JUDGMENT : M.R. Shah, J. 1. Feeling aggrieved and dissatisfied with the impugned judgment and decree passed by the learned Principal Senior Civil Judge, Vadodara passed in Special Civil Suit No. 753 of 1996, by which, the learned trial Court has dismissed the said suit, the original plaintiff- Bank has preferred present First Appeal. 2. The facts leading to the present First Appeal in nutshell are as under: "2.1. That the plaintiff-Bank is a Cooperative Bank of India and is also schedule bank having its branch office at Vadodara. That the plaintiff Bank had got number of customers. That one Tarsali Sahakari Credit Society, Vadodara opened an account with the plaintiff Bank. That the said credit society used to deposit account payee/dividend warrants issued from 9.10.1996 to 19.10.1996 shown to have been issued by different companies for amount payable to the said society. In all these dividend warrants, the paying bank was shown to be any branch of State Bank of India. The said dividend warrants were accepted by the plaintiff Bank as a collecting Bank and since they were account payee warrants after collecting the said warrants, the plaintiff bank sent them to the clearance house and through them the State Bank of India, which is a paying bank. That the respective warrants were accepted for payment by State Bank of India on the concerned dates and payments were made by them and accordingly amount of warrants came to be credited by the plaintiff Bank in the bank account of aforesaid credit society. That thereafter, plaintiff's client/aforesaid credit society withdrew the amount from their account. That paying bank - State Bank of India never raised any objection to the said dividend warrants and they went on clearing the same and never dishonored any of such dividend warrants. It appears that the dispute arose with respect to the dividend warrants and according to State Bank of India - Paying Bank some forgery has been taken place with respect to dividend warrants which was deposited in the bank account of the client of the plaintiff' - aforesaid credit society. Therefore, at the instance of State Bank of India, sum of Rs. 16,59,800/- which was lying in the bank account of the aforesaid Credit Society, the same was paid to the State Bank of India. However, defendants- State Bank of India debited the balance amount of Rs. Therefore, at the instance of State Bank of India, sum of Rs. 16,59,800/- which was lying in the bank account of the aforesaid Credit Society, the same was paid to the State Bank of India. However, defendants- State Bank of India debited the balance amount of Rs. 20,07,357/- from the account of plaintiff Bank, if the payment of dividend warrants deposited by the plaintiff in the bank account of its client- aforesaid Credit Society on the ground that the dividend warrants were forged and those dividends warrants were subject matter of some criminal case. The aforesaid was opposed by the plaintiff bank by submitting that the amount was deposited in the bank account of its client after the same was cleared by the State Bank of India as a clearing house and as a Paying Bank. It was submitted that the plaintiff Bank acted only as a collecting bank and if the aforesaid dividend warrants would not have been cleared by the clearance house and/or paying bank they would not have been deposited the amount in its client - Credit Society. Therefore, the plaintiff instituted the aforesaid suit against the defendants- State Bank of India seeking direction against the defendant to reverse the entire debiting the amount of Rs. 20,07,357/- and credit the said amount in plaintiff account No. 10321. 2.2. Having served with the summons/notice of the suit, defendants appeared before the learned trial Court and oppose the suit by filing written statement. It was contended that amount collected by the plaintiff on the fraudulent dividend warrants was available in the current account of the credit society - Tarsali Sahakari Credit Society and therefore, plaintiff as well as credit society are liable to refund the amount. It was contended that plaintiff can recover the amount from the credit society by debiting their current account. It was contended that suit filed by the plaintiff for the protection of their customer, who played fraud, is liable to be dismissed. It was also further contended that plaintiff was negligent in opening of the account of Credit Society- Tarsali Sahakari Credit Society. It was contended that when the cheques, draft and interest warrants/dividend warrants were found forged, fraudulent, after making the payment by the payee bank, the paying bank recover the amount from the collecting bank, their customer. It was also further contended that plaintiff was negligent in opening of the account of Credit Society- Tarsali Sahakari Credit Society. It was contended that when the cheques, draft and interest warrants/dividend warrants were found forged, fraudulent, after making the payment by the payee bank, the paying bank recover the amount from the collecting bank, their customer. It was submitted that therefore, the Collecting Bank is liable to refund/pay back the said amount collecting by them on fraudulent/forged instruments. The collecting bank in turn may recover the amount from their customers by debiting to their account, as sufficient balance was available in the current account of the society. Therefore, it was requested to dismiss the suit. 2.3. That the learned trial Court framed the issues vide Exh. 164. 