1. At the stage of admission, we directed the records from the trial court to be secured. Accordingly, we had the benefit of perusing the records of the proceedings before the trial court and we have also heard learned counsel for the appellant-bank. The short point for consideration in this appeal is whether the appellant-bank was entitled to the benefit of the provisions of section 131 of the Negotiable Instruments Act, 1881 (in short, “the Act”). The facts are not in serious controversy. Respondent No. 1-bank had made payment of Rs. 50,079.04 to respondent No. 3 on a cheque issued by the second respondent-customer in favour of one Aryan Brush Company. From the evidence on record, it is seen that the second respondent issued a cheque dated December 2, 1975, for a sum of Rs. 579.04 in favour of one of its customers by name Aryan Brush Company. This cheque was subsequently encashed by respondent No. 3 carrying on business under the name and style of Arjun Brush Company. The words and figures as originally found in the cheque which is produced as exhibit P-1 before the trial court and also the amounts were altered so as to read as Rs. 50,079.04, the payee's name was altered so as to read as “Arjun Brush Company” and the date was also changed from December 2, 1975, to December 13, 1975. The first respon-dent-bank, on the strength of the endorsement made by the appellant-bank, i.e, “payee's account credited”, made the payment on this cheque and, accordingly, it credited the account of the appellant-bank in a sum of Rs. 50,079.04. That amount was subsequently withdrawn by the third respondent, Arjun Brush Company. The second respondent bona fide believed that it had issued a cheque for Rs. 579.04 in favour of Aryan Brush Company. However, it transpires from the statement of accounts sent from the first respondent to the second respondent for the period ending December 31, 1975, that this cheque dated December 2, 1975, was made payable to the third respondent for a sum of Rs. 50,079.04 on December 13, 1975, and the same was debited to the account of the second respondent on December 15, 1975. Immediately, after receiving the statement, the officer of the second respondent took up the matter with the first respondent and they exchanged a number of letters in order to clarify as to how a cheque issued for a sum of Rs. 579.04 could have been encashed and the amount debited to the second respondent's account in a sum of Rs. 50,079.04. From the exchange of correspondence, it is established that this cheque exhibit P-1 had been materially altered, i.e, the date of issue of cheque, the amount mentioned therein in words and figures and the payee's name and thereby the third respondent in whose favour that cheque had not been issued by the second respondent, stood to gain in a sum of Rs. 50,079.04. The first respondent called upon the appellant-bank being the collecting bank to reimburse that amount. The appellant-bank took cover under the provisions of section 131 of the Act and resisted the claim of the first respondent. Hence, the suit by the first and second respondents claiming a sum of Rs. 50,079.04 and interest thereon and in that suit they prayed for a decree jointly and severally against the appellant and respondent No. 3.

2. Respondent No. 3 who was the second defendant before the trial court could not be served obviously because, respondent No. 3 was a fictitious person. In this court also, respondent No. 3 has remained unserved. The trial court placed respondent No. 3 ex parte and made a decree making the appellant and respondent No. 3 jointly and severally liable for the suit amount.

3. Learned counsel for the appellant-bank submitted that, in the absence of any issue relating to forgery of the cheque in question, viz., exhibit P-1, the trial court had wrongly come to the conclusion that the appellant-bank was liable for the suit amount; (i) that there had been a misjoinder of parties in that respondent No. 2, i.e, customer of respondent No. 1 should not have been made a party to the proceedings before the trial court; (ii) that the trial court had wrongly construed the applicability of the defence open to the collecting bank under section 131 of the Act and, therefore, the interpretation of that section raises a question of law which has to be considered by this court.

