' This is a suit for the recovery of Rs.1,02,382.70 filed by the plaintiff, a partnership firm registered under the Partnership Act and dealing in wholesale cloth business. Defendant No.1 was Sarhad Bank Limited but later on Sarhad Bank Limited was merged into the Allied Bank of Pakistan and, by order dated 12-12-1983, Allied Bank of Pakistan 'was substituted in place of Sarhad Bank Limited as defendant No.1. Defendant No.2, Abdul Wahid is an ex-cashier of Sarhad Bank Limited. Defendants Nos.3 and 4 were joined in the plaint as brokers working in the plaintiff firm. It is the case of the plaintiff that they used to supply cloth on credit basis to their customers at Sukkur through brokers, defendants Nos.3 and 4, that these brokers used to visit plaintiff's customers at Sukkur for the purposes of getting orders and the bank drafts, cheques and also cash used to be collector by the brokers for handing over the same to the plaintiff firm at Karachi towards payments of their outstanding balances of credit purchases. It is averred on behalf of the plaintiff that they used to maintain the accounts of purchases and payments made by their customers at Sukkur in their books of accounts and during the first week of September, 1972, the plaintiffs contacted on telephone one of their customers namely Messrs Ismial Brothers at Sukkur and demanded the payment of the outstanding balance against the said customer but the customer told them that they had already handed over to the defendants Nos.3 and 4 bank drafts amounting to Rs.6,895.60 made out in the name of plaintiff firm towards the outstanding balance. Thereafter the plaintiff checked from the drawee banks i.e. Premier Bank and Messrs Muslim Commercial Bank Limited about the payment of the said bank drafts, who informed the plaintiff that the said bank drafts have been encashed through Sarhad Bank Limited. Thereafter the plaintiff made enquiries from Sarhad Bank Limited, who informed, according to the plaintiff, that defendant No.3, Abdul Ghaffar, had opend a current account in the name of the plaintiff firm and the said account was being operated in the name of the plaintiff by defendant No.3. Thereafter, according to the plaintiff, the plaintiff made detailed enquiries from the customers at Sukkur and then it was disclosed to the plaintiff that defendants Nos.3 and 4 had collected bank drafts amounting to Rs.96,982.70, details of which were given in the statement filed as Annexure 'A' to the plaint Exh. 7/3. The plaintiff's case is that the A/c. No.429 is Sarhad Bank Limited in the name of plaintiff firm was opened by defendant No.3, Abdul Ghaffar, and he was introduced as "Ismail" by defendant No.2, at that time the cashier of Sarhad Bank Limited and in the facts and circumstances it is apparent that Sarhad Bank Limited was negligent and careless in opening the account and in allowing defendants Nos.3 and 4 to defraud the plaintiff of a sum of Rs.96,982.70. After claiming interest of Rs.5,500 at the rate of 12 per cent per annum, the present suit was filed for the recovery of Rs.1,02,382.70 against all the four defendants including Sarhad Bank Limited.
2.A written statement was filed by Sarhad Bank Limited (now Allied Bank of Pakistan), and in para.6 of the same it was averred that A/c No.429 was opened in usual course of banking by one "Ismail" under the trading name of Messrs Ismail Jamal and Co., as a proprietary concern and not in the name of the "plaintiffs". It was further averred that in usual course of banking business in A/c No.429 several drafts were deposited and proceeds realized and were credited in the said account and the account-holder operated this account in usual course of business withdrew and deposited the amounts by cheques and pay slips. According to defendant No.1, they had no knowledge of any collusion or conspiracy between the defendants Nos.3 and 4 and that according to their knowledge, there was no conspiracy between defendants Nos.2,3 and 4. Carelessness/negligence on the part of the bank was denied. According to the bank, A/c No.429 was opened and operated in accordance with the banking rules and practice and there was no overt act on the part of the bank, which could, otherwise, be termed as carelessness or negligence. In para.6 of the written statement of defendant No.1, as stated earlier, it has been averred that A/c No.929 had been opened by one Ismail. However, in para.10 of the written statement of defendant No.1 it was stated that defendant No.2 (the ex-cashier of Sarhad Bank Limited) knew personally the defendant No.3 (Abdul Ghaffar) and had, therefore, introduced him in his personal capacity and not as an official of the bank. Defendants Nos.3 and 4, though served, did not appear and remained ex parte.
