Corporation Bank vs Hdfc Bank Ltd.

S. Ravi Kumar, J

This Appeal is preferred against judgment dated 26.02.2007 in Original Application (O.A.) No. 1444/2000 on the file of Debts Recovery Tribunal No. I, Mumbai (the Tribunal below). Brief facts leading to this Appeal are as follows.

Appellant herein filed Suit No. 1370/1998 in the High Court of Bombay against Respondent herein claiming certain reliefs and the said Suit was transferred to Tribunal below on establishment of Debts Recovery Tribunals as per the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDDB&FI Act) which was registered as O.A. No. 1444/2000, thereafter Tribunal below proceeded with the matter. On consideration of contentions and rival contentions of both parties, Tribunal below dismissed the O.A., aggrieved by which present Appeal is preferred. Appeal is challenged on the following grounds:

"(a) The impugned order is ex-facie illegal, bad in law and contrary to the provisions of the well settled law.

(b) The Learned Presiding Officer failed to consider the application and other documents filed before the Hon'ble Tribunal by the Appellants.

(c) The Learned Presiding Officer, grossly erred in dismissing the Original Application of the Appellants.

(d) The impugned order of the Learned Presiding Officer, is wholly erroneous, bad in law and based upon incorrect understanding of facts and the law applicable to the present case.

(e) The Learned Presiding Officer ought to have appreciated that the Respondents have collected Rs. 8,92,192/- under materially altered MICR Demand Draft No. 121842 dated 1/8/1996 from the Appellants negligently and without good faith and consequent thereto are not entitled to protection under section 130 and 131-A of the Negotiable Instruments Act, 1881.

(f) The Learned Presiding Officer ought to have directed the Respondents to pay a sum of Rs. 12,67,808/- to the Appellants as per the Appellants' claim with further interest at the rate of 21.25% per annum from 20/1/1998 till the date of realisation in the Original Application.

(g) It is in the interest of justice that the impugned order dtd. 26/2/2007 of the Learned Presiding Officer is required to be set aside to secure the ends of justice."

Heard both sides.

Advocate for Appellant while reiterating the grounds urged in Appeal submitted that the Tribunal below dismissed the O.A. on the presumption that burden is on the Appellant herein, but as per settled law presumption u/s. 131 of the Negotiable Instruments Act, 1881, is in favour of collecting bank and, therefore, it is for the Respondent Defendant to prove said aspect of good faith and the Tribunal below lost sight of it. It is further submitted that it a clear case where money was withdrawn on the basis of a materially altered Demand Draft (D.D.). It is submitted even after the verification of the material, this Tribunal comes to the conclusion that it is for the Plaintiff has to prove, matter may be remitted back to Tribunal below for leading additional evidence.

On the other hand, Advocate for Respondent submitted that trial of this case took place in the year 1996 and the reliefs claimed in the Suit were for declaration and mandatory injunction and considering those reliefs the Tribunal below rightly held that burden is on the Plaintiff to first establish that D.D. was materially altered and thereafter only the burden shifts on Defendants with regard to good faith. It is further submitted when the Respondent produced evidence showing Driving License for address proof and introduction required under the Rules while opening the Account. It is for the Appellant to show that these aspects are not in consonance with the Rules and Regulations existing as on that date. It is submitted that when it is not a 'debt' there is no question of remitting back the matter to the Tribunal below and that Appeal is liable to be dismissed.

I have perused material papers and the impugned order dated 26.02.2007. Before considering the submissions of both sides, it may be relevant to examine reliefs that are claimed in the Suit which are as follows:

"(a) that this Hon'ble Court be pleased to declare that the Defendants have collected Rs. 8,92,192/- under materially altered MICR Demand Draft No. 121842 dated 1.8.1996 from the Plaintiffs negligently and without good faith and consequent thereto are not entitled to protection under Section 130 and 131-A of the Negotiable Instruments Act, 1881;

(b) on it being declared, this Hon'ble Court be pleased to pass mandatory Order and Decree directing the Defendants to pay a sum of Rs. 12,67,808/- to the Plaintiffs as per particulars of claim being Ex. 'G' hereto with further interest at the rate of 21.25% p.a. from 20.1.1998 compounded quarterly to the date of realization;

(c) pending the and final disposal of the Suit, this Hon'ble Court be pleased to direct the Defendants to deposit a sum of Rs. 12,67,808/- in this Hon'ble Court."