2.4. Both the parties led evidence oral as well as documentary. That on appreciation of evidence, by impugned judgment and decree the learned trial Court has dismissed the suit by observing that payment made by the plaintiff bank- Credit bank account of its customer - Tarsali Sahakari Credit Society were on the forged and fabricated dividend warrants. The learned trial Court also observed that the amount of Rs. 19,67,537.20 deducted from the account of the plaintiff bank is as per the circular of Reserve Bank of India dated 30.04.1996 produced at Exh. 200 and 201. 2.5. Feeling aggrieved and dissatisfied with the impugned judgment and decree passed by the learned trial Court, the original plaintiff' has preferred the present First Appeal." 3. Shri A.M. Vadera, learned advocate has appeared on behalf of the appellant- original plaintiff and Ms. Dharmishta Raval, learned advocate has appeared on behalf of the respondents-original defendants- State Bank of India. 3.1. Shri Vadera, learned advocate appearing on behalf of the appellant has vehemently submitted that in the facts and circumstances of the case, the learned trial Court has materially erred in dismissing the suit. 3.2. It is further submitted by Shri Vadera, learned advocate for the appellant that the learned trial Court has not properly appreciated the duty of the collecting Bank. 3.3. 3.2. It is further submitted by Shri Vadera, learned advocate for the appellant that the learned trial Court has not properly appreciated the duty of the collecting Bank. 3.3. It is further submitted by Shri Vadera, learned advocate for the appellant that the learned trial Court has not properly appreciated fact that the plaintiff acted as only collecting bank and whatever dividends were deposited by its customer were sent to the clearing house and clearing house sent to the Payee bank (SBI) and only after the clearing house and the Payee bank cleared dividend warrants, the amount under the respective dividend warrants were credited in the bank account of its customer- Tarsali Sahakari Credit Society. It is submitted that if there was no clearance from the clearing house or the Payee bank, the plaintiff acting as a collecting bank would not have credited the amount in the bank account of its customer. 3.4. It is further submitted that the learned trial Court ought to have appreciated the fact that the appellant is a member of clearing house, and as a collecting bank sent the dividend warrants to the clearing house, the clearing house is a centre where such instruments are brought in for clearing and the Payee bank has to return the instruments, in case of non payment immediately and in case of intervening holiday, on the next working day. It is further submitted that the paying bank is also required to inform the collecting bank from whom the instrument immediately. It is submitted that this care is required to be taken by paying bank to see that no wrongful payment is made them. 3.5. It is further submitted by Shri Vadera, learned advocate for the appellant that the learned trial Court ought to have appreciated the fact that, the dividend warrants deposited by the Credit Society were cleared by Paying/Payee bank as the warrants were never dishonored by paying bank and hence there was no question to suspect anything adverse. 3.6. It is further submitted by Shri Vadera, learned advocate for the appellant that the dividend warrants were deposited from 09.10.1996 onwards were sent to the clearing house and nothing objectionable was ever conveyed by paying bank so far. 3.6. It is further submitted by Shri Vadera, learned advocate for the appellant that the dividend warrants were deposited from 09.10.1996 onwards were sent to the clearing house and nothing objectionable was ever conveyed by paying bank so far. It is further submitted that however, the office of clearing house came to the appellant bank on 28.10.1996 with certain number of dividend warrants deposited by said credit society on 25.10.1996 and which were sent to clearing house and through them to respondent No. 2 for payments, and since they were not returned the amount was credited in the account of credit society. 3.7. It is further submitted by Shri Vadera, learned advocate for the appellant that the learned trial Court has materially erred in not properly appreciating circular of Reserve Bank of India dated 30.04.1996 produced at Exh. 200 and 201 and has materially erred in observing that after making payment to the SBI, plaintiff can recover the same from its customer. It is submitted that as such it was for the defendant No. 2 being the payee bank should have filed recovery suit against the credit society who is beneficiary of the fraud. 