Decided on September 25,1953



Venkatarama Aiyar, J. - (1.) This appeal arises out of a suit instituted by the respondent, which is a firm of cloth merchants carrying on business among other places, .at Madras, for the recovery of a sum of Rs. 5225-12-9 from the Bharat Bank Ltd., who are the appellants. On 24-11-1943 the respondent drew a cheque for Rs. 5225-12-9 on the Chartered Bank of India, Australia and China at Madras payable to their Benares branch or bearer. The cheque was crossed and sent by ordinary post to the payee at Benares. Exhibit P. 2 is a photographic copy of the said cheque. On 6-12-1943 a person who gave out his name as Matha Frasad Gupta opened an account with the Mount Road branch of the appellants with a cash deposit of Rs. 250 and then put into his account the cheque drawn by the plaintiff on 24-111943 and the same was cashed by the Bank in the usual course of business through the clearing house on 7-12-1943. Matha. Prasacl Gupta operated on this account by issuing a cheque for Rs. 200, Ex. P. 4(a) and another cheque tor Rs. 2,225 Ex. P. 4(b) both dated 6-12-1943 and drawn in tavour of one Seetharam. On 7-12-1943 he drew a cheque for Rs. 126 in favour of a watch-maker. Ex. P. 4 (d) and on 9-12-1943 himself drew a cheque for Rs. 2,800 Ex. P. 4(c), and thereafter disappeared. The balance remaining to the credit of his account at that time was Rs. 124-9-0.
(2.) The plaintiff discovered .the loss of the cheque in March 1944 and lodged a complaint with the police. Investigation which followed thereon revealed that the person who had cashed the cheques, Exs. P. 4 and P. 4(b), and signed his name as Sectharam was in truth a person called R. P. Misra of Benares; that the person who gave-out his name as Matha Prasad Gupta was In fact a person called jawahar Lal; that they along with others had conspired to commit theft of cheques and to cash them by forging signatures; that in pursuance of this conspiracy one Jai Narayanan had stolen the cheque of which Ex. P.2 is a copy; that Jawahar Lal forged the signature of the payee therein and that the proceeds thereof had been taken by Jawahar Lal and Misra. Thereafter Jawahar Lal turned approver; Misra was prosecuted along with nine others for various offences in Sessions Case No. 15 of 1945 on the file of the Court of the Additional Sessions Judge, Benares, and convicted and sentenced to imprisonment.
(3.) Meantime, the plaintiff instituted the suit out of which this appeal has arisen for the recovery of the amount of the cheque from the appellants on the ground that Jawahar Lal alias Math Prasad Gupta got no title to it and that by receiving the amount due thereon the Bank had become liable to the plaintiff in conversion. The appellants pleaded that in realising the cheque they had acted in good faith and without negligence and that they were accordingly protected by Section 131, Negotiable Instruments Act. The suit was tried by Mack J. He held that Matha Prasad Cupta had been pennitted by the Bank authorities to open an account without proper introduction, that Ex. P. 2 had been cashed without due examination of the endorsements there on and that such examination Would have revealed the true character of the transaction, that the Bank had been negligent at all stages, of tile matter and was, therefore, not entitled to rely on Section 131 of the Act, in answer to the claim. In the result the suit w3s decreed. The defendants prefer this appeal.;

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