Negligence in opening an account does not automatically result in liability for the bank, and there must be a sufficient connection between the opening of the account and the collection of the cheque to establish negligence.

C.V. BHADANG, J.

1. By this appeal, the appellant/original plaintiff is challenging the judgment and order dated 10/6/2014 passed by the learned Ad hoc District Judge-I (FTC), Panaji in Regular Civil Appeal No. 85/2012. By the impugned judgment, the appeal filed by the respondents/original defendants has been allowed thereby dismissing Special Civil Suit No. 172/2003/B filed by the appellant.

2. The brief facts necessary for the disposal of the appeal may be stated thus:

"That the appellant is a banking corporation established under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970. The appellants are having branch offices at various places including one at Panaji-Goa. The respondent No. 1 is the head office of HDFC bank, while the second and the third respondents are branches of the HDFC bank at Mumbai and at Panaji-Goa."

3. A Demand Draft bearing No. PG 098111 for Rs. 900/- was purchased on 1.2.2003 in the name of one Shri Ashwin Babhubhai Trivedi. The said Demand Draft was purchased from Raipur branch of the appellant and was payable at its Kota branch in Rajasthan. As per the plaint allegations, the defendant No. 3 on 6/2/2003 presented the Demand Draft for clearing at the Panaji branch of the appellant, when it was found to be drawn on 4/2/2003 for a sum of Rs. 9,30,600/-. The appellants honoured the Demand Draft which was presented for payment in clearing by the respondent No. 3.

4. It further appears that some officials of the respondent No. 3 visited the appellant on 10/2/2003 asking for a copy of the Demand Draft on account of which the officials of the appellant became suspicious. Thereupon the Raipur branch of the appellant was contacted and upon inquiry it was learnt that the Demand Draft was actually issued on 1.2.2003 and was drawn on Bank of Baroda at Kota for a sum of Rs. 900/- (Rupees nine hundred only). Thus the appellants learnt that the Demand Draft which was sent for clearing by the respondent No. 3 was forged and materially altered draft. The appellants thereafter made attempts to seek details of the account holder, in whose account the Demand Draft was deposited and encashed. However, respondent No. 3 refused to divulge any information either about the account holder or about the encashment of the Demand Draft.

5. The appellants also reported the matter to the police on 10/2/2003.

6. On 13/2/2003, the Deputy Regional Manager of the appellant along with other officials visited respondent No. 3 and made a request to furnish information/details about (i) the name and address of the account holder (ii) date of opening of the account (iii) whether any FIR was lodged by the respondent No. 3. However, again no information was given or divulged. Subsequently it was learnt that there was no account in the name of Ashwin Babubahai Trivedi with the respondent No. 3, but there was such an account with the respondent No. 2 at Mumbai. It was also learnt that pursuant to the encashment of the Demand Draft the concerned account holder had withdrawn the amount from his account with the respondent No. 2. The appellants claim that Shri Ashwin Babubhai was either a fictitious person and/or the account was opened in a fictitious name. It was the material contention that the respondent No. 2 acted in a negligent manner while opening the account in the name of Ashwin Babubhai Trivedi and also permitting immediate withdrawal of the amount by the said account holder, when the withdrawal of a huge amount was permitted immediately upon encashment of the draft. It was contended that the respondent No. 2 has acted in total disregard of its duties and functions as a collecting banker and the respondent No. 3 is equally responsible for sending the forged/altered draft for collection, thus facilitating the collection of forged/altered draft.

7. It appears that the appellants issued a legal notice on 29/8/2003 to the respondent No. 3 claiming an amount of Rs. 9,30,600/- (Nine lakhs thirty thousand six hundred o