052-SLLR-SLLR-2001-V-3-JAYAMOHAN-v.-HATTON-NATIONAL-BANK-LTD.pdf

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It is in the light of such evidence that the learned AdditionalDistrict Judge should have examined the issues. Instead anattitude of approbation and reprobation on the learned Judge’spart has no doubt confused both sides.
There is no doubt that the internal debit voucher (P3) wasforged. The Defendant – Appellant himself admitted it. (Vide page367 of the Brief). That meant the signatures of Officers said tohave signed within the "Pay Cash" stamp were not those ofwitnesses Wijetillake and Wijesekera who gave evidence nor anyother Senior Officers in the Branch. In addition the signatureson P3 were ex-facie dissimilar to the signatures of those whopurported to sign same. Further, the payee mentioned on theinternal debit voucher. "T. Wimalaratne", was not a person towhom the Plaintiff – Respondent Bank owed any money.
There were three alternatives as to what took place at thetime of payment. They were
Either the Defendant – Appellant knew that P3 was a forgeryand yet fraudulently paid on a forged internal debit voucher,or
did not take sufficient care to check the signatures, andprecautions to ensure that the payment was due, speciallybecause the amount was large, but recklessly and negligentlypaid on the voucher, or
checked the signatures and found them to be genuine andin order and therefore bona fide made the payment.
The learned Additional District Judge was called upon todecide whether the act of the Defendant fell under (iii) above oreither of (i) and (ii). If he found that the Defendant's act did not

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fall under (ill) he was per force expected to grant the relief claimedin the prayer to the plaint since the claim was for the return ofthe actual economic loss sustained by the Bank and not for anyestimated unliquidated damages sustained by the Bankconsequently.
The following matters had to be considered by the learnedJudge in coming to his conclusion as to whether the Defendant- Appellant had acted reasonably and bona fide in terms of hiscontractual relationship with the Bank:-
A cashier attached to a Bank, by virtue of his responsiblepost, was expected to be careful and circumspective.(In any event vide terms mentioned in PI and P2).
He was expected to check on the genuineness of documentssent to him for payment. Whether the payment was internalor external the responsibility of ascertaining the genuinenessof documents presented, lay with the Counter Clerk. Thatwas his basic duty.
He was expected to ensure the identity of the person to whompayment was made. The Counter Clerk could not have saidthat he paid the person who brought the document withoutchecking his identity. That would have been a dereliction ofhis contractual duties.
(i) In this instance was the Defendant – Appellant careful andcircumspective?
The Defendant had with him PI 1, P12 and P13 at the timehe made payment on P3. The signature of witness Wijesekerawas on them (PI 1, P12 and P13). They were dealt with by theDefendant between 9 a.m. and 9.45 a.m. on that day itself beforeP3 was presented to him. (Vide pages 314 to 317 of the Brief).Defendant admitted at pages 328 and 329 as follows:-

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Mr. Musthapha raised the question as to whether it wasconceivable that a person who made payment would retain inhis memory the genuine signatures. Remembering the genuinesignatures and mentally comparing them with the signatures

Though the Defendant – Appellant tried to make out thathe came to know Mr. Wijetillake's signature only on 02. 09. 1981he had no doubt seen P8 and P9 on 25. 08. 1981 whereinMr. Wijetillake's signature had appeared. Mr. Wijetillake at page89 of the Brief stated as follows

He further admitted being very familiar with the signatureof Mr. Wikesekera at pages 332 and 333 of the Brief when heanswered as follows:-

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on documents presented before them are the special skills whichevery Bank Clerk is expected to clothe himself with. After ninemonths' service the Defendant – Appellant could be presumedto have obtained such skill.
