P L D 1957 (W (PLP)

CHANGEZ, J.‑

This regular second appeal arises out of a suit brought by the plaintiff‑respondent for a declaration to the effect that the payment of cheque No. 163747 dated the 14th of June 1949 for Rs. 20,000 which had been drawn by him in favour of Messrs. Prem Singh Devi Ditta Mal, made by the defendant Bank on the 25th of June 1949, was un authorised and not binding on the plaintiff and that the over draft entry dated the 25th of June 1949 made by the defendant in the plaintiff's account showing the sum of Rs. 19,322‑10‑3 to his debit was also not binding on him and for a mandatory injunction directing the defendant to rectify the plaintiff's said account by restoring the credit balance of Rs. 652‑5‑9 as it stood on the 25th of June 1949. In order to appreciate the points involved in this appeal, the material facts may be shortly stated. The plaintiff had a current account with the defendant at its Lahore branch and on the 25th of June 1949, he had only Rs. 652‑5‑9 to his credit in that account. Some time in 1949, he had issued a crossed post‑dated cheque (dated the 14th of June 1949) for Rs. 20,000 for payment to Messrs. Prem Singh Devi Ditta Mal as earnest money for the purchase of their factory at Nankana. Later on it was found by the plaintiff that the transaction could not be given immediate effect, because of the Rehabilitation laws. Therefore, he gave up the idea of purchasing the factory and as he had no intention to honour the cheque, he did not deposit the necessary amount in the bank to meet the demand. Knowing that the balance to his credit was much less than the amount of the cheque and, therefore, it was bound to be dishonoured, the plaintiff did not consider it necessary to inform the bank that the cheque should not be honoured. But on the 25th of June 1949, when he was informed by the Bank that the cheque bad been presented, he at first gave verbal instructions to the Bank on the telephone to stop payment and thereafter personally went to the Bank and handed over the stop‑payment note Exh. D. 1, at 11‑5 a.m. long before the time for the return of the cheque to the clearing house had elapsed. The Bank, however, paid the amount in contravention of the plaintiffs specific instructions, either as a result of collusion with the payees or due to gross negligence. The plaintiff then asked the defendant .to admit that the payment was unauthorised, but he was informed that the overdraft had been covered by the funds of the plaintiff lying to his credit in‑the Karachi branch. He then instituted the present suit on the 4th of January 1950. The suit was resisted by the defendant, Inter alia, on the grounds that in the circumstances of the case the Bank was justified in treating the cheque as a request for overdraft and as the cheque had been duly presented by the Hindustan Commercial Bank Ltd., through the clearing house of the State Bank of Pakistan, it was paid in due, course and by 12‑30 p.m., the latest time permissible for returning the cheque unpaid on a Saturday, the plaintiff had neither given any verbal instructions to stop payment nor had he given the stop‑payment note. It was pleaded that in fact the stop -payment note was received at 12‑50 p.m. and every effort was made to return the cheque to the Hindustan Commercial Bank which refused to take it back. On the pleadings of the parties, the following issues were framed :‑ (1) Whether the defendant Bank paid the amount of the cheque in cash ? (2) Whether the defendant Bank was authorised or justified to make the payment when the amount to the credit of the plaintiff at the Bank branch at Lahore was much below of the amount of the cheque (3) Whether the plaintiff had a sum of Rs. 20,000 (the amount of the cheque) with the defendant Bank at Karachi ? If so with what effect ? (4) (a) Whether the plaintiff is not entitled to the relief of injunction on account of his conduct delay and acquiescence ? (b) Whether decree for declaration in the circumstances of the case should be granted. (5) Relief. Khan Zia Ullah Khan, who ultimately tried the suit, decided issues Nos. 1 and 3 in favour of the defendant, but giving a finding on all the remaining issues in favour of the plaintiff, he decreed the suit with costs. Issue No. 2 was the basic issue in the case and the learned Civil judge after dealing exhaustively with the evidence led by the parties, held that the plaintiff had countermanded the order for the payment of the cheque before it was cashed and as such the defendant Bank had no right to debit the plaintiff with the amount of the cheque. On appeal by the defendant Bank, the learned Additional District judge substantially affirmed the findings of the trial Court and held that the plaintiff's intention to dishonour the cheque had become known to the Bank before 12‑30 p.m. and, therefore, the Bank was neither justified nor authorised to make the payment. He accordingly dismissed the appeal, but left the parties to bear their respective costs throughout. The defendant has now come up in second appeal before this Court. It was contended by Mr. Norman Edmunds that the Bank was legally justified in making the payment by treating the cheque as an application for loan. It was, however, conceded on behalf of the Bank that at the time of the payment of the cheque only Rs. 652‑5‑9 were lying to the credit