However, defendant No.2 engaged an Advocate and also filed a written statement. In para.2 of his written statement defendant No.2 stated that defendant No.3 Abdul Ghaffar maintained the A/c No.429 in his trading name with defendant No.3 as sole proprietor. It was further stated in para.5 of his written statement that defendant No.3 was known to defendant No.2 since 1968/1969 and that on the request of defendant No.3, the introduction was made in respect of opening of A/c No.429 by defendant No.3. In para.6 of his written statement it is further admitted that A/c No.429 had been opened by defendant No.3, Abdul Ghaffar. The following issues suggested by the learned counsel for the plaintiff and defendants Nos.1 and 2 were adopted by the Court by order dated 17- 4-1974:-
(1) Whether account was opened by the defendant No.3 with the defendant No.1 in the trading name of Esmail Jamal and Co. as a proprietory concern or in the name of the 'plaintiff'? (para. 7 of the plaint and para. 6 of written statement of defendant No.1)
(2) Whether the operation of account was done in due course of normal banking business or the defendant No.1 acted negligently, carelessly and mala fidely in allowing the defendant No.3 to open and operate the account? (para. 8 of the plaint and paras. 7 and 8 of the written statement of the defendant No.1).
(3) Whether the defendant No.1 was required, under the Banking law, to make full, proper and necessary enquiries about defendant No.3, before permitting him to open an account under a trading name? If not whether opening of such an account was in normal due course of business and the defendant No.1 was in no way negligent and careless? (para. 12 of the plaint and para. 11 of the written statement of the defendant No.1).
(4) Whether the defendant No.3 was introduced by the defendant No.2 in his personal capacity or on behalf of defendant No.1? (para. 9 of the written statement of defendant No.1 and para. 5 of defendant No.2).
(5) Whether the drafts and pay orders were received by the defendant No.9 at Sukkur and forwarded to defendant No.3 who in turn handed over to the cashier or the plaintiff's firm? If not, what is its effect? (as per paras. 3 and 8 of the written statement of defendants Nos.3 and 4).
(6) Whether the defendant No.2's services in defendant No.1 were terminated due to forgery and fraud? If not what is its effect? (para. 10 of the plaint).
(7) Whether the defendants Nos.3 and 4 committed breach:
(i) of their agency and appropriated the amount to themselves, causing loss to the principal, i.e. the plaintiff? If the answer is in affirmative, then,
(ii) whether the defendants Nos.1 and 2 were in conspiracy and collusion with the defendants Nos.3 and 4?
(8) Whether any of the defendants are liable to pay the suit amount? If so, whether the liability is joint or several?
(9) What should be the decree, if any?
3. It has already been observed that defendant No.2 had filed a written statement but thereafter no appearance has been made on behalf of the defendant No.2. Defendants Nos.3 and 4 are ex parte.
Suit has been defended by the defendant No.1 bank. On behalf of the plaintiff, Abdul I,atif (Exh. 7) attorney and Accountant of the plaintiff firm, gave evidence and produced a general power-of- attorney given by the plaintiff firm in his favour, as Exh. 7/1, certificate of registration of plaintiff firm as Exh. 7/2 and a statement of amounts with particulars, which according to the plaintiff were misappropriated, as Exh. 7/3. On behalf of the defendant No.1 bank, one Ansar Azam, Manager of the Merewether Tower Branch of Allied Bank of Pakistan since August, 1983, Exh. 8, gave evidence and produced the statement of account of A/c No.429 of Messrs Ismail Jamal & Co. maintained in the Merewether Tower Branch of defendant No.1 as Exh. 8/1, photostat copy of the account- opening-form dated 16-4-1971 of A/c No.429 as Exh. 8/2, copy of legal notice dated 15-11-1972 on behalf of the plaintiff addressed to defendant No.1 bank as Exh. 8/3 and reply of the bank's Advocate dated 21-11-1972 as Exh. 8/4. As stated earlier, no one has appeared on behalf of defendants Nos. 2, 3 and 4 and no evidence has been led on their behalf. I have heard the arguments of Mr. S.Ishtiaq Ali, learned counsel for the plaintiff and Mr. Tahir Hussain, learned counsel for defendant No.1 bank.
