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The New Marine Coal Co. (Bengal) Private Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
CourtSupreme Court of India
Decided On
Reported inAIR1964SC152; [1964]2SCR859
ActsGovernment of India Act, 1935 - Sections 175(3); Indian Evidence Act, 1872 - Sections 115; Indian Contract Act, 1872 - Sections 70 and 115
AppellantThe New Marine Coal Co. (Bengal) Private Ltd.
RespondentUnion of India (Uoi)
Cases ReferredBaxendale v. Bennett
contract - negligence - section 175 (3) of government of india act, 1935, section 115 of indian evidence act, 1872 and sections 70 and 115 of indian contract act, 1872 - whether arrangement for keeping intimation card is safe custody not as good and effective as it should have been and somebody managed to pilfer the said card justifying respondent's case that appellant being negligent estopped from making claim - in ordinary course of business it is assumed by businessman that there would not be pilfered by any of his employees if letter placed on table or on file which is kept at some other place - wrong to say that appellant was negligent if intimation card was taken away by some fraudulent person - appeal allowed in view that doctrine of estoppel inapplicable as appellant was not.....gajendragadkar, j.1. this appeal arises out of a suit filed by the appellant, the new marinecoal (bengal) private ltd. against the respondent, the union of india, on theoriginal side of the calcutta high court to recover rs. 20,343/8/-. theappellant's case was that it had supplied coal to the bengal nagpur railwayadministration in the month of june, 1949, and the amount claimed by itrepresented the price of the said coal and sales-tax thereon. the appellantalso made an alternative case, because it was apprehended that the respondentmay urge that the contract sued on was illegal and invalid since it did notcomply with s. 175(3) of the government of india act, 1935. under thisalternative claim, the appellant alleged that the coal had been supplied by theappellant not intending so to do.....

Gajendragadkar, J.

1. This appeal arises out of a suit filed by the appellant, the New MarineCoal (Bengal) Private Ltd. against the respondent, the Union of India, on theoriginal side of the Calcutta High Court to recover Rs. 20,343/8/-. Theappellant's case was that it had supplied coal to the Bengal Nagpur RailwayAdministration in the month of June, 1949, and the amount claimed by itrepresented the price of the said coal and sales-tax thereon. The appellantalso made an alternative case, because it was apprehended that the respondentmay urge that the contract sued on was illegal and invalid since it did notcomply with s. 175(3) of the Government of India Act, 1935. Under thisalternative claim, the appellant alleged that the coal had been supplied by theappellant not intending so to do gratuitously, and the respondent had enjoyedthe benefits thereof, and so, the respondent was bound to make compensation tothe appellant in the form of the value of the said Coal under s. 70 of theIndian Contract Act. The appellant's case was that since the said amount had tobe paid to it at its Esplanade Office in Calcutta, the original side of theCalcutta High Court had jurisdiction to entertain the said suit. Since a partof the cause of action had accrued outside the limits of the originaljurisdiction of the Calcutta High Court, the appellant obtained leave to seeunder clause 12 of the Letters Patent.

2. In its written statement, the respondent admitted the delivery of thecoal to the Bengal Nagpur Railway Administration and did not dispute theappellant's case that it had forwarded to the respondent bills in regard to theamount alleged to be payable to the appellant for the said supply. Therespondent, however, pleaded that the contract on which the suit was based was illegalinasmuch as it had entered into in contravention of the provisions of s. 175(3)of the Government of India Act, 1935; and it was urged that s. 70 of the IndianContract Act had no application. Besides, the respondent alleged that followingthe usual practice and course of dealings between the parties, an intimationcard was issued and sent to the appellant by the respondent requesting theappellant to obtain payment on presentation of a proper receipt and authorityagainst its bills in question. Thereafter, the respondent, on receipt of thesaid intimation card and a proper receipt executed on behalf of the appellant,paid the amount covered by the said bills by an 'account payee' cheque on theReserve Bank of India drawn in favour of the appellant which was delivered tothe person purporting to have authority to receive payment on behalf of theappellant. The respondent thus alternatively pleaded satisfaction of the claim,and so, urged that the appellant had no cause of action for the suit.

