Desai, J. - (1.) This is an appeal by a plff. whose suit for the recovery of money has been dismissed by the Dist, J. of Kumaun on appeal. It was decreed by the trial Court, but the learned Dist. J. reversed the decree.
(2.) There is no dispute about the facts which, are as under. The plff. appellant, Messrs. Durga Sah Mohan Lal Sah, is a firm of bankers at Ranikhet. In 1940 'B' Company of the Queen's Royal Regiment, under the command of Major Phillips, was stationed at Dulikhet. On 31-5-1940 Lt. Lockyer of the Regiment in his official capacity drew a cheque for Rs. 716-13-0 on the Imperial Bank of India, Allahabad branch, payable to Major Phillips also in his official capacity, or bearer, & crossed it generally. He did not mark it as "not negotiable." He handed over the cheque to Major Phillips who endorsed it in blank on the back & gave it to Sgt. Pettiford: with direction to take it to Lt. Mausel to pay it into the local treasury. Sgt. Pettiford, contrary to the direction & apparently dishonestly, took it on 1-7-1940 to the plff. & asked it to cash it for him. The plff. at once paid him the amount of Rs. 716-13 0 & he went away. He disappeared & when Major Phillips knew about his disappearance with the cheque, he instructed the drawee bank at Allahabad not to honour the cheque if it was presented to it. The plff. handed over the cheque to the Allahabad Bank at Naini Tal for collecting the money. This bank sent it to the Imperial Bank at Allahabad which refused payment in accordance with the instructions of Major Phillips. The plff. communicated the fact of the refusal to Major Phillips & demanded the payment of the cheque by him. Major Phillips disowned all liability on the ground that as he was acting in official capacity he was not personally liable. The plff. addressed the Govt. but in vain, & after the necessary formalities instituted the suit which has given rise to this appeals against the Governor-General, Major Phillips & Lt. Lockyer.
(3.) The suit was jointly defended by the defts. Their sole contention was that the plff. was not justified in paying the cheque in cash to Sgt. Pettiford when it was a crossed cheque. Their contention was, & still is, that the plff should have paid it through a banker & not direct, & that the cheque was handed over to Sgt. Pettiford not to be cashed but to be paid into the treasury through Lt. Mausel. The trial Ct. took the view that the cheque was negotiable despite the crossing & was negotiated by Sgt. Pettiford to the plff. which acted in good faith & without negligence, that it became holder in due course of the cheque & that the defts were liable to pay the money to it. The learned Dist. J., on appeal, held that the plff. was not justified in paying the amount of the crossed cheque in cash to Sgt. Pettiford & did not act without negligence.;