1. This appeal is from a judgment and decree passed by a learned Judge of the City Civil Court at Calcutta in a suit instituted by the respondent No. 1 before me as plaintiff. The material facts are not disputed. A sum of Rs. 26,790/- was due from the Government of West Bengal to the plaintiff who describes himself as a “supplier” to the Government to satisfy this claim the Principal Agricultural Officer, 24-Parganas (North), Barasat, on February 20, 1966 purchased a demand draft for the amount payable to the plaintiff in his trade name from the State Bank of India, Barasat, Branch, drawn on the State Bank of India, Head Office, at 1, Strand Road, Calcutta. This draft bearing No. T824720 was made over to the plaintiff from whose custody it was subsequently lost. The plaintiff immediately reported the loss to all concerned including State Bank of India, Barasat Branch, and State Bank of India, Head Office, who are respectively defendants Nos. 1 and 2 in the suit, and asked for a duplicate draft conveying his readiness to execute an indemnity bond for this purpose. The State Bank of India informed the plaintiff that the draft in question had not been paid and was still outstanding in their books assuring him that due caution would be exercised in the event of its presentation for payment but pleaded their inability to issue a duplicate draft except on an indemnity bond executed by the purchaser of the original draft, the Principal Agricultural Officer, who has been impleaded as proforma defendant No. 3. As he was in no way responsible for the loss, the Principal Agricultural Officer declined to execute the bond but requested defendant No. 1 to issue a duplicate draft as asked for by the plaintiff. Ultimately having failed to persuade defendants Nos. 1 and 2 to issue a duplicate, the plaintiff brought the instant suit praying for a decree declaring that the, plaintiff is entitled to a, duplicate demand draft for Rs. 26,790 from defendants. Nos. 1 and 2 and for a direction on the said defendants to issue a duplicate draft, if necessary, on the plaintiff executing an indemnity bond and for permanent injunction restraining the defendants from making any payment on the original draft.
2. The main defence of defendant Nos. 1 and 2 as appearing from their written statement is based on a rule in the Bank's Book of Instructions which requires inter alia an indemnity bond to be executed by, the purchaser of the draft before a duplicate could be issued. The court below decreed the suit declaring that the plaintiff is entitled to a duplicate demand draft from defendants Nos. 1 and 2 who were directed to issue a duplicate on the plaintiff executing an indemnity bond and the defendants were permanently restrained from making any payment on the original draft.
3. The decision of the court below rests on the terms of Section 45-A of the Negotiable Instruments Act which is as follows:—
“Where a bill of exchange has been lost before it is overdue, the person who was the holder of it may apply to the drawer to give him another bill of the same tenor, giving security to the drawer, if required, to indemnify him against all persons whatever in case the bill alleged to have been lost shall be found again.
If the drawer on request as aforesaid refuses to give such duplicate bill, he may be compelled to do so.”
4. It is not claimed that the Bank's Book of Instructions has any statutory force and clearly if the draft was a bill of exchange then the plaintiffs right to get a duplicate of the lost draft cannot be questioned. In, Birbhum Central Co-operative Bank Ltd. v. Pioneer Bank Ltd., AIR 1956 Cal 615, a Division Bench of this Court has observed that it is well settled that a banker's draft is a bill of exchange and as such it is a negotiable instrument. The same view has been taken in Suganchand & Co. v. Brahmayya & Co., AIR 1951 Mad 910 (2), M.J Rice and Atta Mills v. Firm Ramlal Onkarmal, AIR 1957 Assam 133 and Sidh Nath Shukla v. Punjab National Bank, AIR 1960 All 238.
5. Mr. Ghosh appearing for the appellants contended that a draft of the kind with which we are concerned in this case, did not come up for consideration in the decisions which support the view that a demand draft is a bill of exchange. A demand draft may be issued either by a bank on a different bank or by one branch of a bank to another branch of the same bank or upon its head office. The draft in the instant case drawn by Barasat branch of State Bank of India on its head office at Calcutta is of the latter kind. Mr. Ghosh argued that such a draft does not satisfy the definition of a bill of exchange and the holder of it is not therefore entitled to the protection of Section 45-A. Mr. Ghosh also relied on a decision of the Bombay High Court in Haji Shaikh Hasanoo v. S. Natesa Mudaliar, AIR 1959 Bom 267 which holds that such drafts are not negotiable instruments at all. Before I turn to the question whether a draft of the kind under consideration is a bill of exchange it will be convenient to consider the Bombay decision relied on by Mr. Ghosh.
