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TaxTMI 
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TaxTMI 
2003 (1) TMI 521
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.... of the plaintiff. Defendants 2 and 3 were having accounts with the 1st defendant bank and both the above cheques were drawn on the 1st defendant bank. The plaintiff received both the cheques. When those cheques were forwarded to their head office by post, the above cheques were stolen and the name of the payee was defaced and altered and forged in the name of the 4th defendant viz. K.S. Marar. The 4th defendant was holding an account with the 1st defendant. The above two cheques were encashed by the 4th defendant through the 1st defendant. It was alleged that the above defaced and forged cheques were encashed by the 4th defendant only because of the negligence on the part of the 1st defendant and hence the plaintiff filed the suit claiming the amount covered by those two cheques with interest thereon from the 1st defen-dant. 3. The 1st defendant in the written statement contended that both the cheques were issued in the name of K.S. Marar and there was no evidence of any defacement or forging of the cheques and as such the above cheques had been collected in the account of the 4th defendant and was encashed by him. There was no apparent alteration or forging of the cheque which co....
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....ed that the above cheques (Exts. X1 and X2) were issued in the name of the plaintiff, but the above cheques were defaced and forged in the name of the 4th defendant one K.S. Marar. On going through the above cheques, by a perusal it is not possible to find out or suspect any defacement or alteration. But the evidence let in by the plaintiff and the counterfoils of those cheques would reveal that those cheques were drawn in the name of the plaintiff and the plaintiff received the above cheques. But later, when those cheques along with other cheques were sent to the head office by ordinary post, those cheques were stolen and defaced and forged in the name of the 4th defendant K.S. Marar and those were presented by K.S. Marar before the 1st defendant bank. Defendants 2 and 3 were having their accounts with the 1st defendant and the 1st defendant was the drawee bank in respect of both the cheques. The 4th defendant was having an account with the 1st defendant and the 4th defendant presented the above forged cheques for encashment and the 1st defendant collected the amount and the amount was withdrawn by the 4th defendant. Though the 1st defendant-appellant claimed protection under sect....
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....re the account itself was opened with the cheque in question or whether the cheque was put into the account so shortly after the opening of the account. The learned counsel for the 1st defendant-appellant placed reliance on a decision of this Court in State Bank of India v. Kerala State Co-op. Marketing Federation [1995] 2 KLJ 621. That was a case where a cheque issued in favour of the same plaintiff viz. the Kerala State Co-operative Marketing Federation had been stolen defaced and forged in the name of one Narayanan and presented for collection and the amount was collected and a portion of the amount had been withdrawn by the aforesaid Narayanan. In the above case this Court held that the collecting bank was entitled to the protection under section 131 of the Negotiable Instruments Act as the bank had acted in good faith and without negligence. There also an account was opened in the name of Narayanan who had been introduced by an account holder. After five days of the opening of the account, Narayanan presented a cheque for Rs. 1 lakh and the collecting bank had collected the amount and Narayanan had withdrawn Rs. 50,000 from the account. Later it was revealed that the above che....
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.... receipt of the cheque in question. The question whether the bank had acted with negligence in the opening of the account will, however, be relevant under section 131 to this extent that if the opening of the account and the deposit of the cheque are really part of one scheme, as where the account itself it opened with the cheque in question or where it is put into the account so shortly after the opening of the account as to lead to the inference that it is part of it, the negligence in the matter of opening the account must be treated as negligence in the matter of relaization of the cheque." (p. 405) The above decision had been relied on by a Division Bench of this Court in Central Bank of India Ltd. v. Gopinathan Nair [1972] KLT 518 wherein it was held: "We are, therefore, of the same opinion as the one expressed by Venkatarama Aiyar, J. in the Madras Division Bench ruling cited above regarding the opening of the account, namely, that, if there is a connection between the cashing of the cheque and the opening of the account, to that extent alone the defect in the opening of the account should reflect on the cashing of the cheque - not otherwise. We however make it clear that....