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S.K.C.C. Bank Ltd., Amalapuram Vs. Vissapragada Subrahmanyam - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Revn. Petn. No. 1420 of 1959
Judge
Reported inAIR1963AP250
ActsNegotiable Instruments Act, 1881 - Sections 31; Provincial Small Cause Courts Act, 1887- Sections 25
AppellantS.K.C.C. Bank Ltd., Amalapuram
RespondentVissapragada Subrahmanyam
Appellant AdvocateC. Sitaramaiah, Adv. for ;G. Venkatarama Sastry, Adv.
Respondent AdvocateM. Suryanarayana Murthy, Adv.
DispositionRevision dismissed
Excerpt:
.....proof of special loss or damage by wrongful dishonourment - on interpretation of section 31 of act nominal damages be paid to non-trader ( substantial damages to be paid to trader - nominal damages to mean sum of money that may be spoken of but not in high quantity ( damages awarded by lower court too high in high court's opinion - high court not to interfere with quantum and damages awarded. - - 1. this civil revision petition raises an interesting question as to the damages payable under section 31 of the negotiable instruments act by reason of a cheque of a non-trader being dishonoured by the petitioner bank. though there is no corresponding provision 'in the bills of exchange act, there are certain well-established principles laid down by the english courts in regard to the..........judge has, in a very careful judgment, held that the plaintiff-respondent was entitled to nominal damages under section 31 of the negotiable instruments act. in paragraph 19 he held that taking all conceivable circumstances into consideration, an amount of rs. 175/- would be a proper compensation that might be awarded to the respondent-plaintiff in the suit. he awarded proportionate costs. the bank has consequently preferred the revision to this court.2. section 31 of the negotiable instruments act enacts that if the drawee of a cheque having sufficient funds of the drawer in his hands property applicable to the payment of such cheque defaults to make payment, the bank must compensate the drawer for any loss or damage caused by such default. though there is no corresponding.....
Judgment:
ORDER

Umamaheswaram, J.

1. This Civil Revision Petition raises an interesting question as to the damages payable under Section 31 of the Negotiable Instruments Act by reason of a cheque of a non-trader being dishonoured by the petitioner Bank. The respondent herein was employed as the supervisor of the Bank. He had a current account from 1931. He deposited a cheque issued in his favour by the South India Co-operative Insurance Society for a sum of Rs. 29-25. The amount of the cheque was realised and a memo dated 29-3-1957 was issued by the Bank intimating that his current account was credited with that amount. Thereupon he issued a cheque for Rs. 28/- in favour of the defendant-bank with a covering letter Ex. A-2 dated 14-5-1957 requesting the petitioner to adjust the amount of the cheque to the current account of the Alamur Co-operative Land Mortgage Bank towards loan No. 1237. This cheque was dishonoured as the amount of the cheque issued by the South India Co-operative Insurance Society in favour of the respondent was wrongly credited to the account of one Dr. P.V.S. Somayajulu. After the respondent was dismissed from service, be instituted the suit for recovery of a sum of Rs. 510/- by way of damages. The petitioner-Bank contended that he was not entitled to any damages as the Bank clerk committed a bona fide mistake in crediting the amount to the account of Dr. P.V. S. Somayajulu. It was further contended that as the respondent-plaintiff was dismissed from service, the suit was instituted with a wrong motive. The learned Subordinate Judge has, in a very careful judgment, held that the plaintiff-respondent was entitled to nominal damages under Section 31 of the Negotiable Instruments Act. In paragraph 19 he held that taking all conceivable circumstances into consideration, an amount of Rs. 175/- would be a proper compensation that might be awarded to the respondent-plaintiff in the suit. He awarded proportionate costs. The Bank has consequently preferred the revision to this Court.

2. Section 31 of the Negotiable Instruments Act enacts that if the drawee of a cheque having sufficient funds of the drawer in his hands property applicable to the payment of such cheque defaults to make payment, the Bank must compensate the drawer for any loss or damage caused by such default. Though there is no corresponding provision 'in the Bills of Exchange Act, there are certain well-established principles laid down by the English Courts in regard to the awarding of damages in the case of cheques being dishonoured when there are sufficient funds in the Bank. In WILSON V. UNITED COUNTIES BANK LTD., 1920 A. C. 102 Lord Birkenhead summed up the law in the following terms at page 112:--

'The ratio decidendi in such cases is that the refusal to meet the cheque, under such circumstances, is so obviously injurious to the credit of a trader that the latter can recover, without allegation of special damage, reasonable compensation for the injury done to his credit. The leading case upon this point is that of ROLIN V. STEWARD, (1854) 14 C.B. 595. The direction of Lord Campbell to the jury has been generally accepted and treated as an accurate statement of the law.'

