CANARA BANK Vs. CANARA SALES CORPORATION

JUDGEMENT

(1.) THE above appeal is filed against the decree passed in the suit, Original Suit No. 72 of 1962, on the file of the Civil Judge, Mangalore, by the first defendant therein, the Canara Bank Ltd. After the nationalisation of the said bank, the Canara Bank has been brought on record as the appellant. The suit was instituted for and on behalf of the Canara Sales Corporation Ltd., Mangalore, by its managing director, V. S. Kudva, who died during the pendency of the suit. After his death, the suit was continued by L. V. Kudva as the managing director of the plaintiff. The second defendant was one Y. Venkatesha Bhat who was the chief accounts officer of the plaintiff up to the year 1961. The second defendant died during the pendency of this appeal and his legal representatives have been brought on record.

(2.) THE suit was instituted against defendants Nos, 1 and 2 for recovery of a sum of Rs. 3,26,047.92 on the basis of the following allegations made in the plaint: The plaintiff is a company having its head office at Mangalore and dealing mainly in motor vehicle parts and other requirements of motor vehicles. It had opened a current account in the Mangalore Bunder branch of the first defendant -bank. V. S. Kudva, who was the managing director of the plaintiff, and K. S. Bhandarkar, who was the general manager of a sister concern of the plaintiff, had been authorised to operate on the said current account of the plaintiff with the first defendant. The second defendant was working as the chief accounts officer of the plaintiff from 1950, and in that capacity he was attending to the maintenance of accounts of the plaintiff and was also in charge andcustody of the cheque books issued by the first defendant -bank to the plaintiff. In March, 1961, the second defendant was absent from his duty for some time and during the period one Appuraya Shenoy, who was the assistant of the second defendant, was asked to bring the accounts of the plaintiff up to date. While doing so, the said Shenoy noticed certain discrepancies with regard to two cheques bearing Nos. 625061 and 625070 for Rs. 8,364.12 and Rs. 6,774.05, respectively. The counter -foils of the above cheques showed that they had been drawn in favour of the Canara Industrial and Syndicate Bank (now known as ' Syndicate Bank ') and were for sums of Rs. 1,000 each. But, as there were no vouchers in support of the said payments to the Syndicate Bank, Shenoy made further enquiry regarding them. His enquiry disclosed that in fact the two cheques had been drawn for Rs. 8,364.12 and Rs. 6,774.05 by the second defendant and that the said amounts had not been shown in the accounts of the plaintiff. While as against cheque No. 625061 encashed on February 3, 1961, there was a debit entry of Rs. 1,000 as against the Syndicate Bank in the rough day -book maintained by the second defendant, there was no entry at all of any sort in respect of cheque No. 625070. In order to ascertain the truth about the withdrawal of the sums under the two cheques referred to above, the second defendant, who was away at Bangalore, was asked to go to Mangalore immediately by two telegrams which were sent on March 17, 1961, and March 22, 1961. It was not known at that time that the two cheques had been forged by somebody. Though the second defendant replied that he would be reaching Mangalore shortly, he did not actually meet V. S. Kudva till March 24, 1961. On that day one more cheque bearing No. 908792 drawn on the first defendant for a sum of Rs. 8,645.65 came to the notice of V. S. Kudva. The counter -foil of the said cheque showed that it had been drawn for a sum of Rs. 3,000 in favour of the Syndicate Bank. Actually, the said cheque had been drawn for Rs. 8,645.65 by the second defendant and he had received the said amount from the first defendant as the ' payee' under the said cheque. Thereupon, V. S. Kudva went to the office of the first defendant on March 24, 1961, and inspected the three cheques. He found that the signatures on the three cheques purporting to be his signatures were not really his signatures and that the sums drawn under the three cheques had all been utilised by the second defendant. That on March 25, 1961, a complaint was lodged by the plaintiff with the District Superintendent of Police for investigating into the case. As V. S. Kudva found that the account books maintained by the second defendant contained incorrect entries, he appointed a firm of chartered accountants known as S. Kaliswaran and S. Narayan to conduct a special audit of the accounts of the plaintiff for the years 1957 -58 to 1960 -61. The said special audit disclosed that during those four years, thesecond defendant had drawn in all a sum of Rs. 3,24,047.92 under 42 cheques (including the three cheques referred to above) particulars of which are mentioned in Schedule ' A ' attached to the plaint from the account of the plaintiff with the first defendant and that all the said cheques were forged ones. It was also clear that the said amount had not been utilised for the purpose of the plaintiff though in most of the instances it had been falsely shown in the accounts of the plaintiff which had been written by the second defendant himself that the monies had been received and were spent for the purpose of the plaintiff. It is the case of the plaintiff that the payments made on the 42 forged cheques by the first defendant were all unauthorised ones and that the first defendant is liable to pay the sums covered by the said cheques to the plaintiff and that the second defendant is jointly and severally liable to pay the said amount. It is also pleaded, inter alia, that the plaintiff had not in any way acquiesced in or ratified the payments made by the first defendant under the said 42 cheques and that there was no negligence which would disentitle the plaintiff to claim the said amount. The plaintiff instituted the above suit for recovery of the above sum after its demand for its payment was not complied with by the defendants.

(3.) ON the basis of the above pleadings, the parties went to trial. The records disclose that it was the first defendant alone that contested the suit. The second defendant does not appear to have taken any serious interest in the conduct of his defence. The trial court after negativing the contentions raised by the defendants, passed a decree against the defendants for a sum of Rs. 3,24,047.92 with current interest at six per cent. per annum from the date of suit, i.e., August 20, 1966. The defendants were also directed to pay the costs of the suit. Aggrieved by the decree passed by the trial court, the first defendant has filed this appeal.