3. On these pleadings, seven substantive issues were framed by the learnedtrial Judge. Issues 1 & 2 which were framed in respect of the jurisdictionof the Court were not pressed by the respondent, and so, no findings wererecorded on them. On issue No. 3 the learned trial Judge found that thecontract on which the appellant based his claim was invalid and unenforceable.Issue No. 4 in regard to the alleged payment of the bills was found against therespondent. On issue No. 5, the trial Court held that the respondent was boundto pay to the appellant the amount claimed by way of compensation. Issue No. 6which was raised by the respondent under s. 80 of the Code of Civil Procedurewas not pressed, and therefore, no finding was recorded on it, Issue No. 7which was framed on the appellant's allegation that its claim had been admittedby the respondent was answered against the appellant. In the result, the mainfinding on issue No. 5 decided the fate of the suit and since the said findingwas in favour of the appellant, a decree was passed directing the respondent topay to the appellant Rs. 20,030/8/-. This amount, according to the decree, hadto carry interest at the rate of 6 percent per annum.

4. This decree was challenged by the respondent by an appeal before a DivisionBench of the said High Court. The appeal was heard by P. B. Mukarji and BoseJJ. Both the learned judges agreed that the respondent's appeal should beallowed and the appellant's claim dismissed with costs, but their decision wasbased on different grounds. Bose J. held that the contract sued on was invalidand that the claim made by the appellant for compensation under s. 70 of theIndian Contract Act was not sustainable. He also found that the appellant'scontention that the said contract which was initially invalid had been dulyratified, had not been proved. It is on these grounds that Bose J. came to theconclusion that the appellant's claim, could not be granted. Incidentally, itmay be added that Bose J., was not prepared to consider the plea of negligencewhich was raised by the respondent for the first time in appeal.

Mukarji, J.

5. who delivered the principal Judgment of the Appeal Court agreed with BoseJ. in holding that the contract was invalid and s. 70 was inapplicable. He,however, took the view that the said contract had been duly ratified and so, heproceeded to examine the question as to whether the appellant's claim wasjustified on the merits. On this part of the case, the learned Judge took theview that even if both the appellant and the respondent were held to beinnocent, since the respondent had actually parted with the money, theappellant was not entitled to require the respondent to pay over the said moneyagain, because he thought that as held by Ashhurst J. in Lickbarrow v. Mason 2 T.R. 63 it was a well-recognised principle of law 'that whenever oneof two innocent persons must suffer by the acts of a third, he who enables suchthird person to occasion the loss must sustain it.' In the opinion of thelearned Judge, the intimation card had been duly sent by post by the respondentto the appellant and the fact that the said intimation card went intounauthorised hands of dishonest persons who used it fraudulently for thepurpose of obtaining a cheque for the amount in question from the respondent,showed that the appellant had by his negligence enabled the said fraudulentpersons to secure the cheque, and so, it was not open to the appellant to claimthe amount from the respondent. It is on these grounds that Mukharji, J.,allowed the appeal and dismissed the appellant's suit with costs. It is againstthis judgment and degree that the appellant has come to this Court with acertificate granted by the said High Court.

6. In the courts below, elaborate arguments were urged by the parties on thequestion as to whether the contract, the subject-matter of the suit, wasinvalid and if yes, whether a claim for compensation made by the appellantcould be sustained under s. 70 of the Indian Contract Act. Both these questionsare concluded by a recent decision of this Court in the State of West Bengal v.M/S. B. K. Mondal & Sons [1962] Su. 1 S.C.R. 876. As a result of thisdecision, there can be no doubt that the contract on which the suit is based isvoid and unenforceable, and this part of the decision is against the appellant.It is also clear under this decision that if in pursuance of the said voidcontract, the appellant has performed his part and the respondent has receivedthe benefit of the performance of the contract by the appellant, section 70would justify the claim made by the appellant against the respondent. This partof the decision is in favour of the appellant. It is therefore unnecessary todeal with this aspect of the matter at length.

