Case Details

State Bank Of India Vs Icici Bank Ltd.

Case Details

casenoCase TypeCivil Appeal
casenoFiling Number1060/2019
casenoRegistration Number100/2019
caseno Filing Date29-07-2019
hearingRegistration Date07-11-2019
hearingFirst Hearing Date04th December 2019
dateDecision Date28th December 2019
casestatusCase StatusCase Disposed
courtCourt Number and Judge1-District And Sessions Judge;
natureNature of DisposalContested--Dismissed;

Petitioners & Respondents

contactsPetitioner

State Bank Of India, ;

contactsPetitioner Advocate

Navneet Kumar Bhalla;

contacts Respondent Name

Icici Bank Ltd., Icici Bank Ltd., Icici Bank;

Order Details

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Order Details

Order not found.

Final Order Judgement

orderdateOrder Date28-12-2019 documents
1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 IN THE COURT OF BHUPESH SHARMA, DISTRICT JUDGE, SOLAN, (H.P). CIS CNR No. : HPSO010017752019 CIS Case Type : Civil Appeal CIS Registration No. : 100 CIS Case Year : 2019 Civil Appeal No. : 39-S/13 of 2019 Date of Institution : 4.12.2019 Date of Decision : 28.12.2019 State Bank of India, a Body Corporate Constituted under the State Bank of India Act, 1955 amongst other Branches having one of it's branch State Bank of India, Solan Branch, Solan , H.P. through its Chief Manager Smt. Shivali Banga. ................Appellant. Versus 1. ICICI Bank Ltd., Bandra Kurla Complex Tower (BKC) Mumbai through its MD/CEO. 2. ICICI Bank Ltd, The Mall Solan, near Himani Hotel, Solan, through its Branch Manager. 3. ICICI Bank, 11 Vivekanand Road Kolkata through its Incharge/Manager ...Respondents. Appeal against the judgment and decree dated 29.4.2019 passed by learned Civil Judge, Court No.2, Solan, District Solan (H.P.) in Civil Suit No.89/1 of 2014/09 titled as “ State Bank of India Vs. ICICI Bank Limited and others”. ------ For the Appellant : Shri N.K.Bhalla, Advocate. For the Respondents : Shri Raman Gupta ,Advocate. JUDGMENT Appellant-plaintiff, is in appeal before this Court against the judgment and decree dated 29.4.2019 passed by learned Civil Judge, Court No.2, Solan, District Solan, (H.P.) in Civil Suit No. 89/1 of 2014/09 titled as “ State Bank of India Vs. ICICI Bank Limited and others ”, whereby, the suit of the plaintiff 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 for recovery of a sum of 1,11,370/- along with ₹ pendente lite and future interest at the rate of 16.25% per annum with monthly rests till its actual realization has been dismissed. 2. The parties shall be referred to as the “plaintiff” and the “defendants” in this judgment accordingly, as they have been referred and described in the plaint and in the judgment of the learned trial Court. 3. The facts material and relevant for the disposal of this appeal, in short, are as under:- The plaintiff filed a civil suit seeking recovery of a sum of 1,11,370/-- along with ₹ pendente lite and future interest at the rate of 16.25% per annum with monthly rests till its actual realization against the defendants jointly and severally. The case of the plaintiff is that it is a Body Corporate constituted under the State Bank of India Act, 1955 having its Central Head Office at Madam Cama Road, Nariman Point Bombay with branches throughout India and one of such branch is situated at Solan, Tehsil and District Solan, (H.P.). On 18.11.2008, the defendant No.2 i.e. ICICI Bank, The Mall Solan, near Himani Hotel, Solan, (H.P.) presented two SBI Mutual funds redemption warrants bearing instrument Nos. 140074 and 140075 issued on 07.10.2008 for a sum of 50,000/-₹ each total amounting to 1,00,000/- with the plaintiff bank for payment₹ which came through clearing system to the plaintiff bank at State Bank of Patiala Solan branch, which organize the clearing house. The plaintiff bank being paying bank received the said warrants in normal course of business through clearing and there was no reason to suspect the genuineness of the instruments and accordingly, credited the said amount aggregating to 1,00,000/- in the account of the collecting₹ Bank, ICICI Bank Solan Branch on 18.11.2008. On 22.11.2008, four SBI mutual funds redemption warrants were presented in favour of the plaintiff bank