2005 PLP 705 (CLD)

KHILJI ARIF HUSSAIN, J.

The petitioner questioned the order of Wafaqi Mohtasib (Ombudsman) dated 5-5-1991 is illegal, unwarranted and of no legal effect. Brief facts of the case are the respondent No.2 had an account in the petitioner-Bank at its Empress Market Branch, Karachi and deposited three cheques for collection in his account being Cheque bearing No.TA-0291885 dated 16-12-1989 for Rs.1,75,000, Cheque No.0292376 dated 2-1-1991 for Rs.1,00,000 and Cheque No.TA-0292377 dated 2-1-1990 for Rs.50,

000. These cheques were issued by Messrs. Alam Traders, Karachi, an account holder of the petitioner-Bank from his running Finance Account which he maintained in the petitioner-Bank Branch known as Noor Branch. The cheques were sent for collection through petitioner Empress Market Branch for their encashment. First cheque was received for collection on 17-12-1989, which was returned uncleared by the petitioner-Bank. The other two cheques were received by the petitioner-Bank on 25-2-1990 and 4-3-1990, which were returned uncleared with the remarks refer to drawee . The respondent No.2 thereafter addressed a letter to the President of the petitioner-Bank demanding payment of the amount of cheque, but the same was not responded by the petitioner. The respondent then filed complaint before the Wafaqi Mohtasib, who, after hearing the parties, vide his order dated 5-5-1991, recommended that the petitioner-Bank should make the payment of the cheques and is free to recover the amount either from the official responsible for issuing undertaking of encashment of the cheques in question or from the party who issued the cheques. Aggrieved by the said order of the Wafaqi Mohtasib, the petitioner preferred representation before the President of the Islamic Republic of Pakistan, which was dismissed as barred by time. The petitioner questioned through this petition the said two orders. We have heard Mr. A.I. Chundrigar, learned counsel for the petitioner and Mr. Riaz Ahmed Khan, learned counsel for respondent No.2. Mr. A.I. Chundrigar, learned counsel for the petitioner, questioned the validity of the order passed by respondent No.1, Wafaqi Mohtasib on the ground that the respondent No.1 committed error of law while recommending for the payment of cheque amount without taking into consideration that there was no practice in Bank to endorse on the cheque good for payment and endorsement made by the Manager of the petitioner-Bank was without any lawful authority. The learned counsel argued that the said Manager was never authorized by the petitioner-Bank to endorse such remarks on the cheques and the petitioner-Bank is not answerable for the unauthorized acts on the part of its employees. On the other hand, Mr. Riaz Ahmed Khan, learned counsel for respondent No.2, argued that relying upon the endorsement made by an officer of the Bank, the petitioner has entered into transaction with the account holder of the petitioner-Bank and accepted the cheques, issued by him, as the Manager of the Bank gave assurance of the encashment of the said cheques on their due dates and on the basis of the said representation of the officers of the petitioner-Bank, the respondent No.2 entered into a transaction. We have taken into consideration the arguments advanced by the learned counsel for the parties and we are of the view that the different branches or branch office of a bank are not separate or distinct personality and they cannot be considered as a separate entity. All the officers of the banking company transacting business at any particular branch or branch office are acting on behalf of the banking company and Bank is answerable for their act while they are acting in normal course of their duties. The Bank is vicariously liable for the acts of its officers and cannot evade responsibility for damages, however, there can be exception to it like where it can establish that complaining party himself is a part of forgery of beneficiary and had knowledge of it. In the instant case the Branch Manager, who is the highest officer in a branch and is supposed to deal with all the affairs of the branch, not only endorsed on the reverse of the postdated cheques good for payment , but also put seal of the Bank on it. The Branch Manager further thereafter gave assurance on the letterhead of the petitioner-Bank that the cheques in question would be certainly encashed on the date mentioned thereon. If we read endorsement on the back of the cheque along with the assurance given by the petitioner-Bank on its behalf for the encashment of the cheques on their due dates on their letterheads, perhaps one can say that the petitioner-Bank gave a guarantee that the said cheques will be encashed on their due dates irrespective of whether amount is available in the account or not. It is not the case of the petitioner-Bank that the cheques were not presented on their due dates and as such petitioner-Bank is not liable for their encashment. The only question raised by the petitioner-Bank is that the officer, who made the endorsement, has not been authorized by the petitioner-Bank. It is not possible for us to accept this plea. As a prudent businessman one has to take reasonable care while dealing with any individual and a businessman in normal course ought to have relied upon the Manager of the branch who is holding highest post in Branch and to accept his commitment as a commitment on behalf of the Bank. The petitioner-Bank cannot deny their liability towards their customers who deal with the officers of the Bank by taking the plea that the said officer was not authorized by the Bank as it is not possible for a customer that on each and every occasion he should ask from an officer of the bank about his authority. In the instant case it is not alleged by the petitioner that the respondent was party to the alleged unauthorized acts of his Manager. It is the normal course of events, it is perfectly reasonable for a businessman to rely upon the representation of a Manager of the Bank rather to investigate the extent of his powers. On the contrary it is the Manager who is expected to be conscious of the limits of his authority. Incidentally by our order dated 13-8-2004 we have requested Mr. Chundrigar to place on record report of action, if any, taken against such Manager but he was unable to do so. In the circumstances and adverse inference could always be drawn against the petitioner. It may be mentioned that in Ch. Muhammad Nawaz v. Province of West Pakistan PLD 1975 Baghdad-ul-Jadid 11, a Division Bench of the Lahore High Court observed that failure of the master to take action against a negligent servant can be treated as ratification of the fortuous act. In the case of Value Gold Ltd. and 2 others v. United Bank Limited PLD 1999 Kar.1, the Court has held that Bank is vicariously liable for the acts of its officers or its nominees and cannot evade responsibility for damages if otherwise proved. Learned Advocate for the petitioner in support of his contention relied upon the case of Bank of Baroda, Ltd. v. Punjab National Bank Ltd. and others AIR (31) 1944 P.C.

56. The above judgment prima facie appears to support the contention of the learned counsel. Upon careful consideration of the same, however, we find it was clearly distinguishable and does not help the petitioner. In the above-referred matter, the suit was filed by the appellant Bank against the respondent-Bank which had endorsed on cheque good for payment . After recording evidence learned Judge held that there was no practice prevailing for certifying cheque good for payment on the basis of which appellant bank granted loan to his customer. Indeed the appellant bank was expected to know original banking practice and act accordingly. Nevertheless since the respondent No.2 was a layman he could always be assumed to have acted on the faith of the endorsement. In the instant case, respondent filed complaint before Wafaqi Mohtasib on the allegation of maladministration on the part of the petitioner-Bank. The respondent alleged that before entering into the transaction with the party, the drawer of the cheque, the petitioner s Bank Manager assured him that the cheques on their presentation on the due dates will be encahsed and not only endorsed good for payment on back of the cheque certificates were also issued on the letter head of the petitioner-Bank with seal of the petitioner s Bank that the said cheque will be encahsed on its presentation. Learned Wafaqi Mohtasib on the basis of these facts came to the conclusion that due to maladministration in the office of the petitioner s Bank respondent is entitled for payment of the cheque amounts. A representation was filed against the order of Wafaqi Mohtasib, which was dismissed on the ground that the same is barred by time. In any event we are not directly concerned, with a fixing liability but are only required to determine whether the findings of the Wafaqi Mohtasib as to maladministration on the part of the petitioner is liable to be interfered with. The cheque was dishonoured by the same bank whose Manager had endorsed it to be good for payment. The expression maladministration under Article 2(a) of President s Order 1 of 1983 has a wide connotation and is not confined to strict legal rights alone. Even in the Bank of Baroda case relied upon by Mr. Chundrigar their Lordships observed that under good banking assets the respondent-Bank should have stood by its mistakes act but the Court was merely concerned with legal liability. Under Article 199 of the Constitution the jurisdiction of this Court is discretionary and interference can be refused even if the impugned order is illegal but otherwise just fair. For the foreging reasons we are of the view that this petition has no merit and must be dismissed. The above are the reasons for the short order dated 13-8-2004. M.H./N-55/K Petition dismissed.