3.8. It is further submitted that the learned trial Court has not properly appreciated the fact that moment any intimation was given to the plaintiff bank with respect to the forged dividend warrants, immediately the plaintiff bank recover Rs. 16,59,800/- which were lying in the bank account of its client and forwarded it to the SBI. It is submitted that as such intimation of vague warrants was given very late by paying bank and amount was credited in the account of the credit society, which the credit society withdrew. It is submitted that therefore, the action of the defendant bank in debiting the amount of Rs. 19,67,537.20 from the account No. 10321 of plaintiff bank was absolutely illegal, which ought to have been set aside by the learned trial Court. 3.9. It is further submitted that the learned trial Court has failed to appreciate that the amount of fraudulent dividend warrants, has been withdrawn by the Credit Society and therefore, the credit society is the beneficiary of fraud, hence the respondent No. 2 should have taken action against the credit society to recover the amount of dividend warrants. 3.10. 3.9. It is further submitted that the learned trial Court has failed to appreciate that the amount of fraudulent dividend warrants, has been withdrawn by the Credit Society and therefore, the credit society is the beneficiary of fraud, hence the respondent No. 2 should have taken action against the credit society to recover the amount of dividend warrants. 3.10. It is further submitted that the learned trial Court has erred in holding that the respondent bank who is acting as clearing house, has no authority to recover/deduct the amount of paying bank, by debiting the account of appellant/member bank. Making above submissions and relying upon Section 131 of the Negotiable Instruments Act by further submitting that collecting bank acted bonafidely and credited of the dividend warrants after same were cleared by the clearance house and paying bank, it is requested to allow the present appeal and to quash and set aside the judgment and decree and consequently to decree the suit. 4. Present appeal is vehemently opposed by Ms. Dharmishta Raval, learned advocate for the respondents- original defendants. It is vehemently submitted by Ms. Raval, learned advocate for the respondents - original defendants that the amount towards fake dividend warrants were credited by the plaintiff bank in the bank account of its client and therefore, when it was found that dividend warrants were forged which were credited in the bank account of the plaintiff client, it is for the plaintiff to recover the same from his client at all from the amount lying in the bank account or by recovery suit. It is submitted that therefore, in the facts and circumstances of the case and even considering the circular issued by the RBI dated 30.04.1996 produced at Exhs. 200 and 201, it cannot be said that the learned trial Court has committed any error in dismissing the suit. 4.1. It is submitted that therefore, the defendant bank was justified in recovering the said amount from the plaintiff bank by debiting said amount from the bank account of the plaintiff. It is submitted that instead of filing the suit against its client, the plaintiff bank can institute the suit against defendants and paying bank that itself is suggestive of collusion between the plaintiff and its customer - Tarsali Sahakari Credit Society, Vadodara. 4.2. It is submitted that instead of filing the suit against its client, the plaintiff bank can institute the suit against defendants and paying bank that itself is suggestive of collusion between the plaintiff and its customer - Tarsali Sahakari Credit Society, Vadodara. 4.2. It is submitted that therefore, in the facts and circumstances of the case, the plaintiff shall not be entitled to any protection under Section 131 of the Negotiable Instruments Act. 4.3. Ms. Raval, learned advocate for the respondent- Bank has heavily relied upon the circular issued by the RBI dated 30.04.1996 by submitting that as per instruction of the RBI in such a situation the plaintiff Bank - collecting Bank has to initiate appropriate proceeding against the customer/persons who received the amount by fraud. Making above submissions and relying upon following decisions of the Hon'ble Supreme Court as well as Madras High Court and the Delhi High Court, it is requested to dismiss the present appeal. "1. Canara Bank v. Canara Sales Corporation and Others reported in (1987) 2 SCC 666 . 2. United Bank of India, Madras v. Bank of Baroda, Madras reported in AIR 1997 Madras 23. 3. Decision of the Delhi High Court in the case of State Bank of India v. Punjab National Bank in Suit No. 768 of 1967 dated 13.12.1994." 