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Madras High Court
SADASIVAM
N.Mohamed Hussain Sahib - Appellant
Versus
Chartered Bank, Madras - Respondent
Decided On : 10/16/1963
Suit for damages for loss of reputation, credit and social position due to dishonor of cheques by the bank. Plaintiff had an overdraft account with the bank and had requested the bank to transfer funds from his account in London to his account in Karachi. The bank transferred the funds to Karachi and opened a current account in the plaintiff's name. The plaintiff later requested the bank to transfer the funds back to Madras, but the bank did not do so until June 1958. The plaintiff alleged that the bank's actions caused him to lose his reputation, credit and social position, and he sued the bank for damages.
Fact of the Case:
The plaintiff had an overdraft account with the bank and had requested the bank to transfer funds from his account in London to his account in Karachi. The bank transferred the funds to Karachi and opened a current account in the plaintiff's name. The plaintiff later requested the bank to transfer the funds back to Madras, but the bank did not do so until June 1958. The plaintiff alleged that the bank's actions caused him to lose his reputation, credit and social position, and he sued the bank for damages.
Finding of the Court:
The court found that the bank was not liable to the plaintiff for damages. The court found that the bank had not acted negligently in transferring the funds to Karachi and opening a current account in the plaintiff's name. The court also found that the bank had not acted negligently in failing to transfer the funds back to Madras until June 1958. The court found that the plaintiff's loss of reputation, credit and social position was not caused by the bank's actions.
Issues: 1. Whether the opening of the current account with the Chartered Bank, Karachi from and out of the funds received by the 1st defendant from their head office at the instance of the plaintiff ? 2. Did the plaintiff give any instruction to the 1st defendant to get back the money to Madras from Karachi in the year 1948-1949 or only in June 1958 ? 3. Is the 1st defendant guilty of negligence in not repatriating the amount before July 1959 ? 4. Was the 1st defendant constituted an agent of the plaintiff to repatriate the moneys of the plaintiff from Pakistan ? 5. Did the 1st defendant take all reasonabla steps to get the money from Pakistan pursuant to the instructions of the plaintiff. 6. Were the funds at Karachi under the 1st defendant's order and control at any material times ? 7. In any event, was repatriation or transfer of funds from Pakistan to Madras impossible at all material times ? 8. Was the transfer of the funds in Karachi from the current account to fixed deposit account made on the plaintiff's instructions and was the renewal of the fixed deposit made mm time to time on plaintiff's instructions"9. Was the letter dated 20-06-1958 given by the plaintiff to the dictation of the 1st defendant or was it given under the circumstances alleged in para 14 of the written statement ? 10. Did the 1st defendant agree in 1955 to provide overdraft facility to the plaintiff to the extent of 3½ lakhs on the security of the plaintiffs immovable property and a further overdraft facility of 2½ lakhs from 26-11-1956 on the security of the plaintiff's existing and future stock-in-trade ? 11. Was the dishonouring of the plaintiff's cheques by the 1st defendant on account of the plaintiff's transgressing his overdraft limit ? 12. Was the 1st defendant under any legal obligation to take into account the funds in Karachi, while disposing of the cheques drawn by the plaintiff ? 13. Could the funds with the Chartered Bank, Karachi be deemed to be at any time available to the plaintiff at Madras as claimed in paragraph 19 of the plaint ? 14. Was the putting up of the board by the 1st defendant that it was a mortgagee in possession tantamount to its taking possession of the tannery and if so, was it unlawful ? 15. Was the bankruptcy of the plaintiff" caused by the acts of omission or commission on the part of the 1st defendant and if so were they calculated to cause injury to the plaintiff's personal credit and reputation ? 16. Is the plaintiff entitled to claim any damages on account of mental agony, and suffering of the social position, credit and reputation and if so what is the quantum of such damages ? In any event, is the claim for damages for Rs. 75,00,000 excessive ? 17. Is the plaintiff as an undischarged insolvent not entitled to maintain the suit ? 18. Could the plaint claim or any part thereof, if decreed to the insolvent's estate represented by the 2nd defendant, enure to the benefit of the Insolvent's estate represented by the 2nd defendant ? 19. Is the is defendant entitled to compensatory costs under section 35 C.P.C. ? 20. To what relief are the parties entitled ?