bearing instrument Nos. 140211, 140212 in favour of defendant No.4, instrument Nos. 140224 and 140225 in favour of Sanjay Dass son of Sh. Rajesh Dass by ICICI Bank Solan Branch. Similarly, on 24.11.2009, three more Mutual Funds redemption warrants bearing No. 140218, 140219 and 140220 in favour of Rohit Aggarwal were presented by HDFC Bank, Solan, (H.P.). All these 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 instruments/warrants were having same date of issuance i.e. 16.10.2008 and were of 50,000/- each presented to the plaintiff bank for payment₹ through State Bank of Patiala, Solan Branch, which organize clearing house. The plaintiff bank on receiving four SBI mutual funds redemption warrants on 22.11.2008 got suspicious finding the instruments of the similar names from the different banks. Therefore, the plaintiff bank found appropriate to make an inquiry from the concerned banks i.e. presenting banks and from Mumbai office being a issuing authority. The plaintiff bank was informed by its office at Mumbai that the SBI mutual funds presented by defendant No 2 as well as by the other banks had not been issued by it and these warrants are forged one. The plaintiff bank on receiving the said communication through fax immediately stopped payment of these instruments of SBI Mutual Redemption warrants and the concerned banks were informed about this fraud. The defendant No. 2 through e-mail dated 1.1.2009 not only supplied the details i.e. address and account Nos. of defendant No. 4 but also informed to the plaintiff bank that the holder of mutual fund i.e. defendant No.4 is maintaining account with there ICICI Bank at Kolkata. The plaintiff had no prior knowledge or intimation about the fraudulent SBI mutual fund redemption warrants, at the time of crediting the amount of the warrants in the account of the collecting bank .The plaintiff bank came to know about the fake warrants only when the plaintiff bank had received the communication from Mumbai office. The defendant No.2 acted in most negligent manner and failed to exercise due diligence before presenting instruments. As per the banking rules ,the collecting branch has a bigger responsibility towards paying bank on behalf of the presenter of the instruments and after fully satisfying all these general requirements, the collecting branch has to forward the instruments to the clearing bank and thereafter to paying bank through clearing house. In this case, the defendant No.2 did not verify the details of the holder of the instruments before presenting the instruments, therefore, the defendant No.2 failed to exercise due care and diligence which could have prevented the payment of the amount on the basis of fraudulent redemption warrants. The defendant Nos. 2 and 3 acted in a sheer negligent manner at the time of opening of the account in favour of the defendant No.4 without taking proper identity proof as required under KYC rules. Therefore, the defendants are jointly and severally liable to the plaintiff bank to 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 reimburse/refund the paid amount of mutual funds redemption warrants. The plaintiff bank made due demand of the amount by issuing a legal notice on 28.1.2009 to defendant No.2 and also lodged FIR No. 249/2008 dated 25-11-2008 under Sections 420, 467, 468 IPC at Police Station Sadar Solan, District Solan, (H.P.).The defendants despite receiving the statutory demand notice failed to respond. The plaintiff bank is entitled to the amount of 1,11,370/- alongwith ₹ pendente lite and future interest at the rate of 16.25% per annum with monthly rests till its realization jointly and severally against the defendants. Hence, the suit. 4. The defendant Nos. 1 to 3 contested the suit of the plaintiff by filing joint written statement whereas, the suit against the defendant No.4 was withdrawn by the plaintiff vide order dated 18.2.2014. 