4. Issue No.1 is whether the account i.e. A/c No.429 was opened by the defendant No.3 with the defendant No.1 bank in the trading name of Ismail Jamal & Co. as a proprietary concern or in the name of the plaintiff. Exh. 8/2 shows that one Ismail had opened the account in the name of Messrs Ismail Jamal & Co. as the sole proprietor. An attempt had been made by Mr. Tahir Hussain, learned counsel for defendant No.1, to argue that the account had not been opened by defendant No.3, whose name is Abdul Ghaffar, but by one Ismail. However the stand taken by the defendant No.1 bank in their written statement as well as in their reply dated 21-11-1972 Exh. 8/4 clearly shows that even according to the defendant No.1 bank the A/c No.429 had been opened by Abdul Ghaffar.
Reference has already been made to para.10 of the written statement by defendant No.1 bank, in which it is mentioned that the defendant No.2, the ex-cashier of Sarhad Bank Limited, knew personally the defendant No.3, Abdul Ghaffar, and therefore introduced him. In Exh. 8/4, the reply of the defendant No.1 bank to the legal notice given on behalf of the plaintiff had also taken this position. In para.2 of Exh. 8/4 it is mentioned as follows:- "It is, however, correct that a current account No.429 was opened by one Abdul Ghaffar in normal course of business in the name of Messrs Ismail Jamal & Co., a proprietary concern."
' The evidence on record, therefore, establishes that A/c No.429 was opened by defendant No.3, Abdul Ghaffar, with defendant No.1 bank in the name of Ismail Jamal & Co. as a proprietary concern but in the account-opening-form he has not shown himself as Abdul Ghaffar but has shown himself as Ismail and has also signed as Ismail. Issue No.(1) is decided accordingly.
5. I will now take up issue No.(4), with is whether the defendant No.3 was introduced by the defendant No.2 in his personal capacity or on behalf of defendant No.1? I have already decided, while dealing with issue No.(1) that A/c No.429 was opened by defendant No.3 with the defendant No.1 bank in the name of Ismail Jamal & Co. as a proprietary concern. The evidence also establishes that defendant No.2, ex-cashier of defendant No.1 bank, had introduced defendant No.3 for the purposes of opening A/c No.429. Defendant No.3, Abdul Ghaffar, had been introduced by defendant No.2 not as Abdul Ghaffar but as Ismail. It has come in evidence that the bank permits the introduction of new accoaunt-holders by the officers of the bank and therefore, introduction of defendant No.3 by defendant No.2 as far as opening of A/c No.429 is concerned, was in the capacity of an officer of the bank. Issue No.(4) is decided accordingly.
6. Issue No.(5) arises out of the written statement filed by defendants Nos.3 and 4. Defendants Nos.3 and 4 have not appeared and no evidence has been led on their behalf. The plea taken on behalf of defendants No. 3 and 4 that the drafts and pay orders which were received by defendant No.4 at Sukkur and were forwarded to defendant No.3, had in fact been handed over to the cashier of the plaintiff firm, has not been proved. The evidence led on behalf of the plaintiff has established that the drafts in question were received by defendants Nos.3 and 4 on behalf of the plaintiff firm but the same were not handed over to the plaintiff but were deposited in A/c No.429 opened by defendant No.3 describing himself as Ismail. Defendants Nos.3 and 4 had, therefore, misappropriated the amounts in question, whiSh they had received in trust for the plaintiff. Issue No. (5) is decided accordingly.
7. Issue No.(6) is whether the services of defendant No.2 (ex-cashier of defendant No.1 bank) were terminated due to forgery and fraud. This assertion made on behalf of the plaintiff in para. 10 of the plaint has been denied in the written statement of defendant No.1, who had averred that defendant No.2 was released from his services with the bank at his own request. No evidence has been led on behalf of the plaintiff in regard to this issue. It has not been proved that the services of defendant No.2 with the defendant No.1 bank were terminated due to forgery and fraud. Issue No.(6) is decided accordingly.