7. Assuming then that the appellant is entitled to claim the amount from therespondent, two questions still remain to be considered. The first question iswhether the intimation card on the production of which the respondent alwaysproceeded to issue a cheque against the bills received by it from theappellant, was received by the appellant or not, and if this question isanswered in the affirmative, the other question which will call for ourdecision is whether by virtue of the fact that after the intimation card hadbeen duly posted by the respondent to the appellant, it fell into dishonesthands and was fraudulently used by some persons, that would create animpediment in the way of the appellant's claim on the ground that the appellantwas negligent and his negligence creates estoppel. Before addressing ourselvesto these questions, it would be necessary to set out the material facts as tothe despatch of the intimation card and the fraudulent use which was made of itby persons in whose hands the said card appears to have fallen. It appears thataccording to the ordinary course of business, on receiving the bills from theappellant, the respondent used to send an intimation card to the appellant andthe said card had to be sent back by the appellant with a person having the authorityof the appellant to receive the payment and when it was so produced before therespondent, a cheque used to be issued. In the present case, it is commonground that a bill was sent by the appellant to the respondent making a totalclaim of Rs. 20,343/8/- on August 18, 1949. Thereafter, on October 10, 1949,the respondent sent the intimation card to the appellant addressed at its placeof business 135, Canning Street, Calcutta. This card intimated to the appellantthat its claim for the amount specified in its bill would be paid onpresentation of a proper receipt and authority between 11 A.M. to 3 P.M. onordinary days and between 11 A.M. to 1 P.M. on Saturdays. Along with the card,a form of the receipt was sent and the appellant was asked to sign it. Thisintimation card was duly posted. Later, one Mr. B. L. Aggarwal produced theintimation card before the respondent. In doing so he produced an endorsementwhich purported to show that the appellant had authorised him to receive thepayment on its behalf. When the intimation card with the appropriate authoritywas shown to the respondent, Mr. Aggarwal was asked to pass a receipt and whenthe receipt was passed in the usual form, an 'account payee' cheque for theamount in question was given to him. Mr. Aggarwal took the cheque and left therespondent's office.

8. Meanwhile, it appears that some persons had entered into a conspiracy tomake fraudulent use of the intimation card which had gone into their custody.In order to carry out his conspiracy, they purported to form a limited companybearing the same name as that of the appellant. A resolution purported to havebeen passed by the Directors of this fictitious company on October 17, 1949authorised the opening of an account in favour of the Company in the UnitedCommercial Bank Ltd., Calcutta. This resolution purported to be signed by theChairman of the Board of Directors Mr. Abinash Chander Chatterji. Armed withthis resolution an application was made to open an account in the UnitedCommercial Bank Ltd., and while doing so, the Articles of Association purportedto be the Articles of the said fictitious Company were produced and the accountwas opened with a cheque of Rs. 500/- on October 27, 1949. On October 26, 1949,the cheque received from the respondent was credited in the said account, andas was to be expected, withdrawals from this account, began in quicksuccession, with the result that by November 1, 1949, only Rs. 68/- were leftin this account. That, in brief, is the story of the fraud which has beencommitted in respect of the cheque issued by the respondent to the appellantfor the bill dated August 18, 1949.

9. In the courts below, the appellant denied that it had received theintimation card from the respondent, and it was alleged on its behalf that indelivering the cheque to the person who presented the said card with theauthority purporting to have been issued by the appellant, it cannot be saidthat the respondent had given the cheque to any person authorised by theappellant, and so, the appellant was justified in saying that it had notreceived the payment for its bill. In support of its case, the appellantexamined its Director, Mr. Parikh and its officer, Mr. Bhat. The respondent ledno oral evidence; it, however, relied on the fact that the intimation card borethe postal mark which showed that it had been posted and it was urged that thesaid postal mark raised a presumption that the card which had been duly postedin the Post Office must have, in ordinary course, reached the addressee. Thetrial Court noticed the fact that the intimation card did not bear acorresponding delivery mark as it should have, and it took the view that theonus was on the respondent to show that the said card had in fact beendelivered to the appellant. It then considered the oral evidence adduced by theappellant and having regard to the fact that no evidence had been led by therespondent, it came to the conclusion that the respondent had failed in showingthat there intimation card had been duly delivered to the appellant.Substantially, it is on the basis of this finding that the decree was passed bythe trial Court in favour of the appellant.

