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TMI Blog1960 (4) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff bank since 1945. In 1947 Jagir Singh, P.W. 1, was the manager of the defendant bank's branch at Rupar. In those days the plaintiff bank used to transmit its surplus funds to the Punjab Provincial Co-operative Bank Limited, at Lahore, normally through the Government treasury at a nominal charge of six pies per hundred rupees. Sometimes it also transmitted money to the Punjab Provincial Co-operative Bank Limited, at Lahore, through the defendant bank's branch at Lahore. The plaintiff bank's case has been that on August 7, 1947, Jagir Singh, P.W. 1, as the then manager of the defendant bank's Rupar branch, made an approach to the plaintiff's manager, Ram Singh, P.W. 2, for money explaining that his branch stood in need of money to meet the withdrawals on it and as it was not practicable to obtain transmission of the money from the defendant bank's head office at Lahore because of the difficulties prevailing in those days, the plaintiff bank would oblige the defendant bank's branch at Rupar by remitting a sum of Rs. 5,000 through it to the Punjab Provincial Cooperative Bank Limited, at Lahore, and that the amount so given as a facility to the defendant bank's branch at Rupar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anager, Jagir Singh, P.W. 1, accountant, Ram Saran Das, D.W. 1, and cashier, who has not been produced as a witness of the defendant bank's Rupar branch. Obviously the amount was received by the defendant bank's Rupar branch on the very day and it is clear that in the date under the signature of Pyara Singh the year has been written by mistake as 1948 instead of 1947. The letter, exhibit P.5, of October 10, 1947, is from the Punjab Provincial Co-operative Bank Limited, at Lahore, informing the plaintiff bank that the draft for the amount of Rs. 5,000 was being returned because the defendant bank at Lahore had closed. On August 7, 1947, on receipt of the amount of Rs. 5,000 from the plaintiff bank, the manager of the defendant bank's branch at Rupar issued draft No. 018363/569/47 for the amount in favour of the plaintiff bank. On receipt of the letter, exhibit P.5, the senior accountant of the plaintiff bank wrote the letter, exhibit P.4, to the manager of the defendant bank's branch at Rupar on November 11, 1947, and the material part of that letter, that is relevant here, is: "On your request we paid you Rs. 5,000 on 7th August, 1947, against draft No. 018363 (569/47), dated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half to the Punjab Provincial Co-operative Bank Limited, Lahore. The position taken by the defendant bank at the time was that there was no fiduciary relationship between the parties and the plaintiff bank took an ordinary demand draft and that the amount of the draft was no more than a debt due by the defendant bank to the plaintiff bank and consequently the plaintiff as creditor ranked with other creditors of the defendant bank. This in brief were the cases of the parties at that time. The learned company judge, Achhru Ram J., on April 1, 1949, allowed the application of the plaintiff bank. It is a fact admitted by both sides that there was an appeal from the order of the learned judge and a division bench reversed the order and dismissed the application of the plaintiff bank on the ground that there was no jurisdiction in the learned company judge to pass the order as he had done. It was in these circumstances that the plaintiff bank instituted the suit giving rise to this appeal, on January 18, 1953, against the defendant bank. In substance, after narrating the facts as given above, what the plaintiff bank has claimed is that the amount of Rs. 5,000 was obtained by the manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding is that there was no special contract, as pleaded by the plaintiff bank, accompanying the demand draft given by the Rupar branch of the defendant bank to the plaintiff bank and as such no fiduciary relationship was created between the parties in regard to the handling of the amount of the draft. It was urged before the learned trial judge that the plaintiff bank's taking three drafts in lieu of the first one draft according to the endorsement, exhibit D. 3, of January 21, 1948, of the manager of the defendant bank's Rupar branch amounts to novation of contract, but this argument did not prevail with the learned trial judge. It may be stated here straightaway that this plea of novation of contract had been taken by the defendant bank before the learned company judge and was negatived. In the written statement to the present suit no such plea has been taken. Even on this consideration an argument like this is not admissible to the defendant bank. In the end the learned trial judge has dismissed the suit of the plaintiff, leaving the parties to their own costs. This, as stated, is an appeal by the plaintiff bank against the judgment and decree of the learned trial judge. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 6,801-12-3 were paid out as withdrawals on that very day. The cash in hand left was Rs. 15,103-9-7. It is said that the bank had this amount in hand and there was no need for the manager to be apprehensive. This is to ignore a patent fact in the statement which would make any manager of a bank apprehensive and particularly in the circumstances as they were prevailing in August, 1947, attended by uncertainty on account of the impending partition. The amount of the withdrawals on this day was little more than the amount of receipt; if the same drain were to continue on the next day, the manager would have been faced with a rather awkward situation. He could not possibly anticipate receipts in the bank but because of the withdrawals he could anticipate that the same may continue on the following day. It was this situation which he was trying to meet when he approached Ram Singh, P.W. 2, that cash of Rs. 5,000 be made available to meet the contingency that might well arise on the next day in view of the state of the account on August 6, 1947. In the circumstances prevailing in those days it is consistent with probabilities that the two managers agreed to a special contract