5. The defendant Nos. 1 to 3 by filing joint written statement raised preliminary objections qua maintainability, cause of action, estoppel and suppression of material facts . On merits, it is submitted that the defendant No. 4 i.e. Pinku Gupta was account holder of account No. 627701513191 with ICICI Bank Limited. He had deposited SBI mutual funds redemption instruments Nos. 140074 and 140075 dated 7.10.2008 of State Bank of India for collection from the plaintiff bank. The said warrants had been dropped in the cheque drop box at Solan and lodged in customer account on 17.11.2008. Warrants as per process were presented to State Bank of India, Solan for clearance on the morning of 18.11.2008 and after clearance from State Bank of India on the same day, the amount was credited in the account of defendant No.4 on the evening of 18.11.2008. These warrants were payable at par at all branches of State Bank of India and hence duly sent to the plaintiff bank for collection in clearing . The defendants after receiving clearance from the plaintiff bank credited the said amount in the account of defendant No.4. The plaintiff bank being the author of the said redemption warrants was under the responsibility to verify the authenticity of the same, however, it failed to do so. The defendants are only the collecting bank and have no means to verify the genuineness of the redemption warrants. The defendants took all the precautions which were required to be taken at the time of sending the Redemption warrants to the plaintiff bank for clearance and encashment. The plaintiff bank violated its own internal guidelines in dealing with the payment under redemption warrants, therefore, they have no cause of action. Furthermore, the 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 defendant No.3 had opened the account in favour of the defendant No.4 as per KYC guidelines. It is denied that the plaintiff bank had issued a legal notice calling upon the defendants to pay a sum of 1,11,370/-.₹ The plaintiff has no cause of action and the suit has been filed on false, frivolous and vexatious allegations which warrants dismissal. 6. No replication was filed by the plaintiff. Out of pleadings of the parties, the following issues were settled for adjudication and determination by the learned trial Court vide order dated 26.08.2014 :- 1. .Whether the plaintiff bank is entitled for a decree of 1,11,370/- along with ₹ future interest @ of 16.25% per annum with monthly rests from the date of filing of suit till the payment alongwith costs of the suit, as prayed for ? OPP 2 Whether the suit of the plaintiff bank is not maintainable ? OPD 3. Whether the plaintiff has no cause of action to file and maintain the present suit, as alleged ? OPD 4 . Whether the plaintiff has suppressed the material facts and has not come to court with clean hands?PD 5. Whether the plaintiff has no locus-standi to file the present suit, as alleged ? OPD 6. Relief. 7. Both the parties were put on trial on issues referred supra. They adduced oral and documentary evidence in support of their respective claims. 8. The plaintiff in support of its claim examined ten witnesses. PW1 is the statement of C. Chander Mohan, No. 24, PW2 is the statement of HC Sohan Lal, he has proved the copy of FIR No. 249/2008, dated 25.11.2008 under Sections 420, 461, 468 and 471 IPC registered at Police Station Sadar, Solan as Ex.PW2/A. PW3 is the statement of HC Hardev Singh, he conducted partly investigation in case FIR No. 249/2008, PW4 Sanjeet Singh, PW5 Mohan Lal has proved documents Ex.PW5/A to Ex. PW5/F, PW7 Mohan Lal and PW8 Govind Singh being Court officials are formal witnesses. PW6 HC Jeet Ram remained 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 associated with the investigation in case FIR No. 249/2008. PW9 Inspector Asha Rana prepared the untraced report Ex.PW9/A and has also proved investigating documents i.e. Ex.PW9/B to Ex.PW9/J and PW10 R.K. Sharma is authorized official of the plaintiff bank. He has tendered in evidence his sworn affidavit Ex.PW10/A and has proved the documents Ex.PW10/B to Ex. PW10/G. 9. The defendants examined one witness i.e. Pankaj Attri, Branch Manager, ICICI Bank, The Mall, Solan as DW1. He has tendered in evidence his sworn affidavit Ex.DW1/A. 10. The learned trial Court after hearing the learned counsel for the plaintiff and perusing the evidence on record, dismissed the suit of the plaintiff being without cause of action vide impugned judgment and decree dated 29.4.2019 in Civil Suit No.89/1 of 2014/2009, titled as “State Bank of India Vs. ICICI Bank Limited and others”. 