Allowed

Arun v. the Canara Bank and Anr.

Patna HC29 Apr 2011CWJC/2457/2010

Case brief

AI extract

What is this about?

In a writ petition, a public sector bank was directed to pay the principal amount of a lost cheque deposited for encashment plus interest, as the bank failed to return the instrument and its compensation policy did not limit liability in this context.

What did the court decide?

Respondent Bank directed to credit Rs.6000/- plus interest at savings account rate to the petitioner's account within two weeks.

Arun Vs the Canara Bank and Anr. — Banking and Recovery | Patna HC (2011)

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 IN THE HIGH COURT OF JUDICATURE AT PATNA

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 CWJC No.2457 of 2010

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1. ARUN

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 Versus

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1. THE CANARA BANK THROUGH THE ASSISTANT GENERAL MANAGER,
CIRCLE OFFICE, EXHIBITION ROAD, PATNA

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2. THE BRANCH MANAGER, CANARA BANK, RAJENDRA NAGAR, 147, B, ARYA
KUMAR ROAD, RAJENDRA NAGAR, PATNA- 80006

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 -----------

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2/ 29/04/2011 Heard learned counsel for the petitioner and for the Canara Bank.

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Two cheques valued at Rs.6000/and

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Rs.6500/- were deposited by the petitioner in his account for encashment. The cheques were sent to the Delhi Branch of the Bank for encashment. Needless to observe that the cheques were in custody of the Bank

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which held it in trust on behalf of the customer. Any loss of the instrument while in custody of the Bank naturally renders the Bank answerable to compensate the customer, circumstances so warranting.

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The Bank does not deny that the sum of Rs.6500/- has been subsequently credited to the account of the petitioner along with interest. Likewise,

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the amount of interest on the second instrument of

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Rs.6000/- has also been credited to his account. The petitioner desired crediting of the principal amount of Rs.6000/- which has been refuted by the Bank opining that the petitioner may obtain another instrument from the drawer.

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Counter affidavit has been filed on behalf of the Bank. The facts are not in dispute. Learned counsel for the Bank relies upon Clause-6 of the Compensation Policy of the Bank dealing with cheques/instruments lost in transit/in clearance process or by paying bank’s branch. It is submitted that the Bank was obliged to inform the account holder in case of loss in transit to enable the original drawer to stop payment. This obviously was to prevent a lost instrument going into the wrong hands. The policy then provides that the Bank shall render all assistance to the customer to obtain a duplicate instrument from the drawer of the cheque. The contention of the Bank is that it was liable no more except for interest under Sub-clause-(a) and (b) of the same. The interest having been paid, under the policy it was the duty of the customer to approach the drawer of the instrument.

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Learned counsel for the Bank submits that on 23.4.2009 and 23.5.2009 it requested the petitioner to

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give the details of the ‘payee’ of the cheque which the petitioner had failed to do preventing the Bank from facilitating issues. The ‘payee’ was the petitioner. Learned counsel for the Bank submits that it was an error and the reference was to the drawer of the instrument. Even if that be so, the primary

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responsibility of the Bank as the custodian of the instrument in trust does not stand negated. The petitioner had deposited the cheque with the Bank. The Bank is required to maintain its own records as an efficient commercial operator. It cannot seek to cast its own burden on the customer by urging that though it may have been negligent on its own part, the customer was negligent in not assisting it.

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The Compensation Policy of the Bank would come into operation only if the drawer of the instrument had ordered stoppage of payment when the loss of the cheque was communicated to him. Naturally, in that event there was no instrument to credit its value in the account of the petitioner and a new instrument would have been required. It is not the case of the Bank that the drawer of the instrument had ordered payment to be stopped. Surely, the Bank can take appropriate steps to ensure that the lost cheque is not presented for encashment at the concerned Branch which can make necessary entries to that effect in its records. Today the banking functions being largely electronic, surely, there can be no difficulty in the same.

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The contention of the Bank that the petitioner on 3.10.2008 had withdrawn his complaint vide Annexure-C is but a desperate attempt to salvage the

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situation for itself. There is no doubt that the petitioner at that stage agreed not to pursue matters as the bank assured him that it was looking into the complaint. When it was not being redressed the petitioner has raised his grievance. The letter dated 3.10.2008 does not operate as a waiver or estoppel against him in any manner. The Bank is a public sector organization, a State under Article-12 of the Constitution. The manner in which it has contested the challenge by the petitioner for a petty sum of Rs.6000/- spending thousands of rupees in the process disappoints the Court thoroughly. A public sector bank litigates on the public money. When it litigates, the standard of scrutiny of its actions shall by much higher than others. If only the Bank had paid Rs.6000/- to the petitioner it would have saved thousands of public money. The amount involved presently does not satisfy the Court to consider issue of fixation of personal accountability or against those who may be responsible for the frittering away of public resources in unnecessary and avoidable litigation.

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The Court therefore directs the respondent Bank to not only credit the sum of Rs.6000/- to the account of the petitioner, but also to give him interest on the sum at the savings bank account rate till the date of such credit less the interest that has already

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been paid to him on this amount.

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Let this order be complied with within a maximum period of two weeks from the date of receipt/presentation of a copy of this order before the concerned Branch of the Bank.

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The writ application stands allowed.

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( Navin Sinha, J.)

Arun v. the Canara Bank and Anr.

Case brief

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Arun v. the Canara Bank and Anr.

Case brief

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