judgement:
ivil Appeal No. 2635 of 1989.
From the judgment and order dated 3.11.82 of the Madras High Court in Second Appeal No. 2136 of 1979.
J. Ramamurti, R. Vagai and K.K. Mani for the appellant.
section Padmanabhan, Mrs. Anjani and K. Ramkumar, for the respondent.
The judgment of the Court was delivered by OZA, J.
Leave granted.
Heard learned counsel for the par ties.
Facts necessary for this appeal are, that the petitioner appellant original defendant purchased the suit property by registered sale deed dated 27.12.1950 executed by Asirvada Nadar, Ponnammal and Devadasan in favour of the present petitioner appellant for a consideration of Rs.7,000.
On 4.1.1951 the present respondent executed a rent agreement in favour of the present appellant for the building acknowledg ing her as her landlady @ Rs.80 per month.
In 1963 the mother of the appellant by name of Rama lakshmi Ammal died.
In 1974 the respondent filed the suit from which the present appeal arises viz. Suit No. 79 of 1974 against the petitioner appellant for conveyance of the property of the petitioner in favour of the respondent on the ground of a 'Yadast ' which was for the first time pro duced with the suit and is alleged to have been written by the mother of the petitioner on 24.12.
1950 which is marked as exhibit A 11, in favour of the respondent.
This document provided that respondent could get conveyance of the proper ty in the suit from the petitioner after paying the sale price of Rs.7,000 and Rs. 1,000 for registration expenses.
This 'Yadast ' (so called agreement) was on a plain piece of paper which is neither stamped nor registered nor attested.
It is also significant that although this document is al leged to have been written on 24.12.50 even before the sale 'deed of the property itself was executed in favour of the appellant but this document was not even mentioned in the notice which was served by the respondent on the present appellant before this suit nor there is any reference any where in any earlier correspondence nor there is a mention of this document in the sale deed dated 27.12.1950 which apparently is of a date subsequent to 24.12.1950 nor there is any mention of it in the rent 836 agreement dated 4.1.1951 to which the present respondent himself is a party.
By judgment dated 8.11.1978 the trial court (Sub Judge) relying on this 'Yadast ' decreed the suit filed by the respondent.
On appeal the Additional District Judge after detailed examination of all the facts and evidence came to the find ings of fact that the present petitioner acquired title to the property on the basis of the sale deed which is a regis tered document in her favour and this property was leased out to the respondent under a rent agreement.
It also held that as the mother of the petitioner was not a party to the sale deed she had no right to agree to convey the property or to ask the daughter to convey the suit property in favour of the respondent.
The plaintiff respondent was not a party to the sale deed (transferor) but is only a stranger who became a tenant under the rent agreement.
1n fact the sale deed was executed by some other person and therefore this 'Yadast ' could not be said to be an agreement to reconvey the property as apparently both the parties to the 'Yadast ' one making the commitment to reconvey and another in whose favour the commitment is made, are not parties at all to the original transaction of sale.
The learned Additional District Judge also came to the conclusion that this document was not genuine and is a forged document which is invalid and was just got up for the purposes of this suit and it has seen the light of the day for the first time after 23 years after the date on which it purports to have been executed and for all these 23 years it was never referred to also.
The learned appellate Court also felt that the suit for specific performance was barred as it was filed more than 20 years after the alleged 'Yadast ' (agreement.) The learned Judge of the High Court in second appeal by the impugned judgment interfered with the finding of fact arrived at by the lower appellate court which was the final court of facts and went on at length to reassess the evi dence and not only to reassess but unfortunately the circum stances have even been imagined to suggest the connection between the 'Yadast ' and the sale deed when in fact there is no mention of this kind of document in the sale deed al though it bears a date even earlier to the sale deed and it is on this ground that the special leave petition is filed.
The learned counsel appearing for the appellant contend ed that the suit for specific performance of the contract could only be decreed 837 against the executant of the contract provided the executant had a right to dispose of the property about which the suit is filed.
Admittedly the mother .of the present appellant who is alleged to have executed the 'Yadast ' is not the owner of the property and the sale deed is in favour of the present appellant does not disclose that the present appel lant purchased the property either as Benami on behalf of the mother or as a nominee of the mother.
It appears there fore that a theory of some loan and repayment was invented but the learned Judge of the High Court failed to notice that even if this agreement was genuine it could only be enforced against the executant and not against the present appellant.
In fact the theory of loan which was suggested and a case was sought to be made out that the sale deed was not an out and out sale but only as a guarantee for the loan and therefore this 'Yadast ' was in substance a document of reconveyance.
The learned Judge of the High Court failed to notice that the respondent is not the person who executed the sale deed in favour of the appellant.
In fact both the parties to the 'Yadast ' are strangers to the sale deed and the sale deed does not refer to any one of them nor there is anything in the sale deed to indicate that it was not an out and out sale.
Unfortunately, the learned Judge of the High Court has not even discussed the reasons on the basis of which the learned first appellate court had come to a finding of fact that this document is a forgery and could not be said to be a genuine document.
The learned first appellate court came to this conclu sion on the basis.of the circumstances which could not be denied although this document bears a date earlier than the sale deed and the rent agreement to which the respondent himself is a party but there is no mention of this document in anyone of those two documents.
There is no reference about this document for all these years i.e. from 1950 to 1974 even in the suit notice.
It is also a circumstance relied on by the lower appellate court that it is on ordi nary piece of paper not a stamped paper.
It is not regis tered and it is not attested and in view of these circum stances and especially of the fact that during the lifetime of Ramalakshmi Ammal, mother who is alleged to be the executant this document did not see the light of the day nor was referred to at any stage.
The learned lower appellate court came to a finding of fact and the High Court unfortu nately has not given reasons as to why these circumstances should not be considered.
The learned Judge has chosen to interfere with the findings of fact solely on the basis of one ground 838 that the evidence of the scribe of this document 'Yadast ' was not discussed by the lower appellate court but the evidence of the scribe who has chosen to write such a docu ment is worthless and the learned lower appellate court therefore was fight in not relying on this evidence.
Section 100 of the Code of Civil Procedure provides as under: "Second appeal: (1) Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High court is satisfied that the case involves a substantial question of law.
(2) An appeal may lie under this section from an appellate decree passed ex parte.
(3) In an appeal under this section, the memorandum of appeal shall precisely state the substantial question of law involved in the appeal.
(4) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
(5) The appeal shall be heard on the question so formulated and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does not involve such ques tion: Provided that nothing in this sub section shall be deemed to take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law, not formulated by it, if it is satisfied that the case involves such question" A perusal of this Section clearly indicates that the High Court had the jurisdiction to interfere only when a substan tial question of law is involved and even then it is expect ed that such a question shall be so framed although the court is not bound by that question as the proviso indi cates.
There may be some other substantial questions of law which may need decision and which can be so decided.
839 After going through the judgment of the High Court in this appeal we find that there is no substantial question of law and much less a question of law on the basis of which the learned Judge exercised jurisdiction under Section 100 and interfered with the findings of fact.
The only reason on the basis of which the High Court exercised jurisdiction under Section 100 is what has been said by the learned Judge himself: "As already stated, its failure to consider the evidence of P.W. 2 as well as its wrong surmise that exhibit B 16 series contained the signatures of Ramalakshmi Ammal, has affected the validity of the finding rendered by it.
" It is well known that P.W. 2 is the scribe of a document which has been found to be forged by the lower appellate court and therefore a person who can go to the extent of manufacturing a document to suit one of the parties to the litigation, in our opinion, cannot be said to be an inde pendent witness and the lower appellate court was right in discarding his testimony.
Unfortunately the High Court felt that he was an independent witness.
The learned Judge felt that the signatures on exhibit B 16 of Ramalakshmi Ammal is a mere surmise but this inference itself appears to be nothing but imagination as the signa tures prove the receipt by Ramalakshmi Ammal of a notice from Tuticorin Municipality for the collection of house tax.
This all in the opinion of the learned Judge was a substantial question of law which called for interference and it is clear that on such questions which have no sub stance and which could not be said to be even question of law, the interference by the High Court in second appeal could not be justified.
At best the two questions on which the High Court chose to interfere quoted above could be said to be questions of appreciation of evidence.
In our opinion therefore the High Court was not fight in interfering with the findings of fact arrived at by the learned lower appellate court.
The appeal is therefore allowed, the judgment of the High Court is set aside and that passed by the lower appellate court is restored.
The appellant shall be entitled to costs of this appeal.
Costs quantified at Rs.3,000.
N.V.K. Appeal allowed.

summary/full:
The appellant purchased the suit property by a regis tered sale deed dated 27th December, 1950 for a considera tion of Rs.7,000.
On 1st January, 1951, the respondent executed a rent agreement in favour of the appellant ac knowledging her as landlady at Rs.80 per month.
The mother of the appellant died in 1963.
In 1974, the respondent filed a suit against the appellant for conveyance of the suit property in his favour on the basis of a 'ya dast ', alleged to have been written by the mother of the appellant on 24th December, 1950 in his favour providing for conveyance of the property in his favour after .paying the sale price of Rs.7,000 and Rs.1,000 for registration ex penses.
This 'yadast ' was however neither stamped, regis tered, nor attested.
