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Querist :
Anonymous
(Querist) 18 April 2011
This query is : Resolved
Dear Sir,
would you give me a judgement of National Commission Judgement
in the matter of Haryana Gramin Bank decide on 7th Septemenr, 2010- bank is liable for the fraud committed by its employee.
and aslo State Bank of India versus Smt Shyama Devi AIR (1978)n 1263 (S.C.)
Thanking You,
Parveen Kr. Aggarwal
(Expert) 19 April 2011
PETITIONER:
STATE BANK OF INDIA
Vs.
RESPONDENT:
SHYAMA DEVI
DATE OF JUDGMENT 05/05/1978
BENCH:
SARKARIA, RANJIT SINGH
UNTWALIA, N.L.
KAILASAM, P.S.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2476 of
1968.
From the Judgment and Decree order dated 3-3-6A of the
Allahabad High Court of Judicature at Allahabad in First
Appeal No. 343 of 1952.
Y. S. Chitale, J. S. Arora, Ashok Grover and G. K. B.
Chowdry for the Appellant.
S. P. Bhargava and M. V. Goswami for the Respondent.
The Judgment of the Court was delivered by
SARKARIA, J.-This appeal on certificate is directed against
a judgment and decree, dated March 3, 1964, of the High
Court of Judicature at Allahabad. It arises out of these
circumstances :
On September 17, 1945, the respondent opened a Savings Bank
Account, being No. 9001, with the appellant’s predecessor,
the imperial Bank of India at its Allahabad Branch. She was
introduced to the Bank by one Kapil Deo Shukla, who was an
employee of the Bank, and admittedly a close neighbour of
the respondent and a friend of her husband, Bhagwati Prasad.
On November 30, 1948, the respondent made a petition in
forma pauperis for the recovery of Rs. 15,547/10/- together
with pendente lite and future interest from the Imperial
Bank. This petition was later registered as a regular suit
in 1950. The plaintiff’s case, as ,pleaded, was as follows
:
The plaintiff had, apart from 1,932/2/- admitted by the
defendand-Bank, the under-noted amounts which were
deposited by her :from time to time with the Bank :
Rs. 105deposited on September 17, 1945
Rs. 4000deposited on September 17, 1945
Rs. 8000deposited on December 7, 1945
Rs. 100deposited on June 20, 1946
——————-
Rs. 12205
——————-
These amounts were entered in the respondent’s Pass Book by
the ,employees of the Bank which had been confirming and
ratifying those entries from time to time.
Paragraph 3 of the plaint is material. It may be extracted
“There was a permanent clerk named Kapil Deo
Shukla in the employ of the defendant Bank,
who exercised much influence on other
employees of the Bank and used to work at
different counters. The Bank viewed his
actions with approval and acted with
negligence. The plaintiff as well as other
constituents regarded him as an employee :and
a responsible person of the Bank and quite
often used to hand over the money and letter
of instructions to him, while this clerk used
to obtain the signature of the officer on the
Pass Book as usual. The plaintiff used to
believe that the money had been deposited and
she was satisfied on perusal ,of the Pass
Book. She had never any occasion for sus-
picion.”
In August 1946, the plaintiff’s husband felt some suspicion
in the Bank’s affairs. She thereupon sent a notice, dated
August 13, 1948 to the defendant Bank. The Bank replied by
letter, dated August 14, 1948, in which it accepted the
deposit of Rs. 1,932/- and denied the deposit and payment of
the four items detailed above. The defendant-Bank was
responsible for the acts and omissions of its employees
which they did during their service, and if Shukla or any
other employee of the Bank had committed embezzlement and
defrauded the plaintiff, the Bank was responsible for making
good that loss.
The defendant-Bank in its written statement admitted that
Kapil Deo Shukla was one of its employees and he used to
work at the ,counter, but not at the Savings Bank counter,
where the Savings account of the plaintiff was dealt with.
Shukla was no longer in the service of the Bank. The Bank
further pleaded that the amount of Rs. 12,205/- as detailed
above, was never deposited with it, nor
were the alleged deposits constituting this amount ever
confirmed or ratified by it. The Bank further stated that
only an aggregate amount of Rs. 1,932/- had been deposited
by the respondent on the diverse dates, as indicated below :
Rs. 50- deposited on September 17, 1945
Rs. 400- deposited on January 31, 1946
Rs. 432- deposited on February 4, 1946
Rs. 1000- deposited on April 23, 1946
Rs. 50- deposited on July 23, 1946
The Bank further averred that the plaintiff was introduced
to, the Bank by the said Kapil Deo Shukla who was her close
neighbour and a fast friend of her husband, Bhagwati Prasad,
and that if the plaintiff-respondent selected him as her
agent or instrument for depositing money in the Bank and he
had defrauded her, or if Kapil Deo Shukla acting in
collusion with her husband, showed wrong amounts in her Pass
Book, the Bank was not liable for any loss that might have
accrued to her.
The parties went to trial on these bases
(1) Did the plaintiff deposit with the
defendant the various sums of money mentioned
in Para 4 of the plaint ?
(2) Are these amounts mentioned in the
plaintiff’s Pass Book ? If so, is the
defendant bound by the entries therein ?
(3) Did the plaintiff make any deposit in
contravention of any rule of the Bank ? If so,
to what effect ?
On Issues (1) and (2), the trial court found that, except
for the items of Rs. 105/- and Rs. 4,000/- entered in the
Pass Book, the respondent had deposited the other amounts
mentioned in it and that the Bank was bound by those
entries. On Issue No. (3), it was held that the Rules were
not strictly enforced by the Bank, and if the Bank had
accepted an amount larger than the sum of Rs. 5,000/in
contravention of its Rules, the respondent was not debarred
from claiming such deposit.
In the result, the trial court, on July 8, 1952, decreed the
respondent’s suit (in respect of two items) for Rs. 10,040/40/-, together with simple interest on this amount
from January 1 1946, to August 14, 1947 @ Rs. 1/8/- per cent
per annum, and from, August 15, 1947 to December 1948 @ Rs. 71-1- per cent per annum. It was further ordered that the
respondent would get simple interest: on the decretal amount
(after deducting Rs. 1,986/2/- which had been paid during
the pendency of the suit) @ 6% per annum. Proportionate
costs were also awarded to the respondent.
Aggrieved, the Batik carried an appeal to the High Court of
Judicature at Allahabad, and the respondent filed cross-
objections in respect of the amounts of Rs. 4,000/- and Rs. 1051-, disallowed by the trial court.
The High Court observed that the disputed amount of Rs. 8,000/shown in the Pass Book consisted of two items, the
bigger of which was an amount of Rs. 7,000/- in the form of
a cheque drawn by Bhagwati Prasad on the account of Bhagwati
Prasad & Sons in Bharat Bank Ltd., Allahabad, and that
Bharat Bank paid the amount of the cheque to Dass Bank Ltd.,
Allahabad, who credited it to the account of Lala Babu alias
Kapil Deo Shukla, the aforesaid employee of the Imperial
Bank. On these premises, the High Court found that the
amount of the cheque was not actually deposited, first, in
the account of Bhagwati Prasad & Sons, nor later in the
Savings Account of the respondent, and that Kapil Deo Shukla
had fraudulently taken the money of the cheque and credited
it in his own account in the Dass Bank Ltd., Allahabad.
“Therefore, the respondent had to suffer because of the
action of Kapil Deo Shukla, an employee of the Imperial
Bank.”
Repelling the contention of the appellant-Bank, the High
Court held on the basis of the evidence of the appellant’s
witnesses Mahadeo Prasad and Narbada Prasad-that “it could
not be said that Kapil Deo Shukla was not acting in the
course of his employment in the Bank”.
Regarding the entry of Rs. 100/- the High Court held that
the initials against this entry purporting to be of L.
Anthony, bad not been proved to be forged inasmuch as L.
Anthony had not been examined, and that if any fraud had
been committed by Kapil Deo Shukla, the Bank was liable for
the same.
In respect of the disputed deposit of Rs. 4,000/-, the High
Court held that the appellant had not, disproved the
statement of Bhagwati Prasad by having the accountant of the
Calcutta National Bank summoned with the accounts relating
to Bhagwati Prasad, and as’ such, it did not see any reason
to disbelieve Bhagwati Prasad’s statement that the cheque
for Rs. 4,000/- was given to the Bank on September 10,1945
to open a Savings Bank account in the name of the res-
pondent, and that if K. D. Shukla cashed that cheque, also
and had the amount deposited in his own account, the
respondent could not be made to suffer for the fraud
committed by Kapil’Deo Shukla in the course of his
employment in the Bank.
With regard to the item of Rs. 105/- also, the High Court
accepted Bhagwati Prasad’s statement that amount ad been
deposited by him on September 7, 1945.
The High Court dismissed the Bank’s appeal and allowed the
plaintiff-respondent’s cross-objections, decreeing the suit
‘for’ Rs. 14,145/10/-, together with simple interest thereon
from January 1, 1946 to August 14, 1947 at the rate of Rs. 1/8/- per cent Or annum and from August 15, 1947 to December 1, 1948 at 6 per cent
per annum. It was further directed that the respondent
could get pendente litse simple interest from the appellant
on the decretal amount at 6% per annum. As the amount of Rs. 1,986/2 had been paid to the respondent on September 16,
1950, it would be deducted from the total amount found due
to the respondent and the decretal amount scaled down pro
tanto. Costs of both the courts were also awarded to the
respondent.
Hence, this appeal by the Bank on a certificate granted by
the High Court under Article 133 of the Constitution read
with sections 109 and 110 of the Code of Civil Procedure.
Dr. Y. S. Chitale, appearing for the appellant, contends
that the respondent’s case, as laid in the plain,, was that
the plaintiff had entrusted K. D. Shukla, who was their
friend, with moneys from time to time for depositing in her
Savings Bank account. In such a situation, K. D. Shukla
could not be said to have been acting in due course of his
employment or an agent of the Bank but only as an agent of
the respondent, and if K. D. Shukla did not deposit those
amounts. as directed by the plaintiff, but misappropriated
the same and to cover up his fraud made false entries in the
Pass Book, the Bank was not liable. Stress has been laid on
the fact that the disputed amounts. were never delivered by
cheque or otherwise at the Bank’s counter. In this
connection, reliance has been placed on the principles
enunciated in Leesh River Tea Co., Ltd. & Ors. v. British
India Steam Navigation Co., Lid.(1); Ruben and Ladenburg v.
Great Fingall(2); and Morris v. C. W. Martin & Sons Ltd.(3)
As against the above, Mr. Bhargav submits that the entries
in the Pass Book showing the deposit of these amounts in the
Savings Bank account of the plaintiff, had admittedly been
made by K. D. Shukla, when he was an employee of the Bank.
It is pointed out that there is evidence on the record to
show that this K. D. Shukla had mani-pulated the accounts of
three other depositors, also, and the Bank had reimbursed
those constituents for the loss, and here is no reason why a
discriminatory treatment should have been meted out to the’
plaintiff. It is argued that evidence on the record
suggests that K. D. Shukla could be called upon to help
other clerks, also, in transactions; with the Bank; that
there could be no collusion between Bhagwatr Prasad and K.
D. Shukla, because no man in his senses, would collude with
another to cause deliberate monetary loss to himself or his
wife.. It is emphasised that according to the statement of
Bhagwati Prasad, the cheque for Rs. 4,000/- drawn by
Bhagwati Prasad on the account of Bhagwati Prasad & Sons for
transfer to the account of the plaintiff,, was handed over
by him at the Bank’s counter. With regard to all the
disputed items, it is urged that the entries in the Pass
Book showing-. these deposits in the plaintiff’s accounts
were, prima facie, sufficient:
to establish the plaintiff’s claim and cast liability on the
appellant. Our attention has also been drawn to the entries
in the Bank’s ledger showing the deposit of this amount of Rs. 4,000/- in the account of the plaintiff. It is
maintained that if K. D. Shukla or any other employee of the
Bank made these entries falsely in the Pass Book or in the
Ledger, the plaintiff could not be made to suffer and that
the Bank would for that fraud committed by the Bank’s
employees in the course of their employment, be liable. It
is contended that in the face of the entries in the Pass
Book, the burden had shifted on the Bank to show, how it was
not liable to make good the loss.
At the outset, it may be noted that the case of the
plaintiff, as adumbrated in the plaint, was different from
what was sought to be made out at the trial. It will bear
repetition that in the plaint, it was pleaded that the
plaintiff “quite often used to hand over the money and
letter of instructions to him (K. D. Shukla), while this
Clerk used to obtain the signatures of the officer on the
Pass Book as usual. The plaintiff used to believe that the
money had been deposited and she was satisfied about such
deposits on perusal of the Pass Book.. She had never any
occasion for suspicion” before August 1946.
At the trial, the plaintiff herself did not appear in the
witness-box, instead. her husband Bhagwati Prasad appeared
as a witness. His version was that it was he, and not his
wife, who used to hand over the money and letter of
instructions for deposit of the same in the plaintiff’s
Savings Bank account; and that he had deposited the amounts
in cash or cheque at the counter behind which, at the Same
table, K. D. Shukla and one other clerk worked. Contrary to
the case set up in the plaint, Bhagwati Prasad went to the
length of saying that he did not send or deposit through K.
D. Shukla any money in his wife’s account with the defendant
Bank. He equivocated even withregard to the paten, fact
that it was K. D. Shukla who had introduced the plaintiff
and identified her signature on the Account Opening Form
submitted to the Bank. He denied that the plaintiff ever
sent her Pass Book to the Bank for completion through K. D.
Shukla and the latter used to return the same to her after
completion. He, however, conceded
“If he was present in the Bank, I may have
deposited or paid some amount through him.”
At this juncture, the witness was confronted with the
contents of paragraph 3 of the plaint. Thereupon, he
admited that what was stated therein was correct. Bhagwati
Prasad further admitted that K. D. Shukla was residing four
or five houses, away from his house and he was known to the
witness for the past 10 or 1 1 years.
Before dealing with the. contentions canvassed, it would be
useful notice the settled legal principles which govern the
vicarious liability of an employer for the loss caused to a
customer through the misdemeanour or negligence of an
employee.
The first of these principles is that the employer is not
liable for the act of the servant if the cause of the loss
or damages arose without his actual fault or privity and without the fault or neglect
of his agents of servants in the course of their employment.
This principle is best illustrated by the decision of the
House of Lords in Leesh River Tea Co. Ltd. & Ors. v.
British India Steam Navigation Co., Ltd. (supra). The facts
of that case were that during her voyage a ship called at an
intermediate port to discharge part of her original cargo
and load some fresh cargo. The shipowners engaged a
stevedore company to discharge and load. A servant of the
stevedore company stole a brass plate, which wasa cover
that could be removed to the access to a storm valve.
Itsremoval rendered the ship unseaworthy as sea water
could enter whenthe ship rolled. The resulting hole in
the ship was concealed by part of the fresh cargo loaded.
On her voyage after leaving the port the ship encountered
heavy weather. Water entered through the hole end damaged
part of the original cargo. In an action for damages by the
owners of the damaged cargo, the shipowners contended that
they were excepted from liability by Art. IV. Rule 2(q) of
the Hague Rules, because the cause of the damage arose
without their actual fault or privity and “without the fault
or neglect of the agents or servants” of the shipowners.
Dealing with this argument, Danckwerts, L.J. observed (at
page 597 ) :
“It seems to me that the vital point in the
case is whether the theft of the brass plate
was made by the stevedore, at Port Sudan, in
the course of his employment by the ship-
owners. He was to be regarded as the agent of
the shipowners for the purpose of unloading
and loading cargo. There is no doubt that
this gave him the opportunity to effect the
theft of the plate; but the stevedore was
concerned with cargo and not with the ship or
parts of the ship. When he deliberately stole
the plate he was acting in a way which was
completely outside the scope of his employment
on behalf of the shipowners. The theft could
not have been prevented by any reasonable
diligence of the shipowners through the
officers and crew of the ship.”
Salmon, L.J., speaking in a similar strain (at page 599)
emphasised that the fact that the thief’s employment on
board presented him with the opportunity to steal does not
suffice to make the shipowners liable. The conclusion drawn
was
“For an employee to, be liable, however, it is
not enough that the employment merely afforded
the servant or agent an opportunity of
committing the crime.”
It must be shown that, the damage complained of was caused
any wrongful act of his servant or agent done within the
scope or course of the servant’s or a s employment,even if
the wrongful act amounted to a crime. For this proposition,
Salmon, L.J. referred to Lloyd V. Grace, Smith & Co.United Africa Company Ltd. v. Baka Owoade(1) the Privy
Council laid down that a master is liable for his servant’s
fraud perpetrated in the course of master’s business,
whether the fraud was for the master’s benefit or not, if it
was committed by the servant in the course of his
employment. There is no difference in the liability of a
master for wrongs whether for fraud or any other wrong
committed by a. servant in the course of his employment, and
it is a question of fact in each case whether it was
committed in the course of the employment.
In that case, the appellant-company, general merchants, had
expressly committed to servants of the respondent, a
transport contractor, at his request, goods for carriage by
road, and the servants stole the goods, and the evidence
established that that conversion took place in the course of
their employment. The respondent was held liable to the
appellants for the value of the goods.- The rule in Lloyd v.
Grace, Smith & Co. (supra) was applied.
Now, let us apply these principles to the facts of the
present case.
The plaintiff’s case, as already noticed, in the plaint was
that the various amounts had been handed over in cash or in
cheque by her to K. D. Shukla, an employee of the Bank for
crediting in her Savings Bank- account with the defendant-
Bank. But Shukla fraudulently misappropriated or converted
the same to his own use.
Therefore, the first question that falls to be considered is
whether the amounts, in question, were handed over by the
plaintiff or on her behalf by her husband, Bhagwati Prasad,
to K. D. Shukla in the course of the Bank’s business ? In
other words, was K. D. Shukla, while receiving these amounts
from the plaintiff, acting as an agent of the plaintiff or
of the Bank in the course of his employment ? This question,
further resolves into the issue whether these amounts in
question were handed over in the usual course of business in
the Bank ?
Issue No. 1, framed by the trial court, is wide enough to
cover this point. As already noticed, the trial court
decided this issue, excepting with regard to the items of Rs. 4,000/- and Rs. 105/-, in favour of the plaintiff. The
High Court, on appeal, decided this issue with regard to the
item of Rs. 4,000/- in favour of the plaintiff.
Since it is contended that the court below has misread the
evidence and has not paid due attention to some of its
features, we propose to reexamine the same ourselves.
The main items shown in the Pass Book, as deposited in the
respondent’s Savings Bank Account are of Rs. 4,000/- and Rs. 8,000/-
In regard to the item of Rs. 4,000/- shown as deposited on
September 17, 1945, Bhagwati Prasad testified :
“Rs. 4000/- was deposited by cheque on 17th
September 1945. It was presented in the Bank
on 10th September,
1945…… The counterfoil (Paper No. 4 of
List 41/C) of Rs. 4000/- relates to this cheque,
showing the amount deposited on 17th September
1945. This is a crose cheque. I had written
a letter in Hindi to the Bank to deposit, the
amount of this cheque in Shyama Devi’s
account.”
In cross-examination, he clarified that this cheque for Rs. 4,000/-, dated 10th September 1945, was drawn by him on
his account in favour of ,self’. The witness bad drawn two
parallel lines on it so as to make it a crossed cheque. He
did not issue this cheque in Shyama Devi’s name. rhis
crossed cheque was handed over by the witness at the counter
of the Bank. The Counter Clerk asked the witness to go
away, assuring that the witness would later on receive the
Pass Bank with the amount duly entered in it. The witness
then went out of station in connection with his bamboo
business. On his return on the 17th September 1945, he went
to the Bank., The Counter Clerk then asked the witness to
deposit some money in cash before a new pass Book could be
issued and the amount of the cbeque credited by the transfer
in the plaintiff’s account. On the same day, the witness
went to the Bank and deposited Rs. 415/- in cash.
Thereupon, a new Pass Book was issued to the witness. The
amount of Rs. 4000/- was shown as deposited in the account
of the plaintiff on 17th September 1945., The cross-
examination reveals that the witness did not obtain any
receipt for the deposit of this cheque. He further admitted
that he had crossed the cheque. so that it could not be
credited to anybody else’s account or be cashed by anyone
also, but would go to his account. He further clarified
that he had signed this cheque on its back as it was a ’self
cheque. He denied the suggestion that he signed the cheque
on 10th September 1945 on its back, as he cashed it at the
Calcutta National Bank. He expressed- ignorance if the
payment of this cbeque was paid by the Calcutta National
Bank.
As testified by Shri A. Ganguli, who was Agent of the
Imperial Bank at Allahabad in August 1946, the procedure for
making deposits in an account with the Bank, was as
follows:-
“When a depositor comes to deposit money in
his or her Savings Bank account, the related
voucher together with cash is tendered by him
at the cash department counter in the Bank.
The receiving Cashier counts and checks up the
amount tendered, enters the items in the cash
scroll maintained by him, certifies the
voucher on, the back by his signature in token
of having received the money and passes the
voucher on to the Cashier for his signature.
The Head Cashier after certifying the voucher
sends it to the official in the Banking
Department who enters the voucher in his cash
scroll after branding, the voucher with the
big ‘received’ round rubber stamp bearing the
date of transaction. The voucher then goes to
the ledger Keeper for entry in the relative
account after which it is passed on to the
Day-Book writer for entry. If the depositor
had on that date lodged his pass-book with the
Ledger-Keeper then the entry is also made in
his pass-book and the pass-book together with the
voucher and Ledger is sent to the official for
attestation. The passbook need not
necessarily be lodged with the Bank at the
time of making the deposit but it must be
produced when a withdrawal is effected. In
the cash voucher that is tendered, the
ledger’s signature is invariably taken before
the money is accepted by the Cashier.”
It may be noted that whereas in the case of the undisputed
items this procedure was followed, evidence with regard to
the observance of this procedure is not available, in the
case of the disputed deposits. Bhagwati Prasad has not
produced any deposit receipt or voucher ,evidencing the
presentation of this crossed cheque for Rs. 4000/- in the
Bank to any employee of the Bank, nor is there any entry in
the cash scroll with regard to the deposit of any cash.
Another suspicious feature about this deposit was that
being a crossed cheque drawn in favour of ’self’, it could
be deposited in the account of the drawer or the endorsee of
the cheque only. It was not explained bow it was cashed by
the Calcutta National Bank. ‘There was no evidence to show
that in whose account in the Calcutta National Bank it was
deposited. Bbagwati Prasad says that he had banded over a
covering letter in Hindi from the plaintiff to the Bank,
requesting it to transfer and deposit the amount of the
cheque in the Savings Bank account of his wife, Shyama Devi.
No such letter is forthcoming, nor is there any evidence on
the record to show that the plaintiff made any attempt to
call for the production of any such letter from the Bank.
No question with regard to this letter was put to Shri A.
Ganguli, the Agent of the Bank, or the other officials of
the defendant-Bank who appeared as witnesses. Bhagwati
Prasad was a man of business. Why did he not straightaway
endorse that cheque in favour of his wife? This interval of
7 days between the alleged presentation of the cheque, to
the defendant-Bank and the date of the false deposit entry,
i.e. 17th September 1945, is itself a very suspicious
feature. The entry in the pass-book, showing the deposit of Rs. 4000/on 1 17th September was obviously false. It is not
disputed that this cheque of Rs. 4000/- (Ex. 20) had already
been credited to some one else’s account in the Calcutta
National Bank Ltd. on the 15th September, 1945. So far as
this deposit of Rs. 4000/- is concerned, it will not be
wrong to say that the decree passed by the High Court
against the defendant-Bank proceed mainly on the ground that
the false deposit entry in the Pass Book in respect thereto
is in the hand of K. D. Shukla who was at the material time
an employee of the Bank.
There is no corresponding entry in the Ledger of the Bank,
showing that the amount of this cheque was first debited in
Bhagwati Prasad’s account and then transferred to the
plaintiff’s account.
The High Court was thus not right in reversing the finding
of the trial court in respect of this item of Rs. 4000/-.
The onus was on the plaintiff to show that she paid the
amount to an employee of the Bank and was received by that employee in the course of his
employment. The false and fraudulent entry about the
deposit of this amount in the Pass Book, could not shift the
onus on the Bank to prove the contrary.
This takes us to the next big deposit in dispute. This
deposit of Rs. 8000/- consists of two items. In
examination-in-chief, all that Bhagwati Prasad stated with
regard to the deposit of this cheque and the transfer of
this amount from his account to that of the plaintiff was
thus :
“On 7th December, 1945 1 deposited Rs. 8000/-.
1 gave a letter that a sum of Rs, 7000/- from
my current account be transferred to the
account of Shyama Devi and I deposited Rs. 1000/- in cash with the Bank.”
He did not say as to which employee of the Bank he had
handed ever this cheque, and where. He did not even allege
that he had received any voucher evidencing the deposit of
this cheque or cash from the Bank, much less he produced any
documentary evidence to show the deposit. Cross-examined,
he expressed ignorance if the Bank had sent him any letter
informing that Rs. 7000/- bad been debited in his account
and transferred to Shyama Devi’s account. He further
admitted that he did not receive or remember if any
‘receipt’ from the Bank transferring Rs. 7000/- from his
account to Shyama Devi’s account was obtained by him. In
this connection, he added : “From the pass-book, I verified
the, correctness of the entries and did not make further
enquiries of the transfer of this amount of Rs. 7000/-.”
The Bank’s case was that it could not have accepted, the
deposit of Rs. 7000/- for crediting to the Savings Bank
Account as it would have been contrary to Rules 6 and 7 of
the Savings Bank Rules. According to these Rules a
depositor cannot pay a sum larger than Rs. 5000/,at a time,
nor can he deposit a sum exceeding Rs. 10,000/- in a year.
When Bhagwati Prasad’s attention was drawn to these Rules
printed in the Pass Book, he stated that at the time of
issuing this cheque, he was not aware of these Rules. Then
there is the ledger entry (Ex. 19) which purports to show
that Rs. 7000/- were withdrawn from the current account of
Bbagwati Prasad & Sons with the imperial Bank of India,
Allahabad, on December 7, 1945, by cheque. The evidence of
the Bank officials, Mahadeo Prasad and Shri A. Ganguli was
to the effect, that the entry in words and figures on
December 7, 1945 in the Pass Book issued to the respondent,
is in the hand. writing of K. D. Shukla, while the initials
against that entry in the relevant column purporting to be
of Mahadeo Prasad (Head Cashier) were forged initials.
The trial court allowed the respondent’s claim in respect of
this ten of Rs. 7000/-, on the basis that the entries in the
Pass Book and the Statement of Ledger Account (Ex. 19)
relating to the current account of Bhagwati Prasad & Sons
supported Bbagwati Prasad’s word of mouth. It did not
accept Mahadeo Prasad’s testimony, who was at the material time, a Sub-Accountant of the Bank to the
effect, that the initials purporting to be his against the
items of Rs. 105/-, Rs. 4000/-, Rs. 400/, Rs. 432/- in the
Ledger Account, were not executed by him, but were
imitations of his initials.
The High Court, at the appellate stage, admitted additional
documentary evidence consisting of certain letters which
passed between the defendant-Bank, the Agent of the Bharat
Bank, Allahabad and Dass Bank Ltd. These letters would show
that the Ledger Entry (Ex. P-9B) showing the withdrawal of Rs. 7000/- on December 7. 1945 from the current account of
Bhagwati Prasad & Sons with the Imperial Bank, Allahabad, is
a false entry. The first of these letters is date.(1
October 7, 1946 (Ex. 1) addressed by the Imperial Bank of
India to the Agent, Bharat Bank Ltd., Allahabad. It is
marked ‘Private and Confidential’. It reads :
“Dear Sir,
Cheque No. 620149 dated 21st November, 1945
for Rs. 7000 drawn by Messrs Bhagwati Prasad &
Sons.
We have been advised by Messrs Bhagwati Prasad
& Sons, the drawer of the above cheque that
this cheque was sent by him to us for credit
of his account. From our records we are
unable to trace this entry in our books. I
shall, therefore be glad if you will advise me
of the date on which and the name of the
person or Bank to whom the amount of the above
cheque was paid by you.”
In reply, the Bharat Bank Ltd., on October 18,
1946, wrote (Ex. 3)
“Dear Sir,
With reference to your P&C letter, dated the
7th instant, we beg to advise that the
amount of the cheque for Rs. 7000/in question
was paid by us to the Dass Bank Ltd., on
21-11-45.”
Thereupon, the Imperial Bank addressed a
letter, dated October 22, 1946 (Ex. 2) to the
Dass Bank Ltd., Allahabad, as follows :-
“Cheque No. 620149, dated 21st November, 1945
for Rs. 7,000 on Bharat Bank Ltd.
The above noted cheque was paid to you through
the clearing on the 21st November, 1945.
Please advise me for whose credit the above
cheque was collected by you.”
In reply, Dass Bank Ltd., informed the
Imperial Bank by their letter, dated October
23, 1946 (Ex. 4) as follows :
“. . . that the amount was realised by us in
cash from Bharat Bank Ltd. and was credited to
our C.D. a/c Lal Babu on the 21st November,
1945.Further our records shows that the above was not presented, nor paid to us through the clearing, as you say, which please note.”
From the additional documentary evidence admitted by the
High Court, two facts emerge clear : (1) That the cheque for Rs. 7000/drawn by Bhagawati Prasad was not handed over in
the normal course of business in the defendant-Bank for
transfer to respondent’s account in the regular manner; (2)
That it was cashed and deposited in the personