Varainita Vita Kannamma Lakshmi and Others vs Indian Overseas Bank Limited and Others

Venkatadri, J.—These two appeals arise out of a suit, Original Suit No. 1870 of 1955, on the file of the City Civil Court, Madras, instituted by one Uthaman, who died after the institution of the suit and subsequently his legal representatives were brought on record, i.e., Plaintiffs 2 to 8. The suit was for recovery of a sum of Rs. 33,651-8-11 in respect of certain dealings with the second Defendant, Bharat Traders. The Plaintiff prayed for a decree not only against the second Defendant, but also against the first Defendant as the Plaintiff sent six drafts mentioned in the plaint for the purpose of collection on behalf of the Plaintiff from the second Defendant or their nominees. The facts, as set out in the plaint, are as follows:

The original Plaintiff (Uthaman) was carrying on business at No. 27, Sembudoss Street, George Town, Madras. He opened an account with the first Defendant, the Indian Overseas Bank, Limited, Madras. The second Defendant, Bharat Traders, used to place orders with the Plaintiff, which he accepted at Madras, for consignment of tiles and other goods to Penang, Port Swettenham or. Singapore. In respect of these consignments made in pursuance of such contracts, the first Plaintiff negotiated the exchange with the Reserve Bank of India through the first Defendant, a scheduled bank, having branch at Penang, and on shipments being made the first plaintiff used to send the bill of lading and other documents of title of the goods to the first Defendant with a draft for the value of Indian currency drawn in favour of the first Defendant on the second Defendant for collection and remittance to the Plaintiff. In the course of such dealings between dates 19th January 1952, and 28th April 1952, the Plaintiff sent six drafts as per particulars given in the plaint from Madras to Penang or Singapore to the second Defendant or their nominees. The total amount of these drafts came to Rs. 34,495-11-6. While sending these drafts to the first Defendant, he gave a direction that the second Defendant (Bharat Traders) might be given two months time and all the papers might be handed over to them on their executing a proper security for payment of the amounts mentioned in the drafts. The expenses were also to be collected from them. The first Plaintiff did not get remittance from the first Defendant (Indian Overseas Bank) of the amounts due under the above drafts after the expiry of two months time which they had been instructed to give the second Defendant as aforesaid and even after a lapse of a considerable time in spite of reminders sent by the Plaintiffs. In regard to these transactions he received only an amount of Rs. 4,000 on 15th October 1952. There was a balance of Rs. 30,495-11-6. The Plaintiff charged the first Defendant that they acted contrary to the instructions of the first Plaintiff and handed over the documents of title relating to each of the above consignments to the second Defendant through their Penang branch without taking from them any proper security, but merely taking a letter of undertaking from them to pay the proceeds within two months. He also further charges them that they did not take any diligent steps to collect the amounts even after they were satisfied that the second Defendant were evading payment on one false pretext or other. Many a time the Plaintiff requested them to take legal action against the second Defendant, but they disclaimed all responsibility stating that they had complied with the instructions given by the Plaintiff, namely, they had taken a personal undertaking from the second Defendant which was the practice in the course of their business. The first Defendant did not care to send the drafts and the letters of undertaking taken by them from the second Defendant within a reasonable time in order to enable the plaintiff to take suitable action or appropriate proceedings against the second Defendant for the recovery of the same. Therefore, the Plaintiff charged the first Defendant that on account of their negligence and acting quite contrary to the instructions given by him, he suffered a loss and the first Defendant had become liable to make good the value of the bills to the Plaintiff with interest at the rate of 6 per cent per annum after the expiry of a reasonable time from their respective dates. The Plaintiff also prayed in the plaint that if, for any reason, the first Defendant was held not liable to pay, the second Defendant might be directed to pay the sum of Rs. 35,675-8-0 on the original consideration of sale and delivery of goods to them.

