Sanjeev Walia vs PUNJAB AND SIND BANK

THIS appeal has been directed by the complainant against order dated 11.8.2006 passed by Consumer Disputes Redressal Forum-II, U.T. Chandigarh (hereinafter to be referred as District Consumer Forum), vide which his complaint was dismissed being meritless.

BRIEFLY stated the facts are that the appellant (complainant) is practising lawyer and was having saving bank account No. 12168 with the Punjab and Sind Bank-respondent for the last many years. It was averred that one Shakti Kumar had issued cheque of Rs. 20,120 drawn on Central Bank of India, Mohali (Pb) in favour of M/s. Himmat General Finance Pvt. Ltd. and on 10.6.2005 the said payee M/s. Himmat General Finance Pvt. Ltd. through its M.D. made an endorsement on the said cheque in favour of the appellant. The said endorsement was also confirmed by the appellant by accepting it and making requisite confirmation entry below the endorsement. It was further averred that the appellant deposited the said cheque with the respondent-bank on 14.6.2005 to be presented for collection in local clearing and credit of the amount was to be given in his saving account. However, respondent illegally returned the said cheque by saying ''endorsement on the back of cheque was irregular''.

It was next averred that appellant wrote letter dated 15.6.2005 Annexure C-3 to respondent and presented it personally and, thereafter, on the next date sent another letter by registered post and the respondent gave reply Annexure C-4 but without any result. However, after serving notice, the complaint was filed alleging deficiency in service. 4a. Respondent contested the complaint and stated that the cheque was endorsed wrongly with mala fide intention, therefore, Forum had no jurisdiction to entertain the same. On merits, it stated that the cheque in question was issued as crossed cheque by one Mr. Shakti Kumar, Advocate in favour of M/s. Himmat General Finance Pvt. Ltd in the proceedings before Lok Adalat, Chandigarh for a sum of Rs. 20,120 but later on wrote a letter Annexure R-1 that the cheque should go in the account of M/s. Himmat General Finance Pvt. Ltd only. It next stated that M/s. Himmat General Finance Pvt. Ltd. had closed the company/business and partners of the said company were abroad and the first endorsement was not made by the first payee as alleged. It next stated that the cheque in question was deposited in saving account with it and the same was returned to the appellant vide letter dated 14.6.2005 with the remarks that endorsement on the cheque was irregular.

PARTIES adduced their evidence by way of affidavits and documents. After hearing the complainant and Counsel for respondent, District Consumer Forum dismissed the complaint vide order dated 11.8.2006.

AGGRIEVED by the said order, complainant has filed the present appeal. We have heard appellant in person who is an Advocate, Mr. Neeraj Sahni, Advocate for respondent and carefully gone through the file. It is an admitted fact that Mr. Shakti Kumar, Advocate had issued crossed cheque in question for a sum of Rs. 20,120 in favour of M/s Himmat General Finance Pvt. Ltd. in the proceedings before the Lok Adalat at Chandigarh. The Managing Director of M/s. Himmat General Finance Pvt. Ltd. had made an endorsement in favour of the appellant (complainant). The appellant accepted the endorsement and then submitted the cheque with respondent (Punjab and Sind Bank) to credit the amount in his saving account No. 12168 after collecting the same. A perusal of the cheque in question Annexure C-1 dated 30.5.2005 shows that it had been issued by Mr. Shakti Kumar in favour of M/s. Himmat General Finance Pvt. Ltd. on 30.5.2005 for a sum of Rs. 20,120 and on the left side on the top, two parallel lines have been drawn in which it is written "& Co." Section 123 of the Negotiable Instruments Act, 1881 under the heading Chapter XIV states that where a cheque bears across its face an addition of the words "and company" or any abbreviation thereof, between two parallel transverse lines, or of two parallel transverse lines simply, either with or without the words "not negotiable" that addition shall be deemed a crossing, and the cheque shall be deemed to be crossed generally. Therefore, according to this section, the cheque is deemed to be crossed generally. The crossing is a direction to the paying bank to pay the money to a bank. The object of crossing is to secure payment not to any particular bank, but to a banker in order that it may be easily traced for whose use the money was received, and to compel the holder to present it through a quarter of known respectability and credit. The crossing operates as a caution to the banker. However, crossing does not restrain the negotiability of the cheque but only further preserves against theft or loss. Thus, mere crossing of a cheque in no way affects the negotiability of the cheque. It simply affects the mode of payment.

