The main legal point established is that a purchaser of a demand draft can stop payment against strangers but not against the payee or any other holder in due course, and courts should not interfere and grant injunctions against the bank unless a serious allegation of fraud with prima facie evidence is shown.

( 1 ) THIS is a petition by purchaser of a demand draft claiming a restraint order on the drawer and drawee Branches of State Bank of Indore injuncting them from honouring the demand draft even if presented by the payee.

( 2 ) MALIK Barkat Ali v. Imperial Bank of India It is necessary to state the facts in brief. The petitioner purchased demand drafts bearing No. 509218 and No. 509219 both dt. 22-2-1991 of the value of Rs. 8,00,000/- and Rs. 2,00,000/- respectively from Patrakar Colony Branch of State Bank of Indore. These drafts were drawn on the Marwadi Road, Bhopal Branch of the same bank and were drawn in favour of M/s. Mc Dowell and Co. Ltd. the respondent No. 3. On 22-2-1991 itself, the petitioner wrote to the Patrakar Colony Branch of State Bank of Indore (the issuing Branch) informing of the loss of drafts and requesting to send instructions to drawee branch, not to honour the draft. A report of the loss of drafts, was also lodged with M. G. Road Police Station, Indore. From the photocopy of the report annexed to the petition, it seems to have been lodged on 26-2-1991. On 26-2-1991 itself the petitioner wrote to the Patrakar Colony Branch of State Bank of Indore, repeating the information about loss of the drafts. However, this time curiously, a strange request was made to get the demand draft dishonoured even if preseated by the payee. The Patrakar Colony Branch conveyed the information and request to the Marwadi Road, Bhopal Branch.

( 3 ) THE story of loss of drafts lost all relevance because it transpired that the Respondent No. 3 M/s. Mc Dowell and Co. Ltd. in whose favour the drafts were drawn, itself presented them in Marwadi Road, Bhopal Branch for payment. The Marwadi Road Bhopal Branch refused to stop payment of the drafts. Hence the petitioner filed this petition contending that Respondent Bank was obliged to dishonour the drafts as the Petitioner, the purchaser of the drafts had instructed it to do so before they were honoured and payment was made to the payee.

( 4 ) SHRI A. M. Mathur, Senior Advocate submits that a demand draft is like a cheque and the Bank is under obligation to stop payment, if the purchaser of the draft instructs it to stop payment before the payment was actually made. In support of this contention a recent ruling of the Supreme Court in M/s. Hyderabad Commercials v. Indian Bank AIR 1991 SC 247 was relied on. ( 5 ) HAVING heard the learned counsel, we find no force in the petition which deserves to be dismissed in limine. In Suganchand and Co. v. Brahmavva and Co. (1951) 21 Com Cas 224 : AIR Madras 910 (2) pointing out the difference between a cheque and a bank draft, it was observed as follows (at p. 613 of AIR) :-"a demand draft is, of course, a bill of exchange drawn by a bank on another bank, or by itself on its own branch and is a negotiable instrument. . . . It is very nearly alied to a cheque, the difference between it and a cheque consisting largely in two facts. Firstly, it can be drawn only by a bank upon another bank, and not by a private individual as in the case of cheques. Secondly, it cannot so easily be countermanded as a cheque, either by the person purchasing it, as by the drawer of a cheque, of by the bank to which it is presented. That is why demand drafts have been held not to be cheques. "in S. N. Shukla v. Punjab National Bank Ltd. AIR 1960 All. 238, it was observed as follows:-"the main point of difference between a cheque and a draft lies in the fact that while a cheque is an order by the drawer on his own agent, the bank, for the payment of a certain sum of money to the bearer or the order of the person in whose favour the cheque is drawn, a draft is not an order by a private person to his own agent. . . . . A draft. . . . . cannot be drawn by a private individual like a cheque. If a person orders his agent to pay a certain amount to another person it is clearly open to him to stop the payment and to direct his agent not to make the payment, prov