2017 (11) TMI 356 - HC - Indian Laws

Suit filed for recovery of money with interest - Money withdrawn by messenger and relative used to transact with the Bank on plaintiff s behalf by forging signatures in the cheque slips - Whether the plaintiff is entitled for the amount claimed? - whether the defendant Bank Officials had passed the cheques without due care and by gross negligence, which amounts to dereliction of duty and misconduct in the course of employment? Held that - To seek protection under section 131, the Banker has to establish that it was not negligent while honouring the cheques presented by Thomas and it was acting in good faith, after following standard protocol for passing the cheques. In this case, the depositions of P.W.1 to P.W.6 satisfy the said requirements. To prove that there was negligent on the part of the bank, it is for the plaintiff to adduce the evidence satisfactory to the conscious of the Court. While the trial Court has cursorily gone through the evidence and allowed the suit, the lower appellate Court has pointed the lapses and lacunae in the finding of the trial Court and has reversed the finding of the trial Court. This Court, on going through the materials placed, holds that the respondent bank was never negligent in honouring the cheques. Hence, they are protected under Section 131 of the Negotiable Instrument Act, 1881. In the absence of justification on the part of the plaintiff for allowing the said Thomas to handle her passbook and cheque book and representing to the bank implicitly and explicitly that Thomas is her representative, she is estopped from alleging negligence on the part of the respondent bank. Therefore, the conduct of the respondent Bank estops her from questioning the bank for honoring the cheques of the plaintiff. Even if it is not signed by her, but due to lookalike signatures, the bank cannot be held responsible. The evidence of DW1 to DW6 narrate the care and caution exercised by the bank officials while passing the cheques. Therefore, their evidence cannot be just ignored, in the absence of contra evidence. As pointed out by the lower appellate Court, the reasoning of the trial Court is bad and bereft of details for his conclusion that the signatures found in the cheques are forged. Therefore, even though there is no legal impediment to exercise the power under Section 73 of the Indian Evidence Act, 1872, without resorting to expert opinion under Section 45 of the Indian Evidence Act, 1872, the manner in which the power under Section 73 of the Indian Evidence Act, 1872 exercised is always subject to judicial scrutiny. First and foremost, the plaintiff/appellant ought to have proved the case of forgery by letting in plausible evidence, which is well within her limitation, but miserably failed to do. Next, in the absence of reasoning and the process undertaken by the trial Court to arrive at the conclusion that signatures found in the disputed signatures are forged, since finding deserves to be reversed. The lower appellate Court has rightly reversed the trial Court finding by allowing the first appeal.

Issues Involved:
1. Entitlement of the plaintiff to the claimed amount.
2. Negligence of the Bank in honoring forged cheques.
3. Validity of the plaintiff's claim under Section 131 of the Negotiable Instruments Act.
4. Comparison of disputed signatures.
5. Bank's duty of care and caution in honoring cheques.

Issue-wise Detailed Analysis:

1. Entitlement of the plaintiff to the claimed amount:
The plaintiff claimed that she had a balance of ?52,900.55 in her savings account, but found only ?127.55 due to fraudulent withdrawals by Thomas, who forged her signatures. The trial court initially allowed the suit, holding the bank negligent. However, the lower appellate court reversed this, stating the plaintiff failed to prove the forgery independently and relied incorrectly on the criminal court's judgment.

2. Negligence of the Bank in honoring forged cheques:
The plaintiff argued that the bank officials failed to exercise due care in verifying the signatures on the cheques, leading to fraudulent withdrawals by Thomas. The bank contended it acted in good faith, following standard protocols, and the plaintiff had introduced Thomas to operate the account. The lower appellate court found no evidence of negligence by the bank, as the plaintiff did not provide scientific proof of forgery.

3. Validity of the plaintiff's claim under Section 131 of the Negotiable Instruments Act:
Section 131 protects banks from liability if they act in good faith and without negligence. The lower appellate court held that the bank met these criteria, as it followed standard procedures and the plaintiff had authorized Thomas to handle her account. The plaintiff's negligence in not updating her account and misplacing her cheque book further weakened her claim.

4. Comparison of disputed signatures:
The trial court compared the signatures through naked eye observation, which the lower appellate court criticized for lacking scientific rigor. The plaintiff did not provide expert testimony or a handwriting expert's report to substantiate the forgery claim. The court emphasized the necessity of scientific comparison for such allegations.

5. Bank's duty of care and caution in honoring cheques:
The bank demonstrated due care by verifying signatures and following standard protocols. The plaintiff's authorization of Thomas and her negligence in account management were significant factors. The lower appellate court concluded that the bank acted in good faith and was protected under Section 131 of the Negotiable Instruments Act.

Conclusion:
The second appeal was dismissed, affirming the lower appellate court's judgment. The plaintiff failed to prove the forgery claim with sufficient evidence, and the bank was found to have acted in good faith and without negligence. The plaintiff's negligence and authorization of Thomas estopped her from alleging bank negligence. The court upheld the bank's protection under Section 131 of the Negotiable Instruments Act.

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