Ratio Decidendi: The court found that the bank was not liable to the plaintiff for damages because the bank had not acted negligently in transferring the funds to Karachi and opening a current account in the plaintiff's name, and the bank had not acted negligently in failing to transfer the funds back to Madras until June 1958. The court also found that the plaintiff's loss of reputation, credit and social position was not caused by the bank's actions.
Final Decision: The suit was dismissed with costs to the bank.
JUDGMENT :- Suit in forma pauperis to recover rupees twelve lakhs as damages from the first defendant with future interest and costs.
2. The plaintiff was a leading merchant in hides and skins in Madras with an average annual turnover of nearly rupees fifty lakhs. He possessed a very valuable, well-mechanised tannery at Vaniyambadi, and he had built up a reputation for his goods both in India and outside. He was a customer of the first defendant and he had an overdraft account with the Bank. The plaintiff had £13,599-8s to his credit in the Head Office of the first defendant Bank in London and he requested the first defendant to get the amount from the Head Office. The amount was admittedly transferred to the branch office of the Chartered Bank at Karachi by the first defendant on the instructions of the plaintiff. The plaintiff's case is that he trusted the integrity and business skill of the first defendant and constituted it as his agent with reference to his dealings with the said moneys and that the first defendant failed in the discharge of its duty in omitting to get the money transferred to Madras in spite of his several instructions from 1948 onwards. The plaintiff's complaint is that he was not even informed till the middle of 1958 about the transfer of the amount in the Karachi branch to Fixed Deposit and that neither the pass book and cheque hook, nor the receipts for the subsequent Fixed Deposits were given to him. The further complaint of the plaintiff is that though the first defendant took a letter from him on 20-06-1958 undertaking to get the transfer of the moneys from the Karachi branch immediately, it wilfully neglected to perform its duty and did not even intimate to him about the availability of the aforesaid moneys at Karachi on 19-05-1959 till it sent the letter on 4-7-1959. The main case of the plaintiff is that in 1955 the first defendant agreed to give an overdraft for his business to the extent of Rs. 3,50,000 on the security of his immovable properties and also agreed to give a further overdraft of Rs. 2,50,000 on 26-11-1956 on the security of the existing and future stock-in-trade of hides and skins and machinery, and that in breach of the said agreements the first defendant capriciously dishonoured cheques drawn by the plaintiff towards the end of 1957 and early in 1958. The plaintiff's case is that on account of the said acts his customers filed suits and obtained attachments before judgment and he was finally adjudicated insolvent in I.P. No. 28 of 1959. Though the plaintiff originally claimed seventy' five lakhs of rupees as damages for the loss suffered by him in his business, position, credit and reputation, he subsequently amended the plaint in confining his claim for damages to rupees twelve lakhs for his reputation, credit and social position alone.
3. The first defendant has traversed every one of the allegations in the plaint and its case is that it did not act as the agent of the plaintiff in respect of the amount transferred to the Karachi branch of the bank, that it merely obliged the plaintiff to open a current account at the Karachi branch, that the current account was converted into a fixed deposit account only at the request of the plaintiff, that the request for re-transfer of the amount to the Madras branch was made only in June 1958 and that there were difficulties in obtaining such transfer of the amount. The first defendant's case is that after the end of 1955 the plaintiff was allowed overdraft facility to the extent of Rs. 3,50,000 solely on the security of stocks held by the plaintiff in Madras and Vaniyambadi, that on 29-12-1955 security of immovable properties by deposit of title deeds was given by the plaintiff only in order to persuade the Bank to refrain from taking action for the recovery of the overdraft amount on account of the income-tax enquiry, that on 26-11 1936 the overdraft facility was reduced to Rupees 2,50,000 as admitted by the plaintiff in his le
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