P L D 1980 Karachi 115 (PLP)

Issues Nos. 2, 3 & 5.-The Plaintiff is his deposition stated that he drew the cheque on his account with the defendant 1 for there was a balance of Rs. 10,000 in his account. In support of the statement he produced a copy of statement account which bears the date of 6-2-1968 and sht7ws that on 4-1-1968 a sum of Rs. 1,10,000 was lying to the credit of the plaintiff in his account with defendant

1. It further shows that on 22-1-1968 a sum of Rs. 10,000 was lying to this credit in the said account. However, the cheque (Exh. 6/1) which was returned unpaid is dated 30-12-1968 and it was presented to the Bank on 1-1-1969 as would appear from the memorandum (Exh. 6/2). Therefore, this statement of account does not support the claim of the plaintiff that when the cheque was presented he had a sum of Rs. 10,000 in his account. The plaintiff has also not produced any account book in support of his claim.. There is no other evidence except the plaintiff's word and statement of the account (Exh. 6/1). On the other hand defendants, witness A. S. Qadri produced copies of statements of accounts of Tasneem Plastic Industries as well as TRAVOMARS (Exh. 9/1 and Exh. 9/2) Exh. 9/1 is relevant to the case under consideration and according to it on 30-12-1968 a sum of Rs. 9,99 was lying to the credit of the plaintiff in this account: Therefore, it is obvious that the cheque drawn? was in excess of Rs. 5 and there being no sufficient fund in the account of the plaintiff it was returned for that. reason. The trend of cross-examination of the witness shows that assurance, of this statement of account was being challenged. However, Mr. A. S. Qadri in his deposition clearly stated that the Bank used to send monthly statements of account and half-yearly confirmation slips of plaintiff's balance in the account. This statement was not questioned in the cross-examination. Significantly. the plaintiff in his cross-examination did not deny the suggestion that the Bank used to send him the statements of account. He, however, stated that he did not remember if the Bank had sent the statements of account. Now, if the plaintiff was receiving the monthly statements of his account and the statement of account produced by the defendants was incorrect, he should have produced his copy of the statement of account to show that there was sufficient balance in his account. The burden of proof being on the. plaintiff he has failed to show that there was sufficient balance in his account and therefore it is not possible to hold on the basis of the evidence available on- record that the plaintiff's cheque was wrongfully returned by the defendant. No doubt that when a cheque is returned with the remarks `refer to drawer' it means `dishonour of the cheque' for the expression `refer to drawer' amounts to a statement by the Bank that "we are not paying, go back to the drawer and ask why" or also, "go back to the drawer and ask him to pay". [See Plunkett and another v. Barclays Bank Limited (1)

1. So far as the question of guarantee is concerned the plaintiff's case is that the guarantee furnished on behalf of his firms was returned to the Bank by P. I. A. as the same was collected by Mr. M. Naqvi as asserted by him in his Letter (Exh. 6118) which name was subsequently corrected as Mr. A. S. K. Qadri in the letter addressed by the Advocate for the plaintiff dated 22-7-1970 (Exh. 6/16). However, A. S. K. Qadri came in the witness-box and denied that he ever collected the original guarantee. In any case, the question whether the guarantee was returned or not, in my view, is immaterial for the argument of Mr. Nasim Faruqui learned counsel for the defendant is that the Bank had a lien under section 171 of the Contract Act on the balance in the account of the plaintiff. However, in my opinion the provisions of section 171 of the Contract Act are not at all attracted, for under the provisions of this section a banker, amongst others named therein; in they absence of a contract to the contrary, has a right to retain as security for a) general balance of account goods bailed to him. In the present case firstly, the plaintiff has not pleaded and proved that there was any general balance outstanding against the plaintiff in his account, secondly no goods were bailed to them over which the Bank could claim lien under the said provisions. Therefore, no lien could be claimed on the credit balance in they account of the plaintiff with the defendant for non return of the original' guarantee issued on behalf of the plaintiff to P. I, A. even if the allegation is' accepted as correct. As regards the third ground that if the cheque was honoured there would not