11. Feeling aggrieved and dissatisfied with the impugned judgment and decree dated 29.4.2019, passed by the learned trial Court in Civil Suit No.89/1 of 2014/2009, titled as “State Bank of India Vs. ICICI Bank Limited and others”, the plaintiff is in appeal before this Court on various grounds. 12. In the grounds of appeal, it is contended that the findings of the learned trial Court failed to appreciate the controversy interse the parties in right perspective. The plaintiff had pleaded negligence on the part of defendant No.3 while opening of account of defendant No.4 in violation of KYC norms. The impugned instruments i.e. SBI Mutual Funds redemption warrants had no palpable disorders to draw a prima facie suspicion against them so as to be traceable with the clearing house. Furthermore, the legal principles as enshrined in Section 131 of the Negotiable Instruments Act, 1881 stand totally ignored by the learned trial court, leading to miscarriage of justice. Therefore, the findings of the learned trial court on all the material issues are unsustainable and liable to be set-aside. 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 13. I have gone through the pleadings, evidence and the judgment and decree dated 29.4.2019, passed by learned trial Court. Heard, learned counsel for the parties and carefully perused the entire record. 14. Following points arise for determination in this appeal:- 1. Whether the impugned judgment and decree dated 29.4.2019, passed by learned trial Court in Civil Suit No. 89/1 of 2014/2009, is legally and factually sustainable ? 2. Relief. 15. For the reasons to be recorded hereinafter, while discussing the aforesaid points for determination, my findings on these points are as under:- Point No.1 : Yes. Relief : Appeal is dismissed as per operative part of the judgment. REASONS IN SUPPORT OF FINDINGS POINT NO.1 16. It is admitted case of the parties that on 18.11.2008, the defendant No.2 presented two SBI Mutual Funds Redemption Warrants bearing Instrument Nos. 140074 (Ex.PW5/A) and 140075 (Ex.PW5/B), duly issued on 7.10.2008 for a sum of ₹ 50,000/- each i.e. total amounting to 1,00,000/- with the plaintiff₹ bank for payment which came through clearing system to the plaintiff bank at State Bank of Patiala, Solan branch being clearing house. The plaintiff bank after receiving said redemption warrants credited the said amount aggregating to 1,00,000/- in the₹ account of collecting bank i.e. ICICI Bank Solan branch who had presented the SBI Mutual Funds Redemption warrants on behalf of defendant No.4. As per the plaintiff bank, SBI Mutual Funds Redemption warrants i.e. Ex.PW5/A and Ex.PW5/B were found 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 forged and fraudulent instruments which had not been issued by SBI Mumbai office. Furthermore, the plaintiff bank had no prior knowledge or intimation about the fraudulent SBI mutual funds redemption warrants at the time of crediting the amount of the warrants in the account of defendant No.2. The plaintiff bank is further alleging that the defendant No.2 acted negligently without exercising due diligence while accepting instruments and thereafter forwarding the same for clearance. In fact, the defendant No.3 at the time of opening of the account in favour of defendant No.4 did not adhere to KYC rules. 17. Learned counsel for the plaintiff while arguing referred to Section 131 of the Negotiable Instruments Act, 1881 and submitted that the defendant No.2 being collecting bank was under obligation to verify credentials of defendant No.4 vis-a-vis veracity of payee as well as disclosures while opening account thereof. 18. In order to appreciate the contentions raised by the learned counsel for the plaintiff, it may be necessary to refer to Section 131 of the Negotiable Instruments Act, 1881 which reads as follows:- “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 payment.” 19. It is thus to be seen that a banker, who en-cashes a cheque, in respect of which is client had no title, would become liable in conversion or for money had and received. However, Section 131 of the Negotiable Instruments Act protects the banker, provided he has received payment in good faith and without 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 negligence of a cheque crossed generally or specially. 