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Raghunath Rithkaran Vs. the Imperial Bank of India Ltd. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtMumbai
Decided On
Case Number Reference No. 1 of 1925
Judge
Reported inAIR1926Bom66; (1925)27BOMLR1229
AppellantRaghunath Rithkaran
RespondentThe Imperial Bank of India Ltd.
Excerpt:
.....they came to know of the mistake, their attention having been drawn to it by the drawee of the hundi. the plaintiffs gave notice to the defendant on august 9, 1924, demanding repayment of kb. 100', the amount of the hundi. eventually they filed a suit to recover the amount:-; (1) that the fact that the plaintiffs accepted the position as drawees of the hundi, established for the time being mutual relationship between themselves and the bank, which cast upon them the duty to inform the bank within a reasonable time that they had accepted that position under a mistake of fact;;(2) that there had been gross carelessness on the part of the plaintiff in not detecting the mistake immediately and also in not intimating the bank of it within a reasonable time after they discovered the..........was any duty lying on the plaintiff's to inform the bank within a reasonable time that they had paid the hundi under a mistake of fact that they were drawees, when as a matter of fact they were not, and no case is cited before us which is directly in point. 6. the plaintiffs relied upon durrant v. ecclesiastical commissioners. in that case the defendants became owners in possession of the tithe of the parish of crimplesham on april 10,1874, the names of the persons for the time being occupying the respective hereditaments subject to tithe were put down in the collecting book of the tithe owners agent, which was used by the collector at the tithe audit. when hodgkinson, one of these two persons, gave up his tenancy of the land in his occupation including a land called stanks, the name.....
Judgment:

Norman Macleod, Kt., C.J.

1. This is a reference from the Small Causes Court, Bombay, under Section 69 of the Presidency Small Cause Courts Act, 1882. The occasion for the reference was due to the fact that there was a difference of opinion between the Judges of the Full Court.

2. The plaintiffs tiled suit No. 2024/30524 of 1924 in the Small Cause Court to recover from the defendant, the Imperial Bank of India, the amount of Rs. 1,000, which the plaintiffs had paid to the defendant on December 22, 1921, under a mistake of fact. On that day four hundis were presented to the plaintiffs by the defendant for sums aggregating Rs. 7,000, They were all written by she same person. Two of the hundis were drawn by Dhanraj Suganchand for Rs. 1000 each. One of those was as a matter of fact not drawn on the plaintiffs. But by the carelessness of the plaintiffs this fourth hundi was treated as having been drawn on them, and so it was honoured The plaintiffs on the same day made entries in their hundi Nondh of these four hundis, and it should then have discovered that one of the hundis, out of the two which were debited to the account of Dhanraj Suganchand, was not drawn on the plaintiffs. No memo of account was sent to Dhanraj Suganchand until the following November, in his reply of November 10, 1922, he complained that he had been debited with Rs. 1,000 in excess of the true amount. Even then it was not until August 9, 1924, that notice was sent to the defendant demanding back Rs. 1,000. The case came before the Chief Judge who said:-

It is the essence of all negotiable instruments that in the case of any mistake whatsoever, notice without any delay has to be given to the party from whom the amount is sought to be recovered, the reason being obvious, as in the meantime the position of the party may have been prejudiced, This has not been done in thin case, and on this ground, if not on any other ground, plaintiffs' suit must fail. But even on the facts, I find plaintiffs have no case, Four hundis no doubt written in a similar hand are brought to them Still the party taking down the particulars did not take oven the ordinary precaution of reading the address of the drawee and took it for granted that the drawees were themselves, because defendant's man said so. This sort of want of precaution in a business man could not absolve him, especially where the party to 'whom the payment is made has suffered by such absence of caution.

3. A rule was obtained from the Full Court, and after arguments, the Chief Judge adhered to his previous opinion.

4. The Third Judge Mr, Chitre held that money paid under a mistake of fact could be recovered, provided there was no laches on the part of the party paying, and that there might be cases where on account of mutual relations between the parties, the party paying the money, though under a mistake of fact, was, by broach of duty, disentitled from recovering, referring to the case of Durrant v. Ecclesiastical Commissioners (1880) 6 Q. B. D. 234.

