Mercantile Bank Of India Ltd. V. Ratnam

1955 Present : Gratiaen, J., and Swan, J.

MERCANTILE BANK OF INDIA LTD., Appellant, and V. S. RATNAM,
Respondent

S. C. 366-D. C. Colombo, 25,215

Cheque-Crossed generally-Theft of cheque-Payment by drawee otherwise than to a banker-Drawees liability to drawer--Bills of Exchange Ordinance, ss. 8 (3), 79 (2).

Where a cheque crossed generally by the drawer is paid by the drawee otherwise than to a banker, the drawee's liability to the drawer is not automatic ; it arises only if, by reason of the unauthorised mode of payment, the drawer proves that he has incurred a loss for which responsibility may fairly be imputed to the drawee. Therefore, where such a cheque is stolen after the payee indorses it in blank and is subsequently paid across the counter to a holder, the drawer cannot avail himself of the provisions of section 79 (2) of the Bills of Exchange Ordinance to institute action for a declaration that the drawee is not entitled to debit his account with the amount of the cheque.

APPEAL from a judgment of the District Court, Colombo.

G. E. Chitty, with J. de Saram, for the defendant appellant.

K. K. Choksy, Q.C.

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