The court held that a banking action performed in good faith, even when negligent, does not incur liability, as outlined in Section 54 of the Banking Regulation Act.

1. The appellant/plaintiff has filed this first appeal challenging the judgment and decree dated 28.11.2008 passed by the learned 7^th Additional District Judge, Raipur (C.G.) in Civil Suit No. 25-A/2007 by which the suit filed by the plaintiff for declaration and permanent injunction has been dismissed by the learned trial Court.

2. The parties have been described as mentioned before the trial Court.

3. Brief facts as reflected from the record are that the plaintiff has filed civil suit on 11.11.1991 which was registered as Civil Suit No. 25- A/2007 mainly contending that:

(a) The defendant No. 1 is the head office of the defendant No. 2 which is carrying banking business. The plaintiff is having Savings Account No. 8296/34 with defendant No. 2. The plaintiff on 02.04.1991 has submitted a cheque bearing No. 725323 dated 28.01.1991 for Rs. 3 Lakhs in favour of the Shri R.S. Shukla, accordingly, the cheque was credited in the plaintiff’s bank account on the same day i.e. 02.04.1991, as such, the total balance of the bank account comes to Rs. 3,15,116.85 which remained upto 25.04.1991. Accordingly, entries were also recorded in the passbook of the plaintiff.

(b) The plaintiff has given a cheque of Rs. 1 Lakh in favour of Smt. Anuradha Shukla which was debited for clearance before the Co-operative Bank Raipur/respondent No. 2 and the same was dishonored due to insufficient fund and returned back to the appellant on 26.04.1991. Thereafter, plaintiff sent a legal notice through his counsel to the bank asking for explanation why the cheque was dishonored when there was sufficient amount in the bank account. It has been informed by the defendant through registered post on 29.04.1991 that due to stop payment instruction from Indira Gandhi Krishi Vishwavidyalaya extension counter the amount which has been credited in the bank account of the plaintiff has been returned back, as such, the plaintiff filed a civil suit for declaring the above said debiting of Rs. 3 Lakhs in the bank account of the plaintiff be declared as null and void and a decree of mandatory injunction be passed in favour of the plaintiff by directing the defendant to credit entry of Rs. 3 Lakhs in plaintiff’s account No. 8296/34. The plaintiff has also claimed future interest at the rate of 12% from 02.04.1991 till the amount is credited in obedience of the decree passed by the learned trial Court.

4. The defendants have filed written statement denying all the adverse allegations made in the plaint mainly contending that the credit entry of Rs. 3 Lakhs on 02.04.1991 was made in the bank account of the plaintiff by following general practice of the bank, subject to collection of the amount of the aforesaid cheque from the extension counter. It has also been contended that the donor of the alleged cheque namely R.N. Shukla had given a letter dated 06.03.1991 to the defendant No. 2 not to make payment of the alleged cheque bearing No. 725323 amounting to Rs. 3 Lakhs to the plaintiff. Accordingly, the cheque submitted by the plaintiff was not encahsed and returned back with endorsement stop payment order. Thus, the bank has acted as per the instruction of the donor of the cheque and have prayed for dismissal of the suit.

5. The learned trial Court on the basis of the evidence and pleadings of the parties has framed as many as 6 issues as under:

6. The plaintiff to substantiate his case has examined himself and exhibited the documents: Passbook of UCO Bank (Exhibit P/1), Passbook (Exhibit P/3), Cheque return memo, Notice dated 28.04.1991 (Exhibit P/4), Postal Receipt (Exhibit P/5 to P/8), Acknowledgement (Exhibit P/9 to P/11), Intimation received from the defendant No. 2 (Exhibit P/12), Ackn