Friday 21 April 2017

When bank is not liable for payment of damages for loss of pay order?

 In para 10 of the plaint, respondent No. 1/plaintiff himself has admitted regarding the factum of forged draft of the Bank. Once he himself admitted that the draft was forged and he could not establish any ill motive or mens rea of Bank, then in absence of any involvement of Bank or its employees, no adverse inference could have been drawn against the Bank.
21. From the conduct of respondent No. 1, it appears that he has not approached the Court with clean hands and a litigant who approaches the Court is bound to produce all the documents executed by him which are relevant to the litigation. He must come with clean hands. [See: MANU/SC/0491/2012 : (2012) 11 SCC 574, Badami (deceased) By Her LR vs. Bhali]. In the present case also, the plaintiff has not come to the Court with clean hands. He has not disclosed about the chain of events through which he followed the investigation process in criminal case registered against the conman, i.e. respondent No. 2. He did not elaborate the fate of police investigation and he has tried to shift the liability over the Bank which in the facts and circumstances of the case cannot be shifted.
22. No contractual liability exists between the Bank and respondent No. 1. Respondent No. 1 had neither contractual agreement with it nor was the customer of the Bank, therefore, no contractual liability of appellant Bank in the present set of facts. Similarly, from the facts and evidence it is established that no tortious liability of the appellant bank exists for suitably compensating respondent No. 1.
23. In view of the aforesaid, no actionable claim can be raised against the Bank because to be actionable claim and get redress from Court, the liability must assume legal shape in any recognized category of wrong such as negligence, malfeasance, misfeasance and non-feasance etc.
'Negligence' ordinarily means failure to do statutory duty or otherwise giving rise to damage, undesired by the defendant, to the plaintiff. Thus its ingredients are
(a) a legal duty on the part of A towards B to exercise care in such conduct of A as falls within the scope of the duty;
(b) breach of that duty;
(c) consequential damage to B."
According to Dias,
"Liability in negligence is technically described as arising out of damage caused by the breach of a duty to take care."
The axis around which the law of negligence revolves is duty, duty to take care, duty to take reasonable care. But concept of duty, its reasonableness, the standard of care required cannot be put in straitjacket. It cannot be rigidly fixed. In Black's Law Dictionary the meaning of each of these expressions is explained as under:
"Malfeasance. -- Evil doing; ill conduct. The commission of some act which is positively unlawful; the doing of an act which is wholly wrongful and unlawful; the doing of an act which person ought not to do at all or the unjust performance of some act which the party had no right or which he had contracted not to do. Comprehensive term including any wrongful conduct that affects, interrupts or interferes with the performance of official duties.
Misfeasance. -- The improper performance of some act which a man may lawfully do.
Non-feasance. -- Non-performance of some act which ought to be performed, omission to perform a required duty at all, or total neglect of duty."
24. The expressions 'malfeasance', 'misfeasance' and 'non-feasance' would, therefore, apply in those limited cases where the State or its officers are liable not only for breach of care and duty but it must be actuated with malice or bad faith [See; MANU/SC/0692/1994 : (1994) 4 SCC 1, Jay Laxmi Salt Works (P) Ltd. vs. State of Gujarat].
25. Here, in the present case from the pleadings and evidence of respondent No. 1/plaintiff, negligence, misfeasance and non-feasance have not been established in any manner. Plaintiff could not establish the malice or bad faith, in the present case. On the other hand, correspondence available on the record suggested that the Bank has taken due care to inform all the branches, Offices and the persons concerned regarding loss of pay order form, moment they come to know about the fraud. Respondent No. 1 was neither customer of the appellant bank nor was in contractual agreement with the Bank. Therefore, on the count of absence of any contractual liability also, no liability could have been fastened over the Bank. The finding so arrived in the impugned judgment and decree are perverse and therefore, set aside. In view of the aforesaid discussions, the judgment and decree dated 12-5-2000 passed by the 9th Additional District Judge, Gwalior is hereby set aside.
IN THE HIGH COURT OF MADHYA PRADESH (GWALIOR BENCH)
F.A. No. 147 of 2000
Decided On: 01.09.2016
 Bank of Maharashtra

Vs.

 Ico Jax India and Ors.

