Mr. R. P. Gupta, J. ( 1 ) THIS suit is for recovery of Rs. 80,605. 00 against defendantno. 1 now (the suit having been withdrawn against defendants 2 to 9 and havingbeen dismissed as such vide order dated 22/4/1988 of this Court ). The allegations bythe plaintiff are that the defendant No. 1 Bank (Punjab National Bank) sent a chequefor collection. It was Cheque No. OC/16-383575, dated 10/12/1964 for Rs. 80,605. 00purporting to be drawn by Land Acquisition Collector, Delhi, in favour of onedurlabh Singh, son of Shyam Singh. It was endorsed to the Bank and it boreendorsement of the Punjab National Bank that payee s account has been credited. The plaintiff believed the cheque to be genuine and on 29/12/1964 made payment ofthe cheque to defendant No. 1 (Punjab National Bank), Ajmeri Gate Extensionbranch, Ajmeri Gate, New Delhi. It is asserted that around 18/1/1965, the plaintiffreceived a letter of that date from Land Acquisition Collector, Delhi, informing thata cheque leaf bearing the aforesaid number of the cheque, among others, had beenstolen by somebody. It was found that the cheque involved in this case was notgenuine. So the assertion is that the plaintiff under mistake that the cheque wasgenuine made payment of the amount of the cheque to defendant No. 1. It is assertedthat the plaintiff is entitled to recover the amount from the defendant No. 1 Bank. Itis urged that defendants had acted fraudulently as somebody had forged thesignature of the Land Acquisition Collector, Delhi, and it was fraudulently drawnin favour of Durlabh Singh. The cause of action is sought from the date of paymentof the cheque. The suit was filed on 11/12/1967. ( 2 ) THE Punjab National Bank, defendant No. 1, has contested the suit urgingthat the plaint does not disclose any cause of action against it. It has been assertedthat plaintiff is the drawee bank who had been keeping account of the Landacquisition Collector, Delhi, and who had specimen signatures of the Land Acquisition Collector, Delhi. The plaintiff had honoured and encashed the cheque dated10/12/1964 and the plaintiff itself was in a position to check up the genuineness orotherwise of the cheque and was responsible for payment of the cheque and so thereis no cause of action against defedant No. 1 Bank. The plaintiff had honoured and encashed the cheque dated10/12/1964 and the plaintiff itself was in a position to check up the genuineness orotherwise of the cheque and was responsible for payment of the cheque and so thereis no cause of action against defedant No. 1 Bank. It is urged that defendant No. 1had no information nor any source to check up the genuineness of the cheque inquestion and so it is not liable for the alleged fraud. It was urged that defendant No. I Bank has already made payment of the amount received by it to its principal. It isasserted that plaintiff itself was negligent in not checking up the alleged forgery inthe cheque and when it cleared and encashed the cheque it cannot blame thecollecting bank. Principal of estoppel is pleaded against the plaintiff. It was urgedthat defendant No. 1 (Punjab National Bank) has only a sum of Rs. 55. 00 left out of theamount of the cheque with them and the rest has been paid to its principal aftercollecting the same from the plaintiff-Bank. It is urged that defendant No. 1 cannotbe held liable for the amount paid by it to its principal as whose agent it collected thecheque. . even if the cheque is shown to be forged. It has been urged that plaintiff hasno locus standi to sue. It is urged that Land Acquisition Collector, Delhi, alone, beingthe owner of the cheque, could sue for recovery of this money. In any case, it is urgedthat Land Acquisition Collector, Delhi, who maintains current account with theplaintiff-Bank, as also the Union of India and Delhi Administration are necessaryparties or at least proforma parties to the suit. So it is urged that suit is bad for nonjoinder of parties. It is asserted that suit is not filed by a duly authorized person. Itis urged that defendant No. 1 Bank did not receive any amount for itself from theplaintiff-Bank. It was only by way of collection for its principal. The defendant No. I was only collecting agent. It is urged that since the money was withdrawn by thedepositor of the cheque, defendant No. 1 Bank cannot be held responsible for thesame. ( 3 ) I need not note the pleas raised by defendants 2 to 9 or their legal representatives as the suit has already been withdrawn and dismissed against them aswithdrawn. It is urged that since the money was withdrawn by thedepositor of the cheque, defendant No. 1 Bank cannot be held responsible for thesame. ( 3 ) I need not note the pleas raised by defendants 2 to 9 or their legal representatives as the suit has already been withdrawn and dismissed against them aswithdrawn. ( 4 ) IN replication to the written statement of defendant No. 1 Bank, the plaintiffhas reiterated its assertions raised in the plaint and denied its negligence in checkingup the alleged forgery in the cheque. The plea of estoppel was totally denied asarising in law or fact. It was urged that liability of defendant No. 1 arose undersection 72 of the Indian Contract Act as being a statutory liability. It was notaccepted that defendant No. 1 Bank has passed on the money to its principal. In anycase, it was urged that defendant No. 1 is liable to pay the money to plaintiff as thecheque was forged one and defendant No. 1 should have been careful in notpresenting a forged cheque for collection. It Was denied that Union of India or theland Acquisition Collector, Delhi Administration, are necessary or proforma parties to the suit. ( 5 ) THE following issues were framed on 5/5/1970:- 1. Is the plaintiff entitled to recover any amount from defendant no. 1 under the provisions of Section 72 of the Indian Contract Act, 1872 ? Ifso, to what amount is the plaintiff entitled and on what basis?2. Is the plaintiff entitled to the recovery of Rs. 80,605. 