Bank liability for forged cheques rejected where forgery and negligence were not proved, and statutory protection applied.

The plaintiff failed to prove that the bank negligently honoured forged cheques or that forgery was established by acceptable evidence. The criminal conviction of the account handler was not conclusive in the civil suit, and the plaintiff had entrusted the cheque book and pass book to that person and authorised him to act on her behalf. The court found no convincing basis to hold that the bank acted in bad faith or without negligence, and the trial court's signature comparison was unsupported by a clear explanation of the admitted signatures or the method used; no expert evidence was produced. In these circumstances, the bank was protected under Section 131 of the Negotiable Instruments Act, 1881, and the plaintiff was estopped from blaming the bank.

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Issues: Whether the plaintiff proved that the bank negligently honoured forged cheques and was therefore liable to reimburse the withdrawn amount.

Analysis: The plaintiff alleged that cheques were encashed on forged signatures and relied on the criminal conviction of the person who handled the account. The lower appellate court found that the criminal case was not conclusive proof in the civil suit and that the plaintiff had not independently established forgery by acceptable evidence. The Court noted that the plaintiff had entrusted the cheque book and pass book to that person, had authorized him to act on her behalf, and had not shown any convincing basis to hold that the bank acted without good faith or without negligence. The Court also held that the trial court's comparison of signatures was unsupported by a clear explanation of the admitted signatures used and the method adopted, and that expert evidence was not produced. In the absence of proof of negligence, the bank was entitled to protection under Section 131 of the Negotiable Instruments Act, 1881. The plaintiff was also held estopped from blaming the bank for the manner in which the account was operated through the authorised person.

Conclusion: The bank was not negligent, the plaintiff failed to prove forgery, and the bank was protected under Section 131 of the Negotiable Instruments Act, 1881; the finding dismissing the suit was upheld against the plaintiff.

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