10. In appeal, Mukarji, J. took the view, and we think, rightly, that theposting of the card having been duly proved, a presumption arose that it musthave been delivered to the addressee in ordinary course. He also considered theoral evidence given by Mr. Parikh and Mr. Bhat and was not satisfied that itwas trustworthy. In particular, the learned Judge was inclined to take the viewthat Mr. Parikh's statement that his office did not employ any despatch clerkand did not keep any Chiti note-book like the Inward and Outward Register wasunbelievable. In the result, he made a finding that the appellant was negligentin receiving, arranging, recording and dealing with letters addressed to it.

11. The position of the evidence in respect of this point is no doubtunsatisfactory. It appears that Mr. Parikh who is the Director of the appellantCompany since 1948 is also the Director of K. Wara Ltd. which manages eightcollieries like that of the appellant. K. Wara Ltd., has its office at 135,Canning Street. The appellant Company also has one office at the said place. APost Box in which letters addressed to the appellant and K. Wara Ltd. could bedropped has been kept on the ground floor of the building in which the saidoffices are situated. The said Post Box is locked and naturally the key isgiven to one or the other of the Peons to open the said Box and take out theletters and deliver them to Mr. Parikh. Mr. Parikh's evidence shows that hisdenial that he had received any intimation card could not be accepted at itsface value for two reasons; the first was that even if the intimation card hadbeen received by the Peon and had not been delivered by him to Mr. Parikh, Mr.Parikh would not know that the card has been received and though his statementthat he did not get the card may be literally true, it would not be true in thesense that the card had not been delivered to the appellant Company. Besides,Mr. Parikh's statement that he did not employ any despatch clerk and kept noinward or outward register is prima facie unbelievable, and so, Mukarji J., wasinclined to hold that the intimation card may have been received by theappellant Company. Having made this finding Mukarji J. proceeded to examine thetrue legal position in regard to the appellant's claim, and as we have alreadyobserved, he held that since the appellant was guilty of negligence which facilitatedthe commission of the offence by some strangers, it was precluded from making aclaim against the respondent. As we have already seen, Bose J., has put hisdecision on the narrow ground that the contract was invalid and s. 70 did nothelp the appellant. That ground, however, cannot now sustain the finalconclusion of Bose, J., in view of the recent decision of this Court in thecase of M/S. B. K. Mondal & Sons [1962] Su 1 S.C.R. 876. Therefore, indealing with the present appeal, we will assume that the finding recorded byMukarji J., is correct and that the intimation card sent by the respondent tothe appellant can be deemed to have been delivered to the appellant. Thequestion which arises for our decision then is : if the intimation card was thereaftertaken by somebody else and fraudulently used, does that create an estoppelagainst the appellant in regard to the claim made by it in the present case

12. In dealing with this point, it is necessary to bear in mind that thoughthe evidence given by Mr. Parikh may be unsatisfactory and may justify theconclusion that despite his denial, the intimation card may have been deliveredto Mr. Parikh, it is not the respondent's case that Mr. Parikh deliberatelyallowed either one of his employees or somebody else to make fraudulent use ofthe said intimation card. In order words, we must deal with the point of lawraised by the appellant on the basis that Mr. Parikh had no connection whateverwith the fraud committed on the respondent and that whoever obtained theintimation card from Mr. Parikh's office and used it for a fraudulent purposeacted on his own without the knowledge or consent of Mr. Parikh. The shortquestion which falls to be considered is if the arrangement for keeping theintimation card is safe custody was not as good and effective as it should havebeen and somebody managed to pilfer the said card, does it justify therespondent's case that the appellant was negligent and by virtue of itsnegligence, it is estopped from making the present claim