00 from the rest of thedefendants also in terms of the allegations contained in the plaint? OPP. 3. To what other relief, if any, is the plaintiff entitled and against whom? Ifso, to what amount is the plaintiff entitled and on what basis?2. Is the plaintiff entitled to the recovery of Rs. 80,605. 00 from the rest of thedefendants also in terms of the allegations contained in the plaint? OPP. 3. To what other relief, if any, is the plaintiff entitled and against whom? (Under this issue, the plaintiff will be entitled to prove the case againstdefendant No. 1 on allegations other than the allegations that the said defendant isliable in view of the provisions of Section 72 of the Contract Act, This he will be doingwithin the ambit of the allegations made in the plaint.) ( 6 ) THIS Court had observed at the time of framing of issues that in the Issue No. 3, the plaintiff will be entitled to prove the case against defendant No. 1 onallegations other than the allegation that defendant is liable inview of the provisionsof Section 72 of the Indian Contract Act also, but this will be done within the ambitof the allegations made in the plaint. It was observed that defendant No. 1 will beat liberty to prove the contentions raised in the written statement regarding Landacquisition Collector, Delhi, only, having the necessary cause of action or locusstandi to file the suit. ( 7 ) I may note here that so far as issue No. 2 is concerned, it does not survive asit arose out of the pleadings of defendants 2 to 9 or their successors and the suitagainst them has already been withdrawn and dismissed as such as claim againstthem has been given up. So I am left to decide issue Nos. 1 and 3 with theobservations of the Court noted above. ( 8 ) IN evidence, the plaintiff examined Mohd. Mustafa, who was the Landacquisition Collector, Delhi, at the time of drawing of the cheque. The nextstatement is that of Hardit Singh, retired officer of the State Bank of India. Mr. Mustafa has asserted that the signature on the cheque Ex. P/a was never signed byhim and the signature at point marked x is not his signature although it purportsas if it was signed by him. It is also urged that the seal under the signature purportingto be that of the Land Acquisition Collector, Delhi at mark y is not the seal of theland Acquisition Collector. P/a was never signed byhim and the signature at point marked x is not his signature although it purportsas if it was signed by him. It is also urged that the seal under the signature purportingto be that of the Land Acquisition Collector, Delhi at mark y is not the seal of theland Acquisition Collector. So he is proving the forgery of the signature and theforgery of the seal on the cheque. It is also in his evidence that some cheque leafs froma cheque book had been stolen, including the leaf of this cheque. As soon as he cameto know about it, he wrote to the agent State Bank of India, Tis Hazari, Delhi, videletter Ex. P/c and the Bank wrote back that the cheque Ex. P/a had already beenencahsed. ( 9 ) HARDIT Singh was the Officer of the State Bank of India, Tis Hazari, at that time. He said that Land Acquisition Collector had maintained an account with theplaintiff-Bank during the period 1963 to 1967. He also proved that cheque inquestion was presented to the Tis Hazari branch of the plaintiff-Bank. It wasreceived for clearing from the Punjab National Bank and it was passed by U. S. Bhargava, the Accountant of the Bank. Mr. Bhargava was dead by the time theevidence of this witness was being recorded. The amount of the cheque was paid on29/12/1964. This witness identifies the initials of U. S. Bhargava, Accountant. Theamountwas paid through clearing to defendant No. 1. He also narrated that amountof this cheque was claimed by Land Acquisition Collector from the State Bank ofindia and they had to pay it in the year 1967 by raising a debit to the suspense accountand by giving a credit to the Land Acquisition Collector. ( 10 ) DEFENDANT No. 1 examined one witness M. L. Kumariya, Sr. Manager ofasaf Ali Road branch of the Bank. He produced copy of general power of attorneyas DI-W1/l and statement of account of Durlabh Singh was produced as DI-W2/2a. The account showed a balance of Rs. 120. 37 p. only when this witness wasmaking statement on 22/4/1988. There was no entry after 31/12/1987. He asserts thathis Bank acted only as a collecting agent in respect of the cheque and the amount wascredited to the account of Durlabh Singh on 29/12/1964. ( 11 ) THE facts are not disputed in this case. 120. 37 p. only when this witness wasmaking statement on 22/4/1988. There was no entry after 31/12/1987. He asserts thathis Bank acted only as a collecting agent in respect of the cheque and the amount wascredited to the account of Durlabh Singh on 29/12/1964. ( 11 ) THE facts are not disputed in this case. The forgery of the cheque, the factthat it was presented to plaintiff by defendant No. 1 as collecting agent, the fact thatpayment was made to defendant No. 1 for its principal, are fully established bystatement of the witnesses. The only question is whether the plaintiff is entitled torecover the amount from defendant No. 1 who was the collecting agent. ( 12 ) THE assertion of the learned Counsel for plaintiff is that this payment wasmade by plaintiff to defendant No. 1 under a mistaken belief that it was a genuinecheque which was found to be not genuine. So it is urged that the plaintiff is entitledto recover back the amount from the defendant No. 1 to whom the money waspassed on and defendant No. 1 may have its own remedies against its principal. ( 13 ) SECTION 72 of the Indian Contract Act, 1872, is as follows: "72. Liability of person to whom money is paid, or thing delivered, by mistakeor under coercion- A person to whom money has been paid, or anythingdelivered, by mistake or under coercion, must repay or return it. " ( 14 ) THE contention of the plaintiff s Counsel is that the cheque purporting tohave been issued by the Land Acquisition Collector was in fact not so issued by himand, therefore, it was not a cheque, strictly speaking, within the definition of"cheque" in Negotiable Instruments Act. According to him, a cheque is onedocument which is in fact signed by its drawer and if a piece