8. Issue No.7(i) is whether the defendants Nos.3 and 4 committed breach of their agency and appropriated the amounts to themselves causing loss to their principal i.e. the plaintiff and if the answer is in the affirmative then, issue No.7(ii) is whether defendants Nos.1 and 2 were in conspiracy and in collusion with defendants Nos.3 and 4. On the question of misappropriation of the amounts in question by defendants Nos.3 and 4 the evidence led on behalf of the plaintiff has gone uncontroverted. Defendants Nos.3 and 4 have not appeared and have not led any evidence.
The evidence on record establishes that defendants Nos.3 and 4 committed breach of their agency and misappropriated the amount in question. Issue No.7 (i) is answered in the affirmative.
' The evidence on record does not prove that the defendant Nos.1 and 2 were in conspiracy and collusion with defendants Nos.3 and 4. The burden of this issue was on the plaintiff and the solitary evidence of Abdul Latif, the attorney and Accountant of the plaintiff firm, has not discharged this burden. Issue No.7 (ii) is decided in the negative.
9. Issues No.(2) and (3) can be taken up together. What is to be determined is whether the defendant No.1 bank acted negligently or carelessly in allowing the defendant No.3 to open and operate A/c No.429. Reliance has been placed by both the learned counsel on section 131 of Negotiable Instruments Act, 1881, which reads as follows:- "Section 131.-- Subject to the provisions of this Act relating to cheques crossed "account-payee", where a banker in good faith and without negligence receives payment for a customer of a cheque crossed generally or specially to himself, and the customer has no title or a defective title thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment.
Explanation.-- A banker receives payment of a crossed cheque for a customer within the meaning of this section notwithstanding that he credits his customer's account with the amount of the cheque before receiving payment thereof."
' Section 131-A states that the provisions of Chapter XIV (which comprises section 128-A to 131-C including section 131) shall apply to any draft, as defined in section 85-A as if the draft were a cheque. According to section 85-A of the Negotiable Instruments Act, a draft is an order to pay money drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand.
'If the case against a banker is that he has received payment of a draft for a customer where the .customer had no title or a defective title thereto, the banker can seek shelter under section 131-B if he can prove or establish that he had received such payment in good faith and without negligence. It has already been held that defendant No.3, who had opened A/c No.429, and had deposited the bank drafts in question, had no title to such drafts. Answer to issues Nos. 2 & 3, therefore, depends on whether the amounts of such drafts was received by defendant No.l. bank for defendant No. 3 in good faith and without negligence. At this stage reference may be made to the case law cited before me by the learned counsel on this crucial aspect of the case. Mr.S.lshtiaq Ali, learned counsel for the plaintiff, relied upon the following reported judgments:-
(i) Sanyasilingam v.Exchange Bank of India AIR 1948 Bom.
1.
(ii) Bapulal v. Nath Bank Ltd. AIR 1946 Bom.
482.
(iii) Brahma v. Chartered Bank AIR 1956 Cal.
399.
(iv) Underwood v. Bank of Liverpool (1924) I.K.B.
775.
(v) Official Assignee v. Lloyds Bank Ltd. PLD 1969 SC 301.
(vi) Muslim Commercial Bank v. Akhlaq Ahmed PLD 1981 Kar.
636.
(vii) United Bank Ltd. v. Government of Punjab PLD 1982 Lah.
384.
' Mr.Tahir Hussain, learned counsel for Allied Bank of Pakistan, defendant No.1, also relied upon PLD 1981 Kar. 636 in support of his contention that there was neither negligence nor carelessness on the part of the Bank. who had acted in good faith and that even if there was any negligence on the part of the Bank in the opening of A/c 429, no benefit can be taken by the plaintiff from this as there was no negligence of the bank in receiving payment of the drafts in question on behalf of their customer who had opened A/c 429. It was also pointed out by Mr.Tahir Husain that A/c No. 429 was opened in April 1971 whereas the first entry in Exh.7/3 is in November 1971. It was argued that there was no nexus between the negligence, if at all there was any, of the Bank in opening A/c No. 429 and the amounts collected by the Bank through the drafts submitted by the account-holder for collection.
