1.This is an appeal by the New Central Hall, a firm consisting of two partners, Ismail Ibrahim Sully and Moose Ibrahira Sully, plaintiffs in O. S. No. 40 of 1952 on the file of the Subordinate Judge, Madurai, against the dismissal of the suit, though without costs.
The suit has been filed by them against the United Commercial Bank Ltd., Madurai, for recovering damages of Rs. 50,000, with interest at 6 per cent, per annum, from the date of plaint and costs, for dishonouring 11 cheques of theirs issued' on the defendant Bank in the first week of November 1948, though the defendant Bank had sufficient funds of theirs in its hands and could have easily paid all the 11 cheques.
The indignant plaintiffs withdrew their entire-bank balance from this bank on 10th November 1951 and closed their accounts despite the bank's regret and offer to explain the position to the payees of the cheques.
2. The learned Subordinate Judge accepted the fact of dishonouring the cheques by the Bank, by endorsing on the cheques "Refer to the drawer", though the Bank had at that time the plaintiffs funds enough to meet all the cheques, He held however, that, on a true construction of Section 31 of the Negotiable Instruments Act, the plaintiffs could recover as damages only such loss or damage as was caused by the actual default of the bank, and that no such loss was proved.
He also held that the bank had not acted maliciously but only under an honest mistake caused by a clerk not reporting or bringing to account Rs. 4000 deposited by the plaintiffs on 31st October 1951, the 11 cheques dishonoured by the bank aggregating in all to a sum less than this Rs. 4000, and previous cheques of the plaintiffs having been cashed.
He also took into account the fact that the hank had offered to the plaintiffs to write letters to the 11 payees of the dishonoured cheques explaining the mistake. He further observed that if at all the plaintiffs would be only entitled to nominal damages, and remarked, rather curiously, that it was well established that in India, there is no question of awarding nominal damages.
In the end, therefore, he dismissed the suit, and directed the plaintiffs to bear their costs, aggregating to Rs. 2519-14-0. and directed the defendant bank to bear its own costs of Rs. 2314-6-4. The plaintiffs have felt highly aggrieved and have filed this appeal.
3. We have perused the records and heard the learned counsel on both sides. Mr. Venkatadri, the learned counsel for the appellants, and Mr. Nara-simhachari, the learned counsel for the defendant-respondent, argued the rase fully and fairly. Mr. Venkatadri raised three main contentions.
The first was that the lower court went grievously wrong in its interpretation of Section 31 of the Negotiable Instruments Act and that it is well established that traders, like the plaintiffs, would be entitled to substantial damages, even in India, without proof of special loss or damage by the wrongful dishonouring of their cheques, as such loss or damage is presumed.
He said that the lower court went wrong in holding that even traders like the plaintiffs should prove special loss, or otherwise would be entitled only to nominal damages, and in further observing, without any authority, that in India there was no question of awarding nominal damages and so the plaintiffs would be entitled to no damages.
He is undoubtedly right in this contention. The House of Lords has held, in Wilson v. United Counties Bank Ltd., 1920 AC 102 that in an action against a bank by a trader customer, there was a ight to claim substantial damages in the case of a wrongful dishonouring of a cheque, though in the case of a non-trader customer special loss or injury by the dishonouring must be proved, before substantial damages can be claimed, except where there are special circumstances like a man issuing a cheque to a finance being dishonoured wrongfully and the finance breaking off the engagement in consequence.
No doubt, it has been held in Gibbons v. West minster Bank Ltd., 1939-3 All ER 577. that in the case of the dishonouring of a cheque of a person who is not a trader, only nominal damages would be awarded in the absence of any proof of loss of credit or other special loss or damage. But there is no doubt that in the case of a trader, like the plaintiffs, such proof of special loss or damage would not be necessary, and that substantial damages would be presumed and awarded for the wrongful dishonouring.
The very same view regarding both traders and non-traders was adopted in Davidson v. Barclays Bank Ltd., 1940-1 All ER 316. Leading text book writers on the Negotiable Instruments Act have stated that the same rule applies in India, as Mr. Venkatadri pointed out. We are of opinion that the Indian law on the subject is not at all different from the English law on the point, and that in the case of a non-trader, nominal damages should be awarded where there is no proof of special loss or damage 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.