of paper bears forgedsignature of the drawer and is in the proforma of a cheque, it will not be a cheque. For this, he puts reliance on the observations of the Supreme Court of India in AIR1967 SC 389 titled Bihta Co-operative Development and Cane Marketing Unionltd. , and Another v. Bank of Bihar and Others. For this, he puts reliance on the observations of the Supreme Court of India in AIR1967 SC 389 titled Bihta Co-operative Development and Cane Marketing Unionltd. , and Another v. Bank of Bihar and Others. In Para (11) of this report, the Apexcourt observed "if the signatures on the cheque or at least that of one of the jointsignatories to the cheque are not or is not genuine, there is no mandate on the Bankto pay and the question of negligence on the part of the customer, such as, leavingthe cheque book carelessly so that a third party could easily get hold of it wouldafford no defence to the Bank". Their Lordships also noticed what is a "cheque",according to Halsbury s Law of England (3rd Edition), Volume II, Article 380, whichis as under: "a document in cheque form to which the customer s name as drawer is forgedor placed thereon without authority is not a cheque, but a mere nullity. Unlessthe banker can establish adoption or estoppel, he cannot debit the customerwith any payment made on such document. " ( 15 ) THAT suit, however, was against a drawee Bank by the Society whose chequehad been stolen and signatures of one of the authorised signatories had been forged. The Bank had come forward with a plea of negligence of the Society or its officers. While dealing with this question, their Lordships held that since one of the signatures of the authorised signatories were forged so that there never was any mandateby the customer at all to the banker, the question of negligence of the customer inbetween the signature and the presentation of the cheque never arose. Theirlordships held that the circumstances and the encashment of the cheque show thatthe banker was negligent and some of its officers were fraud ulant right from the verybeginning. The cheque was in loose form returned by an ex-constituent and not fromany regular cheque book of the customer. ( 16 ) THIS authority, of course, was not dealing with liabilities between the drawee Bank or the paying Bank and the collecting Bank, but it had noted with approval the observations of Halsbury as to what is a cheque. ( 17 ) AS per Section 6 of the Negotiable Instruments Act: "a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. ( 17 ) AS per Section 6 of the Negotiable Instruments Act: "a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. " ( 18 ) SECTION 5 of the aforesaid Act defines bill of exchange as "an instrumentin writing containing an unconditional order signed by the maker, and directing acertain person to pay certain sum of money only to, or to the order of a certain personor to the bearer of the instrument. " ( 19 ) SO a cheque is a bill of exchange giving directions of payment to a banker and not expressed to be payable otherwise than on demand. ( 20 ) WHEN this meaning of the cheque is understood in the light of theobservations of the Apex Court noted in the above pronouncement, it becomes clearthat a document which is in cheque form but on which the signature of the draweris forged, has in fact no mandate from the drawer. This is, therefore, not a cheque in the strict sense. When such a document is forwarded by a collecting Bank to apaying Bank, and the paying Bank makes payment to the collecting Bank, who inturn passes it on to its principal who had put in the forged cheque, the question iswhat are the rights between the payer Bank and the collecting Bank. That is theprecise question involved in this case. ( 21 ) THE collecting bank, viz. , defendant No. 1 has raised a plea of estoppel onthe ground of negligence of the drawee Bank in encashing this cheque and notdetecting the forgery on the plea that they had all the means and material with themto find out if signatures of the Land Acquisition Collector were genuine or not, andsecondly because this collecting Bank had already paid the money to its principal aswhose agent it collected the cheque, even though it proved to be a forged one later on. ( 22 ) LEARNED Counsel for the plaintiff has brought to my notice a judgment ofthe Division Bench of the Madras High Court reported as AIR 1981 Madras 129,titled Indian Bank v. Catholic Cyrian Bank Ltd. In this case, a customer of theappellant-Bank presented a forged draft of Rs. 29,000. 00 which was purporting to bedrawn on the respondent-Bank for collection. The appellant-Bank forwarded thisforged draft to the respondent-Bank for collection. 29,000. 00 which was purporting to bedrawn on the respondent-Bank for collection. The appellant-Bank forwarded thisforged draft to the respondent-Bank for collection. The money was collected as therespondent-bank did not suspect the forgery. However, about 8 days later, therespondent-Bank learnt of the forgery and it informed the appellant-Bank at once,but by then the customer had withdrawn the amount. The respondent-Bank thensued the appellant-Bank for Rs. 29,000. 00 on the ground that the appellant had beennegligent while opening a current account in the name of its customer and by reasonsof its negligence and want of good faith, the forged draft had come to be wrongly converted. ( 23 ) IT may be noticed that the nature of forgery was that one branch ofrespondent-Bank had issued a draft of Rs. 20. 00 in favour of a customer. On thisgenuine draft, a forgery was made so as to make it a draft for Rs. 29,000. 