Case: Sita Ram Jhunjhunawala Vs. Bombay Bullion Association Ltd. &amp; Ors

one demand against the other, they need not go through the form and ceremony of handing the money backwards and forwards."We consider these observations apposite and hold that where, a payment was made by a cheque drawn on an account with the Bullion Exchange sub-branch and the amount represented by that cheque was transferred to the Clearing House Account of the Association it is virtually a payment in cash, though in form a payment by cheque.15-18. The next transaction to which objection was taken was a payment into the Bullion Hall Sub-branch of a sum of Rupees 4,65,000 by one Sri Bansilal and Sons. The evidence was that the cheque was drawn not on his account on the Bullion Hall Sub-branch of the Bank of Baroda but with the branch of the Bank at the Fort, Bombay. The evidence which the Court accepted was that on the presentation of the cheque the tax ascertained that the constituent had enough funds in the bank for the cheque to be cleared and accepted it and credited the same to the account of the Bullion Exchange Association. The objection raised to the receipt of this payment was also founded on the cheque not being certified as good for payment. It will be noticed that the only point of difference between this cheque and the cheques which were drawn on accounts of members with the Bullion Hall branch which we have dealt with just now is, that the cheque for Rs. 4,65,000 was not drawn on the drawers account with the Bullion Hall Sub-branch but on an account in the same bank at the Fort Branch. For the purpose of considering this point it is not necessary to enter on any examination of the question as to what extent the two branches of the same bank are separate entities. There is no doubt that a customer cannot claim to draw cheques except on the branch where his moneys are deposited and on the account in respect of which the cheque is issued. But that is not what is in controversy in the present case. Here a cheque drawn on the Fort Branch is paid into the Bullion Hall Sub-branch to the credit of the Association. The Bullion Hall Sub-branch of the bank accepts that cheque and credits it to the Association after ascertaining that the drawer of the cheque has enough funds at the Fort branch for meeting that cheque. The only question is whether the payment could be treated as by a cheque which is certified as good for payment. We consider that what we have stated earlier as to the position in regard to a cheque drawn on an account in the same branch would also apply to the present case and that a certificate of the banker that is referred to in the bye-law is a certificate of a bank different from that into which the cheque is being paid. Even if there be any doubt in this matter we are satisfied that when once the stall at the Bullion Hall Sub-branch ascertained that the cheque was backed by sufficient funds to the credit of the customer in the account on which it is drawn, it satisfies the requirements of a cheque certified as good for payment within bye-law 137-B. The learned Judges of the High Court, therefore, rightly held that this payment was not outside the payments permitted by the said bye-law.19. The last of the cases concerns a payment by one Jethalal Sangji Shah of a cheque for Rs. 1,16,250. The, cheque was made in favour of the Bank of India Ltd. not certified good for payment and was paid into the Bullion Hall Sub-branch. The Clearing House received this cheque from Jethalal Sangji Shah after obtaining a declaration from him that he had enough credit in his account with the Bank of India for meeting that cheque. It was stated that the Directors of the Association were approached by the Bank as to whether this cheque could be received in payment and that it was on their advice that a declaration in the form specified was taken from the member and it was only thereafter that the payment was accepted as conforming to by law 137-B. Mr. Purshottam submitted that this payment could certainly not be within bye-law 137-B, and we consider that learned Counsel is right. This, however, does not help him because it concerns the price for 25 bars and, having regard to the quantity of silver with which we are concerned, Mr. Purushottam could not but concede that even if the payment by this constituent was irregular it would not affect the validity of the purchase at the risk of the appellant. We thus reach the conclusion that except the last payment which was not quite regular but whose irregularity is not material, all the other payments were substantially, if not literally, in accordance with the requirements of bye-law 137-B and in consequence the purchase made by the Directors at the risk of the appellant was legal and justified under the by-laws.20. Before concluding it is necessary to advert to the fact that both before the learned trial Judge as well as before the Division Bench a detailed analysis was made of the several payments made by about 17 members of the Association with a view to establish that those payments were not, even if they were made on the 3rd, in accordance with bye-law 137-B. The learned Judges considered the several objections which were formulated to the validity of these payments and after discussing some of the details of the individual cases which were placed before the Court, recorded their finding that the payments satisfied the requirements of the relevant bye-law. In view of the arguments addressed to us we have not examined in detail each one of the objections but have dealt only with those specifically urged before us and the tenability in general of the principles on which these objections were based.