So it appears that the Defendant – Appellant was familiaror should be deemed to have been familiar with the signaturesof Messrs. Wijetillake and Wijesekera when he paid on P3. Inany event Pll, PI2 and P13 were with him when he madepayment on P3. He admitted in evidence that the purportedsignature of Wijesekera on P3 was different. Furthermore Pll,P12 and PI3 did not have his signature in green ink as in P3.Mr. Wijesekera stated in evidence that he had never signed witha green ink pen. This should be seen in the light of Mr. Wijesekerasigning as Accountant in most of the 100 or so vouchers dealtwith by the Defendant – Appellant at Counter R6 in August 1981.FUrther in Pll, PI2 and P13 the name of the account to bedebited was given as "Charges A/c General" whereas in P3 itwas "General Charges A/c". There was no account in the saidBank called "General Charges A/c". (Vide last line of page 139 ofthe Brief)
All these matters (apart from the answers given by theDefendant – Appellant to the Inquiring Officer Mr. Vancuylenbergwhich are not referred to in this judgment) taken together withthe fact that the Defendant – Appellant did not know"T. Wimalaratne" and made no attempt to identify the payee onP3 nor the person who presented P3 for payment to him, coupledwith the fact that there was no signature of an authorised Officeron the reverse of P3 identifying the payee's signature and thatthe amount payable was much more than Rs. 5000/- wouldbring a Court to the conclusion that the Defendant – Appellantwas not careful nor circumspective.
(ii) and (iii) Genuineness of P3 and the identity of the payeeon P3
For the reasons mentioned hereto before, a Court would nodoubt conclude that the Defendant – Appellant did not checkon the genuineness of P3 as expected of him as an Officer of the
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Bank nor ensure identity of the person to whom payment wasmade on P3.
But the Defendant – Appellant took up the position that thecounter did not deal with encashment of cheques but paid oninternal vouchers to persons to whom the Bank owed money.The internal vouchers, it was argued, were issued to the relevantpersons by another Officer who should have been satisfied asto the identity of the payee and that there were dues from thePlaintiff – Respondent Bank to the payee concerned. It was alsoargued that the "Pay Cash" stamp was affixed by anotherresponsible Officer before it was brought to Counter R6. It wasthe contention of the Defendant – Appellant that there had beenno instructions whatsoever that identification should be obtainedat Counter R6. Even the mode of identity required beforepayment was never informed. Contrary instructions were given,it was said, only on the day after this incident viz. 02. 09. 1981.
In other words the Defendant – Appellant has argued thatit was his function only to dole out the money the moment aninternal voucher was placed before him. The contention is thatthe Bank had employed him and trained him to pay moneywithout ascertaining the identity of the payee nor the genuinenessof the document. If so. such instructions by the Bank shouldhave been produced. Otherwise it is reasonable to infer that theBank expected identity of payees and ascertainment of genuinenessof documents before payment on any voucher or cheque, internalor external. Not to infer so would make management of staff inany institution a nightmare. Every employee might scan the contractof employment and circulars distributed, to act prejudiciallytowards the employer under the cover of failure by employer togive specific instructions. Employee should not expect to bespoon fed at every step. If in doubt they certainly could consulttheir seniors or more experienced colleagues. Specially so withregard to Banks.
The Defendant – Appellant accepted receiving P8 and P9.He had in fact signed having read its contents (Vide P8(a) andP9(a)]. The Defendant – Appellant should have known after
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25. 08. 1981 that the Bank was expecting extreme care inhandling cheques for large amounts. Just because the paymentat Counter R6 dealt with internal vouchers it did not mean thatthe extreme care expected of an Officer in paying large amountsin any way got affected. It would be preposterous to argue thatRs. 32875/45 was not a large amount in 1981. In any event the. Defendant – Appellant had not paid such an amount earlier.Remembering the contents of P8 and P9 he should havechecked carefully the genuineness of P3 and the identity of theperson who tendered P3 to him. It is presumptious on the partof the Defendant – Appellant to say that the Plaintiff Bank hadtrained him and employed him at Counter R6 just to pay outthe money the moment an internal voucher was placed beforehim. No Court could admit such a submission on the part of aBank employee whether a "novice" or an "experienced senior".Utmost confidence and care is expected of any Officer employedin a Bank.
Justice Siva Selliah in Sithamparanathan v. PeoplesBank'6’
"It Is needless to emphasize that the utmost confidence Is
expected of any officer employed tn a Bankhe owes
a duty both to the Bank to preserve its fair name andintegrity and to the customer whose money lies in depositwith the Bank. Integrity and confidence thus areindispensable and where an officer has forfeited suchconfidence as has been shown up as being involved inany fraudulent or questionable transaction, both publicinterest and the interest of the Bank demand that heshould be removed from such confidence."