5. Heard the learned advocates for the respective parties at length. At the outset, it is required to be noted and it is not in dispute that the appellant Bank working as a collecting Bank only and as a collecting bank, the duty of the collecting bank is to collect the instrument/warrant/cheque which may be deposited by their customers/client in their Bank and thereafter to send it to the paying Bank through the clearing house. The payment is made by the collecting bank with respect to such instrument only after there is clearance by the paying bank. In the present case, the client/customer of the appellant bank deposited instrument/warrants, which after collecting, the appellant as a collecting bank sent it to the paying bank through the clearing house and after the paying bank - clearing house clear the payment, the appellant-collecting bank bonafidely credited dividend warrants into account of their clients/customers. In the present case, the client/customer of the appellant bank deposited instrument/warrants, which after collecting, the appellant as a collecting bank sent it to the paying bank through the clearing house and after the paying bank - clearing house clear the payment, the appellant-collecting bank bonafidely credited dividend warrants into account of their clients/customers. If the clearing house and/or paying bank would not have cleared the payment and/or raised any objection against the payment, the collecting Bank would not have credited the amount of dividend warrants in their customers. 6. In the present case, it was found that with respect to one customer/client of the collecting bank/appellant, the dividend warrants for a total amount of Rs. 16,59,800 + 19,67,537 = 36,27,337/- were found to be forged one. However, by the time, they were found to be forged one by paying bank (SBI), on the instruction given by the clearing house/paying bank, the aforesaid amount was already credited in the Bank account of the customer/client by the appellant - collecting bank. As soon as the paying bank - SBI informed the appellant with respect to the aforesaid, immediate action was taken by the appellant and a sum of Rs. 16,59,800/- came to be recovered by the appellant bank from the bank account of aforesaid client-Tarsali Sahakari Credit Society, which was lying in its bank account and forwarded to the SBI- paying Bank. However, still a balance amount of Rs. 19,67,537.20/- was due towards forged dividend warrants deposited by the aforesaid client - Tarsali Sahakari Credit Society, SBI- paying Bank recovered the same from the plaintiff Bank by debiting the same from the account of the plaintiff bank. For recovery of Rs. 19,67,537.20/-, the plaintiff has instituted the present suit, which has been dismissed by the learned trial Court by the impugned judgment and order. 6.1. For recovery of Rs. 19,67,537.20/-, the plaintiff has instituted the present suit, which has been dismissed by the learned trial Court by the impugned judgment and order. 6.1. Considering the aforesaid facts and circumstances when the appellant Bank- original plaintiff acted only as a collecting bank and collected the dividend warrants and sent it to the clearing house and the paying bank and thereafter on the basis of clearance given by the paying bank and clearance house and as no objection was raised by the paying bank, the plaintiff bank credited the said amount in the account of the aforesaid client-Tarsali Sahakari Credit Society, it cannot be said that the plaintiff committed any wrong and/or there was any negligence on the part of the plaintiff Bank. If at the relevant time the paying Bank/clearing house would not have cleared the payment and/or would have raised any objection against making the payment towards dividend warrants, in that case, the plaintiff collecting bank would not have made the payment. In such situation, despite the above, if the collecting bank would have paid the amount and/or credited the amount in its client, in that case only, the plaintiff - collecting bank would have been liable to make payment of such loss. Under the circumstances and in the aforesaid facts and circumstances of the case, the amount recovered by the paying bank of Rs. 19,67,537.20/- was not justified. The only remedy available with the paying bank/clearing house to recover the same from customer who deposited the forged dividend warrants. 7. Now, so far as reliance placed upon the decision of the Hon'ble Supreme Court in the case of Canara Sales Corporation & Ors (supra) by the learned counsel for the paying bank- SBI is concerned, on considering the said decision, we are of the opinion that the said decision shall not be applicable to the facts of the case on hand. In the case before the Hon'ble Supreme Court, there was claimed by the account holder's against the bank for recovery of amount fraudulently drawn by the third party by forging his signature on cheques and the account holder immediately informed the bank as soon as the fraud comes to his knowledge, to that, Hon'ble Supreme Court has observed that his claim is sustainable by observing that mere negligence on the part of the account holder not by itself sufficient to absolve the bank from its liability, in absence of proof of estoppel and acquiescence. Under the circumstances, said decision shall not be applicable to the facts of the case on hand. 8. Now, so far as reliance placed upon the decision of the Madras High Court in the case of United Bank of India, Madras (supra) is concerned, the said decision also shall not be applicable to the facts of the case on hand. In the case before the Madras High Court, it was specifically found that there was negligence