5. The question really in this case is whether on the facts there was any duty lying on the plaintiff's to inform the bank within a reasonable time that they had paid the hundi under a mistake of fact that they were drawees, when as a matter of fact they were not, and no case is cited before us which is directly in point.

6. The plaintiffs relied upon Durrant v. Ecclesiastical Commissioners. In that case the defendants became owners in possession of the tithe of the parish of Crimplesham on April 10,1874, The names of the persons for the time being occupying the respective hereditaments subject to tithe were put down in the collecting book of the tithe owners agent, which was used by the collector at the tithe audit. When Hodgkinson, one of these two persons, gave up his tenancy of the land in his occupation including a land called Stanks, the name of the plaintiff' was substituted in the collecting book of the then collector for that of Hodgkinson in respect of all the lands, including Stanks. From, that time until April, 1874, the collector for the lessees, and afterwards the collector for defendants, gave notices to the plaintiff, as an occupier of lands in the parish, to pay the tithe for the lands that appeared by the collecting book to be occupied by him, without any knowledge on his or their part that the plaintiff did not occupy the land called Stanks, or that the plaintiff was not liable to pay tithe for the same, being guided simply in the notices of audit by the list above mentioned The plaintiff paid his tithe according to the notices, in ignorance that the amount specified in the notices included the tithe for Stanks not occupied by him. The tenant of Stanks, who was liable under an agreement with the landlord to pay tithe, was not asked to pay for that land until after the plaintiff, in April, 1877, accidentally discovered that he was paying tithe for land not in his possession, and refused to pay it any more. The question for the opinion of the Court was whether, under these circumstances, the plaintiff was entitled to recover back any and what part of the tithe so paid by him to the defendants Pollock B. in giving judgment said (p. 236).-

I agree in the decision arrived at by the county court)judge in favour of the plaintiff. If the mistake, which was common to both parties, had been discovered within a certain time after the payment the defendants could have obtained the tithe from the tenant. The fact that the mistake was not discovered in time prevents this, and so alters the position of the defendants; but there is no conduct on the part of the plaintiff such as would disentitle him from recovering in this action In Cocks v. Masterman (1829) 9 B. & C the ground of the decision was that the hanker should hear the loss, because he had not done that which bankers are bound to do, given notice of the forgery of the cheque when it became due. This and other similar cases proceed upon the ground of Borne mutual relation between the parties creating a duty on the part of the plaintiff, breach of which disentitles him from recovering. No such state of facts exists here, and the plaintiff, having paid the money under a mistake of fact, is entitled to recover it back.

7. It, is to be noticed on the facts of that case that the plaintiff could not derive from the notices served upon him any knowledge that he was being charged with tithe for land which was no longer in his occupation. What would have been the result if the notices had contained the actual mention of the lands alleged to be in his possession, including the lands called Stanks,' cannot he concluded from the judgment. But it was certainly said that 'there is no conduct on the part of the plaintiff such an would disentitle him from recovering in this action.' It might be inferred from those words that there might have been conduct on the part of the plaintiff which would disentitle him from recovering. I do not think that the facts in that cane hear any resemblance to the facts in this case, as the question here is whether there was any relationship between the patties which would have cast a certain duty on the plaintiff, which, if he did not perform, would conclude him from recovering.

8. The defendant relied upon the decision in London and River Plate Bank v. Hank of Liverpool [1895] 1 Q. B. 7 where it was held that :--

When a bill becomes due and is presented for payment, and is paid in good faith and the money is received in good faith, if such an interval of time has elapsed that the position of the holder may have been altered, the money so paid cannot be recovered from the holder, although indorsements on the hill subsequently prove to be forgeries.

9. Reference was made in the judgment to the decision in Cocks v. Masterman (1829) 9 B. & C. 902 where the simple rule was laid down in clear language for the first time that (p. 1.1)

When a bill becomes due and is presented for payment the holder ought to know at once whether the bill is going to be paid or not. If the mistake is discovered at once, it may be the money can be recovered back; but if it be not, and the money is paid in good faith, and is received in good faith, and there is an interval of time in which the position of the holder may be altered, the principle seems to apply that money once paid cannot be recovered back.