The aforesaid dictum was referred to with acceptanceby Chief Justice G. P. S. de Silva in Bank of Ceylon v.Manivasagasivam(7) • at 83.
A cashier is a trustee of the Bank's money allotted to him atwork. He cannot be heard to say that he owed no duty to check
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on the genuineness of a document placed before him for paymentnor identify properly the person who calls over before him forpayment with such a document. The Defendant – Appellant wasduty bound to check on both – genuineness of P3 and identityof the payee who called before him.
Merely looking at P3 on the one hand and Pll, P12 andPI3 paid on the same day by the Defendant – Appellant on theother, the following discrepancies are visible –
Pll, P12, and P13 carry on the face of it the seal
"AUTHORISED by- as per Memo/Letter" and the word
"Accountant" written on it. No such seal nor word appearon P3.
Pll, P12 and P13 refer to "Charges A/c General (Petty Chargesand Sundries)" while P3 refers to "General Charges A/c". Therewas no account called "General Charges A/c” at this Bank.
Pll referred to "Cost of 3 Towels for D.G.M's Toilet", P12referred to "Toilet requirements for D.G.M's new toilet" andP13 to "Cost of 6 packets Air FVeshner for Dealer's Department”.P3 on the other hand referred to "Pay Mr. T. Wimalaratneon a/c of receipt No. 3/024/A". There is no evidence that theDefendant – Appellant checked as to what that endorsementmeant. There was a senior officer seated close to him.
The defendant – Appellant admitted that the signaturesfound within paying cashier's stamp on Pll, PI 2 and PI 3differed from the signatures on P3.
Significantly Pll, P12 and P13 carried a serial number"434", "433" and "431" respectively while P3 did not carryany such number even though the name of account soundedsimilar.
P11, P12 and P13 each carried a signature (in fact the sametype of signature) within the column "Officer – in – Charge/Accountant/Manager" while P3 did not have any suchsignature.
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These discrepancies are perceivable ex-facie even to alayman. The Bank stated as per P7 that the voucher (P3) "wasnot the usual form and contained irregular and/or suspiciousfeatures, and that payment was made without obtainingidentification and contrary to instructions and practice." TheBank also pointed out to Defendant – Appellant that P3 wasnot duly authorised and that the signatures thereon were forged.
On the 2nd of September 1981 itself, the day after thepayment was made, the Bank had pointed out by P4 that P3did not bear signatures of any authorised Officer of the Bank.The only explanation given by the Defendant – Appellant by P5was that on examination the Defendant – Appellant found thesignatures of the Manager and the Accountant, which heaccepted as correct and therefore paid cash. He stated on P5that "To the naked eye the (se) signatures looked authentic".
It is the same Defendant – Appellant who wrote P5, answeredat pages 330 and 331 as earlier referred to and at page 332 ofthe Brief as follows
There is no doubt that if the Defendant – Appellant performedhis duties diligently as a Bank Clerk as per the terms of P1 andP2 he would have noticed the discrepancies and therefore referredP3 to a Senior Officer before payment.
Quite rightly the learned Additional District Judge at page433 of the Brief had stated as follows:-

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Thus the learned Additional District Judge had quite rightlyconcluded that the Defendant had acted negligently and carelessly.(Vide answer to issue 8 – page 449 of the Brief). That wouldmean that the Defendant – Appellant did not properly checkthe signatures on P3 before payment. If he did properly checkhe would have found them to be not genuine and not in order.Checking of the signatures could have been done in comparisonwith the signatures on PI 1, P12 and P13. If there was any doubtthe Defendant – Appellant could have referred the matter to theSenior Officer seated close to him. The amount after all relativelywas unusually high. (Vide P10 and P10A. Page 90 of R6).
It is therefore not possible to come to the conclusion thatthe Defendant – Appellant made the payment bona fide. He wasnegligent and careless as stated by the learned AdditionalDistrict Judge. The learned Judge also concluded that it had

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not been proved that the Defendant – Appellant knew that P3was a forgery and yet fraudulently paid on a forged internaldebit voucher. We agree with his conclusion. So long as anynexus between the payee and the Defendant – Appellant hadnot been established nor any act or conduct on the part of theDefendant- Appellant that displayed positive knowledge on hispart that P3 was a forgery, the benefit of the doubt must enureto the Defendant – Appellant.
