The main legal point established in the judgment is that in order to establish liability, there must be a breach of duty, and the absence of malice or bad faith is crucial in cases of negligence.

The appellant-Bank of Maharashtra has preferred this appeal under Section 96 of the Code of Civil Procedure, 1908 against the judgment and decree dated 12-05-2000 passed by the 9th Additional District Judge, Gwalior in case No. 187-B/1996 whereby the decree of Rs.30,940/- has been passed against the appellant.

2. Facts in brief are that the plaintiff/respondent No.1 happened to be a trader in electronic items, namely, TV and VCR, pursuing his business in Gwalior. On 27-01-1991 respondent No.2 visited the shop of respondent No.1 and gave an offer of purchasing electronic merchandise and promised to give payment by way of pay order of Bank of Maharashtra (hereinafter referred as 'Bank') under the Educated Unemployed Loan Scheme of the Bank.

3. Respondent No.1 supplied the electronic merchandise in response to the order placed by respondent No.2 and in consideration of the same, got pay order of Rs.34,200/-. When respondent No.1 submitted the said pay order for encashment in his Bank; Indian Overseas Bank, then much to its chagrin, surprise and dismay found that the said pay order was forged one and was not at all issued by the appellant bank.

4. The matter was reported to the police and it was found that the pay order which was purportedly given by respondent No.2 to respondent No.1 was earlier lost/stolen by somebody from the Jabalpur Branch and while affixing the forged seal of Gwalior Branch over the said pay order the respondent No.2 tried to get advantage of it and purportedly paid for the purchased goods through that forged pay order. Police investigated the matter but could not get trace of respondent No.2 Ramnaresh. Therefore, the actual conspiracy could not come to the light. On the other hand, respondent No.1 who has supplied the electronic merchandise to respondent No.2 has preferred a civil suit for recovery against the present appellant bank as well as against respondent No.2 on the pretext that due to carelessness/negligence of the Bank, respondent No.1 plaintiff suffered loss for which the Bank should compensate him accordingly. According to the respondent No.1/plaintiff, the Bank had not published the news of theft or loss of pay order in public, therefore, plaintiff suffered.

5. The trial Court issued the notices and present appellant caused its appearance and submitted written statement and contested the claim of respondent No.1/plaintiff whereas the respondent No.2/defendant No.3 did not turn up and remained ex-parte. The trial Court has framed five issues for adjudication in which issue No.2 (a) and (b) are in respect of alleged negligence/carelessness attributable on the part of appellant Bank. Issue No.2(a) and (b) reads as under:

^^2-v & D;k izfroknh dz0 1 o 2 dh vlko/kkuh ds dkj.k izfroknh dz0 3 dks is vkMZj izkIr gqvk ;fn gka\

2-c & rks D;k izfroknh dz0 1 o 2 oknh dks 34]200 :i;s vnk djus ds fy, mRrjnk;h gS\**

6. To support its claim, respondent No. 1/plaintiff had examined three witnesses; including the proprietor of the plaintiff through power of attorney holder. Personally proprietor of plaintiff Smt. Radha Khetan did not prefer to appear in the witness box.

7. On behalf of present appellant/defendants No.1 & 2, Branch Manager of Gwalior Branch appeared in the witness box as DW-1 and deposed in favour of the Bank and another witness, local trader of the Gwalior city as DW-2.

8. The trial Court after considering the evidence led by the parties and submissions made in this behalf, passed the impugned judgment and decree fastening the liability of Rs.30,940/- over the appellant Bank for causing carelessness and negligence because of which respondent No. 2 got pay order, misused it and cheated the plaintiff.

9. In the trial Court, present respondent No.2 (defendant No.3) remained ex parte and did not appear even before this Court, therefore, the appellant had moved an application for dispensing with service of respondent No.2 which got allowed vide order dated 06-02-2008.

10. The appeal was admitted for fi