00. Theforgery was so skillfully made that there was no suspicion on the face of the draft andunless it was looked upon with a suspicious eye, there was nothing wrong on the factof it. ( 24 ) THE appellant-Bank pleaded that it had exercised due diligence and therewas no negligence on its part as a collecting Bank and it also sought protection underthe provisions of Sections 131 and 131 (A) of the Negotiable Instruments Act. ( 25 ) THE Division Bench held under the circumstances of the case that the Bankopening the account could not be considered to have acted without negligence evenif it might have acted in good faith. Consequently, the collecting Bank was notentitled to benefit of Sections 131 and 131 (A) of the Negotiable Instruments Act. They also observed that in such a case the Bank which honoured the draft could notbe said to be guilty of contributory negligence merely because it failed to makeenquiries from its branch which issued the draft before the same was cleared and theamount thereof was credited to the account of the new customer and he withdrewit. ( 26 ) SECTIONS 131 and 131 (A) of the Negotiable Instruments Act, 1881, may be noted at this stage as they deal with the protection available to collecting Banks. These are as under: "sec. ( 26 ) SECTIONS 131 and 131 (A) of the Negotiable Instruments Act, 1881, may be noted at this stage as they deal with the protection available to collecting Banks. These are as under: "sec. 131-A banker who has in good faith and without negligence receivedpayment for a customer of a cheque crossed generally or specially to himselfshall not, in case the title to the cheque proves defective, incur any liability tothe true owner of the cheque by reason only of having received such payment. S. 131 (A)-The provisions of this Chapter shall apply to any draft, as definedin Section 85a, as if the draft were a cheque. " ( 27 ) THE wording of Section 131 shows that one of the conditions for availabilityof protection to the collecting Bank is "in case the title to the cheque provesdefective". Prima facie, it will not apply when cheque itself is forged. Forgery isnot the same thing as "dispute about title of cheque". ( 28 ) ONE more judgment of a Division Bench of Madras High Court has beenbrought to my notice by the learned Counsel for the plaintiff. It is AIR 1955 Madras402 titled Bharat Bank Ltd. , Madras, Appellant v. Kishinchand Chellaram, Respondent. In this case, dealing with defence of a collecting Bank based on Section 131 ofthe Negotiable Instruments Act, the Division Bench observed: "when in an action in conversion a defence is raised under Sec. 131 the primaryquestion for determination is whether in the matter of realisation of the chequethe collecting Bank had acted without negligence - Negligence not merely atthe stage of encashment but at the prior stages from the receipt of the chequein question. The question whether the Bank had acted with negligence in theopening of the account will be relevant under Sec. 131 to this extent that if theopening of the account and the deposit of the cheque are really part of onescheme as where the account itself is opened with the cheque in question orwhere it is put into the account so shortly after the opening of the account asto lead to the inference that it is part of it, then negligence in the matter ofopening the account must be treated as negligence in the matter of realisationof the cheque. The question as to how far the two stages can be regarded as sointimately associated as to be considered as one transaction is a question offact. " ( 29 ) IN the present case, the signature of the drawer on the cheque being forged,firstly it could not fall within the category of "cheque" in strict sense, and secondly,the dispute in the present case is not as to the title of the cheque, but it arises out ofa fraud played by forgery of drawer s signature. There was a false representationthat it was a valid cheque duly signed by the drawer who in this case purported tobe the Land Acquisition Collector. This misrepresentation appeared from the faceof the document which purported to be a cheque. The drawee Bank was deceivedand its concerned officers could not detect the forgery. Does it mean that thecollecting Bank is protected because the drawee Bank paid? The Division Benchauthority of Madras High Court (supra) gives the answer in the negative. ( 30 ) IN the facts and the circumstances of the case before me, the account wasopened on 24/12/1964 and on 26/12/1964, this cheque for a huge amount of Rs. 80,605 / - was deposited. the value of Rs. 80,000. 00 in the year 1964 has to be imaginedto infer what care-was needed for the Bank which opened the account and which wasaccepting the cheque for collection. The money was received on 29/12/1964 and itwas withdrawn between 1/1/1965 to 11/1/1965. There was not an existing account asof old but a new account. The defendant Bank still was not put to caution and didnot enquire who it was that was rushing with deposit of such cheque and withdrawal of the same within a few days. In the written statement of the defendantbank, it does not even disclose the identity of the client who opened the account withdefendant No. 1, the circumstances leading to opening of the account, the circumstances of deposit of the cheque and withdrawal of its entire money. ( 31 ) THERE is no accepted rule of law nor principal of equity or estoppel that bymaking payment of a cheque the drawee Bank is deemed to have made a representation to the collecting Bank that the cheque is genuine. ( 31 ) THERE is no accepted rule of law nor principal of equity or estoppel that bymaking payment of a cheque the drawee Bank is deemed to have made a representation to the collecting Bank that the cheque is genuine. It will, at the most, appearto be an acceptance of fact that on the face of it or prima facie there is no suspiciouscircumstance appearing on the face of the cheque. When a cheque is passed on bythe collecting Bank to a drawee Bank, the drawee Bank can expect that the collectingbank has ensured itself about the genuineness of the customer and that there are nosuspicious circumstances preceding deposit of cheque and if any suspicious circumstances arise about withdrawal of the amount, the collecting Bank will act with duecaution. ( 32 ) SUCH matters have arisen in a number of cases before the British as well ascommon Wealth Courts, also. The matters have been dealt with in various ways bythe British Courts. Some have stressed the principle of estoppel considering that thepayment by the drawee Bank amounts to a representation on the genuineness of thecheque