of collecting bank in opening account, which would constitute equal negligence in realization of draft. On facts, it was specifically observed and found that the collecting bank did not act with due care and caution expected of it and therefore, protection under Sections 131 and 131A of the Negotiable Instruments Act will not be available to such bank. Under the circumstances also, the said decision shall not be applicable to the facts of the case on hand. 9. Now, so far as reliance placed upon the decision of the Delhi High Court in the case of State Bank of India (Supra), by the learned counsel for the paying bank - SBI is concerned, we are of the opinion that the said decision shall not be of any assistance of the paying bank, in the facts and circumstances of the case on hand. In para 45, the Delhi High Court has carved out following position of law, which emerges in view of various pronouncements as under: "45. In para 45, the Delhi High Court has carved out following position of law, which emerges in view of various pronouncements as under: "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 or under a mistake of law has a right to recover back the same from the person to whom he pays unless that the rule of estoppel operates against the payer.(ii) When the person paying and the person collecting are both acting mistake of fact or mistake of law then rule of estoppel is ordinarily not applicable against the payer.(iii) In case there is a document which purports to be cheque but on which the signature of the drawer is forged, it does not have a mandate of the drawer having account in the Bank and, therefore, it does not fall strictly within the definition of cheque under Section 6 of the Negotiable Instruments Act.(iv) Such a forged cheque, when it is passed on for collection through a collecting Bank by the person knowing it to be forged (but the collecting Bank not knowing it to be forged and passing it on for collection in good faith in ordinary course of its business of banking and is paid by the drawee Bank, that payment does not amount to a representation by the paying Bank that the signatures on the cheque are genuine signatures of the drawer, unless the surrounding circumstances show that their effect was such a representation made by the drawee Bank or paying Bank to the collecting Bank.(v) The collecting Bank in cases of cheques or drafts, has to act with due care and caution. It has to be careful as to who is depositing a cheque or draft of a huge amount and whether it is in ordinary course of the depositors business to deposit such huge amounts by cheques or drafts and whether such deposit has been made within a few days of the opening of the amount and the amount after collection is sought to be withdrawn soon after the collection so as to make all these acts of opening the accounts, deposit of draft or cheque and withdrawal as part of one scheme. In such circumstances, the collecting Bank is put to inquiry because of the necessity of caution as to the genuineness of the cheque as well as the genuineness of the parties involved and the source of the cheque. If they do not make such inquiries inference of negligence is to arise against them but it will depend on facts and circumstances of each case.(vi) The mere fact that the collecting Bank has made a payment to its customer who deposited the forged cheque does not raise an estoppel against paying Bank if later on it is found that the cheque is forged the collecting Bank cannot escape its liability of returning the money, so collected, to the paying Bank. The collecting bank may certainly have its remedies against its clients for indemnification." 10. Now, applying the aforesaid position of law to the facts of the case on hand, it is not the case on behalf of the paying bank that the collecting bank had not acted with due care and caution. It is also not the case on behalf of the paying bank that there was any lapse on the part of the collecting bank and/or due care and caution was not taken by the collecting bank while making the payment to the depositor of drafts/warrants. In the present case, on the contrary as soon as the paying/payee bank informed the plaintiff - collecting bank that dividend warrants are forged one immediately the collecting bank promptly acted and whatever the amount was laying in the bank account of the depositor, the same came to be recovered and immediately credited to the account of the paying/payee bank. Under the circumstances and in the facts and circumstances of the case, there was no justification on the part of the paying/payee bank to recover the amount of Rs. 19,67,537.20/-. Under the circumstances and in the facts and circumstances of the case, learned trial Court ought to have decreed the suit. 11. In view of the above and for the reasons stated above, present appeal succeeds. The impugned judgment and decree passed by the learned Principal Senior Civil Judge, Vadodara passed in Special Civil Suit No. 753 of 1996 is hereby quashed and set aside and the suit preferred by the plaintiff is hereby decreed fully. Present appeal is accordingly allowed. No costs. Appeal Allowed