The suit was resisted by both the Defendants. The first Defendant filed a written statement stating that it was true that the Plaintiff opened an account with them and that he was their customer. But they contended that Plaintiff was not correct in saying that they did not act according to the instructions given by him while entrusting the six drafts mentioned in the plaint. On the other hand, they handed over the documents to the second Defendant after taking security, which was in the form of a personal undertaking from them. The instructions given by the Plaintiff were vague and the first Defendant was entitled to act as per the normal and usual practice of delivering documents. In regard to the allegation that they did not take prompt steps for the recovery of the amounts covered by the six drafts from the second Defendant, they contend that it is never the practice of banking institutions to take proceedings in their own name and that the Plaintiff himself never authorised the bank by means of a power-of-attorney for the said purpose. Even though it was not their duty to take proceedings against the second Defendant, they called upon the Plaintiff to provide adequate funds for taking legal proceedings and also to give indemnity, but the Plaintiff failed to do so. The Plaintiff himself went to Penang in the month of October 1952, when all the bills had become overdue, yet he did not take any action against the drawees for the recovery of the amount. When the due time for the payment of these drafts was over, the first Defendant called upon the second Defendant to pay the amounts due and payable to the Plaintiff, but they explained to the first Defendant that whatever amounts were due and payable in respect of these transactions, the Plaintiff had been paid and the same was communicated to the Plaintiff. In these circumstances, the first Defendant pleaded that they were not liable to pay any amount to the Plaintiff and that the suit was bad for misjoinder of parties and cause of action and, therefore, the suit was liable to be dismissed as far as they were concerned.

The second Defendant filed a written statement contending that the Plaintiff was only their agent and they were acting on his behalf in respect of these transactions. They had sent a sum of Rs. 40,000. They constituted the Plaintiff as their agent. When the Plaintiff himself was at Penang it was agreed and arranged that the second Defendant should collect the amounts due and payable in respect of these transactions from their own nominees and settle the accounts. So far as the Plaintiff was concerned he had a sum of Rs. 40,000, sent to him and he should have adjusted any items payable by this Defendant from and out of the said sum deposited with the Plaintiff. In any event, as far as the Plaintiff was concerned he had no cause of action and suit itself was barred by limitation.

On these pleadings the parties went to trial before the Court. The Court framed the following, among other issues, namely, whether the first Defendant acted according to the instructions given by the Plaintiff in regard to the collection of the bills in question, whether the first Defendant was bound to take legal proceedings against the second Defendant, whether the Plaintiff had incurred any loss or damage on their failure to do so, and whether the Plaintiff was entitled to recover these amounts from either of the Defendants. The learned First Assistant Judge gave a finding that as far as the first Defendant was concerned they acted according to the instructions given by the first Plaintiff in regard to the collection of the bills, that there was no obligation on the part of the first Defendant to file a suit against the second Defendant in the course of their business, that the Plaintiff had not authorised them nor executed any power of-attorney to enable them to take legal proceedings against the second Defendant and that, therefore, the Plaintiff was not entitled to claim any damages against the first Defendant. As far as the second Defendant was concerned, the learned judge, after considering the relevant documentary and oral evidence in the case, came to the conclusion that the suit was not barred by limitation, and that the Plaintiff was entitled to get a decree against the second Defendant for the goods sold and delivered and for the amounts due under the bills from their respective dates with 6 per cent interest. Accordingly the suit was decreed against the second Defendant and was dismissed as far as the first Defendant was concerned. It is against this dismissal of the suit against the first Defendant the Plaintiff preferred the appeal Appeal Suit No. 73 of 1960, and the second Defendant filed the appeal Appeal Suit No. 134 of 1960, against the decree passed against him in the suit.

