1942 (3) TMI 15 - HC - Indian Laws

Summary

Issues Involved:
1. Authority of Amin to mark the cheque.
2. Whether the Punjab National Bank acted with due care and caution.
3. The legal effect of marking a cheque as "good for payment" under the Negotiable Instruments Act.
4. Admissibility of the unstamped instrument in evidence.

Issue-wise Detailed Analysis:

1. Authority of Amin to mark the cheque:
The Bank of Baroda denied that Amin had the authority to mark the cheque. However, the trial judge, after examining the evidence and Amin's power of attorney, rejected this defense. The marking on the cheque by Amin, the manager of the Bank of Baroda, was found to be valid and binding on the bank.

2. Whether the Punjab National Bank acted with due care and caution:
The Bank of Baroda alleged that the Punjab National Bank did not act with due care or caution and did not act in good faith. The trial judge decided these issues against the defendants, concluding that the Punjab National Bank had acted appropriately. The appellate court agreed with the trial judge's findings and upheld this decision.

3. The legal effect of marking a cheque as "good for payment" under the Negotiable Instruments Act:
The trial judge found that the marking amounted to an acceptance of a bill of exchange and that the Bank of Baroda was liable as acceptors. The appellate court examined various legal texts and cases, including the Negotiable Instruments Act of 1881, which defines a "bill of exchange" and the roles of "drawer," "drawee," and "acceptor." The court noted that the marking of the cheque by the Bank of Baroda was intended to give it additional value, as evidenced by the Punjab Bank's decision to advance Rs. 2,40,000 to Mitter based on the cheque. The marking "good for payment" was construed to mean that the Bank of Baroda would definitely pay Rs. 2,75,000 on the specified date. The court held that this marking constituted an acceptance under Section 7 of the Negotiable Instruments Act, making the Bank of Baroda liable as acceptors.

4. Admissibility of the unstamped instrument in evidence:
The appellants contended that the instrument, being a bill of exchange, should have been stamped as required by the Stamp Act and that its unstamped status rendered it inadmissible in evidence. However, the court found that no objection to the instrument's admissibility was raised during the trial. According to Section 36 of the Stamp Act, once an instrument has been admitted in evidence, its admissibility cannot be questioned at any stage of the same suit or proceeding on the ground that it was not duly stamped. Therefore, the appellants' contention regarding the admissibility of the cheque failed.

Conclusion:
The appellate court concluded that the Bank of Baroda was legally liable to the Punjab National Bank as acceptors of the bill of exchange or cheque for Rs. 2,75,000. The appeal was dismissed with costs, and a certificate for two counsel was granted.