NASIR ASLAM ZAHID, J.---This appeal arises out of the judgment dated 5-2-1984 of the Peshawar High Court dismissing the Regular First Appeal filed by the appellants/defendants.
2. The plaintiff/respondent, Qazi Atiqur Rehman, Advocate, maintained an account with Peshawar GPO and at the relevant time, there was a balance of Rs.25,000 standing to his credit in the said account. On 24-12-1973, the respondent wanted to withdraw a sum of Rs.21,125 from his account but, according to the respondent, instead of giving cash, G.P.O. Peshawar, delivered to the respondent a cheque dated 24-12-1973 of the aforesaid amount drawn on the State Bank of Pakistan. The respondent deposited the cheque with his bankers, National and Grindlays Bank Limited, Peshawar, for collection but the cheque was dishonoured by the State Bank of Pakistan on 26-12-1973 due to lack of funds in the account of G.P.O. According to the respondent, he had entered into an agreement with a firm for the purchase of some timber under which agreement Rs.20,000 as earnest money was payable by him to the seller on or before 27-12-1973 and for that purpose he wanted to withdraw the amount from G.P.O. On account of the dishonour of the said cheque, according to the respondent, he was not able to make payment of the earnest money to the seller and, as a result, the agreement fell through which resulted in huge loss to the respondent.
According to the respondent, if the agreement had been executed, he would have earned a profit of Rs.1,95,000 which he lost and, in addition, he suffered a loss of Rs.70,000 in the shape of liquidated damages, which sum he had to pay to the seller for breach of contract. Respondent filed a suit against the appellants, Federation of Pakistan and Senior Postmaster, G.P.O, Peshawar, for recovering Rs.2,65,000 as damages. The appellants filed a written statement denying their liability to pay damages pleading that the cheque issued by G.P.O. Was no doubt dishonoured by the State Bank on 26-12-1973 but when it was represented by the respondent it was encashed and that there was no default on the part of G.P.O. The trial Court decreed the suit in the sum of Rs.2,65,000 with costs and appellants were also directed to pay interest @ 6% per annum from the date of decree till payment. The appellants filed an Appeal before the High Court which was dismissed by the impugned judgment dated 5-2-1984 of the Peshawar High Court. Leave was granted by this Court in the petition filed by the appellants on the ground that the matter involved interpretation of section 73 of the Contract Act.
3. In support of present appeal, Mian M. Ajmal Deputy Attorney-General, submitted that the cheque issued by G.P.O. Was no doubt dishonoured when it was presented for payment on the first occasion but when it was presented for payment for the second time, the cheque was honoured and payment was made by the State Bank and at the most the respondent lost interest on the amount of the cheque from 24th to 28th December, 1973, and as such the appellants could only be burdened for interest on that amount for about 4 days. According to the learned Deputy Attorney- General, for application of section 73, the loss or damage caused by breach of contract must be such as naturally arose in the usual course of things from the said breach or the damage caused was such as the parties knew when they made the contract and was likely to result from its breach.
It was submitted that the damage which naturally arose from non-payment of the amount in question on 24-7-1973 was that the respondent lost interest thereon from 24th to 28th December, 1973, when on representation of the cheque it was encashed.
4. We are not impressed by the argument that in this case the damages would be restricted to loss of interest only. A post office which acts as a banker cannot take up the position that it can dishonour a cheque issued by a customer without any valid reason or when the customer wants to withdraw money from the post office out of his account, the post office can issue its own cheque which can be dishonoured and, in either of the situations, the post office is not liable for damages to the customer. If no valid reason is given for dishonouring the cheque and sufficient amount is available in tile customer's account to cover the cheque, the post office or the Bank, would be liable in damages to the customer.
5. However, in this case excessive damages have been granted to the respondent. The appellants arc correct in their submission and they did not know that a contract for purpose of timber had been executed by the respondent with the seller and that he was withdrawing money from G.P.O.
To make payment of earnest money to the seller and if the earnest money was not paid the respondent would suffer damages to the extent of Rs?,65,000. But, G.P.O. Will be presumed to have known that respondent shall suffer loss in the usual course of things on account of dishonour of G.P.O's cheque.
6. What will be the measure of damages in such a case? No exact formula can be laid down. As observed earlier, damages will not be restricted to interest. It is clear that the case of a bank and his customer is distinct from the case of an ordinary borrower and lender. In the case of an ordinary borrower generally interest would be sufficient damage for the period the loan remains unpaid after the due date. The relationship between a banker and his customer is of special nature.
Where a customer maintains an account with his banker and he issues a cheque on his account in which sufficient funds are available or the banker issues its own cheque towards withdrawal of the amount by the customer, the banker will be liable to pay damages in case the cheque is dishonoured, unless valid is reasons exist for dishonour, which is not the case here. On the question of measure of damages, reference may be made to the following passage at Page 110'. In the "Law of Banking" by Lord Chorley, Sixth Edition, which is reproduced here:-- "MEASURE OF DAMAGES Wrongful dishonour Refusal by the bank to pay a cheque when the conditions discussed above have been fulfilled amounts to a breach of contract for which the bank is liable to pay damages. The only question will be as to the amount. The ordinary rule for measuring or quantifying damages is that established by the lading case of Hadley v. Baxen-dale, viz. That the party in breach must pay the amount of damage which flows directly and naturally from his failure to keep his contract, provided that such would reasonably have been within the contemplation of the parties at tile time when they made their contract. There is, however, great difficulty in applying this rule to the contract to honour cheques because it will rarely, happen that the banker has any knowledge as to the circumstances under which the customer came to be making payment. Suppose, for example, the customer loses the benefit of an exceptionally profitable contract through the wrongful dishonour of his cheque; is the bank liable to pay him the whole of the loss? There is no decision upon this point, but it is thought that, since possibilities of this kind are obvious, the banker must take the risk of them and is liable".
7. In our view a reasonable assessme nt of the damages in the circumstances of this case would be Rs.25,000 with the appellants also being burdened with court-fee spent by the respondent in this litigation.
8. This appeal is accordingly allowed partly to the extent that damages are reduced to Rs.25,000 and reimbursement by the appellants to the respondent of the total amount of Court-fee paid by the respondent in the entire litigation. The damages and the amount of Court-fee shall be paid by the appellants to the respondent within one month from the date of this Judgment. There will be no order as to costs.