It would be convenient for us to dispose of Appeal Suit No., 134 of 1960, in the first instance. The facts that are necessary for the disposal of this appeal are as follows. The Plaintiff Uthaman and Raghavan were brothers. Raghavan was doing business as Bharat Traders Manufacturers Representative, General Importers and Exporters, at Penang. The Plaintiff, though he was a lawyer for sometime, took up the business of sending the articles as desired by his brother (second Defendant) from time to time. The second Defendant used to place orders mostly for tiles, mangoes and some other miscellaneous things. The Plaintiff complied with the orders placed by the second Defendant) and he would consign the goods through steamers and send the bills of lading, drafts and necessary documents to the second Defendant to enable him to take delivery of the goods at the destination. As the goods were being shipped to foreign countries the Plaintiff had to observe certain regulations and declare that he would see that the money for the goods sent through ship was delivered to the bank mentioned by him before a particular period as provided under the Imports and Exports Control Act. In this case the Plaintiff opened an account with the Indian Overseas Bank Limited, Madras, because it would be easy for the Plaintiff to send the bills of lading and the necessary drafts to Penang, as The-Indian Overseas Bank were having a branch at Penang. Ever since the Plaintiff started business and had dealings with the second Defendant, he used to adopt this procedure, namely, he would deliver the bills of Indian drafts and other documents in the name of Bharat Traders and would instruct the bank at Penang to hand over the documents to the second Defendant and request them to collect the money due and payable under the drafts and remit it to his account at the Madras branch. The documentary evidence in this case shows that the Plaintiff and the second Defendant were having dealings before the suit transactions. The Plaintiff had despatched goods from time to time to the second Defendant and he was receiving the amounts through v the Overseas Bank at Penang. He had a regular account in the Overseas Bank, Madras, in his own name and he was operating the accounts from time to time at Madras. In the course of such transactions, in the year 1952, the Plaintiff sent six drafts as per details given in paragraph 5 of the plaint for the goods sent to Bharat Traders at Penang from time to time. At the time of sending these drafts he gave instructions to the Overseas Bank at Penang that the papers should be handed over to the Bharat Traders for the payment of the amounts. Bharat Traders (second Defendant) took delivery of the goods covered by these six drafts from time to time. Every time when they took delivery of the documents they gave a personal undertaking to the Overseas Bank at Penang for the payment of the amount due under the drafts. In respect of those transactions the second Defendant did not pay the amount covered by these drafts and there was a delay of a considerable time, more than the time fixed under the Imports Control Act. It was the duty of the Plaintiff to collect the monies from the second Defendant in respect of these transactions and see that the monies were deposited into the bank within the time stipulated under the Imports Control Act. When the first Defendant, i.e., the Madras Head Office Bank came to know that the second Defendant had not paid the amount to the Plaintiff through their branch office at Penang, they wrote a letter (exhibit B-29) to the Plaintiff asking him to give reasons for not surrendering the sale proceeds covered by these drafts as otherwise they would have to take proceedings to get back tie proceeds of the bill to India. Similarly the branch office at Penang gave a notice (exhibit-A-18), dated 31st January 1953, to the second Defendant stating that the documents in question were delivered to them on their undertaking to pay the bill amounts within a specified date and that since they had failed to retire the bills even after a considerable time they were instructed by their Madras office to demand payment from them within seven days from the date of the receipt of the notice failing which they had instructions to take legal proceedings to recover all the suit amounts. The second Defendant replied to the first Defendant bank at Penang stating that he had already paid Rs. 40,000 to the Plaintiff to purchase the goods on his behalf from time to time in respect of these transactions of which two remittances amounting to Rs. 26,000 were made by parties directly to the Plaintiff and the accounts had been settled between them, that the Plaintiff was aware of this arrangement when he was at Penang and, therefore, he-asked the bank people at Madras to collect the monies from the Plaintiff. At the same time he wrote a letter (exhibit A-41) to the Plaintiff, complaining to him that it was only at his instigation that the bank people had taken proceedings both at Madras and at Penang and he (Plaintiff) was responsible for spoiling his name in the market and in the eyes of the bankers. He directed the Plaintiff to tell the Overseas Bank at Madras that he had already received the money from the second Defendant in respect of those transactions. The Plaintiff expressed his surprise and shock at this letter from the second Defendant and blamed him for putting him in a most embarrassing situation and expressed plainly that he would not act nor represent as directed by him that he had already received the monies from the second Defendant or that he would adjust the amounts covered by these drafts from and out of the monies sent to him from time to time. He appealed to the second Defendant not to put him in this position and reminded him that it was at his own risk that he sent all the goods to him or his nominees at Penang and if the monies were not paid immediately in respect of these transactions he would