10. Reference was also made to Imperial Bank of Canada v. Bank of Hamilton [1903] A. C. 49 where a cheque for five dollars certified by the Bank of Hamilton (1829) 9 B. & C. 902 33 R. R. 365 Stamp was fraudulently altered to 500 dollars and paid by the Bank of Hamilton to the Imperial Bank of Canada, a holder for value, under a mistake of fact, which was not discovered till the next day. The Imperial Bank of Hamilton sued to recover back 495 dollars from the Imperial Bank of Canada. It was held that notice of forgery was unnecessary, and the cheque for five dollars was not dishonoured; and accordingly the stringent rule laid down in Cocks v. Mastermana) to the effect that notice of dishonor of a bill of exchange must be given on the due date, did not apply. The rule could not be extended to other cases where notice of the mistake was given in reasonable time, and no loss had been occasioned by delay.

11. In my opinion the fact that the plaintiff's accepted the position as drawees of the hundi, established for the time being mutual relationship between themselves and the bank, which cast upon them the duty to inform the bank within a reasonable time, that they had accepted that position under a mistake of fact. There can be no doubt that there had been gross carelessness on the part of the plaintiffs. They certainly had, when they noted the particulars in the hundi nondh, an opportunity of noticing that they were not the drawees mentioned in the hundi in question. Then in the ordinary course of business they should have notified to the drawer that be had been debited with the amount of the hundi, when the mistake would have been discovered, as is shown by the fact that when the drawer was notified of the debit made against him, he at once repudiated it, And then the further delay in sending notice to the bank has not been explained If, as a matter of fact, the plaintiffs had three years from the date they discovered the mistake, then the question of delay would be immaterial. If the plaintiffs are to be responsible for the delay, it must be delay which took place within a short time after the payment was made. It would seem contrary to all principles of common law that in cases of negotiable instruments mistakes of this kind should not be notified within a reasonable time. The fact that the party assumed the liability which was not cast upon him by the document which was presented to him for payment, must, 1 think be taken as a ground for holding that he was bound to notify the mistake within a reasonable time to the holder of the document. I think, therefore, that the decision of the Chief Judge of the Small Cause Court was correct, and the case should be returned to the Small Cause Court with this expression of our opinion. The defendants will be entitled to the costs of the reference.

Coyajee, J.

12. I am of the same opinion. The case stated for our opinion proceeds on the assumption that this is a suit for money founded on mistake. Where money is paid under mistake or ignorance of fact, the rule is that the person to whom it has been paid must repay it. In this case, however, the plaintiffs have, by their conduct, made it impossible to restore the parties to their original position; and this fact, in my opinion, affords a good defence to the suit. The material facts are these. On December 22,1921, the defendant bank presented to the plaintiffs a hundi for payment. The plaintiffs paid the amount without reading the hundi; had they read it they would have found that it was not drawn upon them and that they were, therefore, not liable to pay. They discovered their mistake in November 1922, and it was not until August 9, 1924, that they gave notice of the mistake to the defendant bank and called upon it to repay the money. The plaintiffs took about eleven months to discover their mistake. The hundi, after it was paid, was retained by the plaintiffs, and it is difficult to understand how, but for their own carelessness, the mistake remained so long undetected. Then, after the mistake was discovered, they remained inactive for a period of about twenty months. This long and unaccountable delay has made it impossible for the parties to be restored to their original position By their own negligence-or, as they prefer to put it, by a mistake of fact-the plaintiffs accepted the position of drawees of the hundi; they paid the money and retained the hundi. These facts are sufficient to cast upon them the duty of giving notice of their mistake to the defendant bank within a reasonable) time. It may be conceded that the stringent rule laid down in Cocks v. Masterman (1829) 9 B & C. 902 is not applicable to this case, But the plaintiffs were bound to give the defendant bunk information of their own mistake in accepting the position of drawees of the hundi, within a reasonable time. Their failure to do so has, in my opinion, disentitled them from recovering the money in this suit.


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