have been left any balance in the account and that would have amounted to closure of the account and the same could not have been closed without returning unused cheques, it would suffice to say that in the absence of a contract. to that effect between the parties or banking usage or practice (which has to be pleaded and proved) the Bank had no right to refuse payment on that ground. The Bank, in the absence of a contract to the contrary or any statutory provision or banking usage or practice was bound to honour the' cheque, even when the balance in the account was equal to the amount of the cheque. However, if after the payment of the cheque nothing was left in the account it was open to the Bank to close the account after giving notice to the plaintiff. It is the duty of a banker to see that his client's credit should not suffer on such a ground and if it does, he be comes liable to pay him damages. However, in the present case I have found as a fact that the Bank was entitled to refuse the' payment of the cheque for, the amount of the cheque exceeded the amount available as balance in the account of the plaintiff. I am therefore, of the opinion that there was sufficient reason for not honouring the cheque. Accordingly, I decide all these three issues against the plaintiff. Issue No. 6.-In view of my findings on Issues 2, 3 and 5 it is not necessary to decide this issue. However, since an important question of law has been raised and there is no reported decision of this Court, I think it proper to decide the same. (1) (1936) 2 K B 107 When a cheque of the customer who has sufficient funds- in the hands of a bank properly applicable to the payment of such cheque is dishonoured he is entitled to compensation for any loss or damage caused due to such dishonour. This principle is statutorily recognised in section 31 of the Negotiable Instruments Act, 1881, in the following words : "

31. The drawee of cheque having sufficient funds of the drawer in his hands, properly applicable to the payment of such cheque must pay the cheque when duly required so to do, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default." However, it is submitted by Mr. Nasim Faruqui learned counsel for the defendants that the plaintiff has not pleaded with full particulars and proved any special damages as required by law. He further submitted that plaintiff's claim for Rs. 1,00,000 by way of damages cannot be taken into consideration in the absence of particulars and proof and the suit is liable to be dismissed. On the other hand, Mr. Jan Muhammad Dawood learned counsel for the plaintiff submitted that Court can treat the claim for Rs. 1,00,000 as a claim for general damages and award such damages as it considered just. In reply Mr. Nasim Faruqui argued that under the provision of section 31 of the Negotiable Instruments Act no general damages can be awarded for compensation has to be for such loss or damage as is suffered by the drawer due to dishonour of the cheque which means special damages. However. on the point in issue I may refer to a passage from Hart's Law of Banking, 4ih Edn., Vol. I, p. 443, which is quite illuminating. It is : "Where the banker, being bound to honour his customer's cheque, has failed to do so he will be liable in damages. If special damage naturally ensuing from the dishonour is proved, it will be properly taken into account in assessing the amount of the damages. If the customer be a trader, the jury may properly award substantial damages, in the absence of the proof of special damage. In other cases the customer will be entitled to such damages as will reasonably compensate him for the injury which, from the nature of the case, he has sustained. All loss flowing naturally from the dishonour of a cheque may be taken into account in estimating the damages." Further, Page in his Law of Banking, 5th Edition at page. 173 has stated that substantial damages may be given against the banker without actual loss to the customer. Reference may also be had to the decision of House of Lords in Wilson v. United Counties Bank Limited and another (1). In this case it was held that there was a right to claim substantial damages in case of refusing or dishonouring of a cheque by a bank though in the case of non-trader special loss or injury must be proved before substantial damages could be claimed except where there are special circumstances like a man issuing a cheque to a financee being dishonoured wrongfully and the financee breaking off the engagement in consequence. I may also cite here Gibbons v. West minister Bank Limited (2). In this case a bank wrongfully. dishonoured a cheque of the plaintiff; who was not a Trader. The