TaxTMI 
TaxTMI 
2017 (11) TMI 356
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....h the Bank on her behalf, has forged her signatures in the cheque slips and withdrawn a total sum of Rs. 52,900.55, without her knowledge. 3. The Bank Officials, who should have shown proper care, while passing cheques containing forged signatures, has failed to do so, resulting in withdrawal of Rs. 52,900.55 by the said Thomas fraudulently. The defendant Bank Officials had passed the cheques without due care and by gross negligence, which amounts to dereliction of duty and misconduct in the course of employment. Had due diligence shown by the Bank Officials by proper comparison of the specimen signatures of the plaintiff kept in the custody of the Bank with, the cheques presented by the said Thomas ought not have passed the forged cheques. 4. Based on her complaint to the Mylapore Police Station against the said Thomas, the Police has registered a case and the Trial ended in conviction for two years of Rigorous Imprisonment. Since the defendant Bank has negligently passed the cheques containing four signatures, they are liable to pay a sum of Rs. 52,900.55 with interest at the rate of 18%. 5. The defendant resisted the suit claim on the ground that the plaintiff introduce....
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....he disputed cheques for scientific comparison with the admitted signature, the trial Court has presumed forgery and negligence based on criminal Court judgment. 10. Aggrieved by the reversal judgment, the present second appeal is filed on the following substantial questions of law:- 1.Whether the respondent acted negligently thereby disentitled from claiming protection under Section 131 of Negotiable Instrument Act? 2.Whether the respondent is absolved from its liability in the absence of any valid mandate by account holder to pay the value of the impugned cheque? 3.Whether the bank is absolved by pleading that the customer was negligent in leaving the cheque carelessly? If the cheque has not been signed by the customer with the intention to issue mandate when the payment was made by the respondent/bank is valid in the eye of law? 4.Whether the disputed signatures appear to be forged? 5.Whether the learned Judge is prohibited from comparing the signature by himself as has been enunciated in A.I.R.1994 Karnataka page 315? 6.Whether the respondent-bank has exercised due care and caution? 11. The sum and substance of the plai....
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....3. The learned counsel appearing for the appellant/plaintiff for enlightenment of this Court, circulated the commentaries on Law of Banking by Paget's 2015 Edition, Lexus Nexus Publication. It is a well researched Master Piece on Law of Banking in which, the Chapter relates to payment against a forged cheque or unauthorised signature lists out the effect of honouring forged cheque. Along with the relevant commentary on the duty of the customer; extract of two foreign judgments also reduced for proper understanding of law on this point. (I) THE CUSTOMER'S DUTY TO REFRAIN FROM FACILITATING FRAUD OR FORGERY: 23.7. The customer owes his bank a duty to refrain from drawing cheques or other payment orders in such a manner as to facilitate fraud or forgery. This is often referred to as the Macmillan duty, following the House of Lords' decision in London Joint Stock Bank Ltd. V. Macmillan.[London Joint Stock Bank V. Macmillan [1918] AC 777, HL] The facts in the Macmillan case were that the customers, Macmillan and Arthur, had a clerk who prepared and presented for signature to one of the partners cheques for small amounts of petty cash. The clerk, with a vi....
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....paid by the paying bank and to subsequent cheques drawn in the same manner. 15. The evidence, as appreciated by the lower appellate Court, reveals that the plaintiff has given authorization letter to Thomas for collecting cheque book and pass book on her behalf. She has entrusted Thomas for operating the account in her name. She accepts two cheques signed by her and money was withdrawn through Thomas. She admits that she misplaced her cheque book and pass book and did not update her account for long time. 16. It is contended by the learned counsel for the appellant that the finding of the trial Court based on comparing the signatures though naked eye cannot be faulted in view of explicit power given to Court under Section 73 of the Indian Evidence Act, 1872.On reading of the trial Court judgment, this Court finds that the trial Court has not spelt out, which are the admitted signatures of the plaintiff, were compared with disputed signatures found in the cheques or the manner in which he compared and how he got satisfied that the signatures found on the cheques are forged. 17. The judgments of this Court in (i) Central Bank of India (A Nationalized Bank) rep.by its Manager....
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.... Court has pointed the lapses and lacunae in the finding of the trial Court and has reversed the finding of the trial Court. 22. This Court, on going through the materials placed, holds that the respondent bank was never negligent in honouring the cheques. Hence, they are protected under Section 131 of the Negotiable Instrument Act, 1881. In the absence of justification on the part of the plaintiff for allowing the said Thomas to handle her passbook and cheque book and representing to the bank implicitly and explicitly that Thomas is her representative, she is estopped from alleging negligence on the part of the respondent bank. Therefore, the conduct of the respondent Bank estops her from questioning the bank for honoring the cheques of the plaintiff. Even if it is not signed by her, but due to lookalike signatures, the bank cannot be held responsible. The evidence of DW1 to DW6 narrate the care and caution exercised by the bank officials while passing the cheques. Therefore, their evidence cannot be just ignored, in the absence of contra evidence. As pointed out by the lower appellate Court, the reasoning of the trial Court is bad and bereft of details for his conclusion that ....