incur loss and his family would be put to untold misery and suffering. After this reply to the second Defendant we do not find any other letter from the second Defendant in respect of these transactions, till a notice was issued to the second Defendant by the Plaintiff through his Counsel on the 28th October 1954. There is nothing on record to show that any reply was sent by the second Defendant to this letter. There is also nothing to show that the Plaintiff was acting as an agent of the second Defendant. It may be that Bharat Traders represented by the second Defendant advanced Rs. 40,000 in the beginning of the dealings'' between Bharat Traders and the Plaintiff, but it is not possible for us to hold that the Plaintiff was given directions to adjust this amount in respect of these transactions. The amount was sent in the year 1951, but the transactions relate to the year 1952. In between this period, there were a number of transactions between the Plaintiff and Bharat Traders at Penang; a number of drafts had been sent to the second Defendant along with the shipment of the goods. The Plaintiff was having a separate account in his own name and he was operating the account in the course of his business. There is no evidence to show that the Plaintiff was constituted by the second Defendant as their agent to send the goods on their behalf from Madras to Penang. It is only for the first time when the Indian Overseas Bank (first Defendant) at Penang began to press for the payments due and payable to the Plaintiff in respect of the six drafts that the second Defendant asserted that he had already paid the monies to the Plaintiff and that they would have been adjusted towards these drafts amounts. When the second Defendant filed the written statement in the first instance he did not state that the Plaintiff was the representative of Bharat Traders and that he used to send goods against these advance amounts of this Defendant in the Tiands of the Plaintiff and that the Plaintiff used to adjust the advance amounts in his hand, but stated only in the amended written statement filed by him on 14th July 1959. Evidently it must have been an after-thought and it has not been proved either by documentary or by any oral evidence that the Plaintiff was having monies of the second Defendant in his hand and that Tie should have adjusted them towards the suit amounts. Really, if the second Defendant had advanced any monies to the Plaintiff from time to time it was for him to file a suit for accounts, but not to set up a case of set-off in this proceeding. Farther, there cannot be an agency either express or implied by which one of the parties confides to the other management of some business to be transacted in his own name or in his account and by which the other assume to do the business and to render an account of it. We cannot V also infer an agency from the circumstances and the conduct of the parties. A bare allegation of agency is not sufficient and the specific scope of the agent''s powers must be proved. What is material is whether the incidence of contract as disclosed by the evidence would justify a finding of agency. The mere fact that a person offers advice or writes letters to another in matters of business does not establish the relationship of agency. The second Defendant himself states in his evidence that the Plaintiff began to do an independent business and also he started a leather factory in his wife''s name and film distribution business in his daughter''s name, but that it was all a failure. But we are not concerned with the other dealings, but the question that arises in this appeal is whether the second Defendant is liable to pay the amounts due and payable in respect of the said transactions, and he is aware that he was ordering goods from Madras and as such, the Plaintiff was liable and responsible to the Reserve Bank authorities for surrendering the sale proceeds to the bank in respect of these goods. In one of the letters, especially exhibit A-41, the second Defendant prompted the Plaintiff, with ulterior motive, to suggest to the bank that he had already received the money in respect of the goods sent to him covered by the suit transactions. He also suggests to the Plaintiff to adopt dubious methods in invoicing the goods to enable him to sell the goods at a higher, price at Penang. The second Defendant has not produced his accounts to show that he was sending monies from time to time to the Plaintiff in respect of their dealings and the Plaintiff had sufficient monies to cover the suit transactions. We feel, by the conduct of the second Defendant in these transactions, that he was contravening the rules and regulations of the Imports and Exports Control Act. In the instant case, he had collected the amounts covered by the six drafts after delivery of the goods despatched by the plaintiff to Penang at his instance and direction but he had not surrendered the sale proceeds of the said goods to the Plaintiff through the first Defendant bank at Penang. It is for the concerned authorities to investigate this matter and deal with them if there has been any contravention of the regulations. But as far as this amount claimed by the Plaintiff is concerned, the second Defendant is liable to pay this amount as at his instance the Plaintiff despatched the goods to Penang. The Plaintiff purchased the goods with his monies and on his own responsibility and he sent the goods to the second Defendant through the Overseas Bank handing over the bills of lading and the drafts from time to time when he despatched the goods. Admittedly the second Defendant, in respect of these transactions, paid a sum of Rs. 4,000 to the Plaintiff, and is bound to pay the balance amount, to the, Plaintiff. We agree with the First Assistant Judge of the City Civil Court, Madras, that the Plaintiff will be entitled to recover the suit amount from the second Defendant. In the result this appeal is dismissed with costs.

