K.L. Pandey, J.
1. This is a defendant's appeal against the reversing decree of the lower appeal Court whereby, in an action for deceit, a decree for Rs. 540/- was passed against him.
2. The broad facts of this case are no longer in dispute. Two money-orders, one for Rs. 375/-addressed to Badriprasad Shukla and another for Rs. 165/- addressed to Ramashanker Agarwal, both care of Hariprasad Jaiswal, proprietor Hindusthan Restaurant, Katni, were received by post on 8th May 1951 in the post office at Katni. On the same day, in the usual course, postman Pyarelal (P. W. 4) made payments of the two sums to two persons who were staying in the hotel of the defendant (Hariprasad). In both cases, the defendant not only attested the signatures of the two payees, but also himself wrote their addresses on the money-order coupons under the printed matter appearing thereon as given below:
'The payment has been made in my presence to the payee who is personally known to me and whose permanent address is .... .... .....'
3. The plaintiff's case, was that the two money orders were faked ones and that, in fact, the two sums were not paid at the Ridge Sub Post Office, Jabalpur, which purported to be the office of issue. Also, the two persons, whose addresses were given by the defendant, were not traceable. Since the payees were neither permanent residents of Katni nor known to the postal authorities at that station, in the usual course enquiries were made from the defendant who not only produced the two persons claiming to be entitled to payment but also assured the postman, Pyarelal (P. W. 4), about their identity and recorded the permanent addresses of the two persons as personally known to him.
By falsely identifying the two persons as personally known to him and by giving their false addresses, the defendant induced the postman, Pyarelal (P. W. 4) to deliver the two sums to the persons produced by him. He was. therefore, liable to make good the loss suffered by the plaintiff.
4. The defendant denied that the postman made enquiries from him, or that he produced thetwo persons or identified them or knowingly gave false addresses of those persons. According to the defendant, the postman merely enquired if the two men were staying in the hotel, read the entries in the hotel register, made payments to them and asked him (defendant) to sign the acknowledgments at the place indicated. The defendant pleaded that he had no reason to disbelieve the names and addresses which those persons entered in the hotel register, that his action was bona fide and that, not being a party to the fraud, he was not liable.
5. The Court of first instance accepted the defence and dismissed the suit. Differing from the first Court, the lower appeal Court found that the two money orders were faked ones, that the defendant identified the two persons on his personal knowledge, that when he did so he knew that his representation in that sense was untrue, that his act in identifying them on personal knowledge was therefore not consistent with ordinary human conduct or bona fides, that he was in any event extremely rash in identifying the two persons and thus inducing the postman to deliver the two sums and that he was consequently liable to make good the loss.
6. The defendant has questioned the concurrent finding of the two Courts below that the two money orders were faked ones. It is a finding of fact based on evidence which is binding in second appeal. Having regard to that finding and the circumstances in which money was delivered under these two money orders to persons who are untraceable, there can be no question that the money orders were false documents devised as a part of a fraudulent scheme.
7. It is no longer disputed, though it was denied in the Court of first instance, that the defendant identified the two payees before payments were made to them. The lower appeal Court further found that the defendant identified them on his personal knowledge and gave their permanent addresses. The finding is supported not only by the evidence of Pyarelal (P. W. 4) but also by the coupons Exs. P-1 and P-2. The lower appeal Court did not accept the evidence of the defendant, who can read and write English, to the effect that Pyarelal (P. W. 4) dictated to him the addresses of the payees from the Hotel Register Ex. D-1 and he merely set down in writing their addresses on the coupons below the printed matter referred to in parasraph 2 above. In any event, this is a finding of fact not open to challenge in second appeal. Since the defendant himself wrote out the two addresses, it is not material if he did not put his signature below one of the identifying endorsements,
8. The defendant did not plead in his written statement that the postman Pyarelal (P. W. 4) was guilty of contributory negligence. That being so, the plea cannot be considered for the first time in second appeal. Even apart from this, it is no defence to this action for deceit that Pyarelal (P. W. 4) had other means of knowledge or that he made an incomplete investigation into the facts. The Court will not speculate on what might have happened if there was no misrepresentation.
9. The main ground on which the lower appeal Court's decree has been attacked as erroneous is that, when it was not shown that the defendant was a party to the fraud or had derived any benefit thereunder, he could not be held liable, especially when, relying in good faith on the entries in hisregister Ex. D-1, he identified the two payees. It is urged that there is no liability in law for making a statement honestly believed to be true. (10) The leading case on the subject is Derry v. Peek, (1889) 14 AC 337, in which Lord Herschell observed as follows;
'First in order to sustain an action for deceit, there must fee proof of fraud and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false statement has been made (1) knowingly or (2) without belief in its truth, or (3) recklessly and carelessly whether it be true or false. Although I have treated the second and the third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial to cheat or injure the person to whom the statement was made.
In my opinion making a false statement through want of care falls far short of, and is a very different thing from, fraud, and the same may be said of a false representation honestly believed though on insufficient grounds ...... fraud is essential to found art action of deceit and that it cannot be maintained where the acts proved cannot properly be so termed ....At the same time Idesire to say distinctly that when a false statement hag been made the question whether there were reasonable grounds for believing it, and what were the means of knowledge in the possession of the person making it are most weighty matters for consideration. The ground upon which an alleged belief was founded is a most important test of its reality ......if I thought that a person making afalse statement had shut his eves to the facts, or purposely abstained from inquiring into them. I should hold that honest belief was absent, and that he was just as fraudulent as if he had knowingly stated that which was false.'
11. In this case, the defendant identified the two payees upon his personal knowledge and also gave their permanent addresses. He admitted that he did not personally know them or their addresses. He also accepted that they did not stay in his hotel on any other occasion. Even so, he would have it believed that he relied upon the entries in his register Ex. D-1 to tell the postman that he knew them personally. The entries in Ex. D-l furnished Or could furnish no basis for the misrepresentation that he knew the persons personally. Indeed, as the evidence of Pyarelal (P. W. 4) shows, the defendant made various other statements to convince him on the point and thus to furnish to him satisfactory proof of their identity in order to induce him to pay the amount to them.
In doing so, the defendant knew that the statement was without basis in fact and admittedly false to his knowledge. In a case like this, it is no answer to the claim to say that the defendant merely helped his customers to get the amounts appearing to be remitted to them. When the statement, which according to Pyarelal (P. W. 4) induced him to pay the money to the two payees, was false to the knowledge of the defendant and there was no question of honest belief in the truth of that statement, it must be regarded as fraudulent within the meaning of the rule in (1S89) 14 AC 337 (supra) so as to furnish basis for an actionfor deceit. In this view of the law, the decision of the lower appeal Court is correct.
12. The appeal fails and is dismissed. Thedefendant shall bear his own costs and pay thoseof the plaintiff throughout. Hearing fee in thisCourt according to Schedule.