19940121 TZHC Dar es Salaam

:i I .,. . . IN THE HIGH COURT OF T1u'JZANIA AT~D~. ES SALAJJ:1 CIVIL CJ1.f,'.~ NO. 98 OF: 1992 ( KEKO PHARMACEUTIC!.L) - INDUSTRIES LIMITE:1J )e O e O C • n e r o ,. ' PLAINTIFF versus THE NATIONAL BAI.::: OF COMMERCE ~ ■ ~ 0 e O e o ■ ft • DEFENDANT JUD GM E· NT 10 The plaintiff Keko Pharmaceutical Industries Limi tea has· sued the National Bank of Commerce, the defendant, claiming pa3ment c,f shs.4,619,025/= for lose au.f:f ered by the ·plaintiff and interest at 31 % on the principal amount plus shs_. 920 ~ 000/=· as general damages for breaoh of duty~ The faots in this case are not much_j_n disyute. PWI Iielly Hala told the court that she was working for tbe plaintiff company as Acting Chief Accountant. 20 The plaintiff oompan:y wae manufaetur.i,.ng medicines and dl'ugs for us·e b.Y humans and the same would be sold by the company. The company had an account with the defendant :Sank at Mnazi Mmoja Branch. The company was using the Foreign branch account no.1288O.- Clients to the company eould pa3 by ·obeque but the oompany would not deliver any goods to a client until the eheque is cleared. It is the bank which would advise . ,. · the . Company on whether· ,a cheque . has been cleared. ,' In 1991 the plainti.f:f oompany received a cheque 30 from a client. The cheque Wf!S from Kibiti branch of·the National Bank of Commerce. It was a bariker's cheque. The custo.mer who· delivered the cheque was f~m AL-Shaaf Medical Store who was.net the~r regular tMJ.atomer. The plaintiff banked thE:, cheque and got a pa.j-in-slip .f;rom the bank (_exhj_bj_·::, PI) as evidence o! ~anlting it.~ After depositing the cheque the & c· o• o/2 • - 2 - . plaintiff's account wai: credited with.the amount on the cheque. The bank 1;tat ecient shows the ere di t -of _.,· the amount on the che-~1e. (exl:5bit .P2)~ This was on 22/7/91.when the cheq;;e was· deposited. But in September · 1991, t~e plaintiff 1Eceived a letter f~om the bank \tb.3:-eh was returning t31e cheque which· had been deposited, because the same had ':leen stolen (exhibit P3) ... The eheque was tendered as exhibit P4o Then the plaintiff got a bank statement showing that the amount on the fheque was debited on the plaintiff's account on 18/9/91 (exhibit P5), When the plaintiff wrote the bank about this new development, the bank replied by ~~lidil;lrg· the plaintiff domestic j ,,, ... ,_.,., .! - advice · _,,,.., showing the cheques stolen (exhibit P6). Later on a photocopy of a newspaper showing·numbers of cheques stolen was· received by the plaintiff from the defendant (exhibit P7). •This newspaper notice eontained numbers.of many t1heques including the cheques whi~h is the subject matter of this case. PWI lamented in her evidence that she had -never seen this notice in ,he newspaper before it was sent to her and that the bank should not have i,aoeived the -cheque and in any. ease the bank should h~ve advised the plaintiff immediately rather than wait for euoh a long t'ime before doing so. The plaintiff was claiming for refund of the money on the cheque because the plain1iff had given drugs to the customer w~ch were of the ~alue shown on the cheque~ In oross examination PWI said that the customer with the cheque ,.ias not a regular customer but that he •·ame with ·all the dooumenta required. rwr ·did not . , know what a collecting bank':s :function was or that a period of 45 days was required to clear an ·upcountry ~heque. PWI supplied the·oustomer with drugs after some 4 days since receiving the cheque. The customer has never appeared again since this fraud nor does 'the plaintiff know whether such a o·ustomer. exists at Kibiti •. _/·-•-. -r '\ -~-1111111111111 • ... ·/ PWI said f_urther in re_-exa_mina-:(;ion that. the bank never sent·· the plaint:. cf a circular·· on how to deal with banker's cheques nor· . , _as·- the. plaintiff ever told about the 45 days waiting f 11r clearance of the cheques when- ever the plaintiff <k)osit·ed a banker~s cheque. PWI had never heard of tl19 theft of a banker 1· g cheque. In defence . Hen-, y Mkoni (DWI) api>eared for the def end ant. He said -',hat he was the branch accounting Manager in the U.B .. C.. Foreign Brancho He elaborated that the Foreign bra1ch as Et collec-'t:Lng bank will. ~ollect a cheque brcught to the bank and enter the amoWlt on the cheque in the custome.·.::: s account. Then the cheque is takeYL. tu the paying bo.11k for payment. When the bank enters the amount on the cheque in the customer ts ace oun.t it does not mean that the cheque has bee~ paid. The customers normally ask for the ~heque to be cleared before issuing. out goods. The plaintiff was supposed· to do so before releasing the drugs to the customer. Crediting a Gustomer•s account e with the amount on the cheque does not mean that the •heque has beeµ cleared. That is why there is cleared balance and uno'ieared balance. It takes 45 days to clear· a cheque from Kibiti bank. The plaintiff was supposed to be aware of this faot because the-plaintiff oou~d not . have used the uncleared· ·balance. When. customers open an account with the bank they are informed how long it takes to clear upcountry cheques. · A banker• s eheque \. is like any other obeque. ·The only difference is that it is a cheque issued by the bank which is useg to pay the bank's daily bills·. The plaintiff has been the oustomei-·of _the bank-sinoe 1980. OthE:r customers get banke:'I"' s. cheques but before they part wi tl1 their goods they check with the collecting bank to confirm whe.ther the cheque has been. c_leared. When notic·irn in newspapers are issued ·the aim isto notify the-customers that ' -~enever they deal with unknown cli.e!'.J,ts they have to be careful-. If. the plaintiff had ~one to ·t_he ban_k to confirm about the cheque, the 02::,.:.r. would have tel~pho-9-ed IU.biti branch and got the an_swer. As a collec:ting. • ·- 4 bank, the Foreign branch.is not supposed to know whether ·a oheque is genuine or not. In oross-examinatj ,,n, Mr. Mkoni said tha:t a banker•s ·cheque is the Jank's cheque hut, if issued by one branch of the NcB.C-s it is not respected and. honoured by another br..= nch aut-oniatical_ly because the ., -;heque was not. ·arawn bt the receiving branch. The f. banker's cheque is a c·1eque ~f the issuing branch and not of the whole N.B.t. He, h6wever, admitted that on a manually prepared statement is cleared or uncleared. The bank has a safegu[:ird procedure. to safeguard against . stolen o~egues. custJmers are alerted through various means about stolen cheques; he concludedo At the close of the case for both sides it was ordered that written submissions follow. But up to the t-ime of writing this judgment only the submission from the defence advocate had.been received.· \ In her submission Miss Mutabuzi., learned defehee . ' .__ -:. ' . ~ou.nsei·. has said that. her· client hc::d cone all ,that 'Wh:l:th is.required of a banker as notice of the stol~n cheqU.es had been pub~ished in the newspapers and the plain~itf just like any other customer ha'd been·informed of ho,; 'to ·-elear a cheque, namely th{'lt it takes 45 days !or · an UP oou.ntry oheque to be cleared·. Miss Mutabuzi also sul?mitt·ed that the plaintiff was negligent in not waiting· for the oheque to be cleared before parting wi;n ·the goods, I will now attempt to answer the issue framed at the beginning. The first issue r·eads as followtH. "Whether the defendant. failed to exercise reasonable care ana deligence tin· aooepting the stolen cheque and· forwarding it to the paying bank. ·for colleotion of proceeds." There was nothing wrong with regard to accepting of the etolen ·&heque by the defendant as it had been deposited by the plaintiff who had an acoount with the defendant, The de!endant was yet to forward the cheque to Kibiti .; .... /5 • , ' - 5 - branch, the paying bank~ according to the cheque. Before the defendant hac: done so the plaintiff had released the goods to tjJ customer who had come with the cheqµe~ The defen~,.nt cannot ·cc said to have failed to exercise reas,mable '.l~re and diligence in accepting the stolen ch~que, since it is common knowledge that many cb .: Jues were being depS)si ted at. the defendant's brancr, in the course qf business, and , it was not easy fort:. defendant's employees to detect a stolen cheque. · Did ·;he def end ant fail to exercisa reasonable care and a~~igence in forwarding the cheque ~ to the puying bank. J:gain I think ·.•· ,.t, because it was onlJ after the payin 2· ban_k at Kibi ti had passed the ~heque th&ilt£5 -Jefendant would be in a p0sition to krio~ 1 whether the cheque ·:.1as genuine or not. According to the defendant~s witness, it took ·45 days to clear an upooJ.mtJ!Y cheque. The information concerning the cheque was oommunioated to the plaintiff around 45 days after the cheque was first deposit ea·. the plaintiff had re.leased the gooOs some 4 days aft~r depositin~ the ~heque • . I do not s~e a~ evidence· of failure to exercise reasonable Oare and diligence. This issue_ is answered in the negative. There was only o·ne main issue framed in this <rnse, Issue no 2 was conditional on issue no. 1 being answered in the affirmative, but issue no 1, has 1?een asnwered in the negative •. However it may be useful for the purpose of completeness to deal with ·the issue. of eontributory negligence or simply negligence on the .part of the plaintiff's employees in releasing the goods before the cheque had been cleared. I do not . . - accept the evidence of PWI that she was not aware that there -was need ;to ·clea·r the cheque. first before goods could be released;. and· the -mere faot . that t.he amo_wit . . on the cheque was. shown to· the credit of. the company in the company's account did not mean t~at the cheque had been cleared. There is no magic in, someone stealtng ~lank banker's cheques and ·writing them as if. they have ~~en issued by the bank-. This is _what happened in \ ·~ -· ·~ '·: .... --. 21 1t" - '- A ····•·I' this case in· fact·. Acy b~sinessman would be expected to kn6w that a cheque h~~ to be cleared by the bank before acting on it ant releasing goods in consideration of it. The plaintiff'E servants were therefore negligent '\ ' in releasing the goods before ensuring that the cheque had been ·cleared by th banko 1~ It follows from the above that this suit must be .and is hereby dismiss d with costso A •. BAHATI JUDGE 21/1/94 Mr. ~i~o .for the defendant F&r Plaintiff - absent - served •. A. J3AHATI JUDGE 21/1/94