It was marked as exhibit A 11.
The Trial Court decreed the respondent 's suit relying on the 'yadast '.
On appeal the Additional District Judge after detailed examination of all the facts involved in the case and the evidence of the parties, came to the finding that the appel lant acquired title to the property on the basis of the sale deed which was a registered document in her favour and that the suit property was leased out to the respondent under a rent agreement, and that as the mother of the appellant was not a party to the sale deed she had no right to agree o convey the property or to ask her daughter to convey the same in favour of the respondent.
He also came to the con clusion that the Yadast was not a genuine document but a forged one which was just got up for the purposes of the suit.
He accordingly allowed the appeal, and held that the suit for specific performance was further barred as it was filed more than 20 years after the alleged 'Yadast '. 834 The High Court in Second Appeal, however interfered with the findings of fact arrived at by the lower Appellate Court solely on the basis that the evidence of the scribe of the 'Yadast ' was not discussed by the lower appellate Court, and accordingly allowed the Second Appeal.
In the Special Leave Petition to this Court, it was contended on behalf of the appellant that the suit for specific performance of the contract could only be decreed against the executant of the contract provided the executant had a right to dispose of the property about which the suit was filed, and that there was no question of law on the basis of which the High Court exercised jurisdiction under Section 100 C .P.C. and interfered with the findings of fact.
Allowing the appeal, this Court HELD: 1.
Section 100 C.P.C. clearly indicates that the High Court had the jurisdiction to interfere only when a substantial question of law is involved and even then it is expected that such a question shall be so framed although the court is not bound by that question as the proviso indicates.
There may be some other substantial questions of law which may need decision and which can be so decided.
[838G H] In the instant case, the Single Judge of the High Court has chosen to interfere with the findings of fact solely on the basis of one ground, that the evidence of the scribe of the 'Yadast ' PW 2 was not discussed by the lower appellate court, and its failure has affected the validity of the finding rendered by it.
This was no substantial question of law, much less a question of law on which the High Court could interfere with the findings of fact.
At best the questions on which the High Court chose to interfere could be said to be questions of appreciation of evidence.
[837H; 839F] 2.
The suit for specific performance of the contract could only be decreed against the executant of the contract provided the executant had a right to dispose of the proper ty about which the suit is filed.
[836H; 837A] In the instant case, admittedly the mother of the appel lant who, was alleged to have executed the 'Yadast ' was not the owner of the property.
Both the parties to the 'Yadast ' were strangers to the sale deed, and the sale deed does not refer to any one of them nor there is anything in the sale deed to indicate that it was not an out and out sale.
[837D] 835


judgement:
il Writ Petition 747 of 1985.
(Under Article 32 of the Constitution of India).
S.R. Rangarajan and K.B. Rohtagi for the Petitioner.
Manoj Swarup and Miss Lalita Kohli Advocates for the Respondents.
The Judgment of the Court was delivered by PATHAK, CJ.
This writ petition under Article 32 of the Constitution has been filed by Baldev Raj Sharma against an order of the Bar Council of Punjab and Haryana rejecting his application for enrolment as an advocate.
On 4 March, 1972 the petitioner passed the Bachelor of Arts examination from the Punjabi University, Patiala.
In 1978 he joined the Bachelor of Laws (Academic) course in Kurukshetra University.
The course is of two years ' dura tion.
The petitioner completed the course and on 1 January, 1981 he was awarded the degree of Bachelor of Laws (Academ ic) by the Kurukshetra University.
During the year 198 1 the petitioner joined the LL.B. (Professional) course in the third year in Kanpur University as a regular student.
The Kanpur University confers two distinct degrees, LL.B. (General), which is a two year course, and LL.B. (Profes sional), which is a three year course.
A person who has been awarded the LL.B. (General) degree is eligible for admission to the LL.B, (Professional) third year.
The petitioner says that there is no distinction in the Rules and Regulations of the Kanpur University on whether LL.B. (General) course should be pursued by regular attendance or as a non collegi ate student.
It is urged that the LL.B. degree of the Kanpur University is recognised by the Bar Council of India for the purpose of enrolment as an advocate.
The petitioner attended classes as a regular student of the LL.B 864 (Professional) Course third year of the Kanpur University as required by the Rules and Regulations framed by that Univer sity.
He appeared in the final examination and was declared successful.
On 22 July, 1982 the degree of LL.B. (Profes sional) was issued by the Kanpur University to him.
Thereaf ter, on 4 August, 1982 the petitioner applied to the State Bar Council of Punjab and Haryana with the necessary enrol ment fee for enrolment as an advocate under the .
On 26 April, 1983 the Bar Council of Punjab and Haryana denied enrolment to the petitioner as an advocate on the ground that the petitioner has not fulfilled the conditions laid down in Rule 1(1)(c) of the Rules of the Bar Council of India framed under section 7(h) and (i), section 24(1)(c)(iii) and (iiia) and section 49(1)(d).
The detailed grounds of refusal supplied to the petitioner by the Bar Council of Punjab and Haryana state that the petitioner had obtained his Bachelor of Laws degree from the Kurukshetra University as a result of the examination held in April, 1980 as a private candi date.
It was an LL.B. (Academic) degree obtained in two years ' study as a private candidate.
The third year of law was pursued by him as a regular student from V.S.S.D. Col lege, Kanpur of the Kanpur University from which institution he obtained the professional degree.
It was further stated that the petitioner had not fulfilled the conditions laid down in the provisions detailed earlier as he had passed his two years ' law course as a private candidate from Kurukshe tra University and the third year law only by regular at tendance at the V.S.S.D. College, Kanpur.
It appears that the State Bar Council, upon receiving the application of the petitioner for enrolment as an advocate, obtained the opin ion of the Bar Council of India and in conformity with that opinion the State Bar Council has refused enrolment.
Section 24(1)(c) provides as follows: "24.
Persons who may be admitted as advocates on a State roll(1) Subject to the provisions of this Act, and the rules made thereunder, a person shall be qualified to be admitted as an advocate on a State roll, if he fulfils the following conditions, namely: (c) he has obtained a degree in law (i) . . (ii) . . 865 (iii) after the 12th day of March, 1967, save as provided in sub clause (iiia), after under going a three year course of study in law from any University in India which is recognised for the purposes of this Act by the Bar Coun cil of India; or (iiia) after undergoing a course of study in law, the duration of which is not less than two academic years commencing from the academ ic year 1967 68, or any earlier academic year from any University in India which is recog nised for the purposes of this Act by the Bar Council of India.
" Sub clause (iii) of clause (c) of section 24(1) entitles a person to be admitted as an advocate on a State roll if he has obtained a degree in law after 12th March, 1967 after under going three years ' of study in law in any University in India recognised for the purposes of the by the Bar Council of India.
An exception to this is provided by sub cl.
(iii) of cl.(c), under which a person is quali fied for admission as an advocate if he has obtained a degree in law after undergoing a course of study in law, the duration of which is not less than two academic years com mencing from the academic year 1967 68, or any earlier academic year from any University in India recognised for the purposes of the Act by the Bar Council of India.
The petitioner obtained a degree of Bachelor of Laws (Profes sional) from the Kanpur University in the examination of 1981.
He had pursued the third year course only of study pertaining to that degree as a regular student ,of the V.S.S. 'D. College, Kanpur in Kanpur University.
The Bar Council of India has framed Rules under the .
Rule 1(1)(c) of of the Bar Council of India Rules, 1975 provides that except as provided in section 24(1)(c)(iiia) of the a degree in law obtained from any University in the territory of India after 12th March, 1967 shall not be recognised for the purposes of section 24(1)(c)(iii) of the Act unless the conditions specified there are fulfilled, including the condition "that the course of study in law has been by regular, attendance at the requisite number of lectures, tutorials and moot courts in a college recognised by a University".
These rules were replaced by a fresh set of rules in 1984 and the new Rule 1(1)(c) is almost identical.
The Rule clearly requires that the course of study in law should have been by regular attendance for the requisite number of lectures, tutorials and moot courts and practical training.
The Rule envisages that for the entire period of the law course there must be a regular attendance of the student before he can satisfy the conditions necessary for enrolment as an advocate under the .
The Rules amplify what is intended in section 24(1)(c)(iii) 866 of the Act.
The three years ' course of study envisaged by that subclause in the Act intends that the three years ' course of study in law must be pursued by maintaining regu lar attendance.
We are unable to say that there is any inconsistency between the Act and the Rule.
So also in a case falling under cl.
(iii) of section 24(1)(c) of the Act, a course of study in law must be pursued for not less than two academic years in terms of that sub clause and Rule 1(1)(c) will apply to such a case also.
There is a substantial difference between a course of study pursued as a regular student and a course of study pursued as a private candi date.
The policy underlying the relevant provisions of the Bar Council Rules indicates the great emphasis laid on regular attendance at the law classes.
The conditions are specifically spelt out when the Act is read along with the Rules.
When so read, it is plain that a candidate desiring enrolment as an advocate under the must fulfil the conditions mentioned in section 24(1)(c)(iii) or section 24(1)(c)(iiia) read with Rule 1(1)(c) of the Bar Council of India Rules, 1975.
In the present case the petitioner failed to do so.
His application for enrolment was rightly reject ed.
