1. The O.A. filed by Axis Bank for recovery of a sum of Rs. 37,86,854/- stands allowed by the Tribunal below. The appellants are held liable for this amount along with simple interest @ 18% p.a, from 24.9.2009 onwards with costs. Aggrieved against this order, the appellants have filed the present appeal.

2. The appellant No. 2 is proprietor of appellant No. 1 concern. The sister of appellant No. 2, namely, Ms. Ritu Gera, was reportedly running business in China and was actively involved with her brother (appellant No. 2). Appellant No. 2 opened a current account in the name of appellant No. 1 with respondent Bank on 2.1.2004 and deposited the following amounts through seven different cheques drawn on foreign Banks :

Sr. No.Cheque No.DateDeposited onAmountBank Name

1.12012914.07.0625.0706USD 54000.00Citizen Bank

2.938931.07.0631.07.06CAD 59000.00Royal Bank of Canada

3.597325.08.0607.09.06USD 26191.00Hudson United Bank

4.299811.09.0623.09.06USD 31000.00Wachovia Bank

5.142501923.08.0623.09.06USD 62500.00Commercial Bank

6.8802228.09.0606.10.06EUR 171427.28Permanent TSB

7.988802.10.0606.10.06CAD 65000.81Royal Bank of Canada

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3. The cheque No. 120129 dated 14.7.2006 for USD 54000.00 drawn on Citizen Bank was deposited on 25.7.2006. The said cheque was returned in the month of August 2006 for the reasons of being fraudulent cheque.

4. The cheque No. 9389 dated 31.7.2006 for CAD 59000.81 was drawn on Royal Bank of Canada. This cheque was deposited and was sent for clearing and got credited in the accounts of the appellants on 29.8.2006. The account of Web Pro System & Services was credited with Rs. 23,88,737/-. A sum of Rs. 22,85,538/- was withdrawn out of this amount on various dates by the appellants. This cheque (No. 9389) drawn on Royal Bank of Canada was, however, found to be forged and debit of CAD 59000.81 was passed on to the respondent Bank. The cheque was returned on 9.10.2006 for the reason no account found on this location. Since the respondent Bank was liable to refund this amount to the Bank as per National Clearing Rules of Canada, it refunded the amount to the Canadian Bank.

5. The third cheque No. 5973 dated 25.8.2006 was deposited on 7.9.2006 for USD 26191.00 and was payable on Hudson United Bank. This cheque was also returned on 15.9.2006 due to the reason on account of internal compliance.

6. The fourth cheque No. 2998 dated 11.9.2006 for USD 31000.00 deposited on 23.9.2006 was drawn on Wachovia Bank and was returned on 15.9.2006 due to the reason refer to the maker.

7. The fifth cheque bearing No. 1425019 dated 23.8.2006 for USD 62500.00 drawn on Commercial Bank was also returned unpaid for the reason materially altered. Remaining two cheques were also returned for one reason or the other.

8. Faced with the above position, the respondent Bank took up the matter with the appellants through letters dated 9.10.2006, 11.10.2006 and 12.10.2006. As per the Bank, the appellants avoided accepting service of the said letters and were noncommittal to take any action for refund of the amount withdrawn from the account. The appellants also failed to produce the details of the overseas parties names, addresses and purpose for which the said cheques were received, along with documentary proof. Respondent Bank would allege that these were fraudulent act and Ms. Ritu Gera, sister of appellant No. 2, was equally involved in this fraudulent activity in connivance with the appellant. The Bank accordingly would plead that the appellant and others have cheated the Bank of a sum of Rs. 22,85,538/- by depositing the forged cheques for collection and by withdrawing the amount thereof. The Bank had also lodged a complaint with the police on 19.10.2006 pursuant to which FIR No. 361/07 was registered on 25.4.2007 at Lajpat Nagar Police Station, New Delhi and the police had seized documents. Pleading that an amount of Rs. 29,73,078/- was outstanding, including the principal amount with interest, the Bank had filed the O.A. claiming an amount of Rs. 37,86,854/-.

9. In response to the notice, the appellants appeared and filed written statement. The appellants have averred that in due course of their business appellant No. 1 had received a cheque of 59000 CAD from M/s Nile Traders, Uganda on 17.7.2006 which was deposited for clearance with the respondent Bank. The said cheque was cleared and credited in the account. Appellant No. 1 started proceeding on order of M/s Nile Traders, Uganda and purchased 1000 hard disks worth Rs. 20,50,000/- from M/s. Marks Marketing Pvt. Ltd. against two invoices of Rs. 10,25,000/- each. Appellant No. 1 claims that it had got orders from other companies as well but since the said cheques sent by the concerns got dishonoured, appellant No. 1 did not send any consignment to them.

10. As per the appellants, the respondent Bank had informed appellant No. 1 after 82 days of the date of deposit of cheque of 59000 CAD issued by M/s Nile Traders, Uganda was dishonoured. The appellants would urge that the Bank had earlier informed the appellant No. 1 that the cheque had been cleared and amount was credited in the account of the said appellant. It is only thereafter the appellant No. 1 had purchased 1000 drives worth Rs. 20,50,000/- besides incurring other expenses. The appellants would plead that the Bank otherwise had failed to furnish any document showing that the cheque was dishonoured. As per the appellants, the Bank had withheld an amount of Rs. 1,03,199.42 lying in their accounts. The appellants would accordingly plead that the Bank had acted negligently, besides pleading the deficiency in service on the part of the Bank. The appellants would deny the allegation of fraud or the fact that sister of appellant No. 2 was running business in China where the appellant No. 2 was actively involved. The appellants would point out that the police though had registered a case, but has not taken any action against the appellants. The appellants accordingly would dispute the claim of the Bank or that the Bank was entitled to recover any amount.