' In AIR 1948 Born. 1, taking into consideration the manner in which the bank account was opened without a reference coupled with the manner in which the account was operated upon and most important of all the manner in which the draft was not scrutinized and compared with the application form, it was held that the defendant-bank had failed to prove that they were not guilty of negligence in collecting the amount of the draft in question from the drawee-bank and crediting the same to the account of their own customer. The test of negligence under section 131 of the Negotiable Instruments Act, 1881 was laid down as whether the paying in of any given cheque coupled with the circumstances antecedent and present, was so much out of the ordinary course that it ought to have aroused doubt in the banker's mind and caused him to make inquiries.
' In AIR 1946 Born. 482 it was observed that primarily enquiry as to negligence must be directed in order to find out whether there is negligence in collecting the cheque and not in opening the account, but if there is any antecedent or present circumstance which aroused the suspicious of the banker then it would be his duty before he collects the cheque to make the necessary enquiry and undoubtedly one of the antecedent circumstance would be the opening of the account and in certain cases failure to make enquiries as to the integrity of the proposed customer would constitute negligence but it would depend upon the facts and circumstances attendant upon the opening of an account by the new customer whether an enquiry about him was necessary and called for or not.
' In AIR 1956 Cal. 399 it was observed that section 131 makes it clear that when a banker receives from its customer a cheque crossed in its customer's behalf, the fact that the customer's title to the cheque is defective does not render the banker liable to the true onwer, but the protection under the 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 only defective title, is liable in action for conversion to the true owner. It was further observed that whether a bank is guilty of negligence depends on the particular facts of each case and that the onus of proving good faith and absence of negligence is on the banker claiming protection under section.
131.
' In (1924) 1 K B 775, Scrutton L.J. observed that if banks for fear of offending their customers will not make inquiries into unusual circumstances they must take with the benefits of not annoying their customer the risk of liability because they do not enquire.
' In PLD 1981 Kar. 636, Saeeduzzaman Siddiqui, J. of this Court made the following observations while considering section 131 of the Negotiable Instruments Act, 1881:- "The question, therefore, whether the collecting Bank had acted in good faith and without negligence in opening of the account will be relevant under section 131 of the Negotiable Instruments Act, only to the extent, if it is shown that the opening of the account and the deposit of the cheque are really the part of one scheme. As where in a case the account itself is opened with the disputed cheque or draft or where it is put in the account so shortly after the opening of the account, that it leads to the inference that it is the part of the same transaction. It is then and in those circumstances alone that the negligence in the matter of opening of an account in my opinion could be treated as negligence within the meaning of section 131. The section 131 referred to above affords complete protection if the collecting-Bank acts in good faith and without negligence. The standard of deligence required in this regard is the one which is derived from the practice prevailing among the Banks. The negligence mentioned in the section is in my view therefore referable to the collection of the cheque and not directly to the opening of an account unless as stated earlier, it is shown that the opening of the account is so intimately connected with the collection of the cheque that it forms part of the same transaction. One of the tests in finding out whether the collecting Bank acted in a bona fide manner and without negligence, will be whether the transaction of paying in any given cheque/draft coupled with circumstances antecedent and present were so out of the ordinary course that it ought to have aroused doubts in the mind of the banker and caused them to make an enquiry. Negligence ordinarily means want of reasonable care which an ordinary prudent man will take or apply in a given set of circumstances.
On the evidence on record the learned counsel for the plaintiff was unable to point out any extraordinary or unusual course of procedure followed by defendant 2 in this case in collecting the proceeds of the draft or paying it over to defendant No.1, later. The cheque was sent in the ordinary course for collection to the payee Bank and it is in the evidence of the plaintiff that the person who checked the draft was himself unable to detect any alteration or manipulation in the draft, at the time of its encashment which could arouse any suspicion. In these circumstances, it is hardly open to argument that the defendant 2 did not act in good faith and without negligence so as to deprive them of the protection afforded under section 131 of the Negotiable Instruments Act."