As staled by Mr. Paget in his Law of Banking, fifth edition at page 173, substantial damages may be given against the bank without proof of actual loss to the customer, and in many cases large sums have been awarded. So far as a non-trader is concerned, a different rule has been applied. For the legal infringement, the non-trader is awarded nominal damages. But if the non-trader specifically alleges and proves that he has sustained special damages, he would be entitled to recover the same.

3. The question that arises for consideration in the present case is as to what nominal damages should be awarded for the legal right of the respondent herein being infringed. In GIBBONS V. WESTMINSTER BANK LTD., (1939) 2 K.B. 882, a non-trader was awarded only 40 shillings as nominal damages. The customer's credit is or may be seriously injured by return of one of his cheques dishonoured. The smaller the cheque, the greater is the possibility of damage to his credit.

4. The only decisions of the Indian High Courts bearing on the construction of Section 31 and referred to me by the learned advocates for the petitioner and the respondent ate JOGENDRA NATH V. NEW BENGAL BANK LTD., A.I.R. 1939 Cal 63 and NEW CENTRAL HALL V. UNITED COMMERCIAL BANK LTD., A.I.R. 1939 Mad. 153. The former was a case of a non-trader and a sum of Rs. 500/- was awarded as damages. Reference was made to a passage from Hart's Law of Banking, Edition 4, volume 1, at page 443. The passage is in the following terms:

'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 is a trader, the jury may properly award substantial damages, in the absence of 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.'

In the decision of the Madras High Court in : AIR1959Mad153 , the learned Judges held that the English rule should be adopted in construing the terms of Section 31 of the Negotiable Instruments Act. The learned Judges held that the Indian law on the subject is not at all different from the English law on the point and that in this case of a non-trader, nominal damages should be awarded where there is no proof of special loss or damage j by the wrongful dishonouring and that in the case of a trader, substantial damages should be awarded even in the absence of proof of special loss or damages.

5. Sri Sitharamayya, the learned advocate for the petitioner, invited my attention to page 3 of Mayne's treatise on damages, 11th edition. According to the learned author, 'nominal damages' mean a sum of money that may be spoken of, but has no existence in point of quantity. They are 'a mere peg on which to hang costs'. The relevant passage is as follows:--

'Nominal damages' is a technical phrase which means that the Court has negatived anything like real damage, but is affirming by nominal damages that there is an infraction of a legal right, which, though it gives the plaintiff no right to any real damages at all, yet gives him a right to the verdict or judgment because his legal right has been infringed.'

The Court below has found that a sum of Rs. 175/-would be a proper, measure of nominal damages. The Civil Revision Petition is filed under Section 25 of Provincial Small Cause Courts Act. The scope of Section 25 of the Provincial Small Cause Courts Act was considered by Hidayatullah J., in HARI SHANKAR V. RAO GIRDHARI LAL CHOWDHURY, Judgment of the Supreme Court in Civil Appeal No. 94 of 1959 dated 5-12-1561: (AIR 1963 S.C. 698). The learned Judge observed as follows:-

'The powers that it is said to confer would make a broad spectrum commencing, at one end, with the view that only substantial errors of law can be corrected under it, and ending, at the other, with a power of interference a little better than what an appeal gives.'

The Supreme Court held that the most accurate exposition of the meaning of Section 25 is that of Beaumont, C. I. (as he then was) in BELL & CO. LTD. V. WAMAN HEMRAJ 40 Bom. L. R. 125: (AIR 1938 Bom. 223). The observations of the learned Chief Justice are as follows:--

'The object of Section 25 is to enable the High Court to see that there has been no miscarriage of justice, that the decision was given according to law. The section does not enumerate the cases in which the Court may interfere in revision, as does Section 115 of the Code of Civil Procedure, and I certainly do not propose to attempt an exhaustive definition of the circumstances which may justify such interference; but instances which readily occur to the mind are cases in which the Court which made the order bad no jurisdiction, or in which the Court has based its decision on evidence which should not have been admitted, or cases where the unsuccessful party has not been given a proper opportunity of being heard, or the burden of proof has been placed on the wrong shoulders. Wherever the Court comes to the conclusion that the unsuccessful party has not had a proper trial according to law, then the Court can interfere. But, in my opinion, the Court ought not to interfere merely because it thinks that possibly the Judge who heard the case may have arrived at a conclusion which the High Court would not have arrived at.'

As the learned Subordinate Judge has applied the law correctly in awarding only nominal damages to the respondent herein on a construction of Section 31 of the Negotiable Instruments Act, I see no reason to interfere with damages awarded by him, though, in my opinion, the amount fixed is a little too high.

6. In the result, the Civil Revision Petition is dismissed with costs.

7. I wish to record my feeling of indebtedness to Sri Sitaramayya, the learned advocate for the petitioner and to Sri Suryanarayana Murthi, the learned advocate for the respondent, who have carefully looked up the law and placed all the relevant authorities before me.


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