The writ petition is dismissed, but in the circum stances, there is no order as to costs.
P.S.S. Petition dismissed.

dataset_name: IN-Abs

summary/full:
Sub clause (iii) of cl.
(c) of section 24(1) of the entitles a person to be admitted as an advocate on a State roll if he has obtained a degree in law after 12th March, 1967 after undergoing three years ' of study in law.
Under sub cl.
(iii) of cl.
(c) a person is considered quali fied for admission as an advocate if he has obtained a degree in law after undergoing a course the duration of which is not less than two academic years commencing from the academic year 1967 68 or any earlier academic year.
Rule 1(1)(c) of of the Bar Council of India Rules, 1975 requires that the course of study in law should have been by regular attendance for the requisite number of lectures, tutorials and moot courts and practical training.
The petitioner had obtained his Bachelor of Laws (Aca demic) degree in 1980 as a private candidate.
He then pur sued the third year of law as a regular student from the Kanpur University and obtained the professional degree in 1982.
Thereafter, he applied to the State Bar Council of Punjab and Haryana for enrolment as an advocate under the Act.
The State Bar Council denied enrolment on the ground that he had not fulfilled the conditions laid down in Rule 1(1)(c) of the Rules.
Dismissing the writ petition, HELD: A candidate desiring enrolment as an advocate under the must fulfil the conditions mentioned in section 24(1)(c)(iii) or section 24(1)(c)(iiia) read with Rule 1(1)(c) of the Bar Council of India Rules, 1975.
In the instant case, the petitioner failed to do so.
His applica tion for enrolment was, therefore, rightly rejected.
[866C] Sub clause (iii) of section 24(1)(c) when read along with Rule 1(1)(c) 863 intends that the three years course of study in law must be pursued by maintaining regular attendance.
So also, in a case failing under sub cl.
(iiia) of section 24(1)(c) a course of study in law must be pursued for not less than two academic years and Rule l(1)(c) will apply to such a case also.
The petitioner had passed his two year 's law course as a private candidate and the third year law only by regular attendance.
He was, therefore, not entitled to be enrolled as an advo cate.
[865H 866A, 864E]


judgement:
it Petition (Civil) No. 824 of 1988.
(Under Article 32 of the Constitution of India) V.C. Mahajan, Gaurav Jain, and Ms. Abha Jain for the Petitioner.
Anil Dev Singh, I. Makwana, Rathin Das, K.R. Nambiar, Ms. A. Subhashini, A.M. Khanvilkar, A.S. Bhasme, R.K. Mehta, V. Krishnamurthy, S.K. Agnihotri, A.V. Rangam, Mahabir Singh and P.K. Pillai for the Respondents.
The Order of the Court was delivered by MISRA, J.
This application under article 32 of the Consti tution is at the instance of an advocate by way of a public interest litigation asking for direction to the respondents for making provision of separate schools with vocational training facilities and separate hostels for children of prostitutes.
Notice was issued not only to the original respondents but at the instance of the Court also to a11 the States and the Union Territories.
Many of them have respond ed and affidavits have been filed by way of return to the rule nisi.
Though Mr. Mahajan for the petitioner has pleaded that separate schools and hostels be raised for the children of the prostitutes, we are not inclined to accept the submis sion.
Segregating prostitute children by locating separate schools and providing separate hostels, in our opinion, would not be in the interest of such children.
It is said that prostitutes do not want to have children and ordinarily when children are born to them it is inspite of their desire not to rear children.
But once such children are born to them, it is in the interest of such children and of society at large that the children of prostitutes should be segre gated from their mothers and be allowed to mingle with others and become part of the society.
In fact, counsel appearing for several States have stated at the Bar the same way.
We, therefore, reject the prayer for locating separate schools and hostels for children of the prostitutes.
Children of prostitutes should, however, not be permit ted to live in inferno and the undesirable surroundings of prostitute homes.
This 175 is particularly so for young girls whose body and mind are likely to be abused with growing age for being admitted into the profession of their mothers.
While we do not accept the plea for separate hostels for prostitute children it is necessary that accommodation in hostels and other reformato ry homes should be adequately available to help segregation of these children from their mothers living in prostitute homes as soon as they are identified.
Legislation has been brought to control prostitution.
Prostitution has, however, been on the increase and what was once restricted to certain areas of human habitation has now spread into several localities.
The problem has, therefore, become one of serious nature and requires considerable and effective attention.
We are of the view that instead of disposing of this writ petition with a set of directions, a Committee should be constituted to examine the material aspects of the prob lem and submit a report containing recommendations to the Court on the basis of which further orders can be made.
We accordingly direct that a Committee for such purpose shall be set up and it shall examine the matter from various angles of the problem taking into consideration the differ ent laws relevant to the matter and place its report before the Court within eight weeks from now.
The Committee shall consist of: 1.
Mr. V.C. Mahajan, Senior Advocate, New Delhi.
Mr. R.K. Jain, Senior Advocate, New Delhi.
Mr. M.N. Shroff, Advocate on Record, He shall act as the New Delhi.
convenor.
Mr. R.K. Mehta, Advocate on Record, New Delhi.
Dr. Deepa Das, Women 's Studies & Development Centre, Chhatra Marg, University of Delhi, Delhi 110 007.
176 6.
Sarla Mudgal, Kalyani, 5030, Kalidas Marg, Darya Ganj, New Delhi 110 002.
Krishna Mukherji, All Bengal Women 's Union, Research & Development Committee, 89, Elliott Road, Calcutta 700 016.
The Union of India in the Ministry of Welfare, Depart ment of Women & Child Development is directed to deposit in this Court a sum of Rs.20,000 for the present within two weeks to meet the expenses.
The matter shall be listed on 16th January, 1990 (Tues day) for further orders after the report is received.

summary/full:
This writ petition has been filed pleading for separate schools and hostels for the children of prostitutes.
On behalf of respondents, it was contended that since they are in fact unwanted children of prostitutes it is in the interest of such children and the society at large that they are segregated from their mothers and be allowed to mingle with others and become part of the society.
Setting up a Committee consisting of 4 Advocates and 3 Social Workers to look into the matter and directing listing of the matter on receipt of the Committee 's report, this Court.
HELD: 1.
Children of prostitutes should not be permitted to live in inferno and the undesirable surroundings of prostitute homes.
This is particularly so for young girls whose body and mind are likely to be abused with growing age for being admitted into the profession of their mothers.
While separate schools and hostels for prostitute children are not desirable, accommodation in hostels and other refor matory homes should be adequately made available to help segregation of these children from their mothers living in prostitute homes as soon as they are identified.
[174H; 175A B] 2.
The Committee now set up will look into the problems and submit its report within 8 weeks.
[175D] [This Court directed the Ministry of Welfare, Deptt.
of Women & Child Development functioning under the Union of India to deposit a sum of Rs.20,000 within two weeks to meet the expenses of the Committee].


judgement:
ivil Appeal No. 2842 of 1982.
From the Judgment and Order dated 1.10.1981 of the Madras High Court in Appeal No. 516 of 1977.
C. Seetharamiah, P. Krishna Rao and K.R. Nagaraja for the Appellant.
section Balakrishnan for the Respondent.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This defendant 's appeal by special leave is from the Judgment of the High Court of Judicature at Madras dated 1.10.1981 passed in Appeal No. 516 of 1977 dismissing the appeal and affirming the decree in O.S. No. 7667 of 1975.
The respondent Industrial Chain Concern as plaintiff filed Original Suit No. 7667 of 1975 in the City Civil Court, Madras for recovery of Rs.26,383.49p.
together with interest and costs, being the total amount of loss sustained by it on account of the alleged negligence and conversion on the part of the defendant Indian overseas Bank having its central office at 151, Mount Road, Madras 2, hereinafter referred as 'the Bank ', by negligently allowing one Sethura man, Manager of the plaintiff firm at Madras to open a 'fictitious account ' in the name of 'Industrial Chain Con cern ' as its proprietor and helping him to pay in stolen drafts and cheques drawn in favour of the plaintiff and collecting the same and paying to Sethuraman the proceeds thereof and closing the account thereafter.
It was the case of the plaintiff that it was doing extensive business in Steel Roller Chains and Sprockets with leading industries and Government undertakings.
Its head office was situate at 36, Linghi Chetti Street, Madras 1.
It had supplied goods to seven parties who sent to it drafts and cheques in its 31 name amounting to Rs.26,383.49 and those drafts and cheques had been received by Sethuraman, its Manager, who after opening the 'fictitious account ' in the Bank 's Nungambakkam Branch paid in the stolen drafts and cheques and the Bank collected those and allowed Sethuraman to withdraw the same defrauding the plaintiff.
The plaintiff averred that the Bank was negligent and guilty of conversion in opening of the account, collection of the cheques and drafts and allow ing Sethuraman to withdraw the same and therefore, it was liable to make good the plaintiff 's loss.
The appellant Bank as defendant resisted the suit con tending, inter alia, that it was not negligent in allowing Sethuraman to open the account inasmuch as approaching the Bank Sethuraman represented that he, as proprietor, had started a firm under the name and style of "Industrial Chain Concern" and proposed to open an account in that name.