11. Both parties led evidence on the basis of their respective pleading. The Tribunal formulated three major issues one of which was whether there was any negligence or deficiency in service on the side of the Bank in dealing with the cheques. The appellant had also raised a plea of O.A. being barred by limitation. The Tribunal, after a detailed discussion, has held that the O.A. is not barred by limitation and was filed within three years. The Tribunal has also held that there was no negligence or deficiency in the service on the part of the Bank while dealing with the cheque in question and has accordingly held that the Bank is entitled to recover the amount claimed in the O.A. from both the appellants. The Tribunal, however, has dismissed the O.A. against the sister of appellant No. 2, Ms. Ritu Gera, impleaded as defendant No. 3 in the O.A. Aggrieved against this order, the appellants have filed the present appeal.

12. While issuing notice in this appeal, the appellants were directed to deposit 50% of the principal amount as determined by the Tribunal below. The appellants impugned this order by filing a writ petition before the High Court. The High Court disposed of the writ petition by directing the appellants to deposit Rs. 10 lacs in two instalments. This amount has accordingly been deposited and is being kept in a fixed deposit. This amount is to be appropriated by the Bank only subject to the orders being passed by this Tribunal in the present appeal.

13. When this appeal came up for hearing before this Tribunal on 26.10.2015, the Counsel for the appellants commenced his argument on an application which was not even listed before this Tribunal on the said day. The case was accordingly adjourned while imposing a cost of Rs. 2,000/-. On the next date, it was so noticed that an application was filed for placing on record the investigation report prepared by the police in the criminal case. The Counsel for the appellants was required to satisfy this Tribunal if investigation report will be admissible piece of evidence or if that report could be admitted in evidence at the stage of appeal. On request made by the Counsel, the case was adjourned to 12.11.2015. On this date, another application was filed seeking permission to place on record certain other documents. Notice was issued on this application. On that day, the Counsel for the appellants also prayed for time to move an application to seek permission for recording additional evidence. The case has seen some adjournments thereafter on the subsequent dates as well and in this manner the appeal is now heard along with four applications filed by the appellants.

14. The Counsel for the parties have been heard on the pending applications as well as in the main appeal. It would be appropriate to consider the prayer made in the applications first before considering the submissions made by the Counsel in the main appeal.

15. I.A. No. 942/2015 is filed under Order 41, Rule 27 , CPC read with Section 151, CPC and Sections 19(25) and 22 of the RDDBFI Act. The prayer in the application is to take on record the certified copy of the final police report. Another application (I.A. No. 901/2015) is also filed for placing on record some relevant import documents in respect of final report. Except for stating that investigation report is a very vital document and that there was no document before the Tribunal below to pronounce judgment against the appellant, prayer is made to take this investigation report on record. As already noticed, the Counsel for the appellant was required to satisfy this Tribunal as to how this report prepared by a police officer, which is his finding based on statement of the witnesses recorded, if any, would be admissible in evidence, that too, in the absence of the author of this report. The Counsel for the appellant would submit that the appellant may be permitted to examine the Investigation Officer to produce and prove this document.

16. A perusal of this application would also show that the Bank had filed an application for summoning the Investigation Officer, but said prayer was dismissed by the Tribunal on 8.9.2014. The Bank, however, was directed to file the final report. This order was not challenged either by the Bank or the appellants. It is accordingly prayed that this report may be taken on record as it was not placed on record by the Bank. Merely because the Tribunal below had directed the Bank to place this report on record would not make it relevant or admissible piece of evidence. It is for the appellants to satisfy this Tribunal that this investigation report is a relevant evidence and accordingly is admissible for being taken on record. There is no provision cited before me to show that this investigation report would be relevant piece of evidence in determining civil liability of the appellant. Needless would it be to mention that burden of proof in a criminal case is much more heavy as compared to such burden in civil proceedings. In order to succeed in a criminal case, the case is required to be proved beyond reasonable doubt, whereas, this onerous requirement may not be attracted to the civil proceedings. Otherwise also, the investigation report would be a view formulated by the Investigation Officer and his opinion based on the statement made before him by various witnesses. This opinionated report would not be relevant for deciding the liability of the appellants. Suppose, if this report had been against the appellant, then that would not have been taken to hold him liable. The prayer made in the application, therefore, cannot be allowed. This prayer for recording additional evidence is accordingly rejected.

17. Prayer in I.A. No. 943/2015 is to place on record certified copy of the pleadings along with the documents filed by the respective parties before the Tribunal below. Since these documents and pleadings are part of record of the Tribunal below, there cannot be any objection for taking these documents on record. Accordingly, the documents annexed with the application are taken on record.

18. The third application (I.A. No. 993/2015) is again filed under Order 41, Rule 27 , CPC for permitting the appellant to examine Mr. Ramesh Jain, Director, Marks Marketing (P) Ltd. to prove the receipts dated 1.9.2006 and 2.9.2006 to show that the hard disks were purchased by the appellants from M/s Marks Marketing (P) Ltd. and they have received Rs. 20,50,000/- from the appellants. Further prayer is to examine Mr. Akshay Verma of A.V. Enterprises to prove the courier receipt dated 4.9.2006 to show that the consignment was dispatched to Uganda.