4. We have been taken through the judgment of the trial court and also the evidence on record. In support of the suit claim, respondents Nos. 1 and 2 examined their respective officers. PW-1 is Rajamani Rajam. He was working as an officer in Kempegowda Road branch from December, 1975, till 1979, and his evidence is that respondent No. 2 was one of its big customers and it was issuing cheques from time to time drawn on respondent No. 1-bank for heavy amounts and one such cheque was exhibit P-1 for Rs. 50,079.04 in favour of respondent No. 3, and that cheque was dated December 13, 1975, and that there was an endorsement on that cheque by the appellant that “payee's account was credited” and on the basis of that endorsement, he did not entertain any suspicion and passed the same for payment and that there was no overwriting visible at the time of passing the cheque and even now in the cheque shown, there was no visible overwriting. He also referred to the subsequent correspondence between the first respondent and the second respondent on this point and a number of letters exchanged by them had been marked as documentary evidence in this case. Further, he has stated that, after verification, he found that the second respondent had issued the cheque in favour of Aryan Brush Company and not in favour of the third respondent, that the cheque was examined under ultravoilet machine and he discovered that the entire contents of the cheque, namely, the date, payee's name and amount in words and figures were found altered. This fact was also intimated to the appellant-bank and they did not dispute the allegations of alterations. He has further deposed that the altered figure found under exhibit P-1 was credited by the first respondent-bank through the clearing house to the account of the appellant-bank as they were the collecting bank and thereby the appellant-bank was benefited by the amount credited. His further evidence is that the normal practice on opening an account is to make their own enquiry about the parties, i.e, the party who introduces and the party who approaches the bank in that particular area and he came to know that the appellant-bank had not made proper enquiry before opening the account in favour of respondent No. 3. In cross-examination, his evidence as to the alteration of the cheque by substitution of the date, the amount in words and figures and also the name of the payee was not challenged. It could not be challenged because, in the course of correspondence with the first respondent, the appellant did not take the plea that the cheque was not a forged cheque. As regards the opening of the accounts, it was elicited in his cross-examination that the collecting bank has to follow the following procedure:

“If a party comes to open an account, we verify regarding the nature of business and for what purpose the account is opened, we demand to produce a person known to bank authorities for introduction. We also make personal enquiries of the person who wants to open the account.”

5. The other witness examined by the first respondent was an officer of the second respondent-watch factory. He was at the time working as Deputy General Manager and he has spoken about the issue of cheque in favour of Aryan Brush Company and the entries made in the cheque regarding the name of the payee and he has also spoken about the debiting of a sum of Rs. 50,079.04 against exhibit P-1 to the account of the second respondent. He has been cross-examined. His evidence was not seriously challenged in cross-examination. DW-1 is an officer of the appellant-bank who was the only witness examined on behalf of the appellant. He has said in para 16 of the deposition that he had no personal knowledge of the transaction which had led to the filing of the present suit. In para 17, he has stated that he had no personal knowledge of the alleged representations made by Mr. Sipani, managing director, Sipani Automobiles when he introduced the third respondent. In para 18, he has said that he had not produced any document to the court to show that, in December, 1975, Sipani was a well-known customer of the appellant-bank. In para 19 of the deposition, he has said that he had no records to show what procedure was adopted at the time of opening of the account in the name of the third respondent; and that it was false to suggest that the Syndicate Bank did not follow the usual procedure and norms laid down in opening a new account. In para 20, he has said that he did not know whether the appellant-bank made any enquiries regarding the business, status and permanent address of the proprietor of the third respondent before opening the account, and denied that the appellant-bank failed to observe the basic norms in opening a new account. The other suggestions made to him were also denied. But one thing that is clear from his evidence in his cross-examination is that this witness did not have personal knowledge of the transaction in question and the procedure followed by the appellant bank for accepting their constituents and he did not know whether a person who introduced respondent No. 3 was one Sipani. When one Sipani had allegedly introduced respondent No. 3 to the appellant-bank for making him one of its customers, he could have been a proper witness to prove the defence that was available in favour of the appellant-bank under the provisions of section 131 of the Act. Section 131 reads as under:

“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.— A banker receives payment or a crossed cheque for a customer within the meaning of this section notwithstanding that he credits his customer's accounts with the amount of the cheque before receiving payment thereof).”