Since the Manager of the Bank at Nungambakkam Branch was erstwhile classmate of Sethuraman he (the Manager) knew him and gave the introduction relying on which the current account was opened and after opening the account, which was a real account and not a 'fictitious account ' as alleged, various cheques and drafts had been paid into the account by the customer for collection and the Bank in good faith and without negligence, in course of its business, collected them and credited the account and Sethuraman as customer withdrew money from his account, and that neither at the time of opening the account for at the time of paying in and collection of the cheques, nor at the time of allowing money to be withdrawn there was anything to arouse any suspicion regarding the bona fides of the representation made by Sethuraman.
Later on the customer having expressed a desire to close the account because, as he said, he was winding up his business, the account was closed.
There was, therefore, no negligence on the part of the Bank acting in good faith and it was not liable for conversion.
At the trial the plaintiff firm examined its Manager D.R. Murthy (PW 1) while the defendant Bank also examined its Manager S.P. Muthukrishnan (DW 1).
The trial court decreeing the suit held that the defendant Bank had acted in good faith but not without negligence in opening the account and operating the same and in the process of collection of the cheques and drafts and it was not entitled to invoke the protection of section 131 of the Negotiable Instruments Act and, consequently, it was liable to make good the loss with interest as claimed by the plaintiff.
The Bank having ap pealed therefrom, the High Court agreed with the findings of the trial court and dismissed the appeal.
32 Mr. C. Seetharamiah, the learned counsel for the appel lant submits, inter alia, that the finding of the courts below that the defendant Bank was negligent in opening the account is contrary to law inasmuch as there were no circum stances antecedent or present to arouse any suspicion and there was no obligation on the part of the Bank to compare and verify the name and address given by Sethuraman as proprietor, industrial Chain Concern with the address of the then existing plaintiff 's firm of the same name; that the High Court 's finding that tile Bank was negligent in clear ing the amounts of the cheques is equally contrary to law inasmuch as there was nothing ex facie to put the Bank on guard and there was no warning or indication of defective title on the race of the cheques and drafts to arouse suspi cion of the Bank and it was not necessary for it to make thorough enquiry about the cheques and drafts to have been entitled to invoke the protection of section 131 of the Negotiable Instruments Act: and that even assuming, but not admitting that the Bank was negligent, the plaintiff itself contributed to it by entrusting Sethuraman to receive the cheques and drafts and to deal with them for a long time and that even when the complaint was made to Deputy Commissioner of Police on 19.2.1975 it was about two cheques only, and there was still no complaint about other cheques and drafts.
The first question to be decided, therefore, is whether the Bank was negligent in opening the account in the name of Sethurarman, as proprietor, Industrial Chain Concern.
Mr. section Balakrishnan, for the respondent, defends the High Court 's Judgment.
Evidence of DW 1 Muthukrishnan, Manager of the Bank at the relevant time is that the account was opened by Ext.
B 1, the Account Opening From, on 3.10.1974 by Sethuraman under the title Industrial Chain Concern, the sole proprie tary concern.
It was signed by Sethuraman for Industrial Chain Concern with a rubber stamp as proprietor.
Muthukrish nan, DW 1 deposed: "This account was opened by R. Sethuraman under the title Industrial Chain Concern sole proprietary concern.
Sethuraman is the sole proprietor.
Before that date I knew Sethura man.
He was my college mate in 1955 57 in Vivekananda College.
I was meeting him in social gathering.
When he went to open an account, he represented that he had just started as commission agent under the name and style of Industrial Chain Concern as sole proprietary concern.
He wanted to open an account with Overdraft facility.
I declined his request for overdraft because he himself stated that he had just started commission business.
I 33 was able to identify him as the college mate and to open his account I have signed the introduction in my personal capac ity . . .
It was an ordinary current deposit account.
The introduction given by me was in the normal course of bank ing business.
Before opening account, he showed me some business correspondence and orders.
Some of the orders were placed by India Sugars and Refineries and Madras Ferti lisers.
At that time there was nothing to show that the Industrial Chain Concern was not a proprietary concern or that Sethuraman was an employee of the firm.
He opened an account with cash deposit of Rs. 100 as he described himself as a proprietary concern and as he just then started the business and as I did not grant loan facility there was no occasion for calling credit reports from other bankers.
There was normal operation of the account.
Cheques given in the name of the concern were deposited in the account and after realisation they were withdrawn.
" Comparing the statement of Account and Ext.
B1 with the above evidence there is nothing to doubt this witness.
He denied that at any stage the Bank had acted with negligence or without good faith or that there was no proper introduc tion for opening an account.
He clearly said that the ad dress given in Ext.
B1 was Nallathambi Mudali Chetti Street and that he knew the location and it was far away from Nungambakkam.
That was the place of business of Sethuraman mentioned at the opening of account and the Mount Road Branch of the defendant Bank was the nearest Branch for that place.
Opening of an account by Sethuraman with a trading place at Nallathambi Street with Nungambakkam Branch oc curred to him as unusual but it did not create any suspicion as he asked Sethuraman why he wanted to open an account in Nungambakkam Branch and Sethuraman replied: "I am a commis sion Agent.
I want overdraft facility.
Your are the only agent known to me and that is why I have come to Nungambak kam Branch.
" DW 1 also said that in opening the Current Account he glanced through the order and correspondence shown to him by Sethuraman regarding supplies but he did not check up the address given in the correspondence by these companies in the name of the Industrial Chain Concern.
He denied that he had not checked up the business credentials for the account to be opened in the name of the business concern and that he was negligent in that aspect.
He said: "I declined overdraft facility.
That itself shows that I was not negligent.
Once I declined overdraft facility it did not strike me to refer Sethuraman to the nearest branch from his trading place.
I did not refer him to the 34 Mount Road Branch.
I suggested he can go to the Mount Road Branch.
He came with another request that his overdraft application might be considered after the period of about one year, after his business had improved.
Therefore, he wanted to open an account in Nungambakkam Branch.
" Both Courts below held that the Bank acted in good faith.
We agree.
The question is whether the Bank could be held to have been negligent while opening the account.
It is, however, necessary to bear in mind that this question is often associated with the question of negligence in collecting cheques, etc.
for the customers paid into the account.
This is because till an account is opened no bank er customer relationship exists between the bank and the person proposing to open an account.
Once the account is opened, that relationship is created and with it mutual rights and obligation between the banker and the customer are created under law.
Opening an account by cash is a little different from opening an account by a cheque as in that case the Bank has to act according to the tenor of that instrument and its collection and payment involves the Bank 's duty owed to its real owner if the proposer happens not to be its real owner.
Even when an account is opened by depositing cash but so soon after the opening of the account any cheque is paid into it as to make it part of the same transaction with the opening, the same duty may be implied by law.
What is the standard of care to be taken by a Bank in opening an account? In the Practice and Law of Banking by H.P. Sheldon, 11th Edition, in Chapter five at page 64 it is said: "Before opening an account for a customer who is not already known to him, a banker should make proper preliminary inquiries.
In particu lar, he should obtain references from respon sible persons with regard to the identity, integrity and reliability of the proposed customer.
If a banker does not act prudently and in accordance with current banking prac tice when obtaining references concerning a proposed customer, he may later have cause for regret.
" M.L. Tannan in Banking Law and Practice in India, 18th Edition at page 198 says: "Before opening a new account, a banker should take certain precautions and must ascertain by inquiring from the person wishing to open the account, if such person is unknown to the banker, as to his profession or trade as well as the nature of the account he proposes to open.
By mak 35 ing necessary inquiries from the references furnished by the new customer, the banker can easily verify such information and judge whether or not the person wishing to open an account is a desirable customer.
It is neces sary for a bank to inquire, from responsible parties, given as references by the customer, as to the latter 's integrity and respectabili ty, an omission of which may result in serious consequences not only for the banker con cerned, but also for other bankers and the general public.
" One of the tests of deciding whether the Bank was negli gent, though not always conclusive, is to see whether the Rules or instructions of the Banks were followed or not.
We may accordingly consult those instructions.
B6 contains the general instructions regarding constituent accounts for bank.
Mark II deals with opening of accounts.
It says: "Except at large branches where the sub agent or accountant may be authorised to open Cur rent Accounts, no new Current Account shall be opened without the authority of the agent manager who is solely responsible for all Current Accounts being opened in the proper manner.
A written application on the appropri ate form must be submitted and will be init ialled by the agent at the top left corner after he has satisfied himself of the respect ability of the applicant(s).
It is important that every party must be introduced to the Bank by a respectable person known to the Bank, who must normally call at the Bank and sign in the column specially provided for the purpose in the account opening form.
In all cases his signature must be verified with the specimen lodged and attested.
The agent or accountant may introduce constituents to the Bank provided they are known to him personally and in such cases he should sign the applica tion form at the appropriate place in his personal capacity.
When the introduction of any other member of the staff is accepted, the agent must invariably make independent inquiry and record his findings on the account opening form for future reference if the need arises . . " Mark IV deals with accounts of proprietary concerns.
It says: "An individual trading in the name of concern should fill in form F.S. 5 and sign it in his personal name and also affix his signature on behalf of the concern as proprietor in the space provided.
" 36 if the Banker was negligent in following up the references given at opening of account and subsequently cheques etc. are collected for the customer paid into that account and those happened to be of someone else the Bank may be liable for conversion, unless protected by law.