From a reading of above prayers it is crystal clear that Appellant prayed for a declaration that Defendants have collected a sum of Rs. 8,92,192/- under the materially altered D.D. dated 01.08.1996 from Plaintiff negligently and without good faith and that they are not entitled to protection u/s. 130 and 131 of the Negotiable Instruments Act, 1881 and for consequential relief of mandatory order or decree. It is specific case of Appellant that one person by name V. Shridharan approached its Mylapore Branch, Chennai, for issue of three D.Ds., two for Rs. 8/- each and one for Rs. 811/-. It is further case of Appellant that those D.Ds. were to be issued in favour of M/s. C.S.S. Enterprises, Mumbai. According to Appellant, they have issued D.Ds. under MICR No. 121822, dated 01.08.1996 for Rs. 811/-, MICR No. 121823, dated 01.08.1996 for Rs. 8/- and MICR No. 121824, dated 01.08.1996 for Rs. 8/-. According to Appellant, Respondent as collecting Bank presented D.D. No. 121824, dated 01.08.1996 for Rs. 8/- on behalf of M/s. C.S.S. Enterprises, Mumbai, who was having Current Account No. 034264 and that the said D.D. was cleared and money was paid. According to Appellant on or about 02.11.1996 during their Inter-Branch Reconciliation Process they noticed that the D.D. for Rs. 8/- was materially altered to Rs. 8,92,200/- and fraudulently collected the said amounts. According to Appellant as the Defendant is the collecting bank, it is liable to pay the amount.

As rightly pointed by Advocate for Respondent Bank, this is not a simple Suit for recovery of money. Had it been a simple suit for recovery of money Advocate for Appellant may be right in saying that as per the settled law, good faith u/s. 131 of the Negotiable Instruments Act has to be established by the collecting bank. But, here the relief itself is to declare that Defendant is not entitled for protection u/s. 130 and 131-A of the Negotiable Instruments Act. Admittedly, no evidence of any kind is produced to show that D.D. bearing No. 121824 was issued for Rs. 8/-, but it was materially altered for Rs. 8,92,200/-, having prayed for declaration the burden is heavy on Plaintiff i.e. Appellant to prove their case. When Ld. Advocate for Appellant was requested to show the material evidence in support of above referred pleadings, he then prayed for a remand to lead additional evidence, for which Ld. Advocate for Respondent Bank vehemently opposed and submitted that right of Appeal is not for curing defects or filling up lacunas and it is only provided to examine the correctness of the judgment and to decide whether the Trial Court rightly applied law and rightly appreciated material evidence on record.

I find some force in above submission of Ld. Counsel for Respondent Bank and when the Appellant Plaintiff has not adduced evidence as per the relief claimed in the O.A., it is not open for them to request for a remand to fill up their defects. Ld. P.O. rightly held that burden is on the Appellant and that Appellant failed to discharge its burden.

Advocate for Appellant cited ruling of Hon'ble Supreme Court in Kerala State Co-operative Marketing Federation Ltd. V/s. State Bank of India reported in 2004 Law Suits (SC) 110 and judgment of Madras High Court in United Bank of India, Madras V/s. Bank of Baroda, Madras reported in 1996 LawSuit (Mad) 112 for the proposition that burden in respect of plea of good faith is on the collecting bank. This principle is not disputed by the other side, but their contention is when the very relief is for a declaration that Respondent is not entitled for protection, initial burden is on the Appellant, therefore, those decisions have no application. I am in agreement with the submission of Ld. Advocate for Respondent. Further when Respondent proved that it collected Driving License and also obtained introduction, it is for the Appellant to show that Respondent Bank has not followed the guidelines of R.B.I., that were existing as on that date.

On a overall scrutiny of the material, I am of the considered view that the Tribunal below has not committed any error in appreciating material on record and rightly dismissed the O.A. and that there are no grounds to interfere with its order dated 26.02.2007.

For these reasons, Appeal is dismissed as devoid of merits, but under the circumstances without costs.

All Miscellaneous Applications, if any, are dismissed as infructuous.