of the plaintiff in his current account at the Lahore branch, but it was vehemently argued that as the plaintiff had been a customer of the Bank for along tine and a substantial sum was in fact lying to his credit in the Karachi branch, the Bank. under the general principles of banking, could treat the cheque as an application for loan and could pay the amount as an overdraft in spite of the insufficiency of funds in his account at Lahore branch. In support of his contention he relied on Cuthbert v. Robarts, Lubbock & Co. (1909 L R 2 Ch. D 226), in which Cozens Hardy, Master of Rolls, observed at page 233 as follows:‑-- "If a customer draws a cheque for a sum in excess of the amount standing to the credit of his current account, it is really a request for a loan, and if the cheque is honoured the customer has borrowed money." The question that arose for decision in that appeal was the extent to which the defendants were entitled to a charge on certain shares of the plaintiff to secure a balance or part of a balance due to them from Chancellor who was a broker employed by the plaintiff and a customer of the defendants. While dealing with this question, the above observations were made in the course of the judgment. It does not, however, appear if these observations were made in view of some statutory provision of law or on the basis of general principles of banking under the English Law. Another case which was noticed during the course of the arguments was Cunliffe Brooks & Co. v. The Blackburn and District Benefit Building Society (L R 9 App. Cas. 857), in which Lord Blackburn while dealing with a similar question observed as follows :‑ "In all banking accounts the bankers, so long as the balance of the account is in favour of the customer, are bound to pay cheques properly drawn, and are justified, without any inquiry as to the purpose for which those cheques were drawn, in paying them. But they are under no obligation to honour cheques which exceed the amount of the balance, or, in other words, to allow the customer to over‑draw. Bankers generally do accommodate their customers by allowing such overdrafts to some extent; when they do so the legal effect is that they lend the surplus to the customer, and if the person drawing the cheque is authorised to borrow in this way on account of the customers, the bankers can charge the amount against those customers and their principals, and can make available any securities which, either from the general custom of bankers or from a special bargain, they have to secure their account: Sir John Paget, Bart., K. C. in his well known book on the Law of Banking (fourth edition) says at page 63 that the drawing of a cheque or accepting a bill payable at the bank, when there are not funds sufficient to meet it is presumably a request for an overdraft. Besides referring to the above -quoted two authorities, the following authorities have also been referred to in this connection : Eaton v. Bell (5 B and Ald. 34), Forster v. Clement (2 Camp. 17). He has also referred to the contrary view expressed in London Chartered Bank of Australia v. McMillan (1892 App. Cas. 292), and this ruling was cited at the Bar by Mr. Ghias Muhammad, the learned counsel for the plaintiff. In that case the facts were that in purusance of an arrangement between the appellant bank and the local Government, the Registrar‑General opened an account which, to the knowledge of the appellant, was simply for the purpose of the daily lodgment of the collections of his department and the weekly transferring by his cheque of such lodgment to the treasury; and the cashier sent to lodge such moneys continuously kept back a part thereof, concealing his fraud by means of forged receipts by a fictitious clerk of the bank, whereby the weekly cheques of the Registrar‑General in favour of the treasury resulted in overdrafts to the extent of X6,127, of which he was ignorant, and which the bank omitted to bring to his notice, it was held in an action by the bank against the Government to recover the same, that the latter was not liable. The Government had only received the amount which had been actually collected and which the bank by honouring the weekly cheques presented that it had received in lodgment. The overdrafts by the Registrar General were not merely without authority, but were outside the scope and object of the lodgments and of the drawing there from. It is obvious that in this case the overdraft arose through the unauthorised act of an agent and there were facts which should have put the bank on enquiry and therefore, the view taken in the case by their Lordships of the Privy Council does not negative the proposition laid down in the other English authorities that the drawing of a cheque on a bank, when there are insufficient funds in the name of the customer to meet the demand amounts to a request for a loan. As against the above proposition Mr. Ghias Muhammad maintained that the relationship between the customer and the banker is that of a creditor and a debtor, and the money deposited with the bank is in the nature of a loan, which is repayable on demand through cheques. The characteristic feature of the legal status of a banker is the obligation under which he lies as the debtor of his customer to honour the cheques as long as there are assets of the customer in his hands. Reliance