The court affirmed concurrent negligence between the collecting bank and the courier service for failing to secure the cheque, leading to liability being apportioned at 75% and 25%, respectively.

JUDGMENT

Heard.

2.This appeal has been filed challenging the Judgment passed in O.S.No.154 of 2014 on the file of the II Additional District and Sessions Court, Tiruppur with costs.

3.In this appeal, the fourth defendant is the appellant and the plaintiff and the defendants 1 to 3 & 5 are the respondents before the trial Court. Parties are hereinafter referred as per their rank in the trial Court for the sake of convenience.

4.Plaintiff’s case in brief: The plaintiff is a wind-power electricity generator company at Udumalpet that supplied power to the 1st defendant/TANGEDCO. In consideration, the 1st defendant issued Cheque No. 155841 dated 03.10.2013 for Rs.10,12,921/-. The cheque was received by the 5th defendant, the plaintiff’s authorised agent, who forwarded it to the plaintiff through the 2nd defendant’s courier service on 05.10.2013. When the consignment did not arrive, the plaintiff enquired and, on 15.10.2013, the 2nd defendant informed that the consignment had been lost in transit, later confirming this in writing on 23.10.2013. Even before receiving that written confirmation, the plaintiff, by letter dated 15.10.2013, requested the 1st defendant to instruct the 3rd defendant (the drawee bank) to stop payment of the cheque. The 1st defendant, however, failed to act diligently and wilfully neglected to protect the plaintiff’s interests. The 1st defendant is liable to pay the cheque amount of Rs.10,12,921/-.

5.The cheque was lost due to the 2nd defendant’s carelessness and negligence; hence, the 2nd defendant is personally liable to compensate the plaintiff for the loss. The mere lodging of a police complaint does not absolve the 2nd defendant of liability to make good the loss and settle the cheque amount. Notably, although the theft and a police complaint dated 10.10.2013 are asserted, the 2nd defendant disclosed these facts to the plaintiff only on 15.10.2013, after undue delay.

6.Subsequently, one Sayeed Maqsood Elahi fraudulently encashed the cheque through the 4th defendant. The plaintiff’s name on the cheque was scored out and replaced with “Sayeed Maqsood Elahi” without any authentication. The 4th defendant failed to verify the genuineness of this alteration and negligently honoured the cheque. The whereabouts of the said person who encashed the cheque are not known to the plaintiff. Hence, the 4th defendant is exclusively responsible for the fraud committed in respect of the cheque. The 4th defendant made the payment in contravention of the directions and circulars issued by the Reserve Bank of India and is, therefore, liable to compensate the plaintiff for the loss.

7.The 3rd defendant, in connivance with the 4th defendant, permitted the encashment without due and proper verification. As the banker maintaining the 1st defendant’s account, the 3rd defendant owed a duty to alert the 4th defendant to the manipulation and alteration in the cheque and to inform both the plaintiff and the 1st defendant of the fraudulent encashment. No such intimation was given. The 3rd defendant thus failed to safeguard the plaintiff’s interests and is equally liable for the loss.

8.The 5th defendant is not liable for the cheque amount. Although the 4th defendant has made certain allegations against the 5th defendant, he has been impleaded only as a formal party to the proceedings.

9.Accordingly, the plaintiff has filed this suit seeking a direction to defendants 1 to 4 to pay Rs.10,12,921/- together with interest at 18% per annum from 15.10.2013 until realisation.

10.The written statement of the 1st defendant in brief: This defendant issued a cheque for Rs.10,12,921/- in favour of the plaintiff, dated 03.