Of course, if there is proof of special loss or damage, that will be taken into consideration for arriving at the exact quantum of damages. Mr. Narasimhachariar was unable to show us any ruling to the contrary. We must also say that the lower court has gone wrong in observing that it is well settled that in India nominal damage; can never be awarded. They can, in our opinion, be certainly awarded in suitable cases, like a trespass not causing damages but only annoyance, the wrongful dishonouring of a cheque issued by a non-trader without special damage etc.
4. Mr. Narasimhachari wanted to rely on the wording of Section 81 of the Negotiable Instruments Act to show that the Indian law on the subject is different from the law laid down in the English cases, and that Section 31 does not make any distinction at all between a trader and non-trader, and that both; will have to prove special loss or damage before claiming substantial damages. He did not accept the view expressed by Bhashyam and Adiga and other text-book writers.
The short answer, to this is that in an Indian case, Jogendranath v. New Bengal Bank Ltd., AIR (1939 Cal 63 the same principle, as has been laid down by the English Courts regarding the wrongful dishonouring of a cheque issued by a trader and a non-trader, has been applied to Indian cases, and that damages of Rs. 500 were awarded in that case for the wrongful dishonouring of a single cheque for Rs. 135. We agree, with respect, with the view expressed in the above case, and also, of course, with the views expressed in the English rulings cited above. But that will not solve tha problem of fixing the particular quantum of damages in this case.
5. So we come to the second contention of Mr. Venkatadri. He said that the damages of Rs. 50,000, claimed in the suit, and in the suit notice earlier, were fully justified not only under the general law relating to traders whose cheques have been dishonoured but also by the proof of special damages let in by the plaintiffs in this case.
Mr. Narasimhachari joined issue with alacrity regarding the proof of special damages, and wanted to show that the plaintiffs instead of suffering damages by the wrongful dishonouring of their cheques, actually increased their credit by being able to borrow Rs. 1000 after the dishonour as against Rs. 500 before the dishonour.
He also said that Mr. Venkatadri was wrong in relying on as alleged fall in the out-turn of their trade after dishonouring to the extent of Rs. 35000; He attributes the fall to the normal rise and fall in trade. He is right here, Exhibit A-47 showed that in 1951-52 the plaintiffs had an out-turn of Rs. 81296-1-6 and that in 1952-53 their out-turn fell to Rs. 46201-3-6. Mr. Venkatadri attributed this fall of Rs. 35.000 to the wrongful dishonouring of the II cheques by the defendant bank.
Mr. Narasimhachari pointed out that the wrong-ful dishonouring of the cheques occurred in the first week of November 1951 right in the midst of 1951-52. He also pointed out that in 1950-51 the outturn of the plaintiffs was only to the tune of about Rs. 50,000 just as in 1952-53, and argued from this that 1951-52 was a peak year in the plaintiffs' trade, and that in the very middle of that peak year the wrongful dishonouring, took place and had not slightest deleterious effect on the plaintiffs' trade or credit.
He also pointed out that no person had been examined to show that the plaintiffs approached him for credit after dishonouring of the cheques and were refused credit on the ground of such dishonouring. Nor was there any person examined to show that the plaintiffs failed in their esteem or reputation when they heard of such dishonouring by the bank.
The three persons who wrote letters to the plaintiffs after dishonouring of the cheques issued to them couched their letters in polite and courteous form, and did not utter a word of contempt or loss of faith. Of course, Mr. Narasimhachari went too far in relying on the absence of proof by the plaintiffs by such positive loss of credit or of positive loss or damage caused by the dishonouring.
As traders they were entitled to substantial damages for wrongful dishonouring of their cheques without such proof of special loss or damages. So, even though the plaintiffs have failed to prove positively, special loss or damages by the wrongful dishonouring of the 11 cheques, they are entitled to substantial damages under the presumption under the law.