SECTION 124 of the said Act further states that if the cheque crossed specifically i.e. if the words "not negotiable" are also mentioned, then its negotiability can be destroyed but it is not destroyed by simply being crossed whether generally or specially. In the present case also if Shakti Kumar, Advocate drawer of the cheque had mentioned on the cheque "not negotiable" then probably the MD of M/s. Himmat General Finance Pvt. Ltd could not have endorsed in favour of the appellant (complainant). Since the word "not negotiable" had not been mentioned, so, MD of M/s. Himmat General Finance Pvt. Ltd. was competent to further endorse it in favour of the appellant and the endorsement was perfectly valid and legal.

THE allegation of OPs that M/s. Himmat General Finance Pvt. Ltd had been closed and its office bearers were abroad is neither here, nor there. THE endorsement in the present case has been made by the Managing Director of M/s. Himmat General Finance Pvt. Ltd namely Sh. Harcharan Singh. Sh. Harcharan Singh has filed affidavit Annexure C-8 dated 27.3.2006 in which he had stated that Shakti Kumar had issued cheque No. 009119 dated 30.8.2005 for Rs. 20,120 drawn on Central Bank of India, in favour of his company and the same was crossed as "& Co." and his company is still in existence, though, no regular business was being conducted by it. He further stated that in order to make good the payment of the amount already due to Sh. Sanjeev Walia, appellant from his company, he had made endorsement on the back of the said cheque in favour of Sh. Sanjeev Walia on 10.6.2005 and the said endorsement was duly made by him under his signatures. In view of this affidavit, no fault can be found with the endorsement and the OPs had wrongly returned the cheque with the remarks that endorsement was wrong or irregular. Now further question is whether drawer of the cheque Mr. Shakti Kumar, Advocate could give directions to OPs that the amount of the cheque should be deposited in the account of M/s. Himmat General Finance Pvt. Ltd. In our opinion, by a separate letter he could not have made such an endorsement. He was competent to write on the cheque as "not negotiable" but once he had not made this endorsement, subsequently by a separate letter the cheque could not be made ''not negotiable''.

The authority of Madras High Court United Commercial Bank Ltd. and Another v. Reliable Hire Purchase Co. Pvt. Ltd. and Others and Indian Overseas Bank Ltd. v. Reliable Hire Purchase Co. Pvt. Ltd., 46 (1976) CC 403, is not applicable to the facts of the present case as it is not in accordance with the provisions of Sections 123 and 124 of Negotiable Instruments Act, 1881. Moreover in the said authority, there was genuine suspicion calling for inquiry as to the genuineness of endorsement purported to have been made by Sundram Motors Pvt. Ltd. through its Sales Manager because the Sales Manager is not ordinarily competent to make an endorsement. It is not the case that the endorsement was made by the Managing Director or Director. The High Court had doubted the authority of Manager of Sundram Motors Pvt. Ltd. who acted for the company in making endorsement and the further the amount was also comparatively large but in the present case there is only small amount and the endorsement has been made by the M.D. of the company which was competent to make such endorsement as the M.D. looks after the day-to-day affairs of the company. Thus, in our opinion, the control of cheque did not remain with Mr. Shakti Kumar, Advocate after he issued the cheque and handed over to M/s. Himmat General Finance Pvt. Ltd. and M/s. Himmat General Finance Pvt. Ltd. had further validly endorsed the cheque in favour of the appellant.

THEREFORE, in view of the discussion above, we hold that there is force in the appeal. Consequently, appeal is accepted with costs of Rs. 5,000 and respondent is directed to credit a sum of Rs. 20,120 in the saving bank account of the appellant along with interest @ 5% p.a. from the date of endorsement i.e. 10.6.2005 till payment. Copies of this order be communicated to the parties, free of charge. Appeal allowed.