In the light of our review of the evidence let us now criticallyexamine the answers given to the issues by the learned AdditionalDistrict Judge.
Answering in the affirmative issue No. 2 as "(a) and/or (b)"he had imported some confusion. The answer to our mindshould have read as "2(a) – yes", "2(b) – yes" (though that appearsto be the learned Judge's intention).
In answering issue No. 7 the learned Judge seems to havetaken it to be connected to issue No. 6 and answered same as"Not proved that the Defendant received the said money". Webelieve this response was erroneous. It should have beenanswered in the affirmative. Issue No. 8 therefore should havebeen answered in view of the answers to issue Nos. 6 and 7 as'Yes. The Defendant had acted negligently and carelessly." Weare unable to understand as to why the learned Judge in answeringissue No. 9. restricted the Plaintiff’s claim to Rs. 32875/45. Thisamount was due from the Defendant – Appellant on the day hepaid that sum negligently and carelessly and the matter cameto light (i. e. on 01. 09. 1981). If he did not reimburse thatBank on that day the Bank should have been granted legalinterest. Therefore we conclude that the answer to issue No. 9should have read as 'Yes".
Coming over to the Defendant's issues, issue No. 10 dealswith instructions in terms of paragraph 5 of the plaint beinggiven or not to the Defendant and/ or other pay clerks.
In his letter to the Minister of Labour (PI8) the Defendant- Appellant stated as follows:-
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"When this voucher was presented for payment I checkedit carefully and found it to be in order in all respects and sincerelyand truly believed that the signatures that appeared thereonwere the signatures of the Accountant and another Officer. Theywere so similar to the genuine signature of these officers and Ihad no doubt about their authenticity since the forgery was socleverly done".
This implies that the Defendant – Appellant was instructedby the Plaintiff – Respondent Bank with regard to the contentsof paragraph 5(a) of the plaint.
The contents of 5(b) and 5(c) were the normal functions ofa Bank Clerk and it was unreasonable on the part of theDefendant – Appellant to distinguish between internal andexternal payments. To deny that checking of the identity of aperson and genuineness of a document was necessary whenthe payment was internal, would connote as stated earlier inthis judgment, that the Bank trained and maintained an Officerto simply dole out money without checking identity (of payee)nor genuineness (of document). In the light of the evidence ofthe two Officer-witnesses of the Bank, the Court could havepresumed that instructions as per paragraphs 5(b) and 5(c) ofthe plaint were indeed given to the Defendant – Appellant. Ifthere were any misgivings as to whether such identity andgenuineness were to be checked or not, (since P8 in its penultimuteparagraph had called upon staff members to refer to theManager when in doubt with regard to identity) the Defendant- Appellant could have checked either with Mr. Wijesekeraseated close to him or with the Manager Wijetillake, and foundout whether it was his duty to check identity and genuinenesswhen paying on interned vouchers.
As to the contents of paragraph 5(d) the evidence ofWijesekera confirmed that it was the practice for vouchers ofRs. 5000/- or more to be personally brought over by him or anAssistant Accountant to Counter R6 though the Defendant -Appellant denied such a practice. The learned Additional DistrictJudge could have admitted the evidence of witness Wijesekera
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in this regard. Witness Wijesekera's evidence was confirmed bywitness Wijetillake. These are normal Bank practices even regularand long standing customers of any Bank are aware of. Usuallywhen amounts are large a Senior Officer comes over to thecounter, looks at the payee and nods at the Counter Clerk.
Therefore it was reasonable to conclude that instructionsas per paragraph 5 of the plaint were in fact given to the Defendant- Appellant. Obviously the Defendant – Appellant (having beenforced to admit subsequently in evidence that he had paid on adubious document) could not have admitted the contents ofparagraph 5.
The learned Judge had criticised the manner in which P8and P9 were prepared and circularised. The haphazardness ofthe Bank's action in this regard could not have shielded theDefendant – Appellant from acting responsibly.
We would have therefore answered issue No. 10 in theaffirmative rather than say "not proved". The standard of proofin this regard was on a balance of probability and as opposedto the denial by the Defendant – Appellant there was positiveevidence of witness Wijesekera corroborated by that of witnessWijetillake which tilted the scale in favour of the Plaintiff Bank.Documents P8 and P9 contributed to such tilting.
