Supreme Court emphasizes caution in granting interim relief, directs refund in forged cheque case

The Supreme Court allowed the bank's appeal in a dispute over a forged signature on a cheque, setting aside the High Court's interim order directing the bank to credit the amount to the company's account. The Court emphasized the importance of considering all relevant factors before granting interim relief and directed the company to refund the credited amount to the bank within a month. Failure to comply would result in enforcement by the High Court. The judgment underscored the necessity of early disposal of the writ petition and cautioned against granting interim orders that effectively provide the main relief sought without proper consideration.

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Issues:
Dispute over forged signature on a cheque leading to reimbursement claim by the respondent against the appellant bank. Jurisdiction of writ petition under Article 226 for banking disputes.

Analysis:
The case involved a dispute between a nationalized bank, referred to as the appellant-bank, and a company operating a current account with the bank. The company claimed that a cheque drawn on their account, bearing a forged signature of their Managing Director, was encashed by the bank, resulting in a debit of Rs. 95,000. The company demanded reimbursement from the bank, alleging the signature was forged. The bank contested the claim, stating the signature was genuine and proper procedures were followed. The company filed a writ petition seeking a direction to reverse the debit entry or credit the amount with interest. The High Court, in an interim order, directed the bank to credit the amount to the company's account, which the bank complied with. However, the bank appealed against this order.

The bank argued that the dispute involved liability under banking laws, which should be resolved through a civil suit, not a writ petition. It contended that the signature was not proven to be forged and proper banking procedures were followed. The company argued that due to the forged signature, the bank was liable to reimburse the amount, citing relevant court decisions. The Supreme Court noted the serious factual dispute and criticized the High Court for granting an interim order without a prima facie case. The Court emphasized the need to consider the balance of convenience and public interest in granting interim relief.

The Supreme Court allowed the bank's appeal, setting aside the interim order directing the bank to credit the amount. The Court directed the company to refund the credited amount to the bank within a month. Failure to comply would lead the High Court to enforce the undertaking provided by the company. The Court stressed the importance of early disposal of the writ petition. No costs were awarded in the matter. The judgment highlighted the need for caution in granting interim orders that effectively provide the main relief sought in a petition without proper consideration of all relevant factors.

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