' In PLD 1982 Lah. 384, a learned Single Judge of the Lahore High Court was of the view that the onus of proving good faith and absence of negligence contemplated by section 131 of the Negotiable Instruments Act was on the banker who claims protection under the Act.
' In PLD 1969 SC 301 the facts were that in a money suit filed in High Court, the defendants' amount lying in a bank was attached by the Court. Subsequently the Bank received a forged letter purporting to be from the Court and bearing the seal and signatures of the Nazir of the Court informing the bank that the attachment had been raised. On receipt of this letter, the bank informed its customer who in turn withdrew the entire amount from the bank. A learned Single Judge of the High Court held that the payment by the bank in compliance with the forged order of the Court was made by the bank at its own risk and the bank was not absolved of its liability to deposit the attached amount as a garnishee. The Division Bench of the High Court in Letters Patent Appeal reversed the order of the Single Judge holding that as the bank had acted in a bona fide manner under the order of the Court, which prima facie was genuine although in fact it was not so, it was protected from making the payment over again for the second time. The matter was taken to the Supreme Court in appeal which was allowed reversing the judgment of the Letters Patent Bench and restoring the order of the Single Judge. Mr.Justice Sajjad Ahmed, who delivered the judgment of the Supreme Court of Pakistan, observed as follow:- "Undoubtedly it is highly essential for the smooth administration of justice and for the strength of the public confidence therein, which is its main pillar and which should be its principal achievement, that the orders of the Courts should command unflinching respect and ready obedience. I do not however consider that the checking up of the genuineness and authenticity of a Court's order involves any disrespect to it, nor does it for that matter, involve any expensive or inconvenient process such as appears to have vexed the minds of the learned Judges of the Letters Patent Bench. In fact, it is in the interest of every Bank and commercial institution itself to set up within itself a trained cell in which such orders as are received from the Courts and the sources of their receipt or delivery are examined and carefully and expeditiously processed to ensure on the one hand the quick implementation of the orders, and, on the other, to defeat any sharp practice/practices that may be indulged in this behalf. I feel constrained to say that in the present case the respondent-Bank has acted recklessly and unwarily in giving effect to the Court's orders without taking note of certain obvious factors which should have put the Bank on an inquiry, to ascertain about the genuineness of that letter.
' Apart from this, I think this is one of those cases wherein, even if it were assumed that the Bank has acted innocently, there is another innocent party involved in the transaction whose interest has to be put into the balance and safeguarded. In such cases, one that could prevent the loss must suffer. The rule of equity which applies as between the two innocent persons in such cases is that the one who could prevent the loss must suffer and not the other who was powerless to do so while the Bank in this case could prevent the loss by a little more care and caution, the appellant who was completely in the dark as to how the transaction went through the Bank, could do nothing in the matter."
10. After examination of the provisions of section 131 of the Negotiable Instruments Act, 1881 and analysis of the case law discussed in the last paragraph of this judgment, it can safely be observed that the following general principles are settled in regard to the liability of bankers where they receive/collect payment for their customers against drafts and cheques to which their customers have defective or no title--
(a) In such cases a banker can seek protection under section 131 of the Negotiable Instruments Act, 1881 if it is proved or established that the banker acted in good faith and without negligence.
(b) The burden or onus of proving or establishing good faith and absence of negligence is on the banker claiming protection under section 131 of the Negotiable Instruments Act, 3881.
(c) Good faith and absence of negligence mentioned in section 131 of the Negotiable Instruments Act, 1881 is apparently referable to the collection of the amount of the draft or cheque for a customer by the banker, but negligence and lack of good faith on the part of the banker in opening the account of the customer in which the amount of the draft or cheque is credited by the bank is also a relevant fact for determining such negligence and lack of good faith.
(d) Circumstances antecedent to the collection of the concerned cheque or draft by the banker are also relevant and can be taken into consideration for the purposes of determining whether the banker can claim protection under section 131 of the Negotiable Instruments Act, 1881.