Hon'ble Judges/Coram:

Anand Pathak, J.

Citation: AIR 2017(NOC)183 MP

1. The appellant-Bank of Maharashtra has preferred this appeal under section 96 of the Code of Civil Procedure, 1908 against the judgment and decree dated 12-5-2000 passed by the 9th Additional District Judge, Gwalior in case No. 187-B/1996 whereby the decree of ` 30,940/- has been passed against the appellant. Facts in brief are that the plaintiff/respondent No. 1 happened to be a trader in electronic items, namely, TV and VCR, pursuing his business in Gwalior. On 27-1-1991 respondent No. 2 visited the shop of respondent No. 1 and gave an offer of purchasing electronic merchandise and promised to give payment by way of pay order of Bank of Maharashtra (hereinafter referred as 'Bank') under the Educated Unemployed Loan Scheme of the Bank.
2. Respondent No. 1 supplied the electronic merchandise in response to the order placed by respondent No. 2 and in consideration of the same, got pay order of ` 34,200/-. When respondent No. 1 submitted the said pay order for encashment in his Bank; Indian Overseas Bank, then much to its chagrin, surprise and dismay found that the said pay order was forged one and was not at all issued by the appellant bank.
3. The matter was reported to the police and it was found that the pay order which was purportedly given by respondent No. 2 to respondent No. 1 was earlier lost/stolen by somebody from the Jabalpur Branch and while affixing the forged seal of Gwalior Branch over the said pay order the respondent No. 2 tried to get advantage of it and purportedly paid for the purchased goods through that forged pay order. Police investigated the matter but could not get trace of respondent No. 2 Ramnaresh. Therefore, the actual conspiracy could not come to the light. On the other hand, respondent No. 1 who has supplied the electronic merchandise to respondent No. 2 has preferred a civil suit for recovery against the present appellant bank as well as against respondent No. 2 on the pretext that due to carelessness/negligence of the Bank, respondent No. 1 plaintiff suffered loss for which the Bank should compensate him accordingly. According to the respondent No. 1/plaintiff, the Bank had not published the news of theft or loss of pay order in public, therefore, plaintiff suffered.
4. The trial Court issued the notices and present appellant caused its appearance and submitted written statement and contested the claim of respondent No. 1/plaintiff whereas the respondent No. 2/defendant No. 3 did not turn up and remained ex parte. The trial Court has framed five issues for adjudication in which Issue No. 2(a) and (b) are in respect of alleged negligence/carelessness attributable on the part of appellant Bank. Issue No. 2(a) and (b) reads as under:
5. To support its claim, respondent No. 1/plaintiff had examined three witnesses; including the proprietor of the plaintiff through power of attorney holder. Personally proprietor of plaintiff Smt. Radha Khetan did not prefer to appear in the witness box.
6. On behalf of present appellant/defendants No. land 2, Branch Manager of Gwalior Branch appeared in the witness box as DW-1 and deposed in favour of the Bank and another witness, local trader of the Gwalior city as DW-2.
7. The trial Court after considering the evidence led by the parties and submissions made in this behalf, passed the impugned judgment and decree fastening the liability of `30,940/- over the appellant Bank for causing carelessness and negligence because of which respondent No. 2 got pay order, misused it and cheated the plaintiff.
8. In the trial Court, present respondent No. 2 (defendant No. 3) remained ex parte and did not appear even before this Court, therefore, the appellant had moved an application for dispensing with service of respondent No. 2 which got allowed vide order dated 6-2-2008.
9. The appeal was admitted for final hearing vide order dated 13-12-2000 and since then pending consideration for final hearing.
10. Heard learned counsel for the appellants and with his assistance perused the record.
11. The question for consideration in the appeal is whether the loss of pay order and its subsequent misuse can give rise to an actionable claim against the appellant and whether the judgment and decree passed by the trial Court holding the appellant liable to compensate respondent No. 1 is just and proper based on sufficient appreciation of evidence?
12. In the evidence, Ramesh Kumar Gyani (PW-1), Assistant Manager, Indian Overseas Bank, Gwalior Branch has deposed on behalf of the plaintiff and he could not make any statement regarding alleged carelessness/negligence on behalf of present appellant. In his examination-in-chief he only mentioned the fact regarding rejection of pay order by the appellant Bank when it was sent for encashment which was very obvious looking to the nature of pay order being forged one.
