Jyoti Prasad Singh Deo Bahadur vs Chota Nagpur Banking Association and Others

Das, J.—The case for Woodland v. Fear [1857] 7 E. & Bl. 519, supports the view which has been taken by the learned Subordinate Judge in this case.

Shortly stated the facts are as follows: On 30th January 1924 defendant 3 drew a cheque in favour of defendant 1, for Rs. 5,000 upon Chota Nagpur Banking Association, Dhanbad Branch. Defendant 1 endorsed it in favour of his Manager defendant 2, for collection who received payment from the Purulia Branch of the Chota Nagpur Banking Association on 1st February 1924. The Purulia Branch sent the cheque on to the Dhanbad Branch. On 2nd February the Dhatbad Branch informed the Purulia Branch that the money was not arranged for. In other words, it dishonoured the cheque. On 4th February the Purulia Branch gave notice of dishonour to defendants 1 and 2 and on 4th April 1924 instituted the present suit for recovery of the money. The suit was resisted on behalf of defendant 1 substantially on the ground that the cheque was discharged by payment made on 1st February 1924 and there was no power left in the Purulia Branch of the Bank to give notice of dishonour.

The learned Subordinate Judge relying upon Clode v. Bayley [1844] 12 M. & W. 51, held that the payment by the Purulia Branch could not operate as satisfaction of the cheque. He substantially held that the Purulia Branch paid the money to defendant 1 not on the credit of defendant 3 but on the credit of defendant 1 who was a substantial zamindar in Purulia and on the faith of his endorsement.

We were much pressed In this Court by Mr. N.C. Sinha with the case of Prince v. Oriental Bank Corporation [1887] 3 A C 325. The facts of that case were as follows: The defendant Bank had branches at three different places Sydney, Murrumburrah and Young. Messrs. Hopkins and Gate were store keepers at Young and had a banking account at the defendant''s Bank at Young. They gave a promissory note to the plaintiff for a certain sum of money payable not at Young, but at Murramburrah; but at Murrumburrah, it appeared they had no banking account. Their Lordships in their judgment state that this was done at the instance of the Bank Manager at Young so that the Branch might make some money as their commission. The note fell due on 3rd April 1875. The plaintiff in whose favour the note was made out lodged it with their Bank for collection. The plaintiff''s Bank handed it over to the Sydney Branch of the defendants, Bank for collection. The Sydney Branch transmitted it to the Murrumburrah branch which stamped the note as having been paid and then sent a transfer draft to Sydney for the amount of the note for payment to the plaintiff''s Bank. So far as the books of account of the Murrumburrah Branch are concerned they showed that the amount had been paid to the plaintiffs Bank and it appeal''s they actually debited the Young branch with the amount for which the transfer draft had been sent.

It appears, however, that on 4th April, Messrs. Hopkins and Gate''s store at Young was destroyed by fire and on 5th April the Manager of the Murrumburrah branch wrote to the Manager of the Sydney branch requesting him to cancel the transfer draft in favour of the plaintiffs Bank This was done and the plaintiff sued the defendants, Bank for recovery of the money as money had and received to his use. Now the Judicial Committee pointed out that the whole case of the plaintiff rested upon the foundation that the different Branches were to be treated for the purpose of payment as if they were separate and independent Banks. Having considered the matter, the Committee came to the conclusion that the Banks were not separate and distinct Banks bat branches of one and the same banking corporation or establishment and that they were separate agencies, although agencies of one principal, that principal being the corporation of the Oriental Bank. In this view they came to the conclusion that the defendant Bank was not liable as they had not received the money nor anything equivalent to money from any source outside their own establishment. Now this case is no doubt an authority for the view that the different branches of a Banking corporation are not separate and distinct Banks but are agencies of one principal. No doubt this is one of the questions at issue in this case, but a further question arises whether there was any obligation on the Purulia Branch to pay the cheque which had been drawn, not on the Parulia Branch but on the Dhanbad Branch. Now as I have said, on this question, the case of Woodland v. Fear [1857] 7 E. Bl. 519 is decisive.

The facts of that case were as follows: The plaintiff Bank had branches all over Somersetshire and amongst others at Glastonbury and Bridgewater. One Helyar gave a cheque to the defendant on the plaintiffs Bank at Glastonbury. The defendant who was well known to the Bank at Bridgewater presented it at Bridge water and received payment. It appears, however, that Helyar had not sufficient funds at Glastonbury Branch which refused to honour the cheque when the Bridge water Branch forwarded the cheque in question to the former branch for collection. Now upon these facts the plaintiff Bank instituted suit against the defendant for recovery of the money paid out to him, and the question which fell to be considered was whether the plaintiff Bank was entitled to recover the money from the defendant. It was pointed out in the course of the judgment of Cambell, C.J. that Helyar kept no account at Bridge water, that he drew no cheque on that establishment and that he and it did not stand in the relation of banker and customer and that the cheque in question therefore must be considered as having been cashed, not on Helyar''s credit, but on the credit of the defendant, and that as there were no laches on the part of the Bridgewater establishment the cage was within the authority of Timmins v. Gibbins 18 Q.B. 722 and the learned Chief Justice proceeded to say as follows:

It appears to us that this is the true view of the casa the cheque was not drawn on the banking company generally, but on the Banking Company at Glastonbury; and this coupled with the fact that Halyar kept his account and his" balance only there, shows that the Bridgewater establishment was not bound to honour his cheque (even supposing he had assets at Glastonbury), as a banker, under the same circumstances as to assets, is bound to honour the cheque of his customer. To hold that the customer of one branch keeping his cash and account there, has a right to have his cheque paid at all or any of the branches, is to suppose a state of circumstances so inconsistent with any safe dealing on the part of the banker, that it cannot be presumed without direct evidence of such an agreement, and the giving on the one hand, and accepting on the other, of a limited cheque book, seems intended to guard against such an inference.

This case was considered by the Privy Council in Prince v. Oriental Bank Corporation [1878] 3 A C 325 to which I have already referred and in reference to this case their Lordships said as follows:

In the case of Woodland v. Fear [1857] 7 E. Bl. 519 it was held that a joint stock bank was bound to pay the cheques of a customer at that branch only at which he kept his account, and had not violated its engagement with the customer by refusing to pay his cheque at another branch. The reason of this decision is obvious. It would be difficult for a bank to carry on its business by means of various branches if a customer who kept his account at one branch might draw cheques upon another branch, however distant from that at which he kept his account and demand that they should be cashed there. The latter branch could not possibly know the state of his accounts The case decides no more than this, that the bank came under no engagement or promise to their customer to honour his cheques at any branch except that at which he kept his account.

It follows that if a cheque drawn on one branch is in fact cashed by another, the latter does not act, on the matter of cashing it, as the bank of the drawer, but is held to rely upon the credit of the person presenting it. I would therefore dismiss this appeal with costs.

James, J.

I agree.