6. So, on the plain language of section 131, it is for the appellant-bank to prove that it had in good faith and without negligence received payment for its customer on a cheque crossed generally or specially to himself. The meaning of the words “good faith and without negligence” was the subject-matter of a number of decisions of the various High Courts in Indian Bank v. Catholic Syrian Bank Ltd., AIR 1981 Mad 129, Brahma Shum Shere Jung Bahadur v. Chartered Bank of India, Australia and China, AIR 1956 Cal 399, etc., and in the judgment of the Bombay High Court in Bapulal Premchand v. Nath Bank Ltd., [1946] 16 Comp Cas 133; AIR 1946 Bom 482, on which learned counsel for the appellant strongly relies, Chagla J., as he then was, has observed as follows (headnote of AIR):

“Primarily, inquiry 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 suspicion 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 circumstances would be the opening of the account. 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. There is no absolute and unqualified obligation on the bank to make enquiries about the respectability of the proposed customer. It is true that modern banking practice requires that a customer should be properly introduced and it would be wiser and more prudent for a bank not to accept a customer without some reference. But it cannot be suggested that after a bank has been given a proper reference with regard to the proposed customer and although there are no suspicious circumstances attendant upon the opening of the account it is still incumbent upon the bank to make further enquiries with regard to the customer, and the bank cannot be held to be guilty of negligence in having failed to make any such further enquiries so as to disentitle it to the protection given by section 131.”

(underlined* by us).

7. Even in this decision on which learned counsel for the appellant has relied, the learned judge has not ruled out the requirement of a proper introduction of a new customer to the bank by a person as to his integrity and standing at the time of opening of his account and that depends on the facts and circumstances of the case. Here the facts are not in dispute. The third respondent was the customer of the appellant-bank. Record shows that the third respondent had only one transaction with the appellant-bank, i.e, the encashment of the cheque materially altered. Immediately after the encashment of the cheque, he had withdrawn the entire amount and, therefore, a heavy burden was cast on the appellant-bank on the facts and circumstances of this case to prove that the third respondent had been properly introduced and it had, in good faith and without negligence, opened his account after making due enquiries. It is axiomatic that the encashment of the cheque by the third respondent was subsequent to his becoming a customer of the appellant-bank and opening of an account in his name by the appellant-bank and, therefore, the appellant-. bank should have proved that it had made proper enquiries and taken proper care while accepting respondent No. 3 as its customer. The decision of this court is also against the appellant on this point. In that case, a plea was taken that a suit cannot lie on the basis of a forged document since a forged document is a nullity in the eye of law. But this court in R.F.A No. 22 of 1970 disposed of on January 18, 1974, has held that it is not open to the appellant to contend that a suit cannot lie on the basis of a forged document. Though, in that case, the court did not go into the question of negligence under section 131 of the Act since the cheques in question were not cheques crossed specially in favour of the party in whose favour the cheques had been drawn, the facts in that case would show that whenever a cheque is drawn in favour of a fictitious person, a duty was cast on the collecting bank to prove that it had not acted negligently and that it had collected the amount in good faith. The appellant-bank having failed to discharge the burden cast on it under section 131 of the Act, the trial court was justified in decreeing the suit.

8. The other two contentions need not detain this court for long since an issue on the forgery of the cheque was not necessary as no such plea was taken by the appellant-bank in its pleadings. Question of misjoinder cannot be permitted by this court for the first time and at any rate it is not made out that by impleading the second respondent as a party, the defence of the appellant was prejudiced. Therefore, there is no merit in this appeal and the same is dismissed.

9. After the pronouncement of this judgment, learned counsel for the appellant made an oral application for grant of certificate to appeal to the Supreme Court. In our opinion, no substantial question of law of public importance arises on the facts and circumstances of this case which-needs to be considered by the Supreme Court and hence the prayer is rejected.