(e) Whether the banker has acted in good faith and without negligence depends on the particular facts of each case.
11. In the instant case Account No. 429 was opened in April, 1971 by Abdul Ghaffar (Defendant No.3) in the Branch of Sarhad Bank Limited. This is admitted by the Bank in its reply to the legal notice of the plaintiff and in para. 10 of the Bank's Written Statement. It is also an admitted position that Account No. 429, although opened by defendant No.3 Abdul Ghaffar, was in fact opened by Abdul Ghaffar describing himself and signing as "Esmail" and the account was opened in the name of "Ismail Jamal and Co." which is also the name of the plaintiff firm. As the Bank knew that the person who was opening Account No. 429 was Abdul Ghaffar but he was describing himself as "Esmail" and was trying to open the account in the name of "Ismail Jamal and Co.", the Bank should have been on guard and put on inquiry to find out why Abdul Ghaffar was describing himself as "Esmail" and trying to open an account in the name of "Ismail Jamal and Co.". It is apparent that no inquiry was made by the Bank in this regard. If the name of the person who was opening the account was "Ismail" and he was known to the Bank as such or was introduced as such in the usual course, and he was opening an account say in the name of "Ismail Jamal and Co." showing himself as the sole proprietor of the concern, perhaps the Bank would not have been required to be so much on guard as in the instant case. It is not the case of the bank or any other party that Abdul Ghaffar was also known as "Esmail". It may be repeated that the admitted position is that 'Abdul Ghaffar came to the bank and opened Account No. 429 in the name of "Ismail Jamal and Co." describing himself and signing as "Esmail" and that Abdul Ghaffar was introduced as "Esmail" by the defendant No.2, the then cashier of Sarhad Bank Limited. Exhibit 8/2 which is a copy of the account opening from dated 16-4-1971, shows .that the instructions for operation of the account was that "Ismail" will operate the account. In my view, if the bank was aware that the person who was describing himself as "Esmail" and wanted to open an account in the name of "Ismail Jamal and Co." as the sole proprietor was in fact Abdul Ghaffar and was not known to the bank as Esmail or Ismail, without further inquiry to satisfy itself why the account was being opened by Abdul Ghaffar as "Esmail" and not as "Abdul Ghaffar", Account No.429 in the name of "Ismail Jamal and Co." should not have been opened by the Bank. The Bank should have been put on guard by this strange and suspicious behaviour of Abdul Ghaffar in describing himself as "Esmail" and by trying to open an account in the name of "Ismail Jamal and Co.". By not making any further inquiries and by opening the account of Abdul Ghaffar, describing himself as "Esmail", in the name of "Ismail Jamal & Co". the defendant No.1 Bank acted negligently. I would go further and observe that this was a case of gross negligence on the part of the defendant No.1 Bank. It should have been apparent to Bank that the said account, in these admitted facts and circumstances, was being opened by Abdul Ghaffar for ulterior purposes.
12. However, Mr.Tahir Hussain, learned counsel for defendant No.1 Bank, relied upon PLD 1981 Kar.
636 and argued that even if there was negligence on the part of the defendant No.1 Bank in allowing the opening of Account No.429 in the manner in which it had been opened, there was no negligence or carelessness or lack of good faith on the part of the defendant No.1 Bank in collecting payments of the drafts in question on the part of their customer. According to the learned counsel for the Bank, the drafts deposited in A/c No.429 were drawn in the name of "Ismail Jamal & Co.", and amounts of these drafts were collected by the Bank and receipts credited to A/c No.429 which was also in the name of "Ismail Jamal & Co.". It was contended that there being no negligence in the collection of the amount on behalf of their customer in respect of the drafts in question and there being no nexus between the opening of Account No.429 and the receipt and collection of the drafts in question, the Bank cannot be made liable. It was further argued that A/c No.429 had been opened as far back as April, 1971 whereas the first draft had been deposited for collection in November, 1971 and therefore, if there was at all any negligence on the part of Bank in opening the Account No.429, as there is such a big lapse of time between the two events i.e. the opening of the account and the collection of the amounts of the drafts in question, these two events cannot be treated as part of the same transaction.
