010-SLLR-SLLR-1990-V-1-THE-PEOPLES-BANK-v.-NEW-LANKA-MERCHANTS-LTD.pdf
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The People's Bank v. New Lanka Merchants Ltd.
67
THE PEOPLE’S BANK
v.NEW LANKA MERCHANTS LTD.
COURT OF APPEAL
S.P. GOONEWARDENE.J. AND K. VIKNARAJAH. J.
C.A. NO. 510/79 (F) – D. C. COLOMBO No. C/1169/M.
JANUARY 21, 1989.
Negligence – Customer of Bank suffering loss on wrong information by Bank employeeRe-realization of cheque – Liability of Bank.
A customer of a firm on tendering cheque for goods purchased was told the balance cashand goods would be delivered to him only upon realisation of the cheque. An employeeof the firm's bank inquired from a Bank employee whether the cheque was realised. TheBank employee told the employee of the firm that the cheque had been honouredwhereupon the firm released the goods and the balance cash to its customer. Later it wasfound that the cheque had been in fact dishonoured.
Held:
The Bank's employee was entitled to furnish the information in response to the inquirymade by the employee of the firm. As a result of the Bank employee giving the wronginformation that the cheque was honoured when in fact it was not. the firm suffered lossin the value of the cheque. The firm was entitled to act on the information given by theBank's employee and the Bank is liable for the negligence of its employee and must makegood the loss sustained by the firm.
APPEAL from a judgment of the District Court of Colombo.
S. Sivarasa with W. D. D. Weerasinghe for the Defendant – Appellant.
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H. L. de Silva, P. C. wiih S. Mahenthiran for the Plaintiff – Respondent.
Cur. a civ, vult
March 17, 1989.
S. B. GOONEWARDENE, J.
The plaintiff filed this action seeking recovery of a sum of Rs. 9,213.66from the Defendant Bank the appellant in this case. The factual back-ground of the case was thus. The plaintiff was at all times material acustomer of the defendant bank and maintained a current account withit. On 12.11.74 a person representing himself as one G. M. Pererapresented himself at the business establishment of the plaintiff andtendered to it a cheque p1 which on the face of it was for a sum of Rs.9,213.66 and drawn in the name of G. M. Perera by George Stewart & Coon The National & Grindlays Bank. It was so tendered after a purportedendorsement, against the purchase of some goods from the plaintiff. Theamount on the cheque being in excess of the value of the goods theplaintiff gave him a sum of Rs. 5.31 in cash and it was agreed that it wasonly after the realisation of the cheque that a further sum of Rs. 8,000 wasto be paid to such person. The balance then represented the value of thegoods purchased which goods too were to be delivered only after therealization of the cheque. On the same day the plaintiff credited thischeque P1 to its current account with the defendant Bank. On 15thNovember, 1974 Francis an employee of the plaintiff called over at thedefendant Bank to inquire whether the cheque had been realised andwas directed to call over again around 12.30 p.m. to be notified whetherthat had happened. Such person when he presente< i himself accordinglywas informed that the cheque had been realised, 'n consequence of thatstatement the person who tendered the cheque to the plaintiff was paida sum of Rs. 8,000 and the goods purchased were also delivered to him.On the 18th of November, 1974 the defendant 3ank had been notified bythe National & Grindlays Bankthat the cheque had been dishonoured andthe defendant Bank received it back as a ‘late return cheque’.
The issue in the case as the District Judge saw it was whether in thesecircumstances where an employee of the defendant Bank by the nameof De Silva made this representation to the plaintiffs agent Francis thatthe cheque P1 had been honoured, which resulted in the plaintiff partingwith the value of the cheque on its face in goods and cash andconsequently sustained this loss upon the defendant Bank subsequently
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debiting this amount to its account, the plaintiff was entitled to recoversuch loss from the defendant Bank.
The District Judge was of the view that there was as he termed it,negligence on the part of the defendant Bank and the principal argumentof Counsel for it at the hearing before us was that in the absence of anissue with respect to negligence the District Judge misdirected himself incoming to that finding and therefore his judgment cannot be allowed tostand.
