 1979, with the Canara Bank, branch at Andhra Nagar, Nizamabad. He deposited a sum of Rs. 20,000/- in his account on 25.5.87 with a view to utilise the same for the marriage of his daughter. Since the marriage was postponed to 1988, he did not draw the amount immediately. When he approached the bank sometime in February, 1988 he was informed that the cash was not available in the bank and was asked to come afterwards. On the next day i.e. on 27.2.88 he presented a cheque for Rs. 20,000/-. But he was informed that there was no amount to his credit in his account and that there was some fraud and that money was withdrawn from his account. According to him a complaint was laid with the police which was registered as Cr. No. 31/88 on the file of Police Station, Navipet. He therefore claimed that the opposite parties be directed to pay Rs. 20,000/- with interest at 18% p.a. from 27.2.1988. The first opposite party filed a counter admitting that the complainant was a customer having S.B. Account 313 and that he deposited the amount of Rs. 20,000/- on 25.5.1987. But the complainant withdrew the amount of Rs. 20,000/- on 15.6.1987. But as the complainant denied withdrawal, a report was given to the police and the same is pending investigation. This version of the opposite party No.1 was adopted by the opposite parties 2 to 4.

The complainant was examined as P.W.1 and the Manager of the opposite party No. 1 was examined as R.W.1. The pass book was marked as Ex. A.1. The District Forum called for the report of the Director, Forensic Science Laboratory, from the Court of Additional Judicial Magistrate of First Class, Nizamabad. On consideration of the evidence and the material available on record, the District Forum came to the conclusion that as the Manager has not taken steps to have Ganga Ram, who presented the cheque, identified especially in view of withdrawal of the entire amount of Rs. 20,000/- from the account, and so did not insist on the production of pass book, that there is negligence on the part of the Manager on account of which the complainant suffered loss. It therefore directed payment of compensation of Rs. 20,000/- to the complainant with interest at 18% p.a. from 27.2.1988.

AGGRIEVED by that order, the opposite parties preferred this appeal. In this appeal, it is firstly contended by the learned Counsel for the appellant that since the criminal case is still pending, the District Forum has no jurisdiction to entertain the complaint. We are not inclined to agree with this contention. In the criminal case, the question whether there is negligence on the part of the Bank Manager in not properly verifying the signature and also in not identifying Gangaram who presented the cheque to the bank are not germine for deciding the criminal case and on the other hand the main question would be whether the cheque was forged or not. But the enquiry to be made in this complaint is whether there was negligence on the part of the Manager constituting deficiency of service within the meaning of Section 2(l)(d)(ii) of the Consumer Protection Act or not. Hence the scope of the enquiry in this complaint is different from that of the enquiry in the criminal case. We, therefore, do not see any substance in this contention.

IT is next submitted that in view of the provisions of Section 85(2) of the Negotiable Instruments Act, the complaint is not maintainable. Section 85(2) of the Negotiable Instruments Act is in the following terms : "Where a cheque is originally expressed to be payable by bearer, the drawee, is discharged by payment in due course to the bearer thereof, notwithstanding any endorsement whether in full or in blank appearing thereon, and notwithstanding that any such endorsement purports to restrict or exclude further negotiation."

A reading of the aforesaid Section shows that if a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due course to the bearer thereof not withstanding any endorsement. But in this case the cheque was issued in the name of Gangaram, it will not absolve the Bank Manager from properly varifying the signatures and also having proper identification of Gangaram before payment of substantial amount of Rs. 20,000/-. Hence we are not inclined to accept the aforesaid contention. It is lastly submitted that there is no negligence on the part of the Manager i.e. the first opposite party and that therefore there is no deficiency of service. The Branch Manager, who was examined as R.W.I stated that he could not identify the complainant as the account holder of S.B. Account No. 313, even though he was present before the Forum, at the time of his examination. Thus, it is clear the Bank Manager does not know the complainant. But, it is submitted that the bank officials followed the procedure and according to him the signatures on the cheque tallied with the specimen signatures with them. But this cannot be accepted in view of the report of the Assistant Director, Forensic Science Laboratory, Hyderabad. He stated in the report that no opinion can be given on the authorship of the enclosed signatures marked as Exs. Q.1 to Q.3 on the basis of present standard. It is therefore clear that the signatures on the cheque did not tally with the undisputed signatures of the complainant. Had the opposite parties have taken care to properly compare the signatures on the cheque with that of the specimen signatures and took steps for getting Gangaram identified by another account holder or from a person known to the bank, this incident Would not have occurred. As the complainant is a villager and the amount covered by the cheque is of a magnitude of Rs. 20,000/- the opposite party No. 1 should have taken proper care for getting the person, Gangaram, identified before paying the amount of Rs. 20,000/-. The District Forum, therefore, rightly held that there is negligence on the part of the Bank Manager and directed to pay compensation. It was held in the decision in Canara Bank v. Canara Sales Corporation and Others that "Whenever a cheque purporting to be by a customer is presented before a bank, it carries a mandate to the bank to pay. If a cheque is forged, there is no such mandate. The Bank can escape liability only if it can establish knowledge to the customer of the forgery in the cheques. Inaction for a continuously long period cannot by itself afford satisfactory grounds for the bank to escape the liability."

Therefore, we are not inclined to interfere with the order of the District Forum. In the result, the appeal is dismissed. No costs. Appeal dismissed.