' The facts of PLD 1981 Kar. 636 are clearly distinguishable from the facts of the instant case. As observed earlier, in the present case by opening Account No.429 the Bank was guilty of gross negligence and in the facts and circumstances the Bank should have been put on guard that this account was being opened for ulterior purposes. In spite of passing of several months before the first draft was deposited in this account by Abdul Ghaffar for its collection, the deposit and collection of amounts of these drafts remain part of the same scheme of defendant No.3 which commenced when Account No.429 was opened by defendant No.3 Abdul Ghaffar in the name of "Ismail Jamal & Co." describing and signing himself as "Esmail". In my view, in these circumstances there is a clear nexus between opening of the Account No.429 by Abdul Ghaffar and the deposit by him of the drafts which were made out in the name of the plaintiff firm but the amounts whereof were collected by the defendant Bank on behalf of Abdul Ghaffar. In the peculiar and distinguishable facts of this case, PLD 1981 Kar. 636 cannot come to the rescue of the defendant Bank. I hold that defendant No.1 Bank acted negligently and carelessly in allowing Abdul Ghaffar, defendant No.3 to open and operate Account No.429 in the name of "Ismail Jamal & Co". I also hold that in the facts and circum stances of this case, defendant No.1 Bank was required to make further inquiries before allowing the defendant No.3 to open the account in the name of "Ismail Jamal and Co." describing himself as "Esmail". Account No.429 was not opened in due course of business of defendant No.l. Issues 2 and 3 are decided accordingly.
13. The last issue is as to what should the decree be. The present suit has been filed for recovery of Rs.1,02,382.70. The basis of this claim is the statement produced by the plaintiff as Exh. 7/3. Exh. 8/1 is the statement of Account No.429 filed by the defendant Bank and a perusal of these two documents i.e. Exh. 7/3 and Exh. 8/1 shows that only the following entries of Exh. 7/3 appear in Exh.
8/1 and entries corresponding to other entries in Exh. 7/3 do not appear in Exh. 8/1:- Common entires of Exh.7/3 and Exh.8/1.
Rs .2,032.40 Rs.1,717.85 Rs.1,557.13 Rs.1,753.50 Rs.1,683.80 Rs.1,625.37 Rs.2,120.10 Rs.14,325.63 Rs.1,634.08 Rs.1,642.81 Rs.2,203.03 Rs.4,061.16 Rs.1,768.12 Rs.4,010.85 Total Rs. 42,135.83 ' Exh. 8/1, the statement of bank account has not been denied by the plaintiff. However, it was argued by Mr.Ishtiaq Ali, learned counsel for the plaintiff, that some of the entries in Exh. 7/3 are of the same date but instead of corresponding individual entries being made in the bank account, composite entries have been made by the Bank. However, such evidence has not been led by the plaintiff. In the absence of evidence to ttrat fact, the decree can only be passed against the defendant No.1 bank and defendant No.2 in the sum of Rs.42,135.83 being the total of such entries made in Exh. 7/3 corresponding entries whereof appear in the statement of bank account which is Exh. 8/1. However, as against defendants Nos.3 to 4 a decree in the total amount claimed is being passed as the case of the plaintiff against the defendants Nos.3 and 4 stands established in respect of the full amount.
14. I pass a decree in the sum of Rs.1,02,382.70 against the defendants Nos.3 and 4, jointly and severally with interest at the rate of 12% per annum from the date of the filing of the suit till realization. The plaintiff shall also be entitled to full costs against the defendants Nos.3 and,
4. I also pass a decree against the defendants Nos.1 and 2 jointly and severally in the sum of Rs.42,135.83 with interest at the rate of 12% per annum from the date of the filing of the suit till realization. The plaintiff shall be entitled to proportionate costs as against defendants Nos . 1 and 2. It is, however, clarified that the plaintiff shall not be entitled to recover any amount in excess of Rs .1,02,382.70 with interest @ 12% per annum from the date of the filing of the suit till realization and costs under the decree passed in this suit.