and, therefore, when the collecting Bank pays off to the customer, it acts toits detriment on the representation of the payee Bank and so the principle of estoppelis applied. In other sets of cases, the Courts have leaned towards necessity of cautionby the collecting Bank and havenot accepted the reasoning that a payment bydrawee bank amounts to a representation of genuineness of the drawer s signatureon the cheque. In those cases, the plea of estoppel was rebuffed and the circumstances surrounding opening of the account, the deposit of the cheque or draft, itscollection and its payment were taken into consideration to draw inference whetherthe collecting Bank was acting with due diligence or was negligent. All these casesare based on general principles of equity and justice and not on any statutoryprovisions of law. ( 33 ) LEARNED Counsel for plaintiff has cited before me one such judgment reported as (1974) 3 All E. R. 834 titled National Westministed Bank Ltd. v. Barclays Bank International Ltd. b Another. All these casesare based on general principles of equity and justice and not on any statutoryprovisions of law. ( 33 ) LEARNED Counsel for plaintiff has cited before me one such judgment reported as (1974) 3 All E. R. 834 titled National Westministed Bank Ltd. v. Barclays Bank International Ltd. b Another. In this case, after reviewing the various preceding judgments, the Queen s Bench Division held: "the mere fact that a banker had honoured a cheque on which his customer ssignature had been undetectably forged did not carry with it an implied representation by the banker to the payee that the signature was genuine. Furthermore, it was immaterial that the cheque had been presented for specialcollection, for that circumstance did not as such imply anything sinister orsuspicious which should put the paying Bank on guard. Accordingly therewas no implied representation by the plaintiffs which could lay the foundationfor an estoppel against them and, therefore, there was no bar to the plaintiffs right to recover the money as having been paid under a mistake of fact. " ( 34 ) IN this case, one b , a resident of Nigeria had an account with the plaintiffbank in their London branch and had a cheque book issued by that branch. Oneblank cheque was stolen from this cheque book, unknown to b . One Ismail, whowas defendant No. 2, was given a cheque for 8000 Pounds Sterling by an intermediary. This happened to be the same cheque which had been stolen from the chequebook of b . Ismail had received it in good faith. However, B s signature had beenforged on it by somebody. The forgery was undetectable except to an expertgraphologist looking with prior suspicion. Ismail, the second defendant, sent thecheque to London for collection. In fact Ismail, although a successful businessman,was moving his assets from Nigeria to London because of the prevailing civil warsituations in Nigeria and for that purpose for the British Pounds, black market pricehad to be paid in Nigerian Pounds which Ismail had agreed to pay to the intermediary if and when the cheque was collected. Ismail sent this cheque to his Bank inlondon. This Bank is the first defendant, i. e. , Barclays Bank International Ltd. It wasdeposited with a request for special clearance and for advice immediately if thecheque is honoured. Ismail sent this cheque to his Bank inlondon. This Bank is the first defendant, i. e. , Barclays Bank International Ltd. It wasdeposited with a request for special clearance and for advice immediately if thecheque is honoured. The cheque was presented to the plaintiff-Bank for specialcollection through the defendant No. 1 Bank. The plaintiff-Bank honoured thecheque as there was no reason to suspect that it was not a genuine cheque and b wasknown to the plaintiff-Bank as a customer of integrity and the plaintiff-Bank sbranch was holding ample collateral security to cover B s indebtedness. Thusbarclays Bank informed Ismail, the second defendant, that the cheque had beenhonoured and his account has been credited with the amount. Relying on thisinformation, the second defendant Ismail paid the black market price in Nigerianpounds, i. e. , 10400 Nigerian Pounds, to intermediary. About two weeks later, b learnt of the payment and informed the plaintiff-Bank that the cheque was a forgery. The plaintiff-Bank then sued the defendant No. 1 Bank as well as Ismail as defendantno. 2 for recovery of 8000 Pounds Sterling as money paid on mistake of fact. Ismail,the second defendant, contended that the plaintiff was estopped from making theclaim since by honouring the cheque the plaintiff had represented that it wasgenuine and in reliance of that representation, he had acted to his detriment. ( 35 ) WITH the observations noted at the earlier stage of reference to thisjudgment, Kerr, J. sitting in Queen s Bench Division negated the plea of Ismail thatthe paying Bank was estopped from recovering the amount from him or from thecollecting Bank because Ismail paid the money to the intermediary after the chequehad been honoured and if the cheque had not been honoured he would not have paidthe price to intermediary and thus he acted to his detriment and that the paymentmade by the plaintiff-Bank amounted to a representation that the cheque wasgenuine. All these contentions were negated by the Bench which held that thepayment was made under mistake of fact. In this case, the amount of 8000 Poundssterling was still in the account of Ismail held by defendant No. 1 Bank and had notgone out of the control of the account. Kerr, J. delivering the judgment, had observedthat the common Aphorism that a banker is under duty to know his customer ssignature is in fact incorrect even as between the banker and his customer. Kerr, J. delivering the judgment, had observedthat the common Aphorism that a banker is under duty to know his customer ssignature is in fact incorrect even as between the banker and his customer. Theprinciple is simply that a banker cannot debit his customer s account on the basis offorged signatures since he has in that event no mandate from the customer for doingso. His