19. In response to the notice issued, the Bank has filed reply raising a preliminary objection. It is stated that the appellants never felt the need to adduce such evidence before the Tribunal below nor such evidence was ever refused by the Tribunal. It is also stated that there is no reason stated in grounds of appeal in support of this plea and hence the appellants cannot be permitted to adduce this evidence, The respondent has referred to various applications filed by the appellants, which act is termed as sheer abuse of process of law. The respondent Bank has highlighted the fact that the appellants have been held liable to pay a sum of Rs. 80 lacs and the appellants are enjoying without discharging the liability for the last more than nine years. The respondent accordingly has opposed the prayer made by the appellants.

20. Order 41, Rule 27 , CPC invoked by the appellants regulates production of additional evidence at the appellate stage. Rule 27 Order 41, CPC states in the negative by providing that parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court and then goes on to carve out certain exceptions. Thus, the parties are not entitled to produce additional evidence at the appellate stage unless :

(a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or

(aa) the parties seeking to produce additional evidence, establishes that notwithstanding the exercise of due diligence, such evidence was not within his knowledge or could not, after the exercise of due diligence, be produced by him at the time when the decree appealed against was passed.

The above-noted sub-clauses of Rule 27(1) of Order 41, CPC deal with the situation where the appellant would seek permission to lead additional evidence pleading these two grounds which are available to a litigant. Besides, Rule 27(1)(b) of Order 41, CPC has left some discretion with the Appellate Court by providing that where the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, then the Appellate Court may allow such evidence or document to be produced, or witness to be examined. This provision of CPC casts an obligation on the Appellate Court to record reasons wherever additional evidence is allowed to be produced.

21. Rule 27 Order 41, CPC is as under:

"27. Production of additional evidence in Appellate Court-(1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. But if

(a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or

(aa) the parties seeking to produce additional evidence, establishes that notwithstanding the exercise of due diligence, such evidence was not within his knowledge or could not, after the exercise of due diligence, be produced by him at the time when the decree appealed against was passed, or

(b) the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, the Appellate Court may allow such evidence or document to be produced, or witness to be examined.

(2) Whenever additional evidence is allowed to be produced by an Appellate Court, the Court shall record the reason for its admission."

22. The Counsel for the appellants has not urged that the prayer to lead additional evidence is on the ground that the Tribunal below had refused to admit the evidence which ought to have been admitted. The case of the appellants is also not that it could not produce this evidence notwithstanding exercise of due diligence or that this evidence was not within his knowledge or that it could not after exercise of due diligence be produced by him at the time when the decree appealed against was passed. Counsel would submit that this is a case where the Appellate Court would require this evidence to be produced and witness to be examined to pronounce judgment or for any substantial cause.

23. Counsel would rely upon a judgment in the case of K. Venkataramiah v. A. Seetharama Reddy & Ors., 1963 (SLT Soft) 131=AIR 1963 SC 1526 in support of his plea. The Honble Supreme Court in this case has dealt with the power of Appellate Court to admit additional evidence and has explained the term any other substantial cause. In this regard, it is observed that under Order 41, Rule 27 (1), the Appellate Court has power to allow additional evidence not only if it requires such evidence to enable it to pronounce judgment", but also for "any other substantial cause. The Court has held that there may well be cases where even though the Court finds that it is able to pronounce judgment on the state of record as it is, and so it cannot strictly say that it requires additional evidence to enable it to pronounce judgment, but it still considers that in the interest of justice something which remains obscure should be filled up so that it can pronounce its judgment in a more satisfactory manner. Such a case will be one for allowing additional evidence for any other substantial cause under Rule 27(1)(b) of the Code. The Honble Supreme Court has also observed that such requirement of the Court is not likely to arise ordinarily unless some inherent lacuna or defect becomes apparent on an examination of the evidence. It may well be that the defect may be pointed out by a party, or that a party may move the Court to supply the defect, but the requirement must be the requirement of the Court upon its appreciation of the evidence as it stands. In this regard, the Honble Supreme Court has quoted the observations of Privy Council in the case of Parsotim Thakur v. Lal Mohar Thakur, AIR 1931 PC 143 , while discussing whether additional evidence can be admitted, and these are as under :

(17) It may be required to enable the Court to pronounce judgment, or for any other substantial cause, but in either case it must be the Court that requires it. This is the plain grammatical reading of the sub-clause. The legitimate occasion for the exercise of this discretion is not whenever before the appeal is heard a party applies to adduce fresh evidence, but when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent.

(18) As the Privy Council proceeded to point out:

It may well be that the defect may be pointed out by a party, or that a party may move the Court to supply the defect, but the requirement must be the requirement of the Court upon its appreciation of the evidence as it stands.

24. The Honble Supreme Court was dealing with the case where the High Court had confirmed the order passed by the Election Tribunal while dismissing Election Petition after allowing additional evidence. The order passed by the High Court was challenged on the ground that the judgment passed was vitiated by the error of law in that the evidence was admitted and considered by the High Court without complying the provisions of law. In this background, the Supreme Court considered the provisions of Order 41, Rule 27 (1)(b), CPC so far as the power of Appellate Court was concerned for permitting additional evidence. The Honble Supreme Court in the case was satisfied that the High Court allowed additional evidence to be admitted as it required such evidence either to enable it to pronounce judgment or for any other substantial cause within the meaning of Rule 27(1)(b) of Order 41 of the Code. The Honble Supreme Court thus was considering the scope of Rule 27(1)(b) and has recorded the observation noted above.

