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1995 (2) TMI 464 - SC - Indian Laws

Issues:
Dispute over forged signature on a cheque leading to reimbursement claim by respondent from the appellant-bank; Writ petition filed in the Bombay High Court seeking reversal of debit entry and reimbursement; Interim order directing appellant-bank to credit the amount pending final adjudication; Appeal against the interim order by the appellant-bank.

Analysis:

The case involved a dispute between a nationalized bank, referred to as the appellant-bank, and a company operating a current account with the bank, referred to as respondent No. 1. The core issue revolved around a bearer cheque drawn on the appellant-bank, allegedly with a forged signature of the Managing Director of respondent No. 1. The respondent claimed that the signature was forged and sought reimbursement of the amount debited from their account based on the cheque. The appellant-bank contested this claim, stating that the signature's authenticity was under investigation and that reimbursement could only be determined through a civil suit, not a writ petition under Article 226 of the Constitution.

In response to the dispute, the respondent filed a Writ Petition in the Bombay High Court, seeking a mandamus to reverse the debit entry and credit the amount back to their account. The High Court, in an interim order, directed the appellant-bank to credit the sum to the respondent's account, considering the prima facie evidence of negligence on the bank's part and the alleged forgery. The appellant-bank, aggrieved by this order, appealed to the Supreme Court.

During the appeal, the appellant-bank argued that the High Court erred in granting the interim order without proper consideration of the disputed facts and the legal complexities involved. The respondent, on the other hand, supported the interim order, citing previous court decisions where banks were held liable for reimbursing amounts debited based on forged signatures. The Supreme Court noted the serious factual dispute and lack of a clear prima facie case for the interim relief granted by the High Court.

Ultimately, the Supreme Court allowed the appeal, setting aside the interim order directing the appellant-bank to credit the amount to the respondent's account. The Court directed the respondent to refund the credited amount within a month, failing which the High Court would enforce the undertaking provided by the respondent. The Court emphasized the need for proper adjudication of the dispute through a civil proceeding rather than a writ petition, highlighting the importance of evidence and due process in resolving such banking disputes.

 

 

 

 

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