S.Sankaran vs SENIOR MANAGER, CANARA BANK

THIS is an appeal by the complainant.

TO put it in a nutshell, the case of the complainant is that the opposite party refused to accept an open draft for an amount of Rs. 2,000/- issued in his name by Bangalore Branch of the same bank. The opposite party justified its action in saying that there was no proper identification of the complainant. The District Forum after hearing the parties, dismissed the complaint by order dated 22.3.93 which is challenged in the present appeal.

The grounds of the appeal are as follows:- (a) The identification is not necessary for paying cash for an open draft; (b) The opposite party knew well the identity of the complainant.

THE opposite party/respondent on his side contended that this appeal has no merit and further added that the appellant did not suffer any damages entitling him to compensation. We shall examine all the three points seriatim. First, whether identification is necessary for the bank to pay cash for on open draft? The draft is usually couched in the following terms: "On demand pay to .... or order Rupees .... for value received". This will show that a draft is a negotiable instrument. The bank on paying the amount is in no manner a loser. It is for the beneficiary of the draft to take care thereof. There may be also a series of endorsements on a draft and it will not be feasible to get identification of all the persons concerned. Until the contrary is proved, the holder of a negotiable instrument is a holder in due course (118 of the Negotiable Instruments Act, 1881). As per Section 85-A where any draft, that is an order to pay money, drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand, purports to be endorsed by or on behalf of the payee, the bank is discharged by payment in due course. Such being the legal position any one interfering with the basic right of a negotiable instrument holder, would do so only at his own risk. For practical purposes a draft is on par with a currency note giving the holder of the instrument instant, immediate and unquestionable title. It is worth remembering that currency notes also are in the form of a negotiable instrument; they are all promises to pay. In fact, when a person insists on obtaining a draft instead of a cheque, it is for the reason that with a draft he can without any further condition obtain the money instantaneously whenever he wants. Therefore, as a general rule, the Bank to whom the demand draft is presented need not ask for identification. Even if the Bank pays to a person who has stolen the draft, there is no liability for the Bank.

THE learned Counsel for the respondent Bank however contended that there are instructions issued by the Head Office to insist upon identification. An officer of the Bank may be bound by those instructions till they are latered down. But the Bank as such cannot make use of them against a customer. Any customer of the Bank or any person having any dealing with the Bank is only bound by the banking law as it appears in statutes and rules made thereunder and Court decisions interpreting the statutes. THErefore, the internal instructions of the Bank cannot shield the Bank, which is a party before us and which is bound by the banking law. The learned Counsel for the respondent further contended that as per the decision of a Bench of the Bombay High Court in Tukaram Bapuji Nikatn v. The Belgaum Bank Limited (AIR 1976 Bombay-185) an identification was necessary. The portion relied upon reads as follows :- "Ordinarily, a Bank issuing a draft cannot refuse to pay the amount thereof, unless there was some doubt as to the identity of the person presenting it as being or properly representing the person in whose favour it was drawn, or, in other words, unless there is reasonable ground for disputing the title of the person presenting the draft."

It is to be noted that even in this proposition the ordinary rule as espounded earlier by us is first stated in clear terms. But the Court has added a word of caution pointing out when the Bank can depart from the general rule. The exception brought in is not in the interest of the Bank, but in the public interest. It is the duty of all citizens to contribute to the prevention of offences and to help criminal administration to bring to book the real culprits. The Bank placed as it is, dealing daily with huge amounts of money has a duty to the State to make its contribution, in the prevention of offences. If it detects any attempt of an offence it has the duty to prevent it. Therefore, if the officer dealing with the matter has got a reasonable ground to suspect any impersonation, he has to take suitable steps. It is to be remembered that while doing so he is not so much acting as a banker, but as a citizen who is duty bound to prevent the commission of offences. As pointed out earlier even if the draft happened to be encashed by a person who has stolen it, the Bank has no liability. But if it is found that the Bank has connived in helping a person to encash a draft knowing well that he was not that person, then the Bank itself would commit an offence. Therefore, combining both the duties of the Bank as a banker first and a vigil second, the proper conduct is to pay the draft unless there is reasonnable ground to suspect the identity of the person presenting the draft. The first point is answered accordingly.

WITH this proposition in mind we shall now turn to the second point. The complainant was an account holder of the Bank from 21.11.91 to 20.3.92. The account was closed not at the instance of the bank, but by the initiative of the complainant. That draft was presented on 30th March, 19S2. It appears that there had been frequent misgivings between the complainant and the bank officials. Therefore, when the complainant appeared again at the Bank counter on 30th March, 1992, that is to say only 10 days after the closure of his account, it is hard to understand that the Bank officials could not identify him. It is also to be added that the amount of the draft was only Rs. 2,000/- in respect of which much attention was not necessary. It appears that the refusal which took place was prompted not by lack of identification as contended by the Bank, but because the complainant was too well identified. What weighed is not only the physical body of the complainant appearing at the counter with his draft, but all his previous history with the Bank. The fact that the bank had in mind the previous history of the complainant is evident from the statement made in the reply letter dated 4th April, 1992 to the complainant in which the bank gave as one of the justifications for non-payment of the draft the following lines : "inasmuch as your dealing with us during the above period was not satisfactory". So the refusal is nothing more than an act of vindictiveness which an institution like a Bank should refrain from resorting to. It is therefore, clear that by refusing to pay a draft presented to the counter on 30th March, 1992, by the complainant the respondent-Bank has become guilty of a clear deficiency of service.

WE shall turn to the third point which was raised by the respondent viz., that the complainant did not sustain any damages on account of the refusal by the Bank to pay the money. Though the complainant alleged that he suffered inconvenience on account of the money not being made available immediately since he needed that money badly, he admitted after the perusal of his pass book in the Vysia Bank that the only damage sustained was by way of mental agony and shame. No doubt when the draft was refused ultimately by the Bank after a certain amount of discussion the complainant was humiliated. But it is to be noted that he invited such humiliation by his own conduct. I laving closed his account with the respondent-Bank with much noise, every reasonable person would have avoided going back to the same Bank, and would have instead presented the draft to the Bank where he was having an account at that time. In fact that is what the complainant also did after meeting with a refusal by the Canara Bank, in getting the amount credited in his account by the Vysia Bank on the very same day. Therefore, the act of the complainant presenting the draft to the Canara Bank was only for the purpose of having another round of confrontation with the officials of the Bank. So having deliberately created the circumstances leading to the humiliation he suffered, he cannot seek compensation before this Commission. The complaint before the Forum is not a genuine one meant to get compensation for damages allegedly inflicted by other party, but this is a further round of dispute between the complainant and the Bank. This kind of litigation should not be encouraged. To sum up: The Bank did not act fairly, commercially and indulged in an unbecoming act in refusing the demand draft of the complainant, the latter has not come before the Forum as a bona fide consumer seeking genuinely protection but as a disputatious consumer.

In the result, the appeal is dismissed. Each party shall bear his own costs. Appeal dismissed.