25. What would clearly emerge from this judgment is that it is the Court which is to see the requirement in this regard and permit additional evidence if it feels that it is required to enable the Court to pronounce judgment or for any other substantial cause. In either event it must be the Court which requires it. This has been held to be the scope of this provision. Importantly, additional evidence for any substantial cause can be admitted if on examination of the evidence as it stand shows some apparent inherent lacuna or defect. No such plea is even made by the Counsel before me. The Counsel has pleaded that additional evidence is needed to enable this Tribunal to pronounce judgment. The examination of these witnesses is only for substantiating the defence of the appellants which they ought to have led at the stage of trial. There is no plea raised as to why it could not be done. There is clear want of due diligence on the part of the appellants. The additional evidence now sought to be placed on record is that which could be taken in exercise of discretion of this Tribunal and if it is felt that this is in any manner necessary or needed for to enable this Tribunal to pronounce judgment. As has been held by the Honble Supreme Court, such requirement is not likely to arise ordinarily unless some inherent lacuna or defect becomes apparent. No such inherent lacuna or defect is highlighted for which there would be any need or requirement to adopt this extraordinary course. This Tribunal does not see any requirement of additional evidence either to pronounce judgment or for any other substantial cause. Accordingly, the prayer made in the application is misconceived and, therefore, rejected.

26. It can be noticed that the Counsel for the appellants has primarily concentrated in making challenge to the finding of fraud returned by the Tribunal below, by urging that the appellants had taken action to supply material once their account was credited with the amount of cheque. This plea thus is that the appellants changed their position by resorting to purchase of the material from the market which they supplied to the party issuing the cheque. The items were supplied and so the appellants changed their position in this manner. In this background, the plea is that the appellants cannot be liable for restitution of this amount as they have not gained anything or has not obtained any undue enrichment.

27. Counsel half-heartedly challenged the finding returned by the Tribunal on the plea raised by the appellants that the O.A. was barred by limitation. The Tribunal below has held that the O.A. filed on 24.4.2001 was well within three years from the date of cause of action being 9.10.2006 when the cheque was returned. The cheque in question was deposited on 31.7.2006 and the other cheques were also deposited between 25.7.2006 and 6.10.2006. The cheque was credited in the account of the appellant on 29.8.2006. The appellants started withdrawing the amount from their account thereafter. On 9.10.2006, cheque was returned. The appellants were informed on the same date followed by communications dated 11.10.2006 and 12.10.2006 for refund of the amount. The cause of action thus arose for the Bank to proceed against the appellants only when the cheque was returned on 9.10.2006. The Tribunal below, therefore, has rightly found that the O.A. was filed within three years of arising cause of action and thus was not barred by limitation. The finding of the Tribunal in this regard is supported by material and evidence on record and does not call for any interference.

28. The Counsel for the appellants would urge that it is because of the negligence and deficiency in service on the part of the Bank that the appellants changed their position and thus the appellants cannot in law ordered to restitute the amount which they spent on procuring the items for supplying the same to the party which issued the cheque. Counsel would contend that the finding returned by the Tribunal below that the conduct of the appellants was fraudulent or suspicious is without any evidence on record. Even the cheque alleged to have been returned or dishonoured was not placed on record. The Counsel for the appellants made strenuous effort to place on record copy of the investigation report by the police officer in the FIR lodged by the Bank to urge that the allegation of fraud is uncalled for. Counsel would contend that the investigation in the criminal case would clearly negate the allegation of fraud and if it had not been so, then police could have proceeded against the appellants.

29. I have already considered and rejected the prayer of the appellants for taking on record this investigation report by way of additional evidence. I am also not impressed with the submission that there is no sufficient material on record for this Tribunal to return a finding or that there is a need to record evidence, or any additional evidence to remand the case back to the Tribunal below to record any additional evidence.

30. The admitted facts on record are that the appellants had deposited the cheque bearing No. 9389 drawn on Royal Bank of Canada statedly issued by Nile Traders, Uganda. As per the Bank, the said cheque was found to be forged and by the time this report was received from Royal Bank of Canada, the amount had been credited into the account of the appellants out of which, allegedly, an amount of Rs. 22,82,538/- was withdrawn by the appellants. The appellants had opened the account with the Bank on 2.1.2004. The Bank could not produce the original documents as these were seized by the Investigating Officer in a criminal case. The Bank, however, produced on record AW 1/2 to AW 1/12 which were copies of cheques and cheque return memos. There is not much dispute that this cheque 9389 drawn on Royal Bank of Canada was found to be a forged one. The amount of the cheque otherwise had been credited and passed on to the appellants.