was placed by the learned counsel on J. Bradley v. The Agra Bank Limited (101 P R 1885), where it was held as follows :‑ "Money deposited in the hands of a banker in the ordinary course of business is money lent to the banker by the depositor, with a superadded obligation that it is to be repaid when called for by cheque. The transaction amounts to a mutuum or loan for use and consumption, it being understood that the banker is to have the use of the money in return for his consent to take charge of it. This contract can always be put an end to by either party. The lender can recover his loan by drawing a cheque on the banker for the amount, and presenting it to him for payment. The borrower can repay the money, or tender repayment to the lender when he pleases. Both parties have equally the right to terminate the relationship of debtor and creditor which springs out of the transaction entered into between them." To the same effect is the decision in Syed Muhammad Yaqub v. Imperial Bank of India (AIR 1941 Ca1.110), in which a reference has been made to some of the English authorities also. No exception can be taken to the principles laid down in these authorities. Mr. Ghias Muhammad further contended that there was no statutory provision on the subject by virtue of which the drawing of a cheque could be treated as an application for loan. He referred to section 31, of the Negotiable Instruments Act XII of 1881 which reads as follows :‑-- "The drawee of a 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." Relying on the language of this section he argued that the obligation to honour customer's cheques arises from the terms implied in the contract entered into between the banker and the customer at the time of the opening of the account, and this obligation extends so long as there are sufficient funds of the drawer of the cheque in the hands of the banker. The banker is under no obligation to pay the cheque if there are no funds to meet the demand. On opening an account mutual rights and obligations are created which are not governed by any express contract, but the terms of the contract are implied in the nature of things. These terms can always be varied by mutual arrangement. The banker may undertake to honour the cheques of the customer even without sufficient funds, or may agree to allow overdrafts. Customers very often arrange with banks for credit or over draft for a certain amount and in that case the banks are under an obligation to the drawer to honour the drafts on them within the limit of the credit or the overdraft. In the present case, however, there was no arrangement made by the plaintiff with the defendant for an overdraft. It was conceded on behalf of the Bank that never before, the plaintiff had over‑drawn on his account at the Lahore Branch. It is, therefore, obvious that there was no contract between the parties express or implied for allowing an overdraft to the plaintiff. But in view of the principle laid down in the English authorities quoted above, the question arises for determination whether, in the circumstances of the case, the drawing of the cheque could have been treated as a request for a loan. "Cheque" is defined in section 6 of the Negotiable Instru ments Act as a bill of exchange drawn cm a specified banker and riot expressed to be payable otherwise than on demand, and a "bill of exchange" is defined in section 5 of the Act as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. These definitions make it clear that a cheque is a type of a "bill of exchange" which must be drawn unconditionally and there is nothing to indicate that the payment of the cheque by the banker is made dependent upon the existence or sufficiency of funds. Although cheques are generally believed to be drawn upon funds in the hands of the banker yet in terms of the definitions of "cheque" and bill of exchange", such a limitation cannot be imposed. When a customer draws a cheque for a larger amount than what he has to his credit in the bank, he obviously makes a request to the bank to pay the amount in spite of insufficiency of funds. It is presumably a request for a loan and if the bank honestly believing that it is a request for an overdraft pays the amount, I see no reason as to how the customer can escape the liability by saying that as he had no funds, he knew that the cheque would be dishonoured and will not be paid. If after issuing such a cheque, he keeps quiet and takes no steps to inform the bank in time, that the cheque should not be honoured, he is surely liable to the ‑bank, if payment is made by the bank in due course. Section 10 of the Negotiable Instruments Act says that "payment in due course" means, payment in accord ance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned." As such I am inclined to hold that the defendant Bank was perfectly justified in treating the cheque as an application for loan and could have paid the amount if no instructions had been received by it from the plaintiff in time to stop its payment. The decision of the present case, therefore turns on the question whether the defendant had not received the stop- payment note Exh. D. 1 before 12‑30 p.m. on the 25th of June 1949. Both the Courts below have given a concurrent finding against the defendant and a number of reasons have been given in support of this finding. Mr. Norman Edmunds strenuously argued that the lower Courts should not have rejected the evidence of respectable officials of the Bank, who have deposed to the circumstances under which the stop‑payment note Exh. D. 1 was obtained from the plaintiff at 12‑50 p.m. in order to help him by making an effort to return the cheque to the bank concerned. Being a concurrent finding of fact, Mr. Norman Edmunds realised his difficulty in asking this Court to disturb such a finding in second appeal. It is now well settled that no second appeal lies on the ground of an erroneous finding of fact, however gross the error may seem to be. This principle was re‑affirmed by the late Federal Court of Pakistan in Abdul Majid v. Khalil Ahmad (P L D 1955 F C 38). where the learned Chief Justice of Pakistan while dealing with this question observed as follows :‑ "It is obvious that what the learned Judges intended to say was that for the reasons stated by them the Courts below should not have accepted the evidence which they did, and they seem to have assumed that a fallacious method of approaching the evidence is, in second appeal, a good ground for upsetting a finding of fact based on such evidence. With great respect, I am unable to agree with this view, because a fallacy in appraising the evidence as to a fact, unless it amounts to a material mistaken assumption, is merely an error in' coming to a finding as to that fact, and such error has never been held to be an error of law justify ing interference in second appeal. I had the occasion to examine this question recently in the Lahore High Court in Nadir Shah v. Lai Shah and others where referring to the leading authorities 'of the Privy Council on this subject I held that the High Court has no jurisdiction to entertain a second appeal on the ground of an erroneous finding of fact, however gross and inexcusable the error may seem to be, unless there is an error in the procedure provided by law, which may possibly have produced an error or defect in the decision of the case on the merits. I adhere to that opinion which was based on the Privy Council decision in Durga Chowdharani v. Jawahir Singh Chowdhri and Mali Muhammad v. Muhammad Bakhsh which lay down this proposition in clear and unmistakable terms. It is not suggested that there was in the present case any `error in the procedure provided by law', nor that there is any rule of law prescribing the manner in which the evidence in such cases has to be judged which was contravened by the Court of First Appeal which is the final judge of facts. The circumstances that the sale deed's contained no recital as to necessity, that the alienations were old sales, that the alienee was dead at the time of the suit and that the vendor was leading the life of a country gentleman and not that of a debauch or wastrel, had all been duly considered by the Courts below in arriving at their conclusions, and assuming that the High Court did not agree with the lower Courts' appreciation of the evidence, that could not be a ground for it to reverse the concurrent findings of fact of the lower Courts. In my opinion, the High Court had no jurisdiction to entertain the second appeal on this ground, and it exceed ed its functions in interfering with those findings". Mr. Norman Edmunds, however, maintained that material evidence has been overlooked and that a distorted and indefensible view has been taken by the learned Additional District Judge, who has also failed to decide the critical question in case whether the evidence of the plaintiff in view of the contradictions and discrepancies in it should have been preferred to the evidence of respectable bank officials. He cited a few authorities in support of his contention that in view of the circumstances enumerated above, the High Court can go into the merits of the case in second appeal. In order to establish this, he read the entire evidence on the record and laid special emphasis on the following points. In the plaint the plaintiff stated that he did not want the cheque to be honoured as it was found that the transaction could not take immediate effect because of the Rehabilitation Laws, whereas while deposing as his own witness he states that Prem Singh, one of the vendors, had not agreed to the transaction. He invited my attention to the cheque in question which is Exh. D. 2, on the reverse of which, the endorse ment appears to have been made by no other person than Prem Singh. P. W. 1 also stated that at the time of the agreement of sale, the Hindus had come here for the purpose. It was argued that this clearly showed that Prem Singh was also here, and therefore it was suggested that the plaintiff had perjured, and these facts have not been even referred to of the learned Additional District judge in his judgment. In my opinion this contention has no substance in it. It is immaterial whether Prem Singh was here or not when the agreement to sell was executed. In fact it is not established that he was here. The statement of P. W. 1 is vague on this point and does not necessarily lead to the conclusion that Prem Singh was also here. He has not stated that Prem Singh was here. The reason advanced by the plaintiff for not getting the cheque cashed might have been two‑fold. It is admitted by Mr. Lieshman (D. W. 12), the Manager of the Bank, that he had been informed by the plaintiff on the 25th of June 1949 that the alienation had been prohibited by the Provincial Government. The mere fact that the cheque is endorsed by Prem Singh does not prove that he had agreed to the transac tion to the knowledge of the plaintiff. In any case these points have no bearing whatsoever on the question as to when the stop‑payment note had been received by the Bank. Another point which was made capital of by the learned counsel for the defendant was that the agreement of sale was not produced by the plaintiff. I do not see how the produc tion of that document could have affected the decision of the point about the time of handing over the stop‑payment note to the Bank. He also argued that Nazar Muhammad, a partner and brother of the plaintiff, to whom letter, Exh. D. 10 dated the 21st of July 1949, was given by the Bank, was not produced and therefore a presumption should have been raised against the plaintiff that had he been produced, his evidence would have gone against the plaintiff. The bank officials have given their own version as to how this document Exh. D. 10 was written. The learned Addi tional District Judge has taken into consideration the point raised by the learned counsel for the appellant and at page 11 of the judgment has dealt with it as follows :‑ "The appellant's learned counsel argued that failure to examine Nazar Muhammad as his witness by the plaintiff should raise a presumption against him that he had accepted the said recital. He relied on the rule of law that evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it. But the question is whether this principle applies to the present case. Production of Nazar Muhammad as a witness would have neither improved the Bank's case, nor prejudiced the plaintiff's. The recital about time is there. It can be look ed into for deciding the particular point whatever its worth may be". And in deciding the question as to when the stop‑payment note had been received by the Bank, the learned Additional District Judge has taken into consideration the recital about it in Exh. D.

10. It cannot therefore be said that the learned Additional District judge had overlooked this piece of evidence. The last point urged in this connection was that due importance was not attached to the evidence of the Manager (D. W. 12) and of D. W. 2, which conclusively showed that at the time when, he initialled the cheque for payment as an overdraft the Manager knew about the balance of the plaintiff in his account at the Karachi branch. This point has been taken into consideration by the learn ed Additional District judge and is dealt with at page 13 of the judgment in the following words:‑ "It is doubtful if the Bank people knew on the 25th of June 1949 the amount to the plaintiff's credit in Karachi branch. It is also doubtful if the overdraft was allowed on that account. Reasons for this view are apparent nervous ness on the part of the Bank people on realisation of the mistake and absence of any reference to Karachi account in subsequent correspondence with the plaintiff on the point". This point, however, is of no consequence, because the principal question is whether the Bank had not received the stop‑payment note before 12‑30 p. m. and it is immaterial whether the Manager had taken into consideration the plain tiff's Karachi account or not at the time when he had initialled the cheque signifying his assent for payment, in spite of insufficiency of funds lying to the credit of the plaintiff in the Lahore branch. These were the only points raised by the learned counsel for the appellant, in support of his contention that this Court was entitled to disturb the finding of fact in second appeal. After going through the entire evidence on the record and after giving due consideration to the points raised by the learned counsel for the appellant, I am unable to hold that any material evidence relevant for the purpose of deciding the points had not been taken into consideration or that a distorted and indefensible view had been taken by the lower appellate Court. In view of the guiding principle laid down by the Federal Court of Pakistan iii this connection, I see no reason to disturb the concurrent finding of fact arrived at by the Courts below. In the end the learned counsel for the appellant argued that the plaintiff was not entitled to the equitable reliefs and the injunction which have been granted to him by the lower Courts. He cited Dad v. Lal and Malka (I L R 5 Lah.389) and Basheshar Nath v. Municipal Committee Moga (188 I C 264) in support of his con tention that a plaintiff asking such relief should come to Court with clean hands and should not come for the purpose of undoing his own act. I have carefully considered this aspect of the case and I am of the view that these rulings have no application to the facts of the present case. The Bank is proved to have received the stop‑payment note in time from the plaintiff and in spite of this it did not care to return the cheque to the bank concerned and allowed its payment in contravention of the plaintiff's specific instructions. I, therefore, do not see how, under the circumstances, the plaintiff can be deprived of his remedy which he is entitled to seek under the law. For the aforesaid reasons, I do not find any merit in this appeal and dismiss it with costs. A. H. Appeal dismissed