plaintiff did not, in the statement of claim, plead any matters showing a loss of credit, but proved that, after the cheque was dishonoured, her landlords had asked her to pay her rent in cash; and not by cbeque. (1) 1920 A C 102????????? (2)x(1939) 3 All E R 577 It was held by Lawsrence: J. that "the authorities which have been cited to me all lay down that a trader is entitled to recover substantial damage, without pleading and proving actual damage for the dishonour of his cheque, but it has never been held that the exception to the general rule as to the measure of damages for breach of contract extends to anyone who is not a trader. The cases in which this view has been taken, and which have been cited to me, are Marzetti v. Williams (1), Rolin v. Steward (2), Bank of New South Wales v. Milvain (3), Kinlan v. Ulster Bank Ltd. (4). The rule is so expressed in Grant on Banking, 7th Edn., pp. 88, 89, and in Smith's Leading Cases, 13th Edn., Vol. 2, p. 574, where it is also stated that the exception to the general rule is an exception which ought not to be extended, and reference there is made to the opinion of Lord Atkinson in the House of Lords in Addis v. Gramophone Co. Ltd. (5). In my opinion, ,l ought to treat this matter as covered by these authorities, and I must hold that ,the corollary of the proposition which is laid down by these cases is the law namely, that a person who is not a trader is not entitled to recover substantial damages unless the damages are alleged and proved as special damages. I am therefore of opinion that "the plaintiff, whom I hold not to be a trader, is entitled to recover only nominal damages, and she will have judgment for 40 s. Judgment for the plaintiff for 40 s". The very same view regarding both traders and non-traders was adopted in Davicson v. Barclays Bank Ltd. (6). However, it is submitted by Mr. Nasim Faruqui learned counsel for the defendants that the rule of English Law cannot be allowed in this country for there is no similar provision in. the English Bills of Exchange Act as is contained in section 31 of our Negotiable Instruments Act. But the submission is not well founded for according to Indian Text Bookwriters on Negotiable Instruments Act, 1881 same rule has been followed by Courts in the sub-continent in respect of the provisions of section 31 of the Negotiable Instruments Act, 1881, and in support reliance is placed by the authors on Jogendranath Chalravarti v. New Bengal Bank Ltd. (7). I may also refer to a decision of Madras High Court in Messrs New Central Hall v. United Commercial Bank Ltd. (8). It was ruled by Pan. chapakes Ayyar sitting with Basheer Ahmed Sayeed, JJ. : "We are of the opinion that the Indian Law on the subject is not at all different from the English Law on the point, and that in case of non-trader nominal damages should be awarded - where there is no proof of special loss or damage by the wrongful dishonouring, and in the case of a trader, substantial damages should be awarded even in the absence of proof of special loss or damages." The Madras decision was followed by the High Court of Andhra Pradesh in S. K. C. C. Bank Ltd., Amalaparam v. Yissapraqada Subrahmanyam (9). 1 may mention that in this case the English decisions in Wilson v. United Counties Bank Ltd. and Gibbons v. Westminster Bank Ltd., were followed Therefore, if the plaintiff had succeeded in proving that his cheque was wrongfully dishonoured he would have been entitled to special damages' (1) (1830) 1 B & Ad. 415 ???????? (2) (i854) 14 C B 59; k3) (1884) 10 V L R 3?? (4) 1928 1 R 171 (5) 1909 A C 488????????? (6) 1940 All E R 316 (7) A I R 1939 Cal. 63?? (8) A I R 1959 Mad. 153 ??????????? (9) A I R 1963 Andh, Pra. 250 notwithstanding the fact that he did not plead and prove any special damages. As to the quantum of damages I may mention that in the Madras case of Messrs. The New Central Hall v. The United Commercial Bank Ltd. 11 cheques aggregating less than Rs. 4,000 were dishonoured and damages, on the fact of that case, in the sum of Rs. 6,000 were awarded and in Calcutta Case of Jogendra Nath Cljakravar/i v. New Bengal Bank Ltd., three cheques by a non-trader were dishonoured and damages in the sum of Rs. 500 were awarded. In the case reported in A I R 1963 Andh. Pra. 250, a cheque of Rs. 28 by a non-trader was dishonoured and an award of nominal damages in the sum of Rs. 175 by the lower Court was upheld. Issue No. 8.-Since in this case the cheque was not unduly dishonoured I am of the view that the plaintiff is not entitled to any relief. I, therefore, dismiss the suit leaving the parties to bear their own costs in the circumstances of this case. S. Q.??? Suit dismissed.