31. To allege that this was not an innocent act on the part of the appellants and would show connivance or intent to defraud, the Bank would make reference to the other six cheques deposited by the appellants which were also found forged. No amount had been credited in the accounts of the appellants, except for the cheque in question. The Counsel for the Bank would allege that this in itself would be enough to show the connivance of the appellants in committing fraud with the Bank by depositing number of cheques which were forged. The Counsel for the appellants, on the other hand, would urge otherwise to say that this would be an indication of the appellants being innocent in the entire episode as they did not act in any of the cases where payment of the cheques had not been remitted to their account. As per the Counsel, the cheque was cleared and credited in the account of the appellant and only then appellants proceeded to purchase 1,000 hard disks valued at Rs. 20,50,000/- from M/s. Marks Marketing Pvt. Ltd. The appellants would allege that the Bank informed them about this cheque being dishonoured after 82 days of deposit. In August, the Bank had informed the appellants that the cheque had been cleared and the amount credited to their account. Believing this, the appellants had purchased the material. Appellants would submit that the Bank did not furnish any document to show dishonour of the cheque. The Counsel submits that the Bank could be expected to be vigilant to credit the cheque when it was aware that other cheques had been or were being returned with different remarks. The appellants accordingly would say that the Bank had acted negligently showing deficiency in service, to challenge the finding returned by the Tribunal below.

32. In support of his plea, the Counsel for the appellants has relied upon the case of Indian Overseas Bank v. Industrial Chain Concern, 1989 (SLT Soft) 430 : I (1990) BC 103 (SC) : (1990) 1 SCC 484. The Honble Supreme Court in this case has considered the issue of Banks negligence in receiving cheque for its customer in the light of Section 131 of the Negotiable Instruments Act. The Court has primarily considered the aspect of negligence on the part of the Bank while opening the account besides considering negligence in collecting the cheques. As is held in this case, the Bank normally has an obligation to collect the customers cheques paid into his account. The Court has observed that the Bank acts basically as mere agent or conduit pipe to receive payment of the cheques from the Banker on whom they are drawn and to hold the proceeds at the disposal of its customer. Unless crossed, the Banker himself is the holder for value. The Bank may be a sum collecting agent or it may take as holder for value or as holder in due course. A Banker receiving instruments paid in for collection and credit to customers account may collect solely for a customer or for himself or both. Where he collects for the customer he will be liable in conversion if the customer has no title. However, if he collects in good faith and without negligence he may plead statutory protection under Section 131 of the Act.

33. The Court has further held that to enable a Bank to avail the immunity under Section 131 as a collecting Banker he has to bring himself within the conditions formulated by this section. Otherwise he is left to his common law liability for conversion or for money had and received in case of the person from whom he took the cheques having no title or defective title. The conditions are :

(a) that the Banker should act in good faith and without negligence in

(b) that the Banker should receive payment for a customer on behalf of him and thus acting as a mere agent in collection of the cheque and not as an account holder,

(c) that the person for whom the Banker acts must be his customer, and

(d) that the cheque should be one crossed generally or especially to himself.

The receipt of the payment contemplated by this section is one from the drawee Bank. As per the Supreme Court, it is settled law that the onus of bringing himself within the section rests on the Banker. The Court has also spoken about the test of negligence for the purpose of Section 131 of the Negotiable Instruments Act to be whether the transaction of paying in any given cheque coupled with the circumstances antecedent and present is so out of the ordinary course that it ought to arose doubts in the Bankers mind and cause him to make inquiries. The Banker is bound to make inquiries when there is anything to rouse suspicion that the cheque is being wrongfully dealt with in being paid into the customers account. It is further held that the Banker is not called upon to be abnormally suspicious. As general rule a Banker before accepting a customer, must take reasonable care to satisfy himself that the person in question is of good reputation; and if he fails to do so he will run the risk of forfeiting the protection given by Section 131 of the Act. Reasonable care will depend on the facts and circumstances of the case. From this, Counsel would contend that the Bank ought to have been more cautious when other cheques deposited by the appellants were returned because of various reasons.

34. It is not a case where one odd cheque deposited by the appellants has been found dishonoured. One cheque after the other and seven in all deposited by the appellants drawn on different Banks were returned dishonoured with reasons which would indicate fraud. Was it a coincidence that all the cheques deposited by the appellants were actuated with fraud How is that only the appellants have dealing with parties who issued cheques having no accounts or cheques which were altered It cannot pass as innocent act. The appellants have attempted to pass burden on the Bank to be vigilant without realising as to what could be expected from them. The submission that return of cheques could have made the Bank vigilant can be urged if the Bank had credited the amounts of all the cheques. There is no want of due diligence on the part of the Bank. The first cheque dated 14.7.2006 was deposited by the appellants with the Bank on 25.7.2006. This was returned in the month of August, 2006 for the reason of its being fraudulent. The cheque in question was returned on 29.9.2006 for the reason mentioned no account found on this location. The other cheques were deposited on 23.9.2006 and 6.10.2006. Thus, these cheques were deposited subsequent to the crediting of cheque No. 9389 and the submission that dishonour of these cheques could have put the Bank a little more cautious really cannot be urged in this background.

35. In regard to the applicability of Section 131 of the Negotiable Instruments Act, the Counsel for the appellants has referred to the case of Kerala State Cooperative Marketing Federation v. State Bank of India & Ors., II (2004) BC 1 (SC) : I (2004) SLT 826 : (2004) 2 SCC 425. The Court in this case has held that for proving that the Bank acted in good faith without negligence, the onus lies on the Bank claiming protection under Section 131 of the Act. In this regard only reference is made to the case of Brahma Shum Shere Jung Bahadur & Anr. v. Chartered Bank of India, Australia and China & Ors., AIR 1956 Cal. 399 .

