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Issues Involved:
1. Negligence of the bank in scrutinizing the cheque. 2. Applicability of Section 10, Section 31, and Section 89 of the Negotiable Instruments Act. 3. Requirement of ultraviolet ray lamp for cheque verification. 4. Payment in due course and the bank's liability. Issue-wise Detailed Analysis: 1. Negligence of the bank in scrutinizing the cheque: The trial court found that the cheque did not appear to be fabricated on visual scrutiny but noted that closer scrutiny could have raised suspicion. The court held the bank negligent for not providing an ultraviolet ray lamp at the Thana Branch, which could have detected the forgery. Consequently, the trial court dismissed the suit with costs. The Additional District Judge and the High Court affirmed this view, emphasizing that the bank should have exercised more caution, especially in an industrial area with heavy transactions, by using an ultraviolet ray lamp available in other branches. 2. Applicability of Section 10, Section 31, and Section 89 of the Negotiable Instruments Act: The appellant argued that the payment was made according to the apparent tenor of the cheque, as required by Section 89. Section 10 defines "payment in due course" as payment made in good faith and without negligence, while Section 31 obligates the drawee to honor the cheque if sufficient funds are available. The courts below found that the bank failed to meet these standards due to the absence of an ultraviolet ray lamp, thus not acting with proper care and caution. 3. Requirement of ultraviolet ray lamp for cheque verification: The appellant contended that the absence of an ultraviolet ray lamp did not constitute negligence, as the bank had verified the cheque's serial number, date, and signature, finding no visible defects. The Privy Council and Calcutta High Court precedents were cited to argue that banks are not required to subject every cheque to advanced technology unless visible defects warrant further scrutiny. The courts below, however, held that the bank's failure to use an ultraviolet ray lamp, especially given its availability in other branches, amounted to negligence. 4. Payment in due course and the bank's liability: The Supreme Court noted that the agent of the bank had taken reasonable care in verifying the cheque, and no visible defects were found. The court emphasized that "payment in due course" under Section 10 means payment made in good faith according to the apparent tenor of the instrument. The court found no evidence that the bank was negligent in its visual scrutiny and that the absence of an ultraviolet ray lamp did not automatically imply negligence. The court concluded that the bank was not obligated to use advanced technology for every cheque and that the lower courts erred in holding the bank liable for negligence. Conclusion: The Supreme Court allowed the appeal, setting aside the judgments of the lower courts and the High Court. The suit was decreed only for the principal amount without any interest, and no costs were awarded. The court held that the bank had acted with reasonable care and was not negligent in the absence of an ultraviolet ray lamp.
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