Lordship dealt with a number of earlier authorities, including the judgmentin Price v. Neal; (1762) 3 Burr 1354, and London and River Plate Bank Ltd. v. Bank ofliverpool Ltd. , (1896) 1 QB 7, and observed that the observations in these pronouncements cannot be treated as Authority for the broad proposition that merelyby paying a wholly forged bill or cheque without negligence, an exporter or bankeris estopped from recovering the money because he is thereby deemed to haverepresented the genuineness of the drawer s signature. ( 36 ) REFERRING to various other authorities of Privy Council and Supreme Courtin various cases, his Lordship observed: "none of the various rationes decidendican, however, in my view be taken even as pursuasive authority for the broadproposition that merely by honouring a forged cheque without negligence thepaying Bank impliedly represents to the payee that the signature is genuine so as tobar any right of recovery from him. " ( 37 ) A Judgment of the Supreme Court of Ceylon in Imperial Bank of India v. Abeyesinghe - (1927)29 Ceylon NLR 257, was REFERRED TO and discussed by Kerr, J. Inthat case, the Supreme Court of Ceylon observed that a cheque on which signatureswere forged was not a cheque at all and further that the proposition that a Bank isbound to know its customer s signatures may be good as between the Bank and itscustomer but in the absence of any negligence in actually honouring the signaturethere was no duty or obligation towards a third party. It was also observed that thecontention that "by paying the money in ordinary course to the person whose nameappeared as payee the Bank must be taken to have represented to him that thedocument was genuine, was unacceptable". Their Lordships further observed inthat case that the Bank was induced to part with the money to the fraudulant clientnot so much in reliance on the cheque having been honoured as by reasons of fraudwhich had been practiced on him. Their Lordships further observed inthat case that the Bank was induced to part with the money to the fraudulant clientnot so much in reliance on the cheque having been honoured as by reasons of fraudwhich had been practiced on him. Then dealing with the equities between thepaying Bank (plaintiff) and the recipient Bank (defendant), their Lordships observed: if it were necessary to decide this case by applying the test of which of twoinnocent parties had enabled a third party to cause loss it seems to me that the (defendant) must bear the responsibility". ( 38 ) ONE more argument before Justice Kerr was that the cheque had been givenfor special collection and, therefore, it should have put the paying Bank on caution. His Lordship discussed the surrounding circumstances and observed: "if this iscorrect in general then I do not think that special collection as such imply anythingsinister or suspicious which itself should put the paying bank on guard". In fact hislordship observed that the fact that the cheque was put in for special collectionshould have put the collecting Bank on guard and the paying Bank could rely on thefact that the collecting was was forwarding the cheque for special collection. Thedoubts, if any, should arise in the mind of the collecting Bank and not in the mindof the paying Bank. ( 39 ) ACCORDING to this observation, the end result was that the claim of theplaintiff-Bank was decreed against the collecting Bank as well as Ismail, defendantno. 2. ( 40 ) AT this stage, it would be appropriate to note a pronouncement of thesupreme Court of India regarding rights arising in respect of payments made undermistake of fact or even under mistake of law, under the provisions of Section 72 ofthe Indian Contract Act. 2. ( 40 ) AT this stage, it would be appropriate to note a pronouncement of thesupreme Court of India regarding rights arising in respect of payments made undermistake of fact or even under mistake of law, under the provisions of Section 72 ofthe Indian Contract Act. The Apex Court in (1959) SCR 1350 titled Sales Tax Officer,banaras and Others v. Kanhiya Lal Mukund Lal Saraf, held that the term "mistake"in Section 72 of the Indian Contract Act comprises within its code a mistake of lawas well as a mistake of fact and that under that Section a party is entitled to recovermoney paid by mistake or under coercion, and if it is established that the payment,even though it be of tax, has been made by the party labouring under mistake of law,the party receiving the money is bound to return it though it might have been paidvoluntarily subject, however, to questions of estoppel, waiver, limitation or the like. ( 41 ) IT was further observed that where there is a clear and unambiguousprovision of law which entitles a party to the relief claimed by him, equitableconsiderations cannot be imported and, in the instant case, the fact, that thegovernment had notretained the moneys paid by the respondent but it spent themaway in the ordinary course of business of the State, would not make any difference,and under the plain terms of Section 72 of the Act, the respondent was entitled torecover the amount. ( 42 ) IN this case, the facts were that the respondent firm paid sales tax in respectof its forward transactions in pursuance of assessment orders passed by the Salestax Officer for the year 1949-51, but in 1952 the Allahabad High Court having heldin M/s. Budh Parkash Jai Parkash v. Sales Tax Officer, Kanpur that the levy of salestax on forward transactions was ultra vires, and the Supreme Court having confirmed this finding of law, the respondent applied for refund of the amount paid, bya writ petition under Article 226 of the Constitution of India. It was contended forthe Sales Tax authority that the respondent was not entitled to a refund because: (1)the amounts in dispute were paid by the respondents under a mistake of law andwere, therefore, irrecoverable; (2) the payments were in discharge of the liabilityunder the Sales Tax Act and were voluntary payment without protest; and (3)inasmuch as the moneys which had been received by the Government had not beenretained but had been spent away by