36. On the other hand, the Counsel for the respondent would rely upon the case of Mahabir Kishore & Ors. v. State of Madhya Pradesh, 1989 (SLT Soft) 347 : AIR 1990 SC 313 . The Supreme Court in this case has considered the provisions of Section 72 of the Indian Contract Act to examine the ingredients of unjust enrichment. The Court has held that the principal of unjust enrichment requires: first, the defendant has been enriched by the receipt of a benefit; secondly, that this enrichment is at the expense of the plaintiff; and thirdly, that the retention of the enrichment be unjust. This justifies restitution. The enrichment may take the form of direct advantage to the recipients wealth such as by the receipt of money or indirect one for instance where inevitable expense has been saved. Relying on this, Counsel would contend that clearly the liability of the appellants would fall under these parameters and thus they are required to restitute unjust enrichment which they have obtained.

37. In short, the submission by the Counsel for the appellants is that the Bank is not entitled to seek protection under Section 131 of the Negotiable Instruments Act and this also is not a case of unjust enrichment. The plea, of course, is that the appellants have not got this money for their own but have spent the same in procuring the material which they supplied to the company issuing the cheque.

38. Almost identical issue arose before this Tribunal in Appeal No. 185/2014 titled as Adya Global Exports Inc. & Anr. v. Canara Bank, decided on 9.10.2014. The issue in the said appeal also related to payment of foreign cheque which was deposited by the appellant therein under Foreign Outward Sight for Collection (FOSC). The cheque had been issued by a foreign company. The proceeds were credited in the current account of the appellant on 8.12.2008. Subsequently, the foreign department of the Bank received an information from the corresponding Bank in the USA that the cheque presented for encashment was an altered one. The foreign department was accordingly informed vide its letter dated 5.8.2009 the said FOSC was returned unpaid with the reason Altered Cheque. Like in the present case, Canara Bank in the case under reference requested the appellant firm to pay the said amount for which it issued a legal notice. The appellant failed to pay the amount. The Bank lodged FIR also and then filed O.A. for recovery of the said amount.

39. The issue of restitution under Section 72 of the Contract Act and the one regarding protection available to the Bank under Section 131 of the Negotiable Instruments Act arose and was considered by this Tribunal in detail on the basis of various judgments. The Counsel appearing for the appellant in the case of M/s. Adya Global Exports (supra), had placed very heavy reliance on the judgment of United Bank of India v. M/s. A.T. Ali Hussain & Co., a Firm & Ors., AIR 1978 Cal 169 . Calcutta High Court in this case has considered the law in England as to restitution of money or property to a person who paid or delivered the same to another by mistake. The Court has noticed that law in England is based on equitable consideration. Referring to the case of Kelly v. Solari, (1841) 9 M and W 54, the Court in this case has observed that if the amount is paid under impression of the truth of a fact which is untrue, it may, generally speaking, be recovered back, however, careless the party paying may have been, in omitting to show due diligence to enquire into the fact. In such a case the receiver was not entitled to it, nor intended to have it. This principle has been followed by the Privy Council in the case of Imperial Bank of Canada v. Bank of Hamilton, 1903 AC 49. It, therefore, follows that when a case comes within the purview of the law laid down in Kellys case (supra) the plaintiff should succeed notwithstanding that the receipt of the money also acted in good faith and parted with the same to another person without a chance of recovery of the same. The rule laid down in Kellys case (supra) thus is that if anybody acting under a mistake pays money or delivers any property to another, the latter must repay or deliver the same to the former.

40. The Courts have held that it is indisputable that if money is paid under a mistake of fact and is re-demanded from the person who received it before his position has been altered to his disadvantage, the money must be repaid. Thus, there is no scope of application of doctrine of estoppel which was disapproved in Kellys case (supra). Otherwise, the Calcutta High Court in the case United Bank (supra) has taken note of Section 72 of the Indian Contract Act, which provides that a person to whom money is paid, or anything delivered, by mistake or coercion, must repay or return it. The High Court has observed that there is no indication in this section as to the application of doctrine of estoppel. The view expressed in some of the judgments was that Section 72 of the Contract Act is to be read subject to doctrine of estoppel. The High Court then considered this question wither the said section is to be read as subject to doctrine of estoppel or should it be construed on the basis of the doctrine of equitable restitution notwithstanding the conduct of the parties. It is held that prima facie, this section comprises within it the principle of English law without any reservation or limitation.

41. In Soloman Jacob v. National Bank of India Ltd., Aden, AIR 1917 Bom. 119 , the High Court has viewed that Section 72 of the Contract Act is to be read subject to doctrine of estoppel. In Adya Global Exports case (supra) this Tribunal has considered the provisions of Section 72 of the Indian Contract Act in detail to see if this section would be subject to doctrine of estoppel or should it be construed on the basis of the doctrine of equitable restitution notwithstanding the conduct of the parties. This Tribunal has held as under :

.... Under the English Law, the applicability of doctrine of estoppel stands excluded. The Court found difference between the English Law and the Indian Law, which difference was indirectly pointed out by the Privy Counsel in the case Shiba Prasad Singh v. Srish Chandra, AIR 1949 PC 297 . The interpretation of Section 72 of the Contract Act as made in the case of Jagdish Prosad v. Produce Exchange Corpn., AIR 1946 Cal 245 was approved by the Privy Council in Shiba Prasad Singhs case (supra). What is observed in Jagdish Prosads case (supra) is as under:

It may be well to add that Their Lordships judgment does not imply that every sum paid under mistake is recoverable no matter what the circumstances may be. There may in a particular case be circumstances which disentitle a plaintiff by estoppel or otherwise.

