1. This appeal is by the plaintiff before the trial court.

2. The parties are referred to by their rank before the trial court for the sake of convenience.

3. The plaintiff was the Bangalore branch of the State Bank of India (Hereinafter referred to as the 'SBI', for brevity). It was the case of the plaintiff that a demand draft bearing No. 462749, dated 9.1.2001, in favour of one Raj Kishore, for a sum of Rs. 25,000/- was issued by SBI, Bhagalpur city, drawn on SBI, Bangalore branch. The same was said to have been presented in the clearing house by defendant No. 1, Sir M. Visweshwaraiah Co - operative Bank Limited on 17.1.2001 and the proceeds were said to have been paid to the payee.
However, the purchaser of the demand draft, one A. K. Agarwal, the third defendant herein, is said to have made a representation to SBI, Bhagalpur, dated 12.1.2001 that the said demand draft was lost by him and had requested the bank to stop payment. Notwithstanding such intimation, the demand draft had been encashed by a person posing himself as the payee who would have apparently also opened a bank account with the first defendant, through which account, the proceeds under the demand draft had been encashed.
Further, since Agarwal had made a request to be issued with a duplicate demand draft, in the belief that the lost demand draft was never encashed, SBI, Bhagalpur, is said to have made enquiries with SBI, Bangalore, as to whether the first demand draft had been presented for encashment. Inexplicably, SBI, Bangalore, is said to have confirmed in writing that the said demand draft had not been presented for encashment. It is on that basis that SBI, Bhagalpur, issued a duplicate demand draft No. 0971060234 dated 9.1.2001 for Rs. 25,000/- (on 7.6.2001), the said demand draft was said to have been duly encashed in course of time.
It is only in September, 2002 that SBI, Bhagalpur placed the third defendant on notice that he was not entitled to the duplicate demand draft and hence was bound to refund an amount of Rs. 25,000/- with interest, as there was dual payment.
It was in the above background that the suit was filed.

4. It was alleged that the first defendant had opened the account of an impostor on an improper introduction, without exercising due care and caution. It had opened the account in the name of a person claiming to be the second defendant with a nominal deposit of Rs. 250/- and had enabled that person to deposit the demand draft dated 9.1.2001 that was said to have been lost by the third defendant, and had allowed him to encash the same. The third defendant who had also acted carelessly in allowing the demand draft to reach the wrong hands was also liable to make good the loss, jointly and severally.
The first defendant contested the suit and denied its liability.

5. The trial court framed the following issues:
"1. Whether the Plaintiff proves that the defendants responsible for the loss incurred by the plaintiff?
2. Whether plaintiff proves that the plaintiff is the true owner of the loss Demand Draft?
3. Whether the plaintiff proves that the defendants 1 to 3 art jointly and severally liable to pay the suit claim?
4. What decree or order?"
The trial couri Had answered Issues Nos. 1 and 2 in the negative and Issue No. 3, partly in the affirmative and decreed the suit against the second defendant. It is that which is under challenge.

6. The learned counsel for the plaintiff contends that the suit as against defendant No. 1 ought to have been decreed. It is asserted that the said defendant could not have been held entitled to protection under S.131 - A of the Negotiable instruments Act, 1881 (Hereinafter referred to as the 'NI Act', for brevity).
It is contended that as a collecting banker, the first defendant was negligent in opening an account in the name of the second defendant without verifying the credentials of the said person.
The first defendant had not discharged the burden of establishing that it had acted in a prudent