6. In the Bombay case which concerns a draft drawn by the Exchange Bank of India and Africa, Madras Branch, on its branch at Nagpur, it was observed that where, as here, the draft is one drawn by One branch of a bank on another branch thereof it cannot by any stretch of imagination even be suggested that the draft is a negotiable instrument”. The Judgment does not state the reason behind the view expressed. Apart from the position that the decision of the Division Bench of the Calcutta High Court in Birbhum Central Co-operative Bank's case, AIR 1956 Cal 615 taking a contrary view is binding on me, the Bombay decision overlooks Sections 85-A and 131A of the Negotiable Instruments Act which contain specific provisions in respect of the drafts drawn by one branch of a bank on another payable to order. It is therefore difficult to agree with the observation in the Bombay case quoted above that a draft of the nature concerned in this case cannot be a negotiable instrument.
7. It now remains to be seen if a draft of this nature is a bill of exchange. Section 5, of the Negotiable Instruments Act defines a bill of exchange as “an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument.” It is not disputed that the lost draft in this case was in the form, Barasat branch of the State Bank of India calling on its head office at Calcutta to pay the amount to the plaintiff or to order. Mr. Ghosh contended that an instrument in order to be a bill of exchange must concern three persons, the drawer or the maker of the draft, the drawee, and the person to whom or to whose order payment is to be made. It was argued that in the instant case the drawer being only a branch of the bank on which the draft was drawn, the drawer and the drawee was the same person so that only two persons were involved including the payee and that as such the instrument might at best be a promissory note, not bill of exchange, in which event the protection given by Sec. 45-A would not be available.
8. It is true that ordinarily different branches of a bank and their head office constitute one legal entity, a branch being only an agency of the head office, but it is also well known that for certain purposes of banking business the branches are treated as distinct entities. For instance, as pointed out in Sheldon's Practice and Law of Banking, Ninth Edition, at page 193, “when a customer draws a cheque he does not draw it upon the bank generally, but upon the particular branch at which he keeps his account” and “one bank is, therefore, not compelled to pay to cheque drawn upon another branch”. Again, different branches of a bank may be endorsers from one to the other of a negotiable instrument and notice of dishonour in such a case has to be given to each branch in succession, each branch being treated for this purpose as distinct both from the head office and the other branches. In Rex v. Lovitt, 1912 AC 212 at p. 219 the Privy Council observed-that “Although branch banks are agencies of one principal firm, it is well settled that for certain special purposes of banking business they may be regarded as distinct trading bodies” and summed up the position appearing on the authorities as that “having regard to the necessary course of business between the parties” the banks must be held to have “localised” in some measure their obligation to their customers or creditors “so as to confine it, primarily at all events, to a particular branch”.
9. This aspect of relation between the different branches of a bank and between them and the head office has been noticed by the Supreme Court in Delhi Cloth and General Mills Co. v. Harnam Singh, AIR 1955 SC 590 at p. 598 of the report, it is stated as settled rule in banking transactions that “the obligation of a bank to pay the cheques of a customer rests primarily on the branch at which he keeps his account and the bank can rightly refuse to cash a cheque at any other branch.” The Bombay High Court also points out the distinctive character of the branches of a bank for certain purposes of banking business in Bank of India Ltd. v. Official Liquidator, AIR 1950 Bom 375 at p. 377. I, therefore, hold that the draft in question is a bill of exchange and the plaintiff is entitled to a duplicate thereof in terms of Section 45-A of the Negotiable Instruments Act.
10. I have already referred to the argument that the drawer and the drawee being the same person, the draft is more in the nature of a promissory note and cannot be a bill of exchange. If it is thought that the fact that Barasat Branch of the State Bank of India and its head office at Calcutta happen respectively to be the drawer and the drawee of the draft introduces an element of uncertainty as to the character of the instrument which otherwise is plainly a bill of exchange, even then the plaintiff can insist on the instrument being treated as a bill of exchange under Section 17 of the Negotiable Instruments Act. Section 17 is as follows:—
“Where an instrument may be construed either as a promissory note or bill of exchange, the holder may at his election treat it as either, and the instrument shall be thenceforward treated accordingly”.
11. In Musammat Bibi Kazmi v. Lachhman Lal Sao*, ILR 9 Pat 717 : (AIR 1930 Pat. 239) a Division Bench of the Patna High Court has held that where the drawer is the same person as the drawee, the holder of the instrument may treat it as a bill of exchange. In the instant case, the correspondence between the parties, including those between defendant No. 3 and the principal defendants, especially exhibit No. 4(e), letter dated 27-1-1967 written by the plaintiff to the Chief Accountant of the State Bank of India at its head office at Calcutta, and exhibit 1, letter dated 10-4-1968 addressed by the plaintiffs Advocate to the Bank's Barasat branch leave no doubt that the plaintiff was all through treating the draft as a bill of exchange. This is therefore an additional ground supporting the plaintiff's claim for a duplicate draft.
12. For the reasons stated above, this appeal must fail and is accordingly dismissed with costs. On the prayer of Mr. Banerji, Counsel for the appellants, operation of the decree to follow this Judgment will remain stayed for a period of one month after it is signed.
13. Appeal dismissed.