A bank is liable to pay compensation to the beneficiary of a cheque if the cheque is dishonoured due to the negligence of the bank.

Mrs. A.S. Vijayakar, Member—This is an original petition alleging deficiency in the serviceof the Opposite Party Bank.

2. A brief background of the case is that a plot of land measuring 16 Bighas was acquired from the three complainants by the Government of Assam for the Soil Conservation Department in 1975. The compensation determined was accepted by the munder protest in 1977. Their reference made to the District Judge for award of enhanced compensation was upheld in 1983. The Government of Assam preferred an appeal before the Hon’ble Guwahati High Court. In 1989 the High Court affirmed the findings of the District Court and accordingly directed payment of compensation, solatium and interest upto date. Their repeated approaches to the Government of Assam towards settlement of their claim on the basis of the High Court’s judgment finally bore fruit only on6.3.1992, when the Director, Soil Conservation as per his cheque No.. 83049 Book No. 1661 paid them an amount of Rs. 14,88,573/-.

3. The cheque on being presented to their bankers, the United Bank of India, Guwahati Branch was returned on 9.3.1992 with the remark “payment stopped by drawer”. On their enquiries it was revealed that due to excess payment such a step was adopted.

4. The above cheque was returned on10.3.1992 and the Director, Soil Conservation Department, issued a fresh cheque for Rs. 13,84,742/- vide Cheque No. 83050, Book No. 1661dated 10.3.1992 which was once again presented to their Bankers for collection on 10.3.1992.

5. Unfortunately this cheque too was returned to the Complainants with the remarks “payment stopped by the drawer” and not arranged for” Further enquiries were made by the Complainants with the Opposite Party-Bank and it was learnt that due to a misinterpretation of the instructions received by it from the Soil Conservation Department, the Bank had wrongly dishonored the cheque.

6. In the reply filed by the Opposite Party-Bank it is stated that the Bank was having as its customer the Director of Soil Conservation, Assam. On 7.3.1992 the said customer issued ‘stop payment’ instructions to the Bank in respect of cheque No. 1661/83049 dated 6.3.1992 for Rs.14,88,513/- in favour of the complainants. On9.3.1992 the said cheque No. 1661/83049 was presented to the State Bank through the United Bank of India, Guwahati in clearing. In view of the said ‘stop payment’ instruction, the said cheque was returned to the said Bank without payment.

7. On 11.3.1992 another cheque bearing No.1661/83050 (succeeding number) drawn by the same Drawer in favour of the same parties (complainants herein) for a sum of Rs. 13,84,742/- was presented through the same presenting banker, United Bank of India, through clearing. Due to oversight and inadvertence this cheque was also returned unpaid to the presenting bankers.

8. On the very same day, a few hours later, it was found that the said cheque ought not to have been returned unpaid. Immediately a special messenger was sent by the State Bank to the presenting bankers and they were requested to represent the cheque on the next day namely on 12.3.1992 since by that time the business hours of the Bank were already over and the accounts had been closed.

9. The next morning on 12.3.1992 the cheque was represented to the State Bank who immediately honoured the same and payment was made to the United Bank of India. The Opposite Parties submit that there is no negligence of carelessness or indifferent attitude on the part of the State Bank. To err is human; an error did in fact occur but the Bank took immediate steps to rectify the said error to avoid any possible inconvenience to the parties and promptly paid the cheque the very next morning after the accounts were opened. It is not shown that any loss was actually caused to the complainants by reason of the mistake committed by the Bank.

10. A claim made on the ground of on account of loss of credibility in that the complainants claim to have issued cheques to various parties whi