20. Needless to emphasize that the protection under Sections 131 and 131A is available only if the banker has received the payment on behalf of a customer in good faith and with due diligence. If the collecting bank did not act with due care and caution, expected of it, the protection under Section 131 and 131A is not available to such bank. Section 131 is a salient provision made with a view to protect the interest of the banks in their day- to- day activities. In order to attract the application of the Section and to avail of the protection given by it, the conditions imposed by the section must be strictly complied with, otherwise the banker's liability for receiving payment of the customer with a defective title in the cheque will remain unaffected. 21. As per the plaintiff, defendant No.3 opened the account of defendant No.4 at 11 Vivekanand Road Kolkata in violation of KYC rules as it failed to take his appropriate identity proof. 22. The defendants in order to rebut the said contentions, placed on record copy of Account Opening Form for defendant No.4 and identify proof documents taken for the same. It is admitted case of the parties that the defendant No.3 at the time of opening of the account in favour of defendant No.4 took identity proof documents i.e. copy of PAN Card (Ex.PW10/B). After going through the copy of KYC guidelines, Account Opening Procedure, the documents taken by the defendant No.3 at the time of opening of the account in favour of defendant No.4 find mention as documents required for proof of identity. Therefore, it cannot be said that the defendant No.3 while opening account in favour of defendant No.4 did not adhere to the procedure and guidelines of KYC. 23. Having considered the material and evidence adduced by the parties, there is nothing to infer that the defendant No.2 acted negligently by accepting instruments and thereafter forwarding the same for clearance and payment. It is also not 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 proved that the defendant No.3 violated KYC rules and procedure while opening bank account in favour of defendant No.4. Therefore, the defendant Nos. 1 to 3 cannot be held liable for the amount credited vide SBI Mutual Funds Redemption Warrants Ex.PW5/A and Ex.PW5/B. 24. The learned trial court after going through the oral and documentary evidence led by the parties, rightly dismissed the suit of the plaintiff. This Court does not find any illegality or perversity in the findings of the learned trial court, warranting interference by way of this appeal. 25. Point No.1 is accordingly decided. 26. No other point was urged and argued before this Court. RELIEF : 27. As per my findings on Point No.1 above, the appeal of the plaintiff is dismissed and the impugned judgment and decree dated 29.4.2019 of the learned trial Court is affirmed and upheld. 28. Decree-sheet be prepared accordingly. 29. The file of the learned trial Court be sent back along with a copy of this judgment, whereas the appeal file be consigned to the Record Room, after completion. Announced in the open Court today the 28 th day of December, 2019. sd/- (Bhupesh Sharma) District Judge, s/s/ Solan (H.P.). 1 Civil appeal-Regd-CIS No.100/2019 CIS CNR No.HPSO010017752019 28.12.2019 Present: Shri N.K. Bhalla, adv for the appellant. Shri Raman Gupta, Adv for the respondent. Vide separate judgment of even date placed on the file, the appeal is dismissed. Decree sheet be drawn up accordingly. Pending applications, if any, shall also stand disposed of. File, after due completion, be consigned to the Record Room. Sd/- Announced. Bhupesh Sharma 28.12.2019 District Judge, Solan, HP.

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Frequently Asked Questions

The Petitioner in case State Bank Of India vs Icici Bank Ltd. is State Bank Of India.

The Respondent in case State Bank Of India vs Icici Bank Ltd. is Icici Bank Ltd. and 3 more.

The case against Icici Bank Ltd.was filed on 29-07-2019 by State Bank Of India.

The status of case State Bank Of India against Icici Bank Ltd. is Case Disposed.