13. In dealing with this question, it is necessary to remember that the pleaof negligence on which estoppel was pleaded by the respondent against theappellant had not been alleged in the written statement. It is remarkable thatthe pleadings of both the parties completely ignored the fact known to both ofthem before the present suit was filed that a cheque had been issued by therespondent and had been fraudulently used by some strangers. The appellant inits plaint does not refer to the issue of the cheque and its fraudulent use andmakes a claim as though the respondent had not honoured the bill submitted toit by the appellant; whereas the respondent in its written statement ignoresthe fact that the cheque had not been received by the appellant but had beenfraudulently obtained and encashed by some other persons. That being the natureof the pleadings filed by the parties in the Trial Court, neither party pleadedany negligence against the other. It is true that both the parties argued thepoint of negligence against each other in the appellate Court. The appellanturged that the respondent should not have delivered the cheque to the personwho presented the bill and the intimation card because a stamped receipt hadnot been produced by the said person as it should have been; the appellant'scase was that it was usual that a stamped receipt had to be produced alongwiththe intimation card by a person duly authorised by the appellant before thecheque was delivered to him and since without a stamped receipt the cheque hadbeen delivered, the respondent was quality of negligence. This point has beenrejected by Mukarji J., but that is another matter.

14. On the other hand, the respondent pleaded that the appellant wasnegligent, inasmuch as the intimation card which had been sent to it and whichmust be presumed to have been delivered to it fell into the hands of strangersowing to the negligent manner in which it was handled after it was delivered inthe Letter Box of the appellant in 135, Canning Street, Calcutta. As we havealready noticed Bose, J., refused to entertain the plea of negligence, urged byboth the parties, whereas Mukarji J., considered it and made a finding infavour of the respondent and against the appellant.

15. Mr. Setalvad contends that a plea of negligence should have been raisedby the respondent in its pleadings and the appellate Court was, therefore, inerror in allowing such a plea to be raised for the first time in appeal. In ouropinion, there is some force in this connection. Negligence in popular languageand in commonsense means failure to exercise that care and diligence which thecircumstances require. Naturally what amounts to negligence would always dependupon the circumstances and facts in any particular case. The nature of thecontract, the circumstances in which the performance of the contract by oneparty or the other was expected the degree of diligence, care and attentionwhich, in ordinary course, was expected to be shown by the parties to thecontract, the circumstances under which and the reason for which failure toshow due diligence occurred are all facts which would be relevant before ajudicial finding can be made on the plea of negligence. Since a plea ofnegligence was not raised by the respondent in the trial Court, the appellantis entitled to contend that it had no opportunity to meet this plea and dealingwith it in appeal has, therefore, been unfair to it.

16. Apart from this aspect of the matter, there is another serious objectionwhich has been taken by Mr. Setalvad against the view which prevailed withMukarji, J. He argues that when a plea of estoppel on the ground of negligenceis raised, negligence to which reference is made in support of such a plea isnot the negligence as it understood in popular language or in common sense; ithas a technical denotation. In support of a plea of estoppel on the ground ofnegligence, it must be shown that the party against whom the plea is raisedowed a duty to the party who raises the plea. Just as estoppel can be pleadedon the ground of misrepresentation or act or omission, so can estoppel bepleaded on the ground of negligence; but before such a plea can succeed,negligence must be established in this technical sense. As Halsbury hasobserved : 'before anyone can be estopped by a representation inferredfrom negligent conduct, there must be a duty to use due care towards the partymisled, or towards the general public of which he is one [Halsbury's Laws ofEngland Vol. 15, page 243, para 451.].' There is another requirement whichhas to be proved before a plea of estoppel on the ground of negligence can beupheld and that requirements is that 'the negligence on which it is basedshould not be indirectly or remotely connected with the misleading effectassigned to it, but must be the proximate or real cause of that result[Halsbury's Laws of England Vol. 15 page 245, para 453.].' Negligence,according to Halsbury, which can sustain a plea of estoppel must be in thetransaction itself and it should be so connected with the result to which itled that it is impossible to treat the two separately. This aspect of thematter has not been duly examined by Mukarji J. when he made his findingagainst the appellant.