As fax as the first Defendant is concerned, the learned First Assistant Judge of the City Civil Court, Madras, framed three issues, namely, (i) whether the first defendant failed to act up to the instructions given by the Plaintiff in regard to the collection of the bills in question; (ii) what was the practice J. and usage adopted by the parties for delivering documents before payment; and (iii) whether the first Defendant was bound to take legal proceedings against the second Defendant and (iv) whether the Plaintiff had incurred any loss or damage on account of the alleged default on the part of the first Defendant. The Plaintiff had dealings with the first Defendant bank just a year before the suit transactions, that is in the year 1951. As he was doing foreign business necessarily he had to send bills of lading and drafts through a scheduled bank under the Foreign Exchange Regulation Act for the purpose of collecting the sale proceeds from the other end. As already stated by us, the Plaintiff and the second Defendant were brothers. Whenever the Plaintiff sent goods to the second Defendant, he would request the bank authorities to give some time to the consignee at the time of the delivery of the documents taking a security for the due repayment of the amounts (exhibits B-14, 15 and 16). Similarly when he sent goods in the year 1952, as usual, he gave instructions to the bank authorities to give two months time for the payment of the amounts due and payable under the drafts in question. All the suit drafts were sent for collection between January 1952 and the 28th April 1952. As per the Foreign Exchange Regulation Act, the sale proceeds should be collected by the bank within six months and it should be surrendered to the Reserve Bank on the expiry of the six months period from the date of despatch of the drafts to the bank at Penang. The second Defendant informed the Plaintiff in the month of April 1952 that he was not in a position to pay the bills immediately) but he retired some of the other bills with the amount he realised by selling the tiles in question. Again in the month of May 1952, after the expiry of the two months of the bills in question, he wrote a letter to the Plaintiff that he had already retired all his 1951 bills, and the only outstanding amount as far as the suit drafts were concerned was Rs. 34,495-11-6 and he promised to clear this amount part by part early. No letter seems to have been passed between the Plaintiff and the second Defendant in regard to the payment of these drafts. It is only the Indian Overseas Bank, Madras, that wrote a letter (exhibit D-29) to the Plaintiff reminding him that he had to surrender the sale proceeds in respect of the goods he had despatched to Bharat Traders at Penang, and requested him to advice them of the reasons for the delay in not accounting for the foreign exchange in the stipulated period of six months and the steps he had taken to get back the proceeds of the bill to India. Similarly, the Indian Overseas Bank at Penang wrote a letter (exhibit A-18-A) to the second Defendant stating that they took delivery of the documents on their personal undertaking to pay the bill amounts within a specified date that the amounts still remained unpaid, the due dates having lapsed a long time before and that since they had failed to retire the bills even after a considerable time they were instructed by the Madras head office to demand payment from them within seven days, failing which they had-instructions to take legal action for recovering the amounts. The second Defendant for the first tame, wrote a letter to the Indian Overseas Bank that he had already remitted about Rs. 40,000 to the Plaintiff for purchasing bills and that he should have adjusted this amount towards the drafts in question (exhibit A-20). At the same time the second Defendant wrote a letter to the Plaintiff requesting him not to precipitate matters and to write to the bank that he had already received the amounts from him in respect of the suit transactions. The Plaintiff refused to act according to the instructions given by the second Defendant, in his letter exhibit B-36. On the other hand, he informed the first Defendant "by his letter exhibit A-22, in the month of February 1953, that the second �Defendant did not pay any amount in respect of the suit transactions and requested them to take prompt action so that he might not be taken to task by the He serve Bank for contravening the regulations under the Foreign Exchange Regulation Act. It is only for the first time, in the month of April 1953, that the Plaintiff informed the bank authorities that if they had not taken sufficient security before handing over the valuable documents to the second Defendant, they would be held responsible for the payment of the amount. The bank repudiated this charge in their letter and stated that they acted according to the instructions and the normal practice of the bank, namely delivering documents after taking a personal undertaking from the second Defendant. Even after this letter, for a period of one year, the Plaintiff kept quiet. It was only then he began once again, to bring pressure upon the bank authorities to take steps to collect the suit amount from the second Defendant. The bank authorities explained their position that it would not be possible for them to take legal proceedings against the second Defendant; AB it was not their practice or custom, and advised the Plaintiff to take legal proceedings immediately against the second Defendant and see that the foreign exchange involved was surrendered to them, as otherwise stringent action would be taken against him by the Reserve Bank of India for violation of the undertaking given by him on the G.R.I, forms. They also informed the Plaintiff about the probable expenses that would have to be incurred by him in filing a suit against the second Defendant for recovery of the suit amount.