It cannot be doubted that a customer of the Bank is entitled to make aninquiry of this nature as was done by the agent of the plaintiff here andact upon the basis that the information so given is correct. Counselendeavoured to contend that such an inquiry must be directed to aresponsible off icer who has authority to give that information and that wasnot so in this case. I am of the view that this contention is scarcelyconsistent with the testimony of the Bank Manager Hewa who wasfunctioning in that capacity at the material time and who was called as itswitness by the defendant Bank. There can be no doubt upon an exami-nation of the evidence of that witness that the inquiry made by theplaintiff's agent from witness De Silva, the Bank’s employee, entitled suchemployee to give that information in the manner he did. It followstherefore from that, that the plaintiff was entitled to act upon a footing ofthe correctness of the information so given. The comment, it is apt tostate at this point has been made by the District Judge that De Silva, theBank's employee, was present in Court and was not called as a witnessfor the defendant to refute the testimony of the plaintiff's agent Franciswho made the inquiry from him. The District Judge's conclusion thereforethat in the event De Silva had provided this information to Francis is inmy view warranted in the circumstances of the case.
To hark back to the point taken relating to the finding ol negligence,there was evidence before the District Judge to suggest that at the timethis information was provided by De Silva to Francis, National & GrindlaysBank had notified the defendant Bank by telephone that the cheque wasbeing dishonoured. That information unfortunately had not been commu-nicated by the Manager Hewa to De Silva nor had he made any entry inthe ledger which would have enabled any one examining such ledger tolearn that fact. This, the District Judge has thought was a singular lapse
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for which the defendant must ultimately bear responsibility. One cannotquarrel with such a view that the bank must hold itself responsible for alapse of this nature on the part of its branch manager.
The case presented to the District Court by the plaintiff upon itspleadings as Counsel for the respondent pointed out to us contained thefollowing assertions:
“In the afternoon of the 15th of November, 1974
The plaintiff on inquiry was informed by the defendant Bank that theplaintiff could draw on the said cheque
The plaintiff states that the defendant had acted in breach of its dutyto the plaintiff as a customer of the Bank".
One sees therefore at a glance that that essentially was the casepresented by the plaintiff and the case in answer ol the defendant uponits pleadings with respect to that was substantially a denial. In thecircumstances attending the events of the day this information which wasgiven to the plaintiff's agent by De Silva the defendant's employee, as theDistrict Judge found, resulted in the subsequent action taken by theplaintiff in parting with its money and goods whereas if the defendant'sofficers had acted circumspectly such an incorrect statement would nothave been made. It was therefore not unreasonable for the District Judgeto have thought as he did that responsibility must be attributed to thedefendant. In whatever way one characterises this lapse on the part of thebank officials, whether as negligence or carelessness l r indifference, itdoes not seem to me that there can be any doubt upon the pleadings andupon the issues in the case that the defendant had to make good the lossthe plaintiff was called upon to bear which loss undoubtedly was attribut-able to the acts of the defendant's agent.
I must observe in passing that it would appear from the evidence thatthe defendant was not obliged to take back from National & GrindlaysBank this ‘late return cheque' as P1 was termed. If it chose to do that ina display of generosity towards National & Grindlays Bank, the plaintiff inmy view cannot be called upon to meet the cost of that generosity.
Taking the case as a whole I am of the view that the pleadings andissues were adequate for the purposes of giving the plaintiff the relief it
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Brooke Bond (Ceylon) Ltd. v. Gunasekera
71
sought and the answer to the issues before the District Judge which in myview were amply supported by the evidence also rendered it necessary(hat the plaintiff should have such relief. I find it difficult to characterise thefindings of the District Judge as unreasonable or the result which hereached as unwarranted. Indeed I would say that any other view takenhere in appeal to the effect that the defendant must succeed could hardlybe described as meeting the justice of the case.
I would therefore affirm the judgment of the District Judge and dismissthis appeal with costs.
VIKNARAJAH, J. -1 agree.
Appeal dismissed.