13. Similarly, Radhakishan Khetan (PW-2) who was power of attorney holder of proprietor of respondent No. 1 firm was examined. He admitted in para 8 of his cross-examination that the Bank of Maharashtra has issued the circular dated 15-3-1989 in respect of missing of pay orders book and circular dated 15-3-1989 was exhibited as Ex-P/15. Perusal of Ex-P/15 shows that the pay order form was lost on 11-1-1989 much prior to the date of incident i.e. 27-2-1989. The same witness in paras 14 and 15 has accepted the fact that once the pay order is being issued for payment by any client then they do not verify whether the pay order is genuine or forged one; because pay order is always issued by the Bank after deposition of the amount. In para 16 also, he admitted that he did not crosscheck the contents of the pay order including signature. From the evidence of this witness nowhere any fact surfaced which could have stood against the appellant for showing/committing any carelessness or negligence so as to cause loss to respondent No. 1/plaintiff. In fact, it was plaintiff who did not show due care and precaution while dealing with a stranger in commercial transaction.
14. Krishna Sharan Vaishya (PW-3) another dealer of the area entered into the witness box and gave evidence in support of the plaintiff. He did not reveal any evidence or information in favour of the plaintiff which could have been prejudicial to the interest of defendants No. 1 and 2 bank.
15. On the other hand, the present appellant (Bank) led the evidence of Mr. A.K. Jain, Senior Manager (DW-1). He categorically narrated the steps which are to be taken when the book of pay orders form is lost. He described in paras 4 and 14 of his deposition that appellant Bank has practice of referring the quotation given by the applicant coming under Educated Unemployed Loan Scheme.
16. The Bank has deposed one more witness Chandrashekhar Sharma (DW-2) who happened to be a dealer in the electronic items. He also deposed in favour of the Bank and his testimony remained unrebutted. He categorically submitted that regarding loan transactions of customer, Bank issues letter along with Pay Order.
17. Respondent No. 1/plaintiff himself has exhibited the original pay order as Ex-P/1 as well as circular issued by the Indian Overseas Bank Ex-P/3 and other documents uptill Ex-P/15. Perusal of these documents nowhere suggest that the Bank was at fault. After loss of pay order form at Jabalpur Branch and after its subsequent misuse by the present respondent No. 2, the Bank has taken the steps vigilantly and looking to the fact that loss of pay order form was from Bank of Maharashtra, Jabalpur Branch, therefore, the Bank of Maharashtra, Gwalior Branch could not had any inclination or anticipation of such mishap. Once the circular has been promptly issued by the Head Office (General Manager CS and Chief Vigilance Officer) then no actionable claim against the Bank can be raised or attracted. The printed pay order form was lost from the Jabalpur Branch and misused by respondent No. 2 by affixing seal (of Gwalior Branch) at Gwalior. The seal could have affixed at any place of any branch of the Bank and could have been misused anywhere in the country. The incident like the present one could have taken place anywhere.
18. The trial Court while appreciating the evidence and the documents placed before the Court for adjudication ignored the fact that the Bank has sufficiently discharged the duties and discharged its onus once the Head Office, Vigilance Cell has issued the circular which is on record. No procedural memo or guidelines have been placed so as to suggest culpability or involvement of the Bank. The trial Court misconstrued the evidence led by the parties and caused perversity in coming to the conclusion that the Bank is liable to pay the amount in which respondent No. 1 has been conned by respondent No. 2. The fact of absconding of respondent No. 2 further raised doubt about the whole incident.
19. There is possibility that respondents No. 1 and 2 might have misused the process of law because respondent No. 1 (plaintiff) has not deposed about the statement if any made before the investigating officer in the criminal case registered against respondent No. 2 so as to substantiate his claim about being cheated by respondent No. 2. In absence of such evidence about the fate of investigation as well as the absence of respondent No. 2 in the present civil suit, it appears that respondent No. 1/plaintiff and respondent No. 2/defendant No. 3 stood In Pari Delicto. In fact, respondent No. 1/plaintiff as well as respondent No. 2 (defendant No. 3) are at fault and do not come with clean hands. Therefore, the relief as claimed by the plaintiff is not legal and equitable. On this count also, the case of the plaintiff fails.
