UNITED BANK OF INDIA vs R.P.CHHABRA

FACTS necessary for the disposal of this appeal are that Mr. R.P. Chhabra, hereinafter referred to as the complainant is sole proprietor of M/s. Chhabra & Co. He has a current account No. 1218 with United Bank of India Asaf Ali Road Branch, New Delhi (hereinafter referred to as the OP). The complainant issued cheque No. 007028 dated 9.8.91 for Rs. 24,965/- in favour of Mr. J.D. Malhotra and is stated to have despatched the same under Registered cover to Mr. Malhotra on 12.8.91. Mr. J.D. Malhotra did not receive the cheque and accordingly he informed the complainant who in turn made enquiry from the bank and he was told that the said cheque had been paid on 17.8.91 as a bearer cheque. The complainant requested the Bank vide his letter-dated 26.8.91 to investigate the matter. The bank, after necessary enquiry, informed the complainant vide letter dated 30.8.91 that the crossing on the cheque had been cancelled and the cheque made open by the drawer of the cheque under his signatures. The complainant felt dissatisfied. He served a Legal notice to which the bank sent reply on the basis of the finding in the enquiry and accordingly the complainant filed a complaint-dated 3.5.93 in District Forum-I. The plea of the bank was that the crossing had been cancelled under signatures of the drawer and the cheque which was initially account payee cheque had been made open. It was presented to the bank on 17.8.91. The General Clerk, as well as the officer were satisfied that the crossing had been cancelled under signatures of the drawer of the cheque and accordingly made payment to the bearer, one Dinesh who presented the cheque.

ON consideration of the material before it, District Forum-I held (a) that according to the rules though issued for the guidelines of the officers of the State Bank of India but which were nevertheless equally applicable to the United Bank of India, which was also a nationalised bank, the crossing could not be cancelled and doing so amounted to material alteration of the cheque (b) the drawer''s signatures appearing under the cancellation of the crossing did not tally with the signatures on the cheque made as drawer to the naked eye. Accordingly the complaint was allowed and the bank was directed to pay to the complainant the amount of the cheque along with the interest @ 15% per annum w.e.f. 17.8.91 besides Rs. 500/- as costs. Aggrieved by the order, the OP has preferred this appeal. We have heard both the parties and have carefully gone through the records. The first question which requires consideration is whether there is any provision of law debarring the cancellation of the crossing and directing the bank to make payment of the cheque in cash. We have not been referred to any such provision. A contrary categorical view has, however, been stated in S.N. Gupta''s "The Banking Law in Theory and Practices (II Edition). In Chapter 17 under the heading "cheque" and sub-heading "Not Negotiable a/c payee" crossing at page 246, it has been stated as follows: "The drawer has every right to cancel the crossing by writing the words ''pay cash'' across the cheque and by putting down his full signatures on the cheque." To the same effect is the extract placed on record from Banking Law and Practice, under the heading Obliterating a Crossing'' which reads as follows:

"If the crossing on a cheque is cancelled, it is called opening of the crossing. The cheque thereafter becomes an open cheque. Only the drawer of the cheque is entitled to open the crossing of the cheque by writing words ''Pay Cash'' and cancelling the crossing along with his full signatures. His initials are not sufficient for this purpose. The paying banker must be very careful in ascertaining the validity of genuineness of the drawer''s signature opening the crossing. If the drawer''s signatures (already on the cheque) is forged by the holder in order to open the crossing and the payment is obtained at the counter, the banker will remain liable to the true owner of the cheque. The banker is under an obligation to pay the cheque according to the direction of the drawer conveyed through the crossing on the cheque."

This brings us to a consideration of the so-called rules relied upon by the District Forum. It is necessary to reproduce the relevant portion in extenso. "Opening/Cancellation of Crossing : The practice of opening/cancelling the crossing on a cheque by the drawer has no legal/ statutory sanction/recognition/sanctity. It is a material alteration. Such a cheque should be paid in cash only to the drawer or his known/authorised agent to reduce possibilities of forgeries of drawer''s signature which is already mere on the cheque by some unscrupulous person for opening/cancelling the crossing; otherwise the bank will be liable to true owner for conversion and cannot debit the drawer''s account also. In such cases, the words ''Pay Cash'' should also be inscribed and authenticated. Both the signatures of the drawer must be identical."

IT has been shown to us that the above rule has any statutory force. In the nature of things it appears to be a guidelines and it has not been shown that similar guideline were issued and were inforce, in the United Bank of India concerned in this case. Even according to the above-mentioned guidelines, the last portion makes it abundantly clear that crossing can be opened writing the words ''Pay Cash'' to be authenticated by the full signatures of the drawer. Coming to the facts of the case in hand, the cheque dated 9.8.91 shows that the words ''a/c payee'' written between two parallel lines drawn on the left top corner of the cheque were scored out by a line across those words and signatures of the drawer made therein as well as towards the middle of the top portion of the cheque under the words "Crossing order cancelled. P. pay cash". In other words, both the cutting of the words "a/c payee" as well as the further direction that crossing order stood cancelled and that the amount be paid in cash were separately signed in full by the drawer.

THE District Forum was not justified in comparing the two sets of signatures appearing on the cheque in question and coming to the conclusion that they did not tally with each other on an examination by the naked eye. It has been repeatedly laid-down by the highest Court that the Court should avoid comparing disputed signatures with the admitted signatures and leave such an examination to the experts. THE occasion for the Court to apply the naked eye test are rare and only when the Court has been assisted by experts in the matter of comparison of disputed writing with the admitted one? It is interesting that the complainant had on an early occasion issued a cheque dated 3.6.91 for Rs. 20,000/-. Initially it was a/c payee and the crossing was cancelled and direction was written in the cheque "Crossing cancelled please pay cash". THE can cellation and crossing of the above direction were issued by the drawer Mr. R.P. Chhabra. THE cheque was paid in cash and Mr. Chhabra had not taken exception to the said payment. A photocopy of the said cheque appears at page 31 of the paper book. The contention on behalf of Mr. Chhabra is that normally a bearer cheque is issued to meet an urgent need. In the instant case, the cheque was dated 9.3.91 and it was presented for encashment on 17.8.91. It was also pointed out that the address of Mr. J.D. Malhotra, payee, was wrongly written as K-18, Green Park New Delhi. In fact, he was residing in Hauz Khas. The three signatures of Dinesh, who purported to have received the payment did not tally with each other and lastly that the amount of the cheque was sizeable and these facts should have put Mr. B.M. Bansal, General Clerk and Mr. K.R. Tamil Selven, Officer In Charge and the payment should have been withheld. After careful consideration of these submissions we are clearly of the view that the bank made the payment of the cheque according to its apparent tenor in due course and after satisfying itself that the crossing had been cancelled and there was a direction to pay the amount in cash. The reasons relied on by the District Forum have been found to be invalid and we, therefore, allow the appeal, set aside the order of DF, as a result the complaint filed by Mr. Chhabra stands dismissed. The parties shall bear their own cost throughout. A copy of the order be conveyed to parties as well as to District Forum-I. Appeal allowed.