Mukarji, J.

17. thought that the principle laid down by Ashhurst, J. in the case ofLackbarrow 2 T.R. 63, was a broad and general principle which applied tothe facts in the present case. It may be conceded that as it was expressed byAshhurst, J., in the case of Lickbarrow, the proposition no doubt has beenstated in a broad and general manner. Indeed, the same proposition has beenaffirmed in the same broad and general way by the Privy Council in CommonwealthTrust Ltd. v. Akotey [1926] A.C. 72. In that case, the respondent who was agrower of cocoa in the Gold Coast Colony, consigned by railway 1050 bags ofcocoa to L., to whom he had previously sold cocoa. Before a difference as tothe price had been settled, L. sold the cocoa to the appellants and handed the consignmentnotes to their agent, who recognised the cocoa to the appellants. Theappellants bought in good faith and for the full price. The respondent thensued the appellants for damages for conversion. It was held by the PrivyCouncil that by his conduct the respondent was precluded from setting up histitle against the appellants, and so his claim was rejected. In support of theview taken by the Privy Council, reliance was placed on the well-knownstatement of Ashhurst, J., in the case of Lickbarrow 2 T.R. 63, and so,it may be conceded that the broad principle enunciated by Ashhurst, J.,received approval from the Privy Council.

18. Subsequently, however, this question has been elaborately examined bythe Privy Council in Mercantile Bank of India Ltd. v. Central Bank of IndiaLtd., and the validity of the broad and generalproposition to which we have just referred has been seriously doubted by thePrivy Council. Lord Wright who delivered the judgment of the Board, referred tothe decision in the case of Lickbarrow 2 T.R. 63, and observed 'thatit may well be that there were facts in that case not fully elucidated in thereport which would justify the decision; but on the face of it their Lordshipsdo not think that the case is one which it would be safe to follow.' Thenreference was made to the opinion of Lord Sumner in the case of R.E. Jones Ltd.v. Waring & Gillow Ltd. [1926] A.C. 670 where the principle enunciatedby Ashhurst J. was not accepted, because it was held that the principle ofestoppel must ultimately depend upon a duty. Lord Lindley similarly inFarquharson Bros. & Co. v. King & Co. [1902] A.C. 325, pointed outthat the dictum of Ashhurst J. was too wide. A similar comment has been made asto the said observation by other Judges to which Lord Wright has referred inthe course of his judgment. It would thus be seen that in the case of TheMercantile Bank of India Ltd. the Privy Councilhas seriously doubted the correctness of the broad observations made byAshhurst J, in the case of Lickbarrow 2 T.R. 63, and has not followed thedecision in the case of Commonwealth Trust Ltd. [1926] A.C. 72. Therefore, itmust be held that the decision of Mukarji J, which proceeded on the basis ofthe broad and unqualified proposition enunciated by Ashhurst, J., in the caseof Lickbarrow cannot be sustained as valid in law.

19. There are two other decisions to which reference may usefully be made inconsidering this point. In Arnold v. The Cheque Bank 1876 C.P.D. 578,Lord Coleridge, C.J., in dealing with the question of negligence, observed that'no authority whatever had been cited before them for the contention thatnegligence in the custody of the draft will disentitle the owner of it or itsproceeds from a person who has wrongfully obtained possession of it. In thecase before them, there was nothing in the draft or the endorsement with whichthe plaintiff had anything to do, calculated in any way to mislead the defendants.It was regularly endorsed and was then enclosed in a letter to the plaintiffscorrespondents, to be sent through the post. There could be no negligence inrelying on the honesty of their servants in the discharge of their ordinaryduty, that of conveying letters to the post; nor can there be any duty to thegeneral public to exercise the same care in transmission of the draft as if anyor every servant employed were a notorious thief.' These observationsillustrate how before invoking a plea of estoppel on the ground of negligence,some duty must be shown to exist between the parties and negligence must beproved in relation to such duty.