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]8. An analysis of theB would show that a member whose Clearance Sheet showed outstanding purchases had, on the Vaida day, to file his Clerance Sheet and to make a payment into the Clearing House of an amount sufficient to pay for all his outstanding purchases at the rate fixed by the Association. This payment had to be made along with the Clearance Sheets and had to be in one of four forms : (a) a cheque certified good for payment, or (b) a Demand Draft on a bank, or (c) a banksor (d) cash. The question raised in this appeal relates to whether certain of the purchasers had made payments into the Clearing House of the amounts payable by them in any of the permitted modes. Before proceeding further we might add that the bank of Baroda which was the Clearing House admitted that the amounts required to be paid by the severalhad been received by it on the 3rd and the total amounts represented by these payments were credited to the Association. Before setting out the matters in controversy as regards the form of payment adopted by certain purchasers under, it is necessary to premise the narrative by a few facts. As already stated the Bank of Baroda Ltd. had been appointed as the Clearing House of the Association under120 in or about 1949 and had been functioning as such ever since. To facilitate payments by and between members the Bank had opened a special branch called the Bullion Hallin the premises of the Association itself.174(3) required every member to open an account in the Bank, so that it might be convenient to pay or draw cheques for effecting clearance. All the members had, in pursuance of and in obedience to thishis was answered by the Division Bench by pointing out that there was nothing illegal in the bank functioning for the purpose of the members of the Clearing House afterp.m. that day. There was evidence before the Court that the ledgers and other books of account in the bank were available for being looked into to ascertain whether a members account had sufficient funds to meet the cheques which had been drawn. There was also evidence that the state of the members account was ascertained before the triplicate form was accepted by the bank and the two left side foils passed on to the depositing member for being handed over to the Clearing House and, as we stated earlier on the next day the bank submitted a statement acknowledging receipt of the amount of the several cheques and showed their amounts to the credit of the Association. In these circumstances, the learned Judges of the High Court came to the conclusion that there had been a payment as required by theB on February 3, 1953.13. We entirely agree with the High Court as regards the alleged illegality said to have been caused by the Bank accepting cheques after the close of the usual Banking hours. It would be noticed that the extension of the banking hours fromp.m. to 7 p.m. that day was not in contravention of any statute, and whatever the position might have been, if such extension acted to the detriment of a constituent of the bank, in the case on hand it was really for the benefit of the customer. In those circumstances, there was nothing illegal and of course, nothing improper in the banking business having continued so long as the work of the bank as a clearing Housethe analysis that we have made of payments that were made into the clearing House by the purchasers in satisfaction of the amounts due by them for the settlement. Rs. 42,99,400 were by way of cheques drawn on the Bullion Hallof the bank. We have also stated that the staff of the bank to whom the cheques were presented had endorsed on the slips that there were sufficient funds in the account to enable the cheques to be cleared and that it was after this process that thewere presented to the Clearing House with the Clearance Sheets in fulfilment of their obligations under thedo not see any substance in this complaint, nor do we see any relevance of this to the point now in controversy, viz., whether there had been a compliance with. As already pointed out, the vaida was originally fixed for the 2nd of February and if that had stood the amount would have been refundable on the 3rd. It was however, owing to a strike of the Gumashtas of the members that a situation had arisen by reason of which the vaida had to be postponed by a day. Whether, as urged by Mr. Purshottam, that upon the proper construction ofC that when a vaida day is shifted the day fixed for the refund of the margin money also gets shifted or whether it would be payable on the day originally fixed, would, in our opinion, make no difference to the result. Theimposes on obligation on the Association to refund the margin money on the day next after the vaida. On its terms however, if the conditions of cls. (a) and (b) cease to exist, and obviously they ceased to exist in the present case even on the 2nd there is nothing in theto preclude the Association from refunding the margin money. Again, even if the margin money were returned before such refund could be legally enforced, the propriety or impropriety of the refund would have no bearing on the only point for consideration relevant to the question whetherB was complied with or not, viz., whether the accounts of the members were in credit at the time the cheques weredo not, however, propose to go into it for the reason that if, as a matter of fact, the Bank of Baroda as a Banking Institution gave Khimji Poonja and Co. credit for Rs. 2 lakhs that was a matter between those two parties and is not a matter which