This is so with regard to issue No. 11 too. The answer toissue 11 should have been "yes" instead of "not proved".
The learned Judge could have answered issues No. 16(a)and (b) instead of avoiding answering them. For the reasonsgiven earlier in this judgment based also on the evidence of theDefendant – Appellant, the learned Judge, we believe, could haveanswered issue No. 16(a) as "no" and issue No. 16(b) as "yes".We would answer accordingly.
Thus the answers to issues, to our mind in the light of theevidence led and documents furnished should have been asfollows:-
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Issue 1-yes
(a)-yes
(b)-yes
-yes
-yes
-yes
-not proved
-yes
-yes
-yes
-yes
-yes
-no
-no
-doesnotarise
-doesnotarise
16(a)-no
(b)-yes
-doesnotarise
-doesnotarise
-not necessary to answer
-doesnotarise
With the answering of the issues as above, the submissionsof the learned Counsel for the Defendant-Appellant with regardto the logic of answering issues 2, 4 and 5 in the affirmative inthe light of the answers given to issues 10 and 11 by the learnedJudge gets resolved. So to the answer to issue No. 7 which wehave answered in the affirmative.
As to the answer to issue No. 12 we have allowed it to standas "no". A Bank cannot be expected to dole out doses of cut anddried information at all times to its Officers with regard toobvious Banking practices. The Officers are presumed to know
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them after training and employment. If they had doubt theyshould consult their superiors. There was no contractual dutycast on the Bank to inform the Defendant – Appellant that thelatter should not pay money "to a person who had no rightwhatsoever to receive that money (Issue 1) nor that the Defendant- Appellant under his contract of service was obliged "not tomake any payments to unknown persons or persons whoseidentity was not known" "[Issue 2(b)). The Bank Clerk in thisinstance should have known them after reading his terms ofcontract PI and P2 and after receiving his training.
The learned Counsel for the Defendant – Appellant complainedthat Issue Nos. 14 to 20 were not answered.
With the answering of issue No. 16(a) and (b) by us thisproblem is resolved.
As to the penultimate submission of the learned Counselfor the Defendant – Appellant the person who prepared thevoucher (P3) could not have been called, as insisted upon byhim, because it had been found to be a forgery. The necessity toproduce all the other vouchers paid by the Defendant – Appellanton 01. 09. 1981 would have arisen only if the Defendant -Appellant insisted that the signatures on P3 were exactly similarto the Officers' actual signatures. The Defendant – Appellanthaving been forced to accept in cross examination that P3 perse appeared to be a forgery, evidence in rebuttal to produce othervouchers did not arise. In any event the Officers who shouldhave signed P3 and whose signatures were purported to be onP3 had given evidence that P3 was a forgery. Therefore thelearned Counsel's submission in this regard is rejected.
With reference to the final submission the learned AdditionalDistrict Judge had no doubt found that the Bank's managementsystem at that time had much to be desired. But that was noexcuse for the Defendant r Appellant to have acted negligentlyand carelessly. The learned Judge had rightly concluded thatthe Defendant- Appellant was obliged to pay back the moneycarelessly and negligently paid by him on P3.
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As for the submissions made by the learned Counsel forthe Plaintiff – Respondent we have now answered issues 7, 10,
11 and 16. The learned Judge did point out certain shortcomingswith regard to the management techniques adopted by the Banksuch as sending a thin sheet of paper (P8) to be signed and sentby Officers, instead of having copies of P8 distributed to allOfficers etc. This did not mean that the Managing Officers wereinefficient. We must not forget that until cases of this nature cropup, a Bank does not necessarily gear itself to face up to sucheventualities. But the fact that the Bank's Officers did considersuch eventualities is brought out by the circularising (by obtainingsignatures of Officers after they perused them) of P8 and P9.
With regard to the denial of intererst to the Plaintiff -Respondent Bank we have now put the record correct.
We therefore amend the answers to the issues given by thelearned Judge to read as given by us hereabove and amend hisconclusion to give judgment as prayed for in the plaint dated17.05. 1982. We dismiss the appeal of the Defendant – Appellantand order that he shall pay the taxed costs of this appeal too tothe Plaintiff Respondent.
JAYAWICKRAMA. J. – I agree.
Appeal dismissed.