for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result that there is no fiduciary relationship between the parties. The use of the word "loan" in the letter does not detract from the circumstances stated in the letter in which the manager of the defendant bank's Rupar branch had obtained the financial assistance from the manager of the plaintiff bank. The word has been used carelessly and without appreciating the true import of it and without realisation that the defendant bank would turn round to base its case on that word to defeat a true case of the plaintiff bank. Nothing turns upon the use of that word in that letter in so far as the merits of the case are concerned. From the beginning down to the date of the letter, exhibit D.2, it has been the case of the plaintiff bank that the money was taken from it by the Rupar branch of the defendant bank because of the anticipated financial difficulties and the plaintiff bank came to the help of the defendant bank in rather difficult circumstances and it was in those circumstances that a special contract was entered into between the parties for transmission of the money from Rupar to Lahore on behalf of the plaintiff bank to be paid to the plaintiff bank's bankers at Lahore. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apprehension of the manager of the defendant bank's Rupar branch in seeking help of the plaintiff bank. Then the learned trial judge says that he wonders what prompted the manager of the Rupar branch of the defendant bank to write the letters, exhibits P.1 and P.2, but it is obvious that there is no reason to wonder in regard to those documents as it was the difficulty in which the defendant bank's Rupar branch manager found himself in regard to the withdrawals on his bank that prompted him to enter into an agreement with the plaintiff bank's manager, who only to safeguard his own bank obtained those writings from the defendant bank's manager. But the learned trial judge is not decisive in his mind whether the apprehension of the manager of the defendant bank's Rupar branch as to the expected drain on that branch is or is not true and the learned trial judge says that "even if we take the manager bona fide believed that he required more money at Rupar and he requested the plaintiff bank to remit the money to Lahore through the defendant bank, in my opinion, it should make no difference at all." If the matter stood there probably that would be so. But it did not stand there and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter, exhibit P. 4, of November 11, 1947, the plaintiff bank was obliged to again write to the defendant bank the letter, exhibit D 2, of January 21, 1948. It was in consequence of that demand that the defendant bank's Rupar branch manager voluntarily issued three drafts in favour of the plaintiff bank. The plaintiff bank never asked for any such drafts ; all that it asked for was the repayment of the amount of Rs. 5,000 of the first dishonoured drafts. It is said that two of three drafts were presented for encashment and so the plaintiff bank has accepted them. The drafts were passed on to the plaintiff bank not honestly but in order to put it off and to gain time. It is obvious that if the defendant bank intended to make payment by draft at that stage, it would have issued one draft for the whole amount upon its head office. Instead, it issued two drafts of Rs. 2,000 each at Delhi and one draft of Rs. 1,000 at Ludhiana. This is a clear indication that the issue of these three drafts was not an honest issue and it was intended to mislead and misguide the plaintiff bank and the result has been as was anticipated by the defendant bank. In the circumstances there has been no novati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nee of his or to his order. " This is the correct position in regard to the relationship arising as in the present case between the parties. Here, the consideration for which the money was made over by the plaintiff bank to the defendant bank so that it may be paid by the defendant bank to the nominee, that is, the Punjab Provincial Co-operative Bank Limited, of the plaintiff bank on its behalf was that the manager of the Rupar branch of the defendant bank anticipated the financial drain on that branch and to safeguard the defendant bank there he obtained the money from the plaintiff bank. The plaintiff bank, in the peculiarity of those days, might not have taken the risk of transmitting its money through an ordinary bank and would in all probability have had resort to the facility provided to it by the Government treasury, if the manager of the defendant's Rupar branch had not agreed to the special contract as has been found to be proved in the present case. Similarly, in Traders Bank Ltd. v. Kalyan Singh AIR 1953 Punj. 194; 23 Comp. Cas. 441 , Weston C.J. observed that "There can be no doubt that ordinarily the position of the bank vis-a-vis a person dealing with the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kashmir Bank Ltd. [1960] 62 PLR 51, but then that case was also a case of an ordinary demand draft not accompanied by a special contract between the parties creating fiduciary relationship between them or an agreement of agency. A similar view has been taken by a learned single judge of the Bombay High Court in Haji Sheikh Hasanoo v. S. Natesa Mudaliar and Co [1959] 29 Comp. Cas. 41 AIR 1959 Bom. 267 . However, the observations of the learned judge here deal with an ordinary demand draft not accompanied by special contract creating fiduciary relationship between the parties or any agreement of agency. On the finding of fact in this case, as above, the plaintiff bank obtained the demand drafts in question for the amount in dispute from the Rupar branch of the defendant bank with a contract for transmission of the amount from Rupar to its bankers at Lahore and the consideration for the taking of the demand draft was as has already been pointed out. There was in this case both a fiduciary relationship created between the parties as also a contract of agency binding the defendant bank to transmit the amount of the plaintiff bank to the plaintiff bank's bankers at Lahore. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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