bears upon the validity of the payment for Rs. 4,65,000 which Khimji made. It is not disputed, or rather it cannot be disputed that the Head Office of the bank credited Khimji Poonja and Co. with the sum of Rs. 2,00,000 and there is evidence as to the intimation of the credit by the Head Office. Of course, the cheque by Khimji on the Chartered Bank was not certified "good for payment" but that was not a payment under. The Head office accepted it and, therefore, nothing follows from their not having insisted on that cheque being certified. The fact remains that the Head Office accepted that cheque; we shall take it in anticipation of being cleared, and as a fact it was cleared the next day. With the propriety of the Head Office of the Bank crediting the constituent with the amount of that cheque before actual realisation neither the Bullion Exchange Branch nor the Association to whose account the sum of Rs. 4,65,000 represented by the cheque drawn in their favour was credited, nor the appellant are concerned. When once the Bank credited that sum into the amount there was enough credit for meeting the cheque of Rs. 4,65,000 which is the only point we are concerneddo not, however, derive any assistance from these decisions on the point now in controversy.The first thing to be noticed about this objection as to certification is that there is no question of certification where a cheque drawn on an account in a branch of a bank is paid into the same branch to the credit of another party who has an account in that branch. Certification is a method adopted when a bank on which a cheque is drawn verifies the customers account on which it is drawn and indicates on the cheque that there are enough funds in his account to meet that cheque. It is obvious that there could be no question of such a certification by a bank of a cheque drawn on an account in a branch when the drawer pays it to the credit of a different account in the same branch. The verification of the account of the constituent for the purpose of ascertaining whether there is enough credit to meet the cheque which precedes a certification takes place at the very moment when the cheque is cleared. There is, therefore, no question then of twocertifying bank on which the cheque is drawn and a clearing bank into which that cheque is paid. In such circumstances, we should consider that the proper view to take of the payment would be that it is really a payment in cash.The Privy Council had, in Arsene A. Larocque v. Hyacinthe Beanchemin, 1897 AC 358, to consider whether the payment a company by receipts given by it on account of the purchase price of the property which they sold was a payment inconsider these observations apposite and hold that where, a payment was made by a cheque drawn on an account with the Bullion Exchangeand the amount represented by that cheque was transferred to the Clearing House Account of the Association it is virtually a payment in cash, though in form a payment byis no doubt that a customer cannot claim to draw cheques except on the branch where his moneys are deposited and on the account in respect of which the cheque is issued. But that is not what is in controversy in the present case. Here a cheque drawn on the Fort Branch is paid into the Bullion Hallto the credit of the Association. The Bullion Hallof the bank accepts that cheque and credits it to the Association after ascertaining that the drawer of the cheque has enough funds at the Fort branch for meeting thatconsider that what we have stated earlier as to the position in regard to a cheque drawn on an account in the same branch would also apply to the present case and that a certificate of the banker that is referred to in theis a certificate of a bank different from that into which the cheque is being paid. Even if there be any doubt in this matter we are satisfied that when once the stall at the Bullion Hallascertained that the cheque was backed by sufficient funds to the credit of the customer in the account on which it is drawn, it satisfies the requirements of a cheque certified as good for payment within. The learned Judges of the High Court, therefore, rightly held that this payment was not outside the payments permitted by the saidhowever, does not help him because it concerns the price for 25 bars and, having regard to the quantity of silver with which we are concerned, Mr. Purushottam could not but concede that even if the payment by this constituent was irregular it would not affect the validity of the purchase at the risk of the appellant. We thus reach the conclusion that except the last payment which was not quite regular but whose irregularity is not material, all the other payments were substantially, if not literally, in accordance with the requirements ofBefore concluding it is necessary to advert to the fact that both before the learned trial Judge as well as before the Division Bench a detailed analysis was made of the several payments made by about 17 members of the Association with a view to establish that those payments were not, even if they were made on the 3rd, in accordance with. The learned Judges considered the several objections which were formulated to the validity of these payments and after discussing some of the details of the individual cases which were placed before the Court, recorded their finding that the payments satisfied the requirements of the relevantIn view of the arguments addressed to us we have not examined in detail each one of the objections but have dealt only with those specifically urged before us and the tenability in general of the principles on which these objections were based.