20. Similarly, in Baxendale v. Bennett, Bramwell, L.J. (1878) 3 Q.B.D.525 had occasion to consider the same point. In that case, the defendantgave H. his blank acceptance on a stamped paper and authorised H. to fill inhis name as drawer. H. returned the blank acceptance to the defendant in thesame state in which he received it. The defendant put it into a drawer of hiswriting table at his chambers, which was unlocked and it was lost or stolen. C.afterwards filled in his own name without the defendant's authority, and anaction was brought on it by the plaintiff as endorsee for value. The court ofAppeal held that the defendant was not liable on the bill. Dealing with thequestion of negligence attributed to the defendant, Bramwell L.J. observed that'the defendant may have been negligent, that is to say, if he had thepaper from a third person, as a bailee bound to keep it with ordinary care, hewould not have kept it in a drawer unlocked.' But, said the learned Judge,this negligence is not the proximate or effective cause of the fraud. A crimewas necessary, for its completion, and so, it was held that the defendant wasnot liable on the bill. This decision shows that negligence must be based on aduty owed by one party to the other and must, besides, be shown to have beenthe proximate or to the immediate cause of the loss.

21. It is in the light of this legal position that the question aboutestoppel raised by the respondent against the appellant in the Appellate Courtmay be considered. Can it be said that when the appellant received theintimation card, it owed a duty to the respondent to keep the said card in alocked drawer maintaining the key all the time with its Director It would notbe easy to answer this question in the affirmative; but assuming that theappellant had a kind of duty towards the respondent having regard to the factthat the intimation card was an important document the presentation of whichwith an endorsement as to authorisation duly made would induce the respondentto issue a cheque to the person presenting it, can the Court say that intrusting its employees to bring letters from the letter box to the Director,the appellant had been negligent As we have already observed, in dealing withthe present dispute on the basis that the intimation card had been dropped inthe letter box of the appellant, it is possible to hold either that the saidcard was collected by the Peon and given over to Mr. Parikh, or it was not. Inthe former case, after Mr. Parikh got the said card, it had been removed fromMr. Parikh's table by someone, either by one of the employees of Mr. Parikh or somestranger. In the latter case, though, technically, the card had been deliveredin the latter box of the appellant, it had not reached Mr. Parikh. In theabsence of any collusion between Mr. Parikh and the person who made fraudulentuse of the intimation card, can the respondent be heard to say that Mr. Parikhdid not show that degree of diligence in receiving the card or in keeping it insafe custody after it was received as he should have In our opinion, it wouldbe difficult to answer this question in favour of the respondent. In ordinarycourse of business, every office that receives large correspondence keeps aletter box outside the premised of the office. The box is locked and the key isinvariably given to the Peon to collect the letters after they are delivered bypostal Peons. This course of business proceeds on the assumption which mustinevitably be made by all businessman that the servants entrusted with the taskof collecting the letters would act honestly. Similarly, in ordinary course ofbusiness, it would be assumed by a businessman that after letters placed on thetable or in a file which is kept at some other place, they would not bepilfered by any of his employees. Under these circumstances, if the intimationcard in question was taken away by some fraudulent person, it would bedifficult to hold that the appellant can be charged with negligence which, inturn, can be held to be the proximate cause of the loss caused to therespondent. In our opinion, therefore, Mukarji J., was in error in holding thatthe respondent could successfully plead estoppel by negligence against theappellant. As we have already observed the question as to whether the claimmade by the appellant against the respondent under s. 70 is concluded by thedecision of this Court in the case of M/S. B. K. Mondal & Sons [1962]Su. 1 S.C.R. 876, in favour of the appellant, and so, it must be held thatthe Division Bench of the High Court erred in dismissing the appellant's claim.

22. The result is, the appeal is allowed, the decree passed by the appellateCourt is set aside and that of the trial Court restored with costs throughout.

23. Appeal allowed.

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