it, the respondent was disentitle to recover thesaid amount. It was on these facts and in the light of these objections against aclaimthat the Apex Court gave the above findings on questions of law involved. The claimof the respondent firm was thus allowed. ( 43 ) THEIR Lordship of the Supreme Court in this case observed that at the timewhen the firm deposited Sales Tax under the U. P. Sales Tax Act and the relevantrules, both the parties, i. e. , the firm as well as the department, were labouring undera mistake of law. The legal position as established later on by the decision ofallahabad High Court and subsequently confirmed by the Supreme Court was notknown to the parties at the relevant date. This mistake of law became apparant onlyon 3/5/1994 when the decision of the Supreme Court confirmed the decision ofallahabad High Court and on that position being established the firm becameentitled to recover back those amounts which had been paid by mistake of law. Theirlordships observed that there was nothing in the circumstances of the case to raiseany estoppel against the respondents nor would the fact that the payments weremade in discharge of a tax liability come within the dictum of the Privy Council. Itwas held that voluntary payment on such tax liability was not by itself enough topreclude the respondents from recovering the said amounts once it was establishedthat the payments were made under mistake of law. ( 44 ) ON the question of estoppel, their Lordships observed as under: "whether the principle of estoppel applies or there are circumstances dependant upon the transaction, which disentitled the respondents to recover backthe moneys, depends upon the facts and circumstances of each case. Noquestion of estoppel can ever arise where both the parties, as in the presentcase, are labouring under mistake of law and one party is not more to blamethan the other. Noquestion of estoppel can ever arise where both the parties, as in the presentcase, are labouring under mistake of law and one party is not more to blamethan the other. Estoppel arises only when the plaintiff by his acts or conductmakes a representation to the defendant of a certain state of facts which is actedupon by the defendants to his detriment, it is only then that the plaintiff isestopped from setting up a different state of facts. Even if this position can beavailed of whether representation is in regard to position in law, no suchoccasion arises when the mistake of law is common to both the parties. " ( 45 ) THE position of law which emerges from a review of the various pronouncements noticed above may be stated as under: (I) A person who makes payment to another under a mistake of fact orunder a mistake of law has a right to recover back the same from theperson to whom he pays unless that the rule of estoppel operates againstthe payer. (ii) When the person paying and the person collecting are both actingmistake of fact or mistake of law then rule of estoppel is ordinarily notapplicable against the payer. (iii) In case there is a document which purports to be cheque but on whichthe signature of the drawer is forged, it does not have a mandate of thedrawer having account in the Bankand, therefore, it does not fall strictlywithin the definition of cheque under Section 6 of the Negotiableinstruments Act. (iv) Such a forged cheque, when it is passed on for collection through acollecting Bank by the person knowing it to be forged (but the collectingbank not knowing it to be forged and passing it on for collection in goodfaith in ordinary course of its business of banking) and is paid by thedrawee Bank, that payment does not amount to a representation by thepaying Bank that the signatures on the cheque are genuine signaturesof the drawer, unless the surrounding circumstances show that theireffect was such a representation made by the drawee Bank or payingbank to the collecting Bank. (v) The collecting Bank in cases of cheques or drafts, has to act with due careand caution. (v) The collecting Bank in cases of cheques or drafts, has to act with due careand caution. It has to be careful as to who is depositing a cheque or draftof a huge amount and whether it is in ordinary course of the depositorsbusiness to deposit such huge amounts by cheques or drafts andwhether such deposit has been made within a few days of the openingof the amount and the amount after collection is sought to be withdrawnsoon after the collection so asto make all these acts of opening theaccounts, deposit of draft or cheque and withdrawal as part of onescheme. In such circumstances, the collecting Bank is put to inquirybecause of the neccessity of caution as to the genuineness of the chequeas well as the genuineness of the parties involved and the source of thecheque. If they do not make such inquiries inference of negligence is toarise against them but it will depend on facts and circumstances of eachcase. (vi) The mere fact that the collecting Bank has made a payment to itscustomer who deposited the forged cheque does not raise an estoppelagainst paying Bank if later on it is found that the cheque is forged. Thecollecting Bank cannot escape its liability of returning the money, socollected, to the paying Bank. The collecting bank may certainly haveits remedies against its clients for indemnification. ( 46 ) REVERTING to the facts of the case in hand, the account in this case wasopened in the name of one Durlab Singh, Zamindar and land lord of Kali Masjid,turkman Gate on 24/12/64 by deposit of cash of Rs. 300. 00. It was Account No. 6048. A cheque book bearing twenty cheques, Nos. 841441 to 841460 was issued on24/12/64. Then on 26/12/64, Rs. 200. 