Thus, it cannot be said that every sum paid under a mistake is recoverable no matter what the circumstances may be. There may in a particular case be a circumstance which dis-entitles a plaintiff by estoppel. It may need a notice here that payment made by mistake in Section 72 of the Contract Act must refer to a payment which was not legally due and which could not have been enforced. The mistake is in thinking that the money paid was due when in fact it was not due. Even if a payment is made under mistake, it is a question to be decided by the Court whether mistake falls within the ambit of this section. This is what would emerge from United Banks case (supra) relied upon by the Counsel for the appellant.

Section 72 of the Contract Act makes no distinction between mistake of facts or mistake of law. However, for basing a claim under the Section there should be pleading with regard to legal injury or prejudice to the plaintiff, unless this is pleaded there is no cause of action. Otherwise any payment made, whether voluntarily or otherwise, under a mistake either of law or fact can be recovered once the mistake is established (See Union of India v. Mrs. Sarojini Rajah, 1975 Tax LR 410). It seems reasonable settled position that the money paid under a mistake induced by fraud of third party may be recovered. The legislative object of Section 72 of the Contract Act is to prevent unjust enrichment and ensure refund or return of the amount. The principle of unjust enrichment requires first, that the defendant has been enriched by the receipt of the benefit, secondly that the enrichment is at the expense of the plaintiff and thirdly, that retention of enrichment be unjust (Mahabir Kishore & Ors. v. State of Madhya Pradesh, AIR 1990 SC 373 refers). This then would be the law which would emerge from Section 72 of the Contract Act. Applying the legal position that would emerge from principles noted above, it can be said that the payment was made to the appellant under mistake of fact that it was due but actually it was not due. The appellant has certainly gained unjust enrichment and which is at the expense of the respondent Bank. The retention of this enrichment certainly would be unjust. Though the applicability of the doctrine of estoppel may not be disputed, but it is a question to be decided by the Courts if the mistake falls within the ambit of section. The Bank has made out a case that sum paid by it under mistake is recoverable."

42. Though the Counsel for the appellants would contend that finding of fraud attributed to the appellants is based on no evidence yet the Counsel for the Bank has tried to make an attempt to refer to the documents on record to substantiate the same. To deny right of restitution, the Counsel for the appellants has referred to the bills of M/s Marks Marketing Pvt. Ltd. showing purchase of 1,000 hard disks valued at Rs. 20,50,000/-. The Counsel for the respondent Bank would refer to Bill No. MMNP/413/2005 and MMNP/384/2005 copies of which are available on record. Counsel for the appellants would contend that the date is not of 2005 but 2006 as it has not clearly appeared on the copies of the bills. In any case, the submission by the Counsel for the appellants is that the invoices of Air Cargo Unit, IGI Airport, New Delhi makes reference to Invoice No. 103 dated 4.9.2006 and this cannot be related to the bills which are being relied upon by the appellants. Counsel would also refer to the rules governing the Clean Cheque Collection in Foreign Currency. As per the Counsel, the Bank had issued instructions in regard to Foreign Cheque Collection - Fraudulent Cheques. To clarify the position of the Bank to reclaim the amount, the Counsel would make reference to the following instructions issued by the Bank :

in some cases there was a clear intention by the customer to commit fraud. In view of the increase in number of such fraudulent cheques, we would like to again draw your attention to our circular number Treasury/IB/2004/008 dated 1st September, 2004, so as to understand the collection mechanism of foreign cheques. We would like to reiterate that, although there is a return cycle/cooling period for foreign currency cheques, even then the credits provided by the correspondent Banks are with recourse. The cheques can be returned even after the cooling period for reasons like fraudulent cheques/stop payments/refer to drawer clauses.

43. Thus, the Counsel would contend that mere crediting of cheques would not disentitle the Bank to reclaim this amount which was paid on account of cheque being found defective or fraudulent one. It is in this background of factual position the issue of protection available to the Bank under Section 131 of the Negotiable Instruments Act may have to be considered. Section 131 of the Negotiable Instruments Act is as under :

131. Non-liability of Banker receiving payment of cheque-A Banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such payment.

[Explanation I-A Banker receives payment of a crossed cheque for a customer within the meaning of this section notwithstanding that he credits his customers account with the amount of the cheque before receiving payment thereof.]

[Explanation II-It shall be the duty of the Banker who receives payment based on an electronic image of a truncated cheque held with him, to verify the prima facie genuineness of the cheque to be truncated and any fraud, forgery or tampering apparent on the face of the instrument that can be verified with due diligence and ordinary care.]