20. In para 10 of the plaint, respondent No. 1/plaintiff himself has admitted regarding the factum of forged draft of the Bank. Once he himself admitted that the draft was forged and he could not establish any ill motive or mens rea of Bank, then in absence of any involvement of Bank or its employees, no adverse inference could have been drawn against the Bank.
21. From the conduct of respondent No. 1, it appears that he has not approached the Court with clean hands and a litigant who approaches the Court is bound to produce all the documents executed by him which are relevant to the litigation. He must come with clean hands. [See: MANU/SC/0491/2012 : (2012) 11 SCC 574, Badami (deceased) By Her LR vs. Bhali]. In the present case also, the plaintiff has not come to the Court with clean hands. He has not disclosed about the chain of events through which he followed the investigation process in criminal case registered against the conman, i.e. respondent No. 2. He did not elaborate the fate of police investigation and he has tried to shift the liability over the Bank which in the facts and circumstances of the case cannot be shifted.
22. No contractual liability exists between the Bank and respondent No. 1. Respondent No. 1 had neither contractual agreement with it nor was the customer of the Bank, therefore, no contractual liability of appellant Bank in the present set of facts. Similarly, from the facts and evidence it is established that no tortious liability of the appellant bank exists for suitably compensating respondent No. 1.
23. In view of the aforesaid, no actionable claim can be raised against the Bank because to be actionable claim and get redress from Court, the liability must assume legal shape in any recognized category of wrong such as negligence, malfeasance, misfeasance and non-feasance etc.
'Negligence' ordinarily means failure to do statutory duty or otherwise giving rise to damage, undesired by the defendant, to the plaintiff. Thus its ingredients are
(a) a legal duty on the part of A towards B to exercise care in such conduct of A as falls within the scope of the duty;
(b) breach of that duty;
(c) consequential damage to B."
According to Dias,
"Liability in negligence is technically described as arising out of damage caused by the breach of a duty to take care."
The axis around which the law of negligence revolves is duty, duty to take care, duty to take reasonable care. But concept of duty, its reasonableness, the standard of care required cannot be put in straitjacket. It cannot be rigidly fixed. In Black's Law Dictionary the meaning of each of these expressions is explained as under:
"Malfeasance. -- Evil doing; ill conduct. The commission of some act which is positively unlawful; the doing of an act which is wholly wrongful and unlawful; the doing of an act which person ought not to do at all or the unjust performance of some act which the party had no right or which he had contracted not to do. Comprehensive term including any wrongful conduct that affects, interrupts or interferes with the performance of official duties.
Misfeasance. -- The improper performance of some act which a man may lawfully do.
Non-feasance. -- Non-performance of some act which ought to be performed, omission to perform a required duty at all, or total neglect of duty."
24. The expressions 'malfeasance', 'misfeasance' and 'non-feasance' would, therefore, apply in those limited cases where the State or its officers are liable not only for breach of care and duty but it must be actuated with malice or bad faith [See; MANU/SC/0692/1994 : (1994) 4 SCC 1, Jay Laxmi Salt Works (P) Ltd. vs. State of Gujarat].
25. Here, in the present case from the pleadings and evidence of respondent No. 1/plaintiff, negligence, misfeasance and non-feasance have not been established in any manner. Plaintiff could not establish the malice or bad faith, in the present case. On the other hand, correspondence available on the record suggested that the Bank has taken due care to inform all the branches, Offices and the persons concerned regarding loss of pay order form, moment they come to know about the fraud. Respondent No. 1 was neither customer of the appellant bank nor was in contractual agreement with the Bank. Therefore, on the count of absence of any contractual liability also, no liability could have been fastened over the Bank. The finding so arrived in the impugned judgment and decree are perverse and therefore, set aside. In view of the aforesaid discussions, the judgment and decree dated 12-5-2000 passed by the 9th Additional District Judge, Gwalior is hereby set aside. The amount including the cost and interest deposited by the appellant in pursuance to the order dated 6-2-2006 passed by this Court, be refunded back to the appellant Bank after due verification.
Appeal allowed.

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