TMI Blog1965 (2) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout consulting the appellant. On December 10, 1946, the respondent presented the cheque to the Nath Bank for payment. The Nath Bank returned the cheque with the remark full cover not received . The respondent orally informed the appellant of the non-payment of the cheque on the Nath Bank, and on December II, 1946 under oral instructions from the appellant, represented the cheque to Nath Bank for payment. The Nath Bank again returned the cheque with the remark full cover not received , and the respondent thereupon debited the appellant with the sum of ₹ 8,800 in the accounts. On the same day, the respondent wrote to the Bharati Central Bank demanding cash payment of the two cheques drawn on them and dated December 9, 1946. The respondent also contacted the appellant. Under instructions from the appellant, the respondent accepted from the Bharati Central Bank a demand draft for ₹ 8,800 dated December 13, 1946 drawn by its Shillong Branch on its Calcutta Head Office towards payment of the two cheques. The respondent presented the draft to the Bharati Central Bank, Calcutta for payment, but instead of making payment, the Bharati Central Bank wrote on December 16, 1946 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sanction of the appellant. This finding is no longer challenged. But the appellant before us contends that the respondent having credited the appellant's account with the amount of the two cheques on the Bharati Central Bank and having accepted on its own responsibility from the Bharati Central Bank the cheque dated December 9, 1945 on the Nath Bank ought not to be allowed to say that it received the cheque on account of and as agent of the appellant, and that in any event the respondent acted negligently and in breach of its duty as the collecting agent of the appellant and is bound to give credit for the sum of Rs, 8,800. These contentions in the present form were not raised in the Courts below. Nevertheless, we allowed the appellant to raise these contentions, but we think that there is no substance in them. According to the uncontradicted testimony of the witness called on behalf of the respondent, the two cheques on the Bharan Central Bank were entrusted by the appellant to the respondent for collection. In paragraph 2 of its objections, the appellant admitted that the cheques were entrusted to the responsible for realisation. Beyond doubt, on December 9. 1946 the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Bank on the respondent's own account and not as agent of the appellant. A banker entrusted by its customer with the collection of a cheque is bound to act according to the directions given by the customer, and in the absence of such directions, according to the usages prevailing at the place where the banker conducts his business and applicable to the matter in hand. The banker is also bound to use reasonable skill and diligence in presenting and securing payment of the cheque and placing the proceeds to his customer's accounts and in taking such other steps as may be proper, to secure the customer's interests. In the instant case, it is not shown that the respondent acted negligently or in breach of its duties or contrary to any instructions given by the appellant or any lawful usages prevailing amongst bankers at Shillong. There is no substance in the further contention of the appellant that by preferring a claim as creditor in respect of the draft in the liquidation of the Bharati Central Bank, the respondent accepted the draft in satisfaction of its dues from the appellant. The respondent owed a duty to the appellant to take steps in the liquidation proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot contain the words where there have been reciprocal demands, between the parties . The addition of those words in the corresponding Art. 87 of Act IX of 1871, Art. 85 of Act XV of 1877 and Art. 85 of the Act of 1908 adopts and emphasises the test of mutuality laid down in the Madras case. In the instant case, there were mutual dealings between the parties. The respondent Bank gave loans on overdrafts, and the appellant made deposits. The loans by the respondent created obligations on the appellant to repay them. The respondent was under independent obligations to repay the amount of the cash deposits and to account for the cheques, hundis and drafts deposited for collection. There were thus transactions on each side creating independent obligations on the other, and both sets of transactions were entered in the same account. The deposits made by the appellant were not merely complete or partial discharges of its obligations to the respondent. There were shifting balances; on many occasions the balance was in favour of the appellant and on many other occasions. the balance was in favour of the respondent. There were reciprocal demands between the parties, and the account was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim having been served on the appellant he preferred an objection before the Court. There, the appellant had contended that the claim of the Bank is barred by time. Paras 2, 3, and 5 of the objection are material and it would be convenient to set them out in full. They run as follows: 2. That it is a fact that this opposite-party did give a cheque for ₹ 8,800 to the Bank on the Bharati Central Bank Ltd., Shillong for realisation in 1947 and in normal course it realised the amount in cash but either for its own convenience or for remitting its own money to Calcutta it accepted a draft from the Bharati Central Bank Limited on its branch at Calcutta without any instruction or intimation to this opposite party and also this opposite-party withdrew their amount by a cheque after this and if in the meantime the said bank stopped its business this opposite-party cannot be held liable for the same. (3) That had the bank not received any cash payment in case of the opposite-party's cheque as it should have received it should have informed them in time. (5) That it is not a fact that the demand-draft was accepted by the bank instead of cash payment with any knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was presented to the Calcutta Branch of the Bharati Central Bank they requested by letter dated December 16, 1946 to present it to the Shillong Branch. Then, according to Dutta. on the advice of the appellant they presented the draft to the Shillong Branch of the Bharati Central Bank. In the meanwhile the Bharati Central Bank had applied for moratorium and this demand draft was not cashed. It would appear that in the proceedings for reconstructing the Bharati Central Bank the respondent asked to be treated as preferential creditors in respect of the amount for which the draft had been made out and have been so treated. It is contended on behalf of the appellant that the respondent having accepted the demand draft on their own responsibility and having sought to be treated as preferential creditors of the Bharat, Central Bank and having in fact been so treated cannot now turn round and say that the appellant's cheques were not honoured and that, therefore, they are entitled to claim the sum of ₹ 5,965-5- 9 and interest from him. The question to which I would address myself is whether the respondent has to be regarded as the appellant's agent only for the collection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation, 1921 Lord Justice Atkin gave an admirable summary of the position. He stated that the banker undertakes to receive money and collect bills for his customer's account, and that money so received is not held in trust for the customer but borrowed from him with a promise to repay it or any part of it ......... against the customer's written order addressed to the bank at such branch. (pp. 201-202). In the appeal before us the two cheques for ₹ 600 and ₹ 8,200 have not been placed on record and so we do not know in whose favour they were drawn and if they were drawn by the appellant in fayour of self what endorsement he had made on the back of the cheques. The cheques could have been drawn by the appellant either in his own favour or in favour of the bank. Whichever be the position the fact remains that these two cheques were credited by him in his account with the respondent. That is not all. Since the appellant had a mutual open and current account with the respondent it may well be that money was owing by him to the respondent on that date and, therefore, he drew these two cheques on the Bharati Central Bank and credited them in his account wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icult to see how they can hold the appellant, whose account with the Bharati Central Bank has been debited by that Bank to the extent of ₹ 8,800, as being still liable upon those cheques. Whatever rights the respondents have. are against the Bharati Central Bank and not the appellant. Indeed, having claimed, as against the Bharati Central Bank to be treated as preferential creditors of that Bank to the rune of ₹ 8,800, particularly on their own showing what was owing to them from the appellant was something less than ₹ 6,000 they cannot now be heard to say that they merely acted as the appellant's agents. For these reasons, disagreeing with the High Court, I hold that the appellant's name cannot be included in the list of the respondent's debtors. I would, therefore, allow the appeal and dismiss the application of the Liquidator under s. 45-D of the Banking Companies Act in so far as it relates to the appellant, with costs throughout and would direct further that the respondents pay the appellants costs both here and in the High Court. ORDER BY COURT In accordance with the opinion of the majority, this appeal is dismissed with costs. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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