The Plaintiff did not take steps immediately, but he went on corresponding with the bank authorities, blaming them for taking a mere personal undertaking from the second Defendant instead of a security as advised by him. Finally lie filed a suit against the second Defendant, also impleading the first Defendant on the ground that as they had not taken sufficient security they would also the liable to pay for the same. On these facts we have to consider whether the bank acted according to the instructions given by the Plaintiff. The Plaintiff merely asked them to hand over the documents after taking a security for payment. He has not defined nor given any dear instructions as to the form of security they should take from the second Defendant at the time of the delivery of the documents. Security may be a personal security, a security of property, or a judicial security. When the bank took a personal undertaking from the second Defendant, it must be deemed that they acted in accordance with the mandate given by the Plaintiff and their duty and responsibility came to an end. One Meenakshisundaram (D.W. 1), assistant in-charge of the-bills, came and deposed in the witness-box that it was not the practice of any bank to take any security of immovable property and that as they were-not permitted to accept securities of immovable property, they would merely take a letter of undertaking from the consignee to whom they delivered the-documents of title. If the bill was not honoured, they used to remind the consignee and inform the consignor. The first Defendant, soon after the expiry of the six months, gave notice to the Plaintiff reminding him to contact the second Defendant immediately and advised him to effect payment of the bills in question. Similarly, they had also sent a notice to the second Defendant at Penang asking him to retire the bills at once failing which they had instructions to take legal action against him for the recovery of the amounts. These facts are enough for us to show that the first Defendant exercised all reasonable diligence in pressing for the payment, and what is reasonable is always a question of fact in the circumstances of the case. It would be futile to try and formulate particular conditions or circumstances which might or might not establish negligence in this connection. Broadly speaking, the banker must exercise the same care and forethought in the interest of their customers. Lord Justice Bankes in Al. Underwood (Ld.) v. Bank of Liverpool (1924) 1 K.B. 775 adopted the test suggested by Lord Dttnedin in Commissioner of Taxation v. English etc. Bank (1920) A.C. 683 (Paget''s Law of Banking, sixth edition, page 343) where he says that the bank''s action must be in accordance with the ordinary Practice of bankers. In the instant case, the Plaintiff knew fully well immediately after the expiry of two months time and then even after a considerable time, the second Defendant was evading to pay the amounts covered by the drafts and as a matter of fact, in 1952 he went to Penang in business connection. He did not take any steps till the bank authorities gave him notice, that in case he failed to surrender the sale proceeds in respect of the goods sent by him to the second Defendant, the Reserve Bank authorities would be taking stringent action against him. In these circumstances, the Plaintiff should have taken steps immediately for the recovery of the suit amount. No useful purpose would be served by the Plaintiff complaining that the bank authorities-were lukewarm in not collecting the bills in question. It is true, as Justice Pickford said in Gaumplin v. London Joint Stock Bank 109 L.T. 856 (Paget''s Law of Banking, page 369),

It is no defence for a bank to say that they were so lazy and had such a small staff that they could not make enquiries.

Lord Warrington in Lloyds Bank v. E.B. Savery & Co. (1933) A.C. 201 (Paget''s Law of Banking sixth edition, page 355) observed,

The standard by which the absence or otherwise of negligence is to be determined must, in my opinion, be ascertained by reference to the practice of reasonable men in carrying on the business of bankers and endeavouring to do so in such a manner as may be calculated to protect themselves and others against fraud.

The bank authorities at Penang did what all they could in the circumstances of the case, and they acted in good faith and without negligence. No doubt the Plaintiff blames the agents at Penang that they were lukewarm in the matter and that they failed to take diligent steps to collect the amount. But we have to consider what were the steps they could take in collecting this amount. They delivered the documents of title as per instructions given by the Plaintiff, after taking a personal undertaking. It was the duty of the Plaintiff to ask the bank authorities at Penang to assign the bills in question and transfer the undertaking in order to enable him to take action against the second Defendant. He did not ask the bank authorities to send the bills in question immediately nor the undertaking given by the second Defendant for taking prompt action against the second Defendant. On the other hand, he asked the bank authorities to take legal proceedings against him which they could not do in the normal course of banking. It was also equally impossible for the bank to take security of immovable property from the second Defendant as it was quite contrary to Section 13 of the Foreign Exchange Regulation Act, VII of 1947, which says that

no person shall except with the general or special permission of the Reserve Bank, (a) take or and any security to any place outside India; (6) transfer any security or create or transfer any interest in a security to or in favour of a person resident outside India.

In these circumstances, we feel that the first Defendant should not be held either negligent or that he did not act in good faith in not collecting the amounts covered by these drafts from the second Defendant.

Another serious charge laid against the bank authorities was that they did not even care to present the bills in question for the acceptance of the second Defendant. But it has been settled that as far as foreign bills are concerned it is not necessary that the acceptance must be on the face of the bill, but it may even be accepted by a letter. Vide--Billing v. Devoux (1931) 3 M. & G.R. 565 (Tannan''s Banking Law), tenth revised edition 246. Therefore, in these circumstance we hold that the first Defendant is not liable for the amount due and payable by the second Defendant to the Plaintiff. At the most it may be said that the bank might have helped the Plaintiff in collecting the amount from the second Defendant, but the Plaintiff himself delayed matters and condoned the inordinate delay caused by the second Defendant in postponing payment of the bills in question from time to time.

What might or would constitute negligence on the part of the collecting banker may lose that character if the acts or omissions adduced as evidence of negligence were induced or encouraged by the action or inaction of the true owner.

Vide--Paget''s Law of Banking sixth edition, 370--Morison v. London County and Westminister Bank Limited. (1914) 3 K.B.

In the result the appeal, i.e., Appeal Suit No. 73 of 1960 is dismissed, but in the circumstances, without costs. The Plaintiff would get a decree against the second Defendant as prayed for in the plaint.