IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN FRIDAY, THE 18TH JUNE 2010 / 28TH JYAISTHA 1932 AS.No. 219 of 1996() ----------------------------- OS.386/1990 of ADDL.SUB COURT,KOLLAM .................... APPELLANT/3RD DEFENDANT IN O.S.386/1990 OF THE ADDL. SUB COURT, KOLLAM: -------------------------------------------------------------------------------- UNITED BANK OF INDIA, BORIALI BRANCH, SAI BABA MARG, BRIVALI MARG, BOMBAY, REPRESENTED BY ITS BRANCH MANAGER OF BORIALI BRANCH. BY ADV. SRI.C.K.ARAVINDAKSHA MENON, SRI.K.C.CHARLES. RESPONDENTS/PLAINTIFF AND DEFENDANTS 1, 2 AND 4 TO 7 RESPECTIVELY IN O.S.386/1990 OF THE ADDL. SUB COURT, KOLLAM: ------------------------------------------------------------------------------------------------------- 1. M. PAPPU PILLAI, AGED 67, BUSINESS, GENERAL MERCHANT AND COMMISSION AGENT, KOTTIYAM, KOLLAM. 2. STATE BANK OF TRAVANCORE, REPRESENTED BY ITS BRANCH MANAGER, KOTTIYAM, KOLLAM. 3. STATE BANK TRAVANCORE, A BANKING CONCERN INCORPORATED UNDER STATE BANK OF INDIA (SUBSIDIARY BANK) ITS REGISTERED OFFICE AT THIRUVANANTHAPURAM BY THE BRANCH MANAGER. 4. UNION OF INDIA, REPRESENTED BY THE SECRETARY, POST AND TELEGRAPH DEPARTMENT, NEW DELHI. 5. POST MASTER GENERAL OF KERALA, THIRUVANANTHAPURAM. AS.No. 219 of 1996 6. POST MASTER GENERAL OF MAHARASHTRA, BOMBAY. 7. JAYANTHILAL AND COMPANY, AF FIRM REGISTERED UNDER INDIAN PARTNERSHIP ACT CARRYING ON BUSINESS AT 104-108, PALVA CHAMBERS, 4TH FLOOR, CLIVE ROAD, BOMBAY. R1 BY ADV. SRI.P.G.PARAMESWARA PANICKER, SRI.P.GOPAL. R2 & R3 BY ADV. SRI.K.K.JOHN, R4 TO R6 ADV. SRI.GEORGE C.P.THARAKAN SCGSC, SRI.P.S.SREEDHARAN PILLAI, SCGSC. THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 18/06/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.N. KRISHNAN, J. = = = = = = = = = = = = = = = A.S. NO. 219 OF 1996 = = = = = = = = = = = = = = = Dated this the 18th day of June, 2010. J U D G M E N T This appeal is preferred against the judgment and decree passed by the Addl. Sub Judge, Kollam in O.S.386/90. The suit is one for realisation of the amount and the Court has granted a decree in favour of the plaintiff against the 3rd defendant for realisation of Rs.32,843/- with interest. It is against that decision the 3rd defendant has come up in appeal. 2. Heard the learned counsel for the appellant as well as for the plaintiff in the suit. This suit represents an unfortunate transaction that has led to the case. Th plaintiff had sent a draft towards the value of the goods purchased to the 7th defendant namely Jayanthilal and Company. The draft was sent by A.S. 219 OF 1996 -2- registered post. It reached Bombay and in the transit from one place to other place it appears that the postal bag itself had been lost and therefore the draft was not delivered to the addressee and therefore the plaintiff was forced to pay the amount. The postal authorities were informed. They moved petitions before the police and nothing could be done but meanwhile it has come out that persons had opened an account with the 3rd defendant, appellant herein and presented the draft for encashment and it was encashed. So when it came to the knowledge it is alleged that the 3rd defendant was negligent in handling the draft and therefore the amount is claimed from them. 3. It has to be stated that before opening a new account the Manager should take certain precautions and must ascertain by enquiry from A.S. 219 OF 1996 -3- the person wishing to open the account, whether such person is known to the Branch, as to his profession, or trade, as well as the nature of the account he proposes to open etc. So there is a duty cast upon the Manager to ascertain the credibility and correctness of the persons who open the account. The 7th defendant is admittedly a Company. It can be seen from the document produced that it is a partnership concern. It can be seen from Exts.B2 and B3 that one Commission agent namely Prabhu Kania had introduced the account holder and acting on the basis of the same the account had been opened. It is very interesting to note that the person who had introduced the new account holder had started an account only on 12.5.88 and has introduced this person to open a new account on 13.5.88. So even the familiarity of the Bank A.S. 219 OF 1996 -4- with the introducer is not there even for 24 hours. When an account is to be opened in the name of a Company or a partnership normally the Bank official would demand for some documents like the registration of the Company or the partnership deed so as to know whether the person attempting to open an account is competent to do so. But to the utter dismay what happens is the Bank authorities did not do anything and merely on the introduction of a person who is unknown to them have opened an account on 13.5.88. It can be seen from Ext.B1 that an amount of Rs.1551 was deposited to start the account later on the same date they presented the draft for encashment and out of the amount of Rs.1551/- Rs.800/- was withdrawn on 16th May and thereafter the draft which was for Rs.24,368/- was credited and on 20th and 21st A.S. 219 OF 1996 -5- May the entire amount of Rs.24,360/- was withdrawn leaving behind the balance of Rs.489/-. So within a span of one week everything had happened and the bank did not have any suspicion at all and the bank authorities did not bother to find out the correctness of the person who had opened the account and therefore it had resulted in loss to the plaintiff. Being a Bank it has got the liability and responsibility to look into the documents properly and do things legally and methodically. Here if limited care had been taken in all these matters the fraud played on the Bank would not have taken place and therefore the negligence of the bank officials had resulted in the loss to the plaintiff. Therefore I agree with the finding of the trial court in making the 3rd defendant liable. A.S. 219 OF 1996 -6- 4. So far as the interest is concerned 15% is seen awarded for the amount from 7.5.88 on the principal amount of Rs.24,368/- and a future interest also on the same rate. It is on the higher side. Really a fraud has been played on the bank and the bank officials were not aware of the same and they have acted negligently but not intentionally to cause any damages to the plaintiff or anybody concerned. Therefore I retain the interest rate at the rate of 15% from the date of suit till the date of decree but reduce the interest to 6% from the date of decree till realisation. The appeal is disposed of accordingly. M.N. KRISHNAN, JUDGE. ul/- A.S. 219 OF 1996 -7- A.S. 219 OF 1996 -8- M.N. KRISHNAN, J. = = = = = = = = = = A.S. No. 219 OF 1996 = = = = = = = = = = = J U D G M E N T 18th June, 2010.