The main legal point established was that the bank, as the custodian of the cheques, was negligent in handling them and was equally liable, along with the drawer, to compensate the drawee for the loss.

1. This intra Court appeal, under Clause X of the Letters Patent, is at the instance of defendant No. 2 against the judgment and decree, passed by learned Single Judge in First Appeal No. 55 of 1985, decided on 19-9-1995.

2. Respondent No. 1 herein, (Hereinafter for brevity the 'NTC') had filed a suit against the appellant State Bank of Indore (Hereinafter for brevity the 'SBI') and respondent No. 2 Haider Ali for recovery of a sum of Rs. 46,000/- being value of 7 cheques, issued in favour of NTC by Haider Ali and deposited with appellant Bank but lost by it, interest and notice charges.

3. Facts giving rise for deciding the said appeal are mentioned hereinbelow:-

Defendant No. 1, Haider Ali, carried on business in cotton waste etc. from Indore. Defendant No. 2 (the present appellant) is a statutory corporation constituted and incorporated under the State Bank of India (Subsidiary Bank) Act, 1959 and is carrying on its banking business from its various branches situated in India and abroad. The defendant No. 1, pursuant to issuance of a Tender Notification, had taken delivery of the goods and towards price of the said cotton waste taken by him, he had issued 9 cheques to respondent No. 1 plaintiff (NTC). The said 9 cheques were deposited by respondent No. 1 with appellant Bank for its collection. Incidentally, it may be mentioned here, that respondent No. 2 Haider Ali and respondent No. 1 NTC, both had accounts in the same bank, but, their branches were different.

4. On presentation of the said 9 cheques by respondent No. 1 to the appellant, the same were sent for its collection from the branch, where respondent No. 2 was having its account. It appears, that during transit, out of 9 cheques, 7 cheques were lost. Thus no collection thereof could be made. The said cheques were lost, while they were handled by the Appellant Bank. After 7 cheques having been lost, appellant intimated to respondent No. 1 plaintiff to get fresh cheques for the said amounts from respondent No. 2, but, respondent No. 2 refused to oblige, respondent No. 1. It further appears that whereabouts of respondent No. 2 are no more available and party was not at all available at Indore.

5. On the suit being filed by NTC against appellant State Bank of Indore and respondent No. 2, the appellant filed its written statement, denying the allegations and its liability for payment of the value of cheques to plaintiff NTC. According to it, it had acted bona fide and if the cheques had been lost, while they were being sent for collection, no liability can be fastened on the Bank. It was further submitted that in any case, there was no sufficient amount to the credit of respondent No. 2, for this reason also, Bank was not liable to pay the amount of the value of cheques to the plaintiff and plaintiff had other remedies available at its disposal for recovery of the amount of these cheques.

6. The learned Trial Court framed issues. Parties went to trial. After appreciation of evidence available on record, the learned Trial Court, decreed the suit in favour of plaintiff NTC, but, decree was passed only against defendant No. 1 Haider Ali. No liability was fastened on appellant Bank.

7. Feeling aggrieved by the said judgment and decree, plaintiff preferred First Appeal in High Court under section 96 of the Code of Civil Procedure.

8. The learned Single Judge vide impugned judgment, has modified the decree of the Trial Court and has passed the decree against the Bank also. Thus, the decree is now joint and several against both the original defendants of the suit.

9. Feeling aggrieved by the said judgment and decree, passed by learned Single Judge, this Appeal has now been preferred under clause-x of the Letters Patent by defendant No. 2 Bank.

10. We have, accordingly, heard the learned counsel for parties, perused the record.

11. Learned counsel for appellant has placed strong reliance on the provisions of sections 30 and 31 of Negotiable Instruments Act, 1881. For proper appreciat