00 were withdrawn by a self cheque No. 841441. The forged cheque in question was deposited on 26/12/1964. On 29/12/64 the presentcheque of Rs. 80605, was collected through clearance. The cheque was dated10/12/64 in the name of Durlabh Singh, son of Sham Singh. Exhibit P-D is the photocopy of that Cheque No. OC 383575. The account opening form, copy of which isex. PW5/3 on the file, shows that the account was introduced by one Laxmi Dasssigning in Urdu as introducer and shown to be having S. F. Account No. 747 atasafali Road branch of Punjab National Bank. Exhibit P-D is the photocopy of that Cheque No. OC 383575. The account opening form, copy of which isex. PW5/3 on the file, shows that the account was introduced by one Laxmi Dasssigning in Urdu as introducer and shown to be having S. F. Account No. 747 atasafali Road branch of Punjab National Bank. Then the withdrawals aftercollectionof this cheque on 29/12/64 were started from 1/1/65 onwards in instalments of Rs. 10,000. 00 per day on 1st, 2nd, 4th, 6th, 7th, 8th and 11/01/1965. On 2/1/65, infact, two cheques, one of Rs. 10,000. 00 and another of Rs. 8,000. 00 in the name of selfwere drawn and money was taken. On 13/1/65 a self cheque of Rs. 6500. 00was drawnand money taken. That put the balance of Rs. 55. 00 in this account on 13/1/65. Thusevery day about Rs. 10,000. 00or more, was being withdrawn. The evidence of DW1,m. L. Kumaria is that K. C. Berry was the Manager at the time of opening of theaccount of Durlabh Singh and that Laxman Dass had introduced Durlabh Singh. This witness does not know if any enquiry was made with regard to antecedents oflaxman Dass. ( 47 ) SO this is the state of evidence and this was the state of incidentssurrounding the transaction of opening the account, deposit of forged cheque andwithdrawal of money. A person who was not an earlier account holder haddeposited a cheque of Rs. 80,000. 00 and odd. Of course it was a cheque purportingto be issued by Land Acquisition Collector. He was introduced by one Laxman Dass,saving Fund Account holder about whose antecedents nothing has been disclosedin the evidence. There is no evidence that any enquiry was made then or at the timewhen the withdrawals was being allowed. The opening of account, the deposit andthe withdrawals, thus appear to be so connected in terms of the timings that thereis necessary inference that they are part of some transaction of fraud. The Punjabnational Bank was necessarily, therefore, obliged to make enquiries while thewithdrawal was being continued as to whether this Durlabh Singh was a genuineperson and whether no suspicion was involved in the entire transactions. ( 48 ) THE Punjab National Bank officers dealing with the opening of this accountand the collection of cheques and its payment, did not care to be cautious and dealtwith the whole affair as a routine with closed eyes. ( 48 ) THE Punjab National Bank officers dealing with the opening of this accountand the collection of cheques and its payment, did not care to be cautious and dealtwith the whole affair as a routine with closed eyes. It was a forged cheque and,therefore, there was no mandate by the Land Acquisition Collector to pay theamount. It is not one of those cases where the cheque was signed by the drawerhimself but some other forgery in the amount etc. was involved. In fact, even in thattype of cases one of which came before the Madras High Court in AIR 1981 Madras129 (already REFERRED TO), the right of paying Bank to recover from the defendantcollecting Bank was upheld. In that case, the amount of Rs. 20. 00was turned into Rs. 29,000. 00 by forgery. In the case before me, it was a stolen cheque from the chequebook of Land Acquisition Collector. So the cheque proforma was genuine buteverything else was forged. It was not a cheque in law. On a consideration of thesurrounding circumstances, there was reason for the collecting branch of Punjabnational Bank to be cautious. They exhibited no caution in their dealings with theso called Durlabh Singh. The Land Acquisition Collector had informed about thecheques being stolen on 18/1/64 itself, while the last withdrawal was made by13/1/64, as already seen. There is nothing on record to suggest that the officers ofthe State Bank of India were themselves extremely negligent in not detecting whatthey could easily detect by the look at the cheque itself. They made the paymentunder mistake of fact that the cheque was genuine. It does not amount to representation on their part that it was a genuinely signed cheque. Since it was not a cheque ,the protection under Section 131 Negotiable Instruments Act is not available to thecollecting Bank, defendant No. 1 (Punjab National Bank ). The mere fact that Punjabnational Bank disbursed the money to its principal does not give any protection toit, as regards the rights of plaintiff. State Bank of India. ( 49 ) AT this stage, I may note that the locus standi of the State Bank of Indiaarises to file its claim from the fact of payment under mistake. The amount was paidfrom the account of Land Acquisition Collector, which the State Bank of India hadto reimburse. State Bank of India. ( 49 ) AT this stage, I may note that the locus standi of the State Bank of Indiaarises to file its claim from the fact of payment under mistake. The amount was paidfrom the account of Land Acquisition Collector, which the State Bank of India hadto reimburse. There is evidence of officer of State Bank of India that they had to makepayments of this amount of Rs. 80,605. 00 to Account of Land Acquisition Collector,delhi. So, the plaintiff has a right to sue the defendant No. 1 who is the collectingbank, without impleading Land Acquisition Collector or the Union of India. ( 50 ) THE net result of my above discussion is that the plaintiff is entitled to succeed in its claim of the amount of Rs. 80,605. 00 against defendant No. 1. Plaintiff has claimed interest @ 6% p. a. , which is justified. Defendant No. 1 is liable to pay the same till the recovery of the amount. The principle of estoppel does not apply on the facts and circumstances of this case. I decide these issues accordigly in favour of the plaintiff and against defendant No. 1. ( 51 ) THE net result is that the plaintiff succeeds in the suit for recovery of Rs. 80,605. 00, which is decreed with interest @ 6% from the date, of the date of the suit, i. e. 28/11/67 upto date of recovery. Earlier interest has not been claimed in the suit. The defendant shall pay cost of the plaintiff also. A decree be drawn accordingly. File be consigned to record room.