A person to whom money has been paid, or anything delivered, by mistake, must repay or return it under Section 72 of the Indian Contract Act.

1. This appeal has been arising out of the judgment and decree dated 26.11.2004 passed in O.S.No.61 of 2004 by the learned Principal District Judge, Dharmapuri at Krishnagiri.

2. The averments made in the plaint in O.S.No.61 of 2004 are as follows:-

The first defendant presented a Demand Draft bearing No.549046, dated 27.10.1997, for Rs.5,20,000/- (Rupees Five Lakhs and Twenty Thousand only) through its Banker, Canara Bank, branch at Hosur viz., the second defendant, purported to have been issued by the State Bank of India, branch at Ghatkopar, (East) Mumbai and purported to have been drawn on the plaintiff Bank branch at Hosur. The said DD was presented by the first defendant through its Banker, second defendant for clearing on its behalf to the plaintiff Bank, branch at Hosur, on 06.11.1997. The plaintiff Bank, in good faith, paid a sum of Rs.5,20,000/- to the first defendant. At the time of General Reconciliation of all the payments effected by DD as per banking practice, the plaintiff's Inter Office Reconciliation Department (Drafts) in Mumbai, intimated the plaintiff Bank branch at Hosur on 20.07.1998 that the above payment of Rs.5,20,000/-, paid by the plaintiff Bank branch to the first defendant, on the basis of DD in question, is not reconciled and it remained outstanding. Therefore, the plaintiff Bank, immediately, ascertained the reason for non reconciliation of the DD and then, they came to know that such Demand Draft has not been issued by the plaintiff Bank branch at Ghatkopar (East), Mumbai.

(ii) On scrutinising the Demand Draft, it was ascertained that the signatures of the officials found on the Demand Draft are forged one. It was a manipulated and forged document with a view to create a valuable security and make a wrongful gains by cheating. The DD was reported to have been received by the first defendant from one M/s. Rehman Enterprises, allegedly in consideration for supply of about 500 Titan Watches to the said M/s.Rehman Enterprises, 40/2, M.G. Marg, Usman Complex, Ghatkopar (East), Mumbai, represented by its partner Mr.Shakeel. The first defendant, on receipt of the Demand Draft, without verifying the genuineness, immediately delivered the Watches to the bearer of Demand Draft, even without ascertaining the background of the person, who brought the DD for such a huge sum and also even without waiting for the collection of such huge amount running to several lakhs.

(iii) The first defendant's show room of the factory at SIPCOT, Hosur, is authorised to handle transactions, which are less than Rs.10,000/- only and the show room officials have to obtain permission of Higher Authorities for any sales more than Rs.10,000/-. So, the plaintiff Bank has reason to suspect that the first defendant's officials of the show room have definitely colluded with the culprits to produce the Demand Draft and the fraudulent transaction is allowed to take place in connivance with the show room officials of the first defendant. Considering the size of the amount involved for the purchase value and also the presentment of the Demand Draft by unknown person, the acceptance of the Demand Draft by the first defendant should have been handled diligently to avoid any loss for the company and also the paying bank to whom the DD would be sent in the usual course of the transaction for payment eventually. If the first defendant made enquiries about the bearer of the DD and also the genuineness of the DD before accepting the same or they have waited for payment advice of the DD, there would not have been any scope for the above fraud. The plaintiff Bank accepted the DD, since the DD has been sent for payment through the clearing bank. So, there was no reason for the plaintiff Bank to suspect the genuineness or the validity of the instrument. The plaintiff Bank accepted the DD on bona fide impression that being the payee under the Demand Draft, the first defendant company would have exercised the caution in entertaining the DD f