Thus, a Banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specifically to himself shall not incur any liability to the true owner of the cheque by reason only on having received such payment in case the title to the cheques proves defective. This Tribunal has considered the judgment in the case of Indian Overseas Bank (supra) and has observed as under:

As noticed in this case, Section 131 of the Negotiable Instruments Act corresponds to Section 82 of the Bills of Exchange Act, 1882 of England which was repealed by the Cheques Act, 1957. The protection is now given by Section 4 of the Cheques Act, 1957. The Honble Supreme Court has, therefore, taken note of certain English decisions where the Bank were held negligent and the protection under Section 82 of the Act was deprived. The Court has noticed the judgment in the case of Capital and Countries Bank v. Gordon, 1903 AC 240, where the House of Lords accepted the position that the Bank acts basically as a mere agent or conduit pipe to receive payment of the cheques from the Banker on whom they are drawn and to hold the proceeds at the disposal of its customer. As an agent of customer for collection, he is bound to exercise diligence in the presentation of cheques for payment within a reasonable time. If a Bank fails to present a cheque within a reasonable time after it reaches him, he is liable to customer for loss arising from delay. A Bank receiving instruments paid in for collection and credit to a customers account may collect solely for a customer or for himself or both. Where he collects for the customer, he will be liable in conversion if the customer has no title. However, he collects in good faith and without negligence, he may plead statutory protection under Section 131 of the Act.

44. In the present case, there is no doubt the Bank was collecting the cheque merely as an agent of its customer. The Honble Supreme Court in the case of Indian Overseas Bank (supra) has considered the aspect of immunity under Section 131 of the Negotiable Instruments Act as under :

25. To enable a Bank to avail the immunity under Section 131 as a collecting Banker he has to bring himself within the conditions formulated by the section. Otherwise he is left to his common law liability for conversion or for money had and received in case of the person from whom he took the cheques having no title or defective title. The conditions are: (a) that the Banker should act in good faith and without negligence in receiving a payment, that is, in the process of collection, (b) that the Banker should receive payment for a customer on behalf of him and thus acting as a mere agent in collection of the cheque and not as an account holder, (c) that the person for whom the Banker acts must be his customer, and (d) that the cheque should be once crossed generally or especially to himself. The receipt of payment contemplated by the section is one from the drawee Bank. It is settled law that the onus of bringing himself within the section rests on the Banker. In Capital and Countries Bank v. Gordon (supra) we have seen, the conception of a collecting Banker was that of receiving the cheque from the customer, presenting it and receiving the money for the customer, and then, and not till then, placing it to the customers credit, exercising functions strictly analogous to those of a clerk of the customer sent to a Bank to cash an open cheque for his employer, if the Bank performs these functions in course of his business, in good faith and without negligence he will be within Section 131 of the Act.

45. This enables the Bank to avail immunity under Section 131 of the Negotiable Instruments Act, it is to bring itself within the conditions formulated under this section. The test of negligence for the purpose of Section 131 of the Negotiable Instruments Act is whether the transaction of paying in any given cheque coupled with the circumstances antecedent and present is so out of the ordinary course that it ought to arose doubts in the Bankers mind and cause him to make inquiries (See:Lyods Bank Ltd. v. E.B. Savory and Co., 1933 AC 201, 1932 All ER Rep 106, 38 Com. Cas. 115; Marfani and Co. Ltd. v. Midland Bank Ltd., (1968) 2 All ER 573;Arab Bank Ltd. v. Ross, (1952) 1 ALL E.R. 709 and Karak Rubber Co. Ltd. v. Burden, (No. 2) (1972) 1 All E.R. 1210). The Banker is bound to make inquiries when there is anything to arose suspicious that the cheque is being wrongfully dealt with in being paid into the customers account. The Banker, however, is not called upon to be abnormally suspicious. (See: Paramount Estates Ltd. v. National Provincial Bank Ltd., (1945) 173 LT 344). In Brahma Shum Shere Jang Bahadurs case (supra), the High Court while considering Section 131 of the Negotiable Instruments Act has observed that "the protection under this section is afforded only if the Banker has received payment in good faith and without negligence, otherwise the Bank which receives payment on a forged cheque or a cheque to which the customer has no title or any defective title, liable in action for conversion to the true owner.

46. Appreciating the submissions in the light of the legal position noticed above, it is clear that there was no negligence which can be attributed to the Bank. The Bank was acting as a collecting agent of the appellants for the cheque which they deposited. 1 am not impressed with the plea that the appellants had deposited several cheques which were found fraudulent but it did not supply the material as the amounts were not credited to the account and that it should be taken as circumstance to indicate want of negligence on the part of the Bank. This submission can equally rebound on the appellants. The appellants are the one who were instrumental in depositing not one but seven cheques which were found to be fictitious false and fraudulent. The appellants were informed in the month of October, but still some cheques were deposited. The cheques were found to be counterfeit and altered. It is for the appellants to show that they did not do it. If the appellants are innocent, they will have to recover this amount from the person issuing these fraudulent cheques. It will be for the appellants to recover this amount from the company which had issued this cheque and the Bank which was a mere collecting agent cannot be held liable or responsible for the cheque against which payment was made by a genuine mistake. The appellants have not taken any action against the persons issuing the cheques. Such a mistake could not have been easily detected even if the Bank had been cautious enough. Mere fact that the cheque was encashed and money received would show that there was no negligence on the part of the Bank. The instruction regarding payment and seeking refund of the amount paid wrongly would also come to the rescue of the Bank. This seems to be fair. Once the foreign Bank had demanded this money back, the Bank had no option but to honour it. So, mere fact that cheque was encashed and money received cannot help the cause of the appellants to escape this liability. The only proper remedy available to the appellants is to take action against the importer of the material. The Bank was only collecting the payment against the cheques in its capacity as agent of its customer. There is nothing on record to indicate if the appellants had taken any action against the importer who had issued these cheques. Accordingly, I am of the considered opinion that no case for interference in the impugned order is made out.

47. The appeal is without any merit and is, therefore, dismissed.

Appeal dismissed.