6. Mr. Narasimhachari then said that the wrongful dishonouring occurred owing to an unfortunate mistake in the bank caused by the clerk's not bringing the deposit of Rs. 4000 by the plaintiffs on 31st October 1951 to account forthwith, and the bank's therefore thinking that there was no money of the plaintiffs in its hand sufficient to meet the 11 dishonoured cheques. But. as observed in 1940-1 All ER 316, such a mistake is no excuse at all, as it ought not to have been made by any bank, and, if made, the bank has to bear its consequences when it wrongfully dishonours a cheque of one of its constituents who has got enough money of his in the bank to meet the cheque.
7. Then Mr. Narasimhachari relied on the offer of the Bank to write letters to the various payees of the dishonoured cheques explaining the mistake. But this too would not take away the liability of the bank to pay substantial damages. It is something like offering to wipe out the spittle from a man with a bucket of water after he has been unjustly spat upon. We may also add that the bank did not always rely on the honest mistake it had made, but insinuated in the reply notice, as well as in the written statement, that the plaintiffs were persons of small means and were apt to issue cheques on banks without sufficient funds. This was adding insult to injury. The only extenuating circumstance is that the insinuations were made after the fight began, and not before.
8. So, we go back to the question as to what would be the proper substantial damages to be awarded to the plaintiffs in this case. Mr. Venkatadri's contention that Rs. 50,000 would be the proper sum to be awarded cannot be accented. No doubt, there may be cases as he urged, where exemplary damages may have to be awarded in the case of dishonouring cheques in exceptional circumstances, like ruining a man's business altogether by such dishonouring, by depriving him of credit and making his creditors rush to him for their debts and forcing him to close his business.
So too, if a man whose cheque has been wrongfully dishonoured is chased by a mob in the street, and hooted as a bankrupt and worthless pauper, or if he loses a valuable contract, or if it has caused him loss by way of litigation, or if owing to the loss of repute, he has to ride himself from Ms shop for months on end or leave his trade and run to a foreign country at least for a while.
None of these exceptional circumstances admittedly existed in this case. This is normal case where substantial damages have to he awarded under the law, and not exemplary damages. Each case has, of course, to be decided on its own facts and circumstances. Here the fact remains that 11 cheques of the plaintiffs issued to 11 different persons were dishonoured by the defendant bank covering a credit amount of about Rs. 4000, and the plaintiffs had to spend Rs. 2519-14-0 as their costs in filing this suit, and a similar amount in preferring this appeal.
In other words, they had not only their 11 cheques aggregating to Rs. 4000 and issued to 11 persons dishonoured, and their reputation affected to that extent as traders, even without proof of special loss or damages; they had also to spend another Rs. 5000 in litigation to vindicate their rights. After carefully, considering every conceivable factor which can influence the determination of the damages in this case, we fix the damages at Rs. 6000. Of course, the plaintiffs will also get proportionate costs on that amount in the lower court and here. They will bear their remaining costs themselves. The defendant will bear his entire costs himself.
9. Mr. Venkatadri contended that the plaintiffs spent Rs. 5000 in litigation, and that, under our decree, they would have only Rs. 2000 and odd left as damages. We consider that quite sufficient. It is not advisable to encourage plaintiffs to open their mouth too wide and to claim extravagant amounts, and spend unnecessary amounts in litigation, and then make that a ground for claiming more damages than they would be justly entitled to. So, we reject this contention. So too Mr. Venkatadri's claim for interest on the amounts covered by the 11 cheques has no substance as he withdrew the entire balance in a week.
10. Mr. Venkatadri wanted to rely on a Bench decision in Venkayya Pantulu v. Surya Prakasamma, 1940-2 Mad LJ 328 : (AIR 1940 Mad 879), where, in the case of defamation of a woman, full costs were allowed even though the damages claimed were drastically reduced. But, in our opinion, their ruling will have no application to the facts of this case, where no woman's reputation has been affected, and it is purely a business matter.
11. In the end therefore, the dismissal of the suit by the lower court is pet aside, and a decree is sued in favour of the plaintiffs for Rs. 6000 with interest at 6 per cent, per annum from the date of the lower court's decree, 5th August 1954 (when alone the amount could be determined) till the date of realisation with proportionate costs, the defendant being directed to bear its own entire suit costs. In this appeal, the plaintiffs will get proportionate costs on the sum decreed, and bear the remaining costs. The defendant will bear its entire costs.