Case study - STD account

Case study - STD account

Case: Cheque paid at the counter of the bank but account holder claimed non-

issuance of that cheque.

Bank Agami used to maintain an STD A/C of a customer. Account was being operated by one Mr. Ayub Ali. He was running trading business of his father-in-law. His father-in-law was a big merchant of Chittagong who was involved in import business of powdered milk. As a representative of father-in-law Mr. Ali maintained an office in Dhaka adjacent to the concerned branch of the Bank Agami. Mr. Ali had to run his office using the assistance of Mr. Apurba, an appointed employee of the trading firm. On behalf of the firm and Mr. Ali, Mr. Apurba used to maintain entire banking transactions including depositing and withdrawal of money in the STD A/C. Both Mr. Ali and Mr. Apurba had to come to the branch every now and then for banking transactions. As the nature of business was wholesale of powdered milk, the sale proceeds were required to be deposited in the A/C several times in a day, even after normal banking transaction. By nature Mr. Ali was a bit snobbish pattern, with a limited association among the employees of the bank, while Mr. Apurba was very friendly to almost all the employees of the bank. As the average balance in the account was very significant, employees of the bank branch had to give both of them due importance in the prevailing competitive environment of banking business. Both of them were familiar to the bank employees for more or less 2 years. Mr. Apurba created a field within the branch more acceptable than Mr. Ali, as he had to come very frequently with big amount of cash money for depositing or with a cheque of big amount for withdrawal. Besides, he was very much amiable and friendly to the bank employees.

One evening “Head of Branch” had to leave the branch for attending an emergency meeting called upon by the Regional Head of the Bank. After returning from the meeting at about 7.30 PM Head of Branch received a telephone call from Mr. Ali enquiring balance in his STD account. On receipt of information of the balance in the A/C, Mr. Ali raised objection about correctness of the balance. HOB informed Mr. Ali that an amount of Tk.4,00,000/- was taken by him at the late afternoon. But Mr. Ali informed the HOB that he did not issue any cheque for Tk.4,00,000/- at that time as mentioned. He advised the HOB to credit his A/C with Tk.4,00,000/-immediately.

Thereafter Head of Branch enquired the matter with his colleagues about that payment. Mr. Apurba came to the branch just after leaving of HOB with a bearer cheque for Tk.4,00,000/. The cheque was found apparently in order duly signed by Mr. Ali. But if it were suspiciously examined, the signature of the cheque to be appeared slightly different from the actual signature of the A/C holder.

Next day Mr. Ali lodged FIR against the Bank with the nearest Police station. After few days Mr. Ali also filed a money suit in the civil court for recovery of the payment made illegally as alleged.

It is to further mention here that it was the practice of HOB to contact the A/C holders in case of payment of cheque with bigger amount. Usually allowing of payment is forbidden after the transaction hour. But in reality, as a practice of banking transaction HOB had to allow payment even after banking transaction.

Since happening of the occurrence Mr. Apurba was found absconding. It was evident that Mr. Apurba stole the cheque leaf from the custody of Mr. Ali.

Accord your opinion/comments on the following issues:-

q  Holder of the instrument.

q  Holder in due course.

q  Payment in due course.

q  Duties & responsibilities discharged by the HOB and other concerned officers who passed the cheque.

q  Responsibilities of the A/C holder.

q  Probable consequence of the case.

q  How will you accord your judgment if you are given with the assignment on the subject case.