Once an acceptance is issued, the Bank cannot go back and contend that the acceptance was not backed by proper documentation, as per Section 37 of the Negotiable Instruments Act, 1881.

JUDGMENT

(Prayer: Appeal filed under Order XXXVI Rule 11 of Original Side Rules read with C1 XV of Letters Patent, to set aside the order of the learned Single Judge dated 09.06.2022 made in C.S.(Com.Div) No.591 of 2018.)

R. Subramanian, J.

1. This appeal is at the instance of the Bank which figured as the second defendant in C.S.(Comm.Div) No.591 of 2018.

2. For convenience, the parties will be referred to as per their rank in the Suit.

3. The plaintiff sued for recovery of a sum of Rs.1,15,09,628/- with interest at 18% on the principal amount of Rs.1,06,33,863/- from the date of plaint till the date of realization. According to the plaintiff, he had supplied Steel (TMT Bars) weighing about 2,55,540 Kgs at Rs.38.20 per kg to the first defendant under an Invoice dated 22.05.2017. A Bill of Exchange was drawn by the plaintiff and the same was discounted with the plaintiff's Banker, namely the third defendant. The third defendant on receipt of the Bill of Exchange, forwarded it to the second defendant, which is the Banker of the first defendant / purchaser seeking its acceptance for collection. According to the plaintiff, the second defendant initially accepted the Bill of Exchange, however, subsequently came up with a false reason that the goods were returned by the buyer for quality issues and therefore, it is not liable to pay. The plaintiff would further plead that having accepted the Bill of Exchange through a SFMS message on 29.05.2017, the second defendant cannot resile from the contract and refuse to pay on an imaginary pretext of return of the goods. The plaintiff hence sued for recovery.

4. The first defendant did not appear either in person or through counsel duly instructed before the Trial Court. The second defendant though appeared through a counsel did not file a written statement within the time allowed under law.

5. The plaintiff was examined as P.W.1 and Exs-P.1 to P.12 were marked. One Mr.K.N.Choudhary, Senior Manager of Indian Bank, the Banker of the plaintiff was examined as C.W.1 and one Mr.K.V.S.Prakash Rao, former Additional General Manager of the Anna Nagar Branch of Indian Bank was examined as C.W.2.

6. The only contention that was raised by the second defendant Bank was that the transaction was not a 'Discounting of Bill' but it was a 'Document Collection Method' which according to the second defendant will not involve liability for payment on its part. The second defendant did not also let in any evidence. Upon consideration of the evidence on record, the Commercial Division came to the conclusion that the transaction is one of bill discounting which would fall within the scope of Section 37 of the Negotiable Instruments Act, 1881 and therefore, as the collecting Banker who had assured payment, the second defendant would also be jointly and severally liable along with the first defendant for the Suit claim. The learned Trial Judge also took note of the fact that there was neither pleading nor evidence on the side of the second defendant Bank. The learned Trial Judge also granted interest at 9% per annum on the Suit claim. The Suit cost was directed to be paid by the first and second defendants. Aggrieved by the order, the second defendant Banker is on appeal.

7. Heard Mr. E. Om Prakash, learned Senior Counsel appearing for the appellant and Mr. SharathChandran, learned counsel appearing for the first respondent and Mr. Kalyana Raman, learend counsel appearing for the third respondent / third defendant Indian Bank.

8. Mr. Om Prakash, learned Senior Counsel appearing for the appellant would vehemently contend that the learned Trial Judge was not right in treating the transaction as a 'Bill Discounting Transaction' where the appellant had assured payment. According to the learned Senior Counsel, the transaction is only a 'Document Collection Method' which does not involve any liability on its part as a collecting Bank.

9. Inviting our attention to the correspondenc