In the instant case, Sethuraman having been known to the Manager who gave the introduction, there was no violation of any instruction or Rules.
It was held in Commissioner of Taxation vs English Scottish and Australian Bank, , that a negli gence in collection is not a question of negligence in opening an account, though the circumstances connected with the opening of an account may shed light on the question whether there was negligence in collecting a cheque.
In Ladbroke & Co. vs Todd, , the plain tiff drew a cheque and sent it to the payee by post.
The letter was stolen and the thief took it to the defendant, a banker, and used it for the purpose of opening an account for the purpose of which he forged the payee 's endorsement.
The defendant accepted believing him to be the payee.
He was not introduced to the Bank and no references were obtained.
The defendant opened the account and the cheque was special ly cleared at the request of the thief, and he drew out the proceeds on the next day.
On the discovery of the fraud the plaintiff brought an action against the defendant for con version.
One of the main questions raised was whether the account having been opened by payment in all the cheques to be collected the defendant could be properly regarded as having received payment for a customer.
It was held that as account was already opened when the cheque was collected, payment had been received for a customer.
The drawer there upon sent another cheque to the real payee and took an assignment of his rights in the stolen cheque and, as hold ers of the cheque or alternatively as assignees, brought an action against the bank to recover the proceeds collected by the bank as money had and received to their use.
Evidence was given that it was the general practice of bankers to obtain a satisfactory introduction or reference.
It was held that the banker had acted in good faith, but was guilty of negligence in not taking reasonable precautions to safeguard the interests of the true owner of the cheque and that therefore he had put himself outside the protection of section 82 of the Bills of Exchange Act, 1882.
Bailbache, J. also said that the banker would have been entitled to the protection of the section as having received payment for a customer, but had lost it owing to his want of due care.
It was also held that the relation of banker and customer began as soon as the first cheque was handed in to the banker for collection, and not when it was paid.
37 In Turner vs London and Provincial Bank, [1903] 2 Legal Decisions Affecting Bankers 33, evidence was admitted as proof of negligence, that the customer had given a reference on opening the account and that this was not followed up.
In the instant case there was no question of a reference inasmuch as the Manager himself knew Sethuraman and gave the introduction.
The account was not opened by depositing any cheque but by depositing case of Rs. 100.
The first cheque was paid into the account later and there is nothing to show that it formed part of the same transaction.
No particulars have been proved as to the tenor of that cheque.
The Manager made several inquiries which in the facts and circumstances of the case, in our view, were sufficient, for it is an accepted rule that the banker may refrain from "making inquiries which it is improbable will lead to detection of the potential customer 's purpose if he is dishonest and which are calculated to offend him and may drive away his customer if he is honest," Marfani & Co. vs Midland Bank, (582).
Except when circumstances of a case so justifies, in making inquiries the banker 's attitude may be solicitous and not detective.
Sethuraman was believed when he said that he was the proprietor of Industrial Chain Concern which he recently started.
He showed some orders and references in proof of his business.
The banker believed in existence of his business but did not meticulously examine the addresses.
Sethuraman was asked as to why he wanted to come to that branch and his reply was that he expected there to have overdraft facility and when that was refused he expressed that after his business improved he would expect to be granted overdraft facilities after one year.
There is no doubt that Sethuraman was a rogue, but he prepared the plan intelligently and the banker in good faith believed in his statements.
We, therefore, find it difficult to hold that the Bank was negligent in opening the account accepting the deposit of cash by a person known to the Manager of the Bank under the above circumstances.
Mr. Balakrishnan has argued that a cheque for Rs.2,800 was paid in on the same date which was a stolen cheque and it ought to have aroused suspicion of the banker.
But there is nothing to show that it formed part of the same transac tion.
As we have already observed, once an account is opened the relationship of banker and customer begins.
Duration is not of the essence.
As was held in Ladbroke & Co. (supra) the mere opening of an account without the actual transac tion was sufficient to constitute the relationship and this view was followed in Commissioner of Taxation vs English Scottish and Australian Bank (supra) and it was stated that the word 'customer ' signifies a relationship of which dura tion is not of the essence.
The contract is not bet 38 ween a habitue and a newcomer, but between a person for whom the bank performs a casual service . . . and a person who has an account of his own at the bank.
Lord Chorley has even expressed the view that for the purpose of establishing the relationship of banker and customer there appears to be no logic in the actual opening of the account, and when the banker agrees to accept the customer the rela tionship comes into existence at that time though the ac count may not be opened until later.
According to the author "the relationship being contractual should be subjected to the normal rules of contract law and the making of the contract depends on the acceptance of the offer.
This con tract could clearly be effected before an account had actu ally been opened though it would state that there must be an agreement to open an account before the banker and customer relationship can exist.
" In the instant case there is, therefore, no doubt that the first cheque was subsequently paid in by Sethuraman as a customer and the Bank was to collect it on account of the customer.
The Bank, therefore, in collecting the cheque and paying the proceed to Sethura man acted as a Collecting Banker and can be held negligent, if at all, only as such as it was to collect it on account of the customer.
In fact, from the statement of account it is clear that the account was opened on October 3, 1974 and was closed on February 1, 1975 and there were a number of transactions of deposits and withdrawals.
The detailed particulars of the cheques paid into the account are not in evidence, it is, therefore, difficult to know whether each individual cheque or draft should have aroused suspicion in the mind of the Banker before accepting the same for collec tion from its customer.
The High Court did not analyse the legal position and did not consider the facts and circumstances in this regard in proper perspective.
We are not inclined to hold the Bank negligent in opening the account considered alone.
The next question is whether the Bank was negligent in collecting the cheques.
In collecting a cheque on account of a customer the banker is protected by section 131 of the Negotiable Instruments Act, 188 1 (26 of 1881) hereinafter referred to as 'the Act ' which reads: "131.
Non liability of banker receiving payment of cheque A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such pay ment.
Explanation A banker receives payment of a cros 39 sed cheque for a customer within the meaning of this section notwithstanding that he cred its his customer 's account with the amount of the cheque before receiving payment thereof.
" In the section the words 'a cheque crossed generally or specially to himself ' are important to be noted.
Section 131 corresponded to section 82 of the Bills of Exchange Act, 1882 of England which was repealed by the Cheques Act, 1957 and the protection there is now given by section 4 of the Cheques Act, 1957.
English decisions can, therefore, be guide in this regard.
In Lloyds Bank Ltd. vs E.B. Savory and Company, 1, the bank was held to be negligent (depriving it of the protection of section 82) not to ask a customer though respectively introduced the name of his employer and in the case of a married woman the name of her husband 's employer.
This is a case where a fraud had arisen through an employee stealing cheques from his employer and placing them into the credit of his account.
Had the bank known his employer, enquiries would have been made.
The request for special collection as in case of Lad broke & Co. (supra) was absent in this case as the account continued for quite some time.
Even in case of special collection it was held that it was desired for the purpose of learning quickly whether or not the cheques will be paid.
This case was mentioned in Marfani and Co. Ltd. vs Midland Bank Ltd., (supra) where the Midland Bank had make a special collection without being asked by their customer.
It was decided that this did not indicate that the bank 's suspi cions were aroused which would require further inquiry.
It was found that the bank took upon a special collection for the reasons (a) that the cheque was for a large sum, so that it was in their interest to collect quickly and (b) that the customer about to buy a restaurant might require the pro ceeds quickly.
In the Court of Appeal, Diplock LJ said that the 'significance ' of the special clearance depends upon the Judge 's assessment of the credibility of the bank officials who gave evidence; and he saw no reason to differ from him.
In the instant case we have no reason to disbelieve what was said by the Manager, DW 1.
In the instant case in the absence of any evidence giving the details of the cheques and their tenor, we are unable to hold that there were notices and circumstances which ought to arouse suspicion on the part of the bank.
The bank normally has an obligation to collect the customer 's cheques paid into his account.
In Halsbury Laws of England, 4th Edn., Vol. 3 at para 46 we read: 40 "46.
Customer 's title to money paid in.
In the absence of notice, express or implied the banker is not concerned to question the cus tomer 's title to money paid in by him.
al though if a person entrusted with a cheque wrongfully pays it to the bank to the credit of someone who is not entitled to it, the true owner, if he has given notice to the bank of his title while the credit remains, may recov er the amount from the bank as money had and received; or as damages for conversion . . .
A banker should be very cautious in accepting for a customer 's account any cheque drawn by him as agent upon his principal 's account, however broad may be the authority to draw.
If the court detects circumstances which should arouse suspicion that the agent was abusing his authority, the banker will be liable to the principal even though the cheque was crossed.
" This is because in every case of opening an account bank takes a mandate and, until changed, controls the operation of the account.
In the instant case, having already opened the account the Bank was not concerned to question the customer 's title to money paid in by him, when a cheque was drawn in favour of Industrial Chain Concern.
In Capital and Counties Bank vs Gordon, [1903] AC 240, the House of Lords accepted the position that a bank acts basically as a mere agent or conduit pipe to receive payment of the cheques from the banker on whom they are drawn and to hold the proceeds at the disposal of its customer.
Unless crossed the banker himself is the holder for value.
He may be a sum collecting agent or he may take as holder for value or as holder in due course.
As an agent of the customer for collection he is bound to exercise diligence in the presen tation of the cheques for payment within reasonable time.
If a banker fails to present a cheque within a reasonable time after it reaches him, he is liable to his customer for loss arising from the delay.
A banker receiving instruments paid in for collection and credit to a customer 's account may collect solely for a customer or for himself or both.
Where he collects for the customer he will be liable in conversion if the customer has no title.
However, if he collects in good faith and without negligence he may plead statutory protection under section 131 of the Act.
In the instant case in the absence of evidence on record we find it difficult to ascertain whether the bank was collecting the cheques merely as agent of the customer or as holder for value or as holder in due course.
Some of the entries in the statement do show deposits and 41 withdrawals of lesser amounts on the same date, but that is not enough for arriving at any conclusion whether the bank was collecting as a holder for value and not merely as an agent of the customer.
To enable a bank to avail the immunity under section 131 as a collecting banker he has to bring himself within the conditions formulated by the section.
Otherwise he is left to his common law liability for conversion or for money had and received in case of the person from whom he took the cheques having no title or defective title.
The conditions are: (a) that the banker should act in good faith and with out negligence in receiving a payment, that is, in the process of collection, (b) that the banker should receive payment for a customer on behalf of him and thus acting as a mere agent in collection of the cheque and not as an account holder (c) that the person for whom the banker acts must be his customer and (d) that the cheque should be one crossed generally or especially to himself.
The receipt of payment contemplated by the section is one from the drawee bank.
It is settled law that the onus of bringing himself within the section rests on the banker.
In Capital and Counties Bank vs Gordon, (supra) as we have seen, the conception of a col lecting banker was that of "receiving the cheque from the customer, presenting it and receiving the money for the customer, and then, and not till then, placing it to the customer 's credit, exercising functions strictly analogous to those of a clerk of the customer sent to a bank to cash an open cheque for his employer.
" If the banker performs these functions in course of his business, in good faith and without negligence he will be within section 131 of the Act.
We have already observed that the principle enunciated in the Commissioners of Taxation vs English Scottish and Australian Bank, (supra) is that the opening of the account is material as shedding light on the question whether there was negligence in collecting a cheque does bring out the true position that there must be sufficient connection established between the opening of the account and the collection of the cheque before a defence under section 131 could be held to be barred.
The question would then be one of facts as to how far the two stages can be regarded as so intimately associated as to be considered as one transac tion.
We have already found that in the instant case there was no evidence to show that the opening of the account and the collection of the cheques and drafts formed part of the same transaction.
Where a banker in good faith and without negligence receives payment for a customer of a cheque and the customer has no title or a defective title to the cheque, the banker does not incur any liability to the true owner of the cheque by reason only of having received such payment.
The banker is not to be treated for purposes of the protective 42 section as having been negligent by reason only of his failure to concern himself with absence of, or irregularity in, endorsement of the cheque or other instrument to which the section applies.
This has to be so because the drawer of the cheque is not a customer of the bank while the payee is.
Where the protection attaches, it covers the receipt of the cheque and every step taken in the ordinary course of busi ness and intended to lead up to the receipt of payment.
Even if there was negligence in opening of the account that act ipso facto would not result in loss to the true owner of the cheque collected.
While collecting the cheque for a customer the bank is under obligation to present it promptly so as to avoid any loss due to change of position.
When it receives the money collected then also there is no direct loss to the true owner.
It is only when the amount is paid or withdrawn by the customer that the loss results.
During this period what is important to note is that at every step in collec tion of the money and making payment the banker is bound by the banker customer relationship and rights and obligations flowing therefrom.
Even so, if there was anything to rouse suspicion regarding the cheque and ownership of the customer the banker may find itself beyond the protection of section 131.
The scope or ambit of possible suspicion will depend on various situations that may have prevailed between the drawer of the cheque and the customer.
In the instant case Sethuraman having been believed to have been the proprietor of Industrial Chain Concern the cheques payable to Industri al Chain Concern left little scope to have aroused any suspicion in the minds of the Bank.
The position may have been different if Sethuraman was known as acting as an employee of Industrial Chain Concern and the cheques were payable to that concern, but were deposited into personal account of the employee which was not the case here.
The requirement of receiving payment for a customer enunciated clearly in Capital and Counties Bank Ltd. vs Gordon, (supra) was extended in Barclays Bank Ltd. vs Astley Industrial Trust Ltd., wherein it was held that the banker may receive payment for himself and yet be enti tled to the protection where, acting in a purely collecting capacity, he has nevertheless a lien or is otherwise a holder for value.
There can be no doubt that the existence of a Current Account created relationship of banker and customer in this case.
Sethuraman would be a customer even if his account was over drawn until that account was closed.
In Halsbury 's Laws of England, 4th Edn., Vol. 3 at para 103 it is said: "If the banker wishes to plead the statutory protection, his dealings throughout must be in good faith and without negligence.
The alter native liability arising from negligence 43 renders the question of good faith practically superfluous, and it is seldom, if ever, raised.
Negligence in this connection is breach of a duty to the possible true owner, not the customer, created by the statute itself, the duty being not to disregard the interests of the true owner.
" It is a settled law that the test of negligence for the purpose of section 131 of the Act is whether the transaction of paying in any given cheque coupled with the circumstances antecedent and present is so out of the ordinary course that it ought to arouse doubts in the banker 's mind and cause him to make inquiries.
Lloyds Bank Ltd. vs E.B. Savory and Co., (supra), Marfani & Co. Ltd. vs Midland Bank Ltd., (supra), Arab Bank Ltd. vs Ross, and Karak Rubber Co. Ltd. vs Burden, (No. 2) are some of the authorities laying down the above rule.
The banker is bound to make inquiries when there is anything to rouse suspicion that the cheque is being wrongfully dealt with in being paid into the customer 's account.
However, the banker is not called upon to be abnormally suspicious, as was held in Penmount Estates Ltd. vs National Provincial Bank Ltd., It was held in Motor Traders Guarantee Corpn.
vs Midland Bank Ltd., , that disregard of the bank 's own regulations may be evidence of negligence.
In the instant case no such regulation of the bank has been produced so as to establish that in collecting the cheque and allowing the customer to withdraw the bank violated its own regulations.
Nor has the plaintiff been able to show that the transactions in paying in the drafts and cheques coupled with the circumstances antecedent and present were so out of the ordinary that it ought to arouse doubts in the Banker 's mind and cause him make inquiries.
As we have observed that the Bank 's negligence in not making inquiries as to the customer upon opening an account if there was any, could shed light in its negligence in col lecting the cheques for him.
But we have found that there was no such negligence in this case.
Mr. Balakrishnan 's submission that in this case while opening the account, the appellant should have inquired of the plaintiff 's firm does not reasonably follow in view of the fact that what Sethura man said was that he was the proprietor off the newly estab lished firm "Industrial Chain Concern" and if that was the name of the payee in the cheques, Sethuraman having been accepted as its proprietor there would be no room for suspi cion that the firm 's cheques were being paid into the pro prietor 's personal account.
There is no allegation and proof that the collection and payment were made contrary to the tenors of the instruments.
Carelessness could occur at the time of collection especially if there was failure to pay due attention to the actual terms of the mandate.
The actual circumstances at the time of 44 paying in for collection, if the amount was very large one might raise suspicion.
But in this case the first cheque paid in was of 2,800.17p.
which could not be regarded as such a large amount to have aroused suspicion considering the fact that the firm was 'Industrial Chain Concern ', dealing in industrial chains and pulleys.
Bharat Bank Ltd. vs Kishanchand Chellaram, AIR 1955 Madras 402; Sanyasilingam vs Exchange Bank of India, AIR 1948 Bombay 1; Woodbrier vs Catholic Bank, AIR 1958 Kerala 316, applied the accepted principles to the facts.
In Orbit Mining & Trading Co. vs Westminister Bank, [1962] 3 All E.R. 565, Harm LJ said: "It cannot at any rate be the duty of a bank continually to keep itself upto date as to the identity of a customer 's employer", though he is presumably required to know the identity of the employer.
That case is distin guishable on facts.
Underwood vs Bank of Liverpool, , was a case of a Director paying into his own pri vate account cheques in favour of the company duly endorsed by himself as sole Director and as such distinguishable on facts.
In Bapulal Premchand vs Nath Bank Ltd., AIR 1946 Bom.
482, Chagla J, as he then was, in the facts of that case expressed that in his opinion, there was no absolute and unqualified obligation on a bank to make inquiries about a proposed customer and that modern banking practice required that a customer should be properly introduced or the bank should act on the reference of some one whom it could trust.
Therefore, perhaps in most cases it would be wiser and more prudent for a bank not to accept a customer without some reference.
But he was not prepared to go so far as to sug gest that after a bank had been given a proper reference with regard to a proposed customer and although there was no suspicious circumstances attendant upon the opening of the account, it was still incumbent upon the bank to make fur ther inquiries with regard to the customer.
In that case the manager of the defendant bank accepted.the reference of the cashier Modi and also in fact made certain inquiries of Modi as to the position and status of the customer.
It was held that it was not obligatory upon the defendant bank to make any further inquiries about his customer and in having failed to make any such further inquiries in his Judgment they were not guilty of negligence.
In the instant case the Manager himself gave the introduction.
As a general rule a banker before accepting a customer, must take reasonable care to satisfy himself that the person in question is of good reputation; and if he fails to do so he will run the risk of forfeiting the protection given by section 131 of the Act but 'reasonable care ' will 45 depend on the facts and circumstances of the case.
The courts have tended to accept the practices and procedures which bankers lay down for themselves, but that can by no means be decisive.
The "type of necessary inquiry at the opening of an account seems to be less stringent at present than it was a generation ago, and it is difficult to spell out from the cases any hard and fast rules.
" This is so because, in the words of Lord Chorley, the use of banking facilities at the present day "has become so wide spread and has penetrated so far into social strata where banking accounts were previously unknown, that precautions at one time considered necessary are now difficult in the press of business to apply.
One of the obvious problems is that of the dishonest employee who may wish to open a bank account for the purpose of getting cheques collected for which he has stolen from his employer.
If the banker is aware of his employment he will naturally watch that those cheques of which the employer is payee, or in which he is otherwise interested, do not pass through the account.
But how far can he be expected to keep himself informed of the employment of all his customers? This is typical of the problems which have faced the judges, and on which their views have tended to vary from time to time, and indeed from judge to judge.
" The above problem has been realised by the courts in England and India.
In Marfani & Co. vs Midland Bank (supra) a man called Kureshy who was minded to cheat his employers, the plaintiffs in the case went to a branch of the defendant bank and asked to open an account giving the name of Sheik Eliaszade and also those of the referees.
He was allowed to do so immediately, before the references had been taken up, and paid Pound 50 the same day.
The next day he paid in a further Pound 35 in cash and the plaintiffs ' cheque for Pound 3,000 made payable to one Eliaszade which he had stolen from them.
His object in opening the account was to get this cheque collected by the defendant bank.
The defendants in fact had this cheque collected spe cially on the day it was paid in, and on the same day wrote to the referees.
On the next day the defendants received the proceeds of the cheque, and one of the officers of the bank on same day had an interview with one of the referees who was a customer at the same branch and who gave a favourable account of Eliaszade which satisfied the manager the other referee never replied.
During the following days Kureshy drew out the whole of the Pound 3,000; indeed he tried to draw out substantially more.
On discovering the fraud the plaintiffs sued the defendant bank for the conversion of their cheque.
When the defendants pleaded section 4 of the Cheques Act, 1957, the plaintiffs contended that they had been negligent under four heads: 46 (i) They had taken no steps to identify the proposed custom er, without which the referee 's good opinion was valueless.
(ii) No inquiry was made as to the antecedents of Kureshy.
(iii) Only one referee responded to the bank 's inquiry (iv) The cheque was in fact collected before the references had been taken up.
The defendants called evidence that they had done all that was usual in such a case, and claimed that this proved that they had acted with due care.
It was held that the defence succeeded.
It is thus clear that the question of negligence or no negligence depends entirely on the facts of each individual case and thus makes it difficult to judge in advance how any particular litigation involving allegations of negligence will go.
In the instant case Sethuraman had in effect opened another account in the name of the plaintiff firm and oper ated it himself as its proprietor.
As we have already observed, carelessness on the part of the bank is most likely to occur at the time of collection of cheques especially in failure to pay due attention to the actual terms of the mandate.
It is not here a case of play ing the detective but of a careful examination of everything which appears on the front and back of the instrument.
Each set of circumstances produces its own requirements.
The instruments, crossing, type of crossing, per pro, pay cash or order etc.
are important.
The banker may be negligent in acting contrary to such mandate under appropriate circum stances.
In the instant case, however, no details regarding such mandates on the alleged cheques are available.
The High Court took the view that if the Manager of the Bank gave the introduction of Sethuraman to open the account in the plaintiff 's name showing him is its proprietor with out making any enquiry as to its true relationship with the concern then he was taking a risk and when it transpired that Sethuraman had made fraudulent representation then the Manager should be taken to have acted negligently.
We are not inclined to agree inasmuch as while dealing with a customer for collecting a cheque, there is no contractual relation between the collecting banker and the true owner.
The duty is implied by law.
A conduct beneficial to the customer at the expense of the true owner when the Bank acts in good faith and without negligence, is no 47 breach of that duty.
It is from this position of the true owner that question of negligence under section 131 of the Act has to be viewed.
The formula approved in Lloyds Bank Ltd. vs Chartered Bank of India, Australia and China, , is that broadly speaking, the banker must exer cise the same care and forethought in the interest of the true owner, with regard to cheques paid in by customer, as a reasonable man would bring on similar business of his own.
Lord Dunedin in Commissioner of Taxation (supra) said that the bank 's action must be in accordance with the ordinary practice of banking and bank cannot be held liable merely because they have not subjected an account to a 'microscopic examination '.
In Ross vs London County, Westminister and Parr 's Bank Ltd., , Bailhache J. took the view that the clerks and cashiers of the defendant bank would be attribut ed the degree of intelligent and knowledge ordinarily re quired of a person in their position to fit them for the discharge of their duties but that no microscopic examina tion of cheques paid in for collection was necessary and that it was not expected that officials of banks should also be 'amateur detectives '.
It could not be said that before opening an account in the name of a firm the Bank would be required to enquiry always whether any firm of the same name was already in existence or not.
What facts ought to be known to the Bank, what inquiries he should have made and what facts were sufficient to cause the Bank reasonably to suspect that Sethuraman was not the true owner in the facts and circumstances of the case would depend on current bank ing practice.
What was the practice long time back when the use of banking facilities by the general public was much less widespread may not be a proper guide.
It should also be noted that the duty of care owed by the Bank to the plain tiff as owner of the cheque did not arise until the cheque was delivered to the Bank by the customer Sethuraman.
It was then only that duty to make inquiries about the cheque arose.
Those inquiries would depend on the apparent tenor of the cheque and the knowledge of facts that earlier inquiries ascertained.
What we have to do is to look at all the cir cumstances at the time of the paying in of the cheque by Sethuraman and to see whether those circumstances were such as would cause a reasonable banker possessed of the informa tion gathered about Sethuraman to suspect that he was not the true owner of the cheque.
There is very little evidence relating to the deposit and particulars of the cheques deposited and hence it is difficult to hold that the Bank ignored obvious indications and was negligent at that time.
It is difficult to accept so speculative a proposition as what would have happened if inquiries had been made which were not made.
It does not constitute any lack of reasonable care to refrain from making 48 such inquiries which it was improbable to have led to detec tion of the customer 's fraud.
While arriving at the above conclusion we have borne in mind the standard of reasonable care and the banking prac tices and its trend in a developing banking system in the country.
Any stricter liability may not be conducive.
It will also be observed that expansion of the banker 's liabil ity and corresponding narrowing down of the banker 's protec tion under the provision of section 131 of the Act may make the banker 's position so vulnerable as to be disadvantageous to the expansion of banking business under the ever expand ing banking system.
This is because a commercial bank, as distinguished from a Central bank, has the following charac teristics, namely (a) that they accept money from, and collect cheques for, their customers and place them to their credit; (2) that they honour cheques or orders drawn on them by their customers when presented for payment and debit their customers accordingly; and (3) that they keep current account in their books in which the credits and debits are entered.
The receipt of money by banker from or on account of his customer constitute it the debtor of the customer.
The bank borrows the money and undertakes to repay it or any part of it at the branch of the bank where the account is kept during banking hours and upon payment being demanded.
The banker has to discharge this obligation and normally the banker would not question the customer 's title to the money paid in.
Applying the above principles of law to the facts of the instant case we are not inclined to hold that the Bank was negligent either in collecting the cheques and drafts or allowing Sethuraman to withdraw the proceeds.
As we have taken the view that the bank was not negli gent, it is not necessary to deal with the question of contributory negligence.
Let the loss lie where it falls.
In the result, this appeal succeeds.
The impugned judg ments are set aside and the appeal is allowed, but without any order as to costs.
Y. Lal Appeal allowed.

summary/full:
The plaintiff respondent filed original suit No. 7667 of 1975 against the appellant Bank in the City Civil Court Madras for recovery of Rs.26,383.49 p. together with inter est and costs, being the amount of loss suffered by it on account of the negligence and conversion on the part of the appellant who negligently allowed one Sethuraman, Manager of the plaintiff 's firm to open a "fictitious account" in the name of "Industrial Chain Concern" as its proprietor and helped him to pay in stolen drafts and cheques drawn in favour of the plaintiff, and by collecting the same and paying the proceeds thereof to Sethuraman, and closing the account thereafter.
The plaintiff 's case was that it was doing extensive business in steel Roller chains and sprock ets with leading Industries and Government undertakings and had supplied goods to seven parties who sent to it drafts and cheques for Rs.26,383.49 p. which were received by Sethuraman, its Manager, who opened fictitious account in the name of the firm with the bank, and withdrew the amount defrauding the plaintiff.
According to the plaintiff the Bank was negligent and guilty of conversion in opening the account as also in collecting the cheques.
Hence it was liable to make good the loss suffered by it.
The appellant Bank denied the allegations of negligence levelled by the plaintiff.
It stated that Sethuraman, who was a Collegemate of the Manager of the Bank was known to him earlier and at the time of opening the account he had represented to the Bank that he, as proprietor, had started a firm under the name and style of "Industrial Chain Concern" and had shown in that connection some business papers on the basis of which the Manager gave the introduction necessary to open the Account but the manager declined to grant overdraft facility asked for by him.
The bank asserted that it acted in good faith throughout the dealings till the closure of the account.
The Trial Court held that the appellant bank had acted in good faith but not without negligence in opening the account and operating the same in the process of collection of cheques/drafts and that it was not 28 entitled to protection of section 131 of the Negotiable of Instruments Act.
Accordingly it decreed the plaintiff 's suit Bank 's appeal to the High Court against the decree of the trial Court was dismissed.
Hence this appeal by Special Leave.
Allowing the appeal, this Court, HELD: As a general rule a banker before accepting a customer, must take reasonable care to satisfy himself that the person in question is of good reputation, and if he fails to do so he will run the risk of forfeiting the pro tection under section 131 of the Negotiable Instruments Act.
What is "reasonable care", will depend on the facts and circumstances of the case.
[45F G] The courts have tended to accept the practices and procedures which bankers lay down for themselves, but that can by no means be decisive.
[45G] Till an account is opened, no banker customer relation ship exists between the bank and the person proposing to open an account.
Once the account is open, the relationship is created and with it mutual rights and obligations between the banker and the customer are created under law.
Opening an account by depositing cash is slightly different from opening one by a cheque as in that case, the Bank has to act according to the tenor of that instrument and its collection and payment involves the Bank 's avowed duty to its real owner if the proposer happens not to be its real owner.
Even when an account is opened by depositing cash but so soon after the opening of the account any cheque is paid into it as to make it part of the same transaction with the opening, the same duty may be implied by law.
[34D F] One of the tests of deciding whether the Bank was negli gent, though not always conclusive, is to see whether the Rules or instructions of the Banks were followed or not.
In the instant case, Sethuraman having been known to the Manag er who gave the introduction there was no violation of any instruction or Rules.
[35E; 36D] Except when circumstances of a case so justify in making inquiries the bankers attitude may be solicitious and not detective.
It is difficult to hold that the Bank was negli gent in opening the account, accepting the deposit of cash by a person known to the Manager of the Bank under the circumstances.
[37G; 38B] 29 The bank normally has an obligation to collect the customer 's cheques paid into his account.
[42H] In every case of opening an account bank takes a man date and, until changed, controls the operation of the account.
In the instant case having already opened the account the Bank was not concerned to question the custom er 's title to a cheque paid in by him, when a cheque was drawn in favour of 'industrial Chain Concern '.
[41A B] If a banker fails to present a cheque within a reason able time after it reaches him, he is liable to his customer for loss arising from the delay.
A banker receiving instruc tions paid in for collection and credit to a customer 's account may collect solely for a customer or for himself or both.
Where he collects for the customer he will be liable in conversion if the customer has no title.
However, if he collects in good faith and without negligence he may plead statutory protection under section 131 of the Act.
[41D E] To enable a bank to avail the immunity under sec tion 131 as a collecting banker he has to bring himself within the conditions formulated by the section.
Otherwise he is left to his common law liability for conversion or for money had and received in case of the person from whom he took the cheques having no title or defective title.
The conditions are: (a) that the banker should act in good faith and without negligence in receiving a payment, that is, in the process of collection, (b) that the banker should re ceive payment for a customer on behalf of him and thus acting as a mere agent in collection of the cheque and not as an account holder (c) that the persons for whom the banker acts must be his customer and (d) that the cheque should be one crossed generally or especially to himself.
The receipt of payment contemplated by the section is one from the drawee bank.
It is settled law that the onus of bringing himself within the section rests on the banker.
There is very little evidence relating to the deposit and particulars of cheques deposited and hence it is difficult to hold that the Bank ignored obvious indications and was negligent at that time.
[41G H; 42A; 48G] Commissioner of Taxation vs English Scottish & Austra lian Bank, ; Ladbroke & Co. vs Todd, ; Turner vs London & Provincial Bank, [1903] 2 Legal Decisions Affecting Bankers 33; Mariani & Co. vs Midland Bank, at 582; Lloyds Bank Ltd. vs E.B. Savory & Company, ; Capital & Counties Bank vs Gordon, [1903] AC 240; Barclays Bank Ltd. vs Astley Indus trial Trust Ltd. ; Arab 30 Bank Ltd. vs Ross, ; Karak Rubber Co. Ltd. vs Burden (No. 2), ; Penmount Estates Ltd. vs National Provincial Bank Ltd., ; Motor Traders Guarantee Corpn.
vs Midland Bank Ltd., ; Bharat Bank Ltd. vs Kishanchand Chel laram, AIR 1955 Mad. 402; Sanyasilingam vs Exchange Bank of India, AIR 1948 Bombay 1; Woodbrier vs Catholic Bank, AIR 1958 Kerala 316; Orbit Mining & Trading Co. vs Westminister Bank, ; Underwood vs Bank of Liverpool, ; Bapulal Premchand vs Nath Bank Ltd., AIR 1946 Bom.
482; Lloyds Bank Ltd. vs Chartered Bank of India, Australia & China, and Ross vs London County, Westminister & Parr 's Bank Ltd., , referred to.


judgement:
TION: Criminal Appeal No. 672 of 1989.
From the Judgment and Order dated 16.2.1988 of the Madras High Court in Crl.
Petition No. 12389 of 1987.
R. Mohan and R.A. Perumal for the Appellant.
R.K. Jain, Mrs. Aruna Mathur and A. Mariarputham for the Respondents.
The Judgment of the Court was delivered by M. FATHIMA BEEVI, J.
Special Leave granted.
The appellant married the first respondent on 29.4.
They lived together until 1982 and have two children.
They separated and the legal battle commenced in 1983.
The first respondent moved the City Civil Court for divorce.
The appellant instituted criminal complaint in the court of the Metropolitan Magistrate.
The complaint was taken cognizance of for offences under Sections 494, 496, 498 A, 112, 114, 120, 120 B and 34 IPC against the respondents.
It was al leged that the first respondent married the second respond ent while the proceedings for decree of divorce were still pending, the marriage was performed secretly in the presence of respondent Nos. 3 to 6.
On the application of the first respondent the High Court by the impugned order quashed the proceedings before the Metropolitan Magistrate.
Hence the appeal.
Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of Court.
In proceedings instituted on complaint exercise of the inherent power to quash the pro ceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive.
If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of the inherent powers under Section 482.
It is not, however, necessary that there should be a meticu lous analysis of the case, before the trial to find 167 out whether the case would end in conviction or not.
The complaint has to be read as a whole.
If it appears on a consideration of the allegations, in the light of the state ment on oath of the complainant that ingredients of the offence/offences are disclosed, and there is no material to show that the complaint is mala fide, frivolous or vexa tious.
in that event there would be no justification for interference by the High Court.
The High Court without proper application of the princi ples that have been laid down by this Court in Sharda Prasad Sinha vs State of Bihar, ; ; Trilok Singh and Others vs Satya Deo Tripathi, [1980] 86 CRL.
LJ 882 AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala and Others, ; proceeded to analyse the case of the complainant in the light of all the probabilities in order to determine whether a conviction would be sustainable and on such premises arrived at a conclusion that the proceedings are to be quashed against all the respondents.
The High Court was clearly in error in assessing the material before it and concluding that the complaint cannot be proceeded with.
We find there are spe cific allegations in the complaint disclosing the ingredi ents of the offence taken cognizance of.
It is for the complainant to substantiate the allegations by evidence at a later stage.
In the absence of circumstances to hold prima facie that the complaint is frivolous when the complaint does disclose the commission of an offence there is no justification for the High Court to interfere.
We, therefore, allow the appeal, set aside the impugned order and direct that the proceedings before the Magistrate shall be restored and disposed of in accordance with the law.
P.S.S. Appeal allowed.

summary/full:
The criminal complaint instituted by the appellant was taken cognizance of by the Magistrate for offences under sections 494, 496,498 A, 112, 114, 120, 120 B and 34 IPC.
It was alleged that the first respondent had married the second respondent while the proceedings for decree of divorce were still pending, and that the marriage was performed secretly in the presence of respondent Nos. 3 to 6.
The High Court, however, on the application of the first respondent quashed the proceedings before the Magistrate.
Allowing the appeal by special leave, HELD: The High Court was in error in assessing the material before it and concluding that the complaint cannot be proceeded with.
[167C D] In proceedings instituted on complaint exercise of the inherent power under section 482 of the Code of Criminal Proce dure by the High Court to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive.
It is not necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not.
The complaint has to be read as a whole.
[166G; 167A] In the instant case, there were specific allegations in the complaint disclosing the ingredients of the offence taken cognizance of.
It was for the complainant to substan tiate the allegations by evidence at a later stage.
In the absence of circumstances to hold prima facie that the com plaint was frivolous there was no jurisdiction for the High Court to interfere.
[167D E] Sharda Prasad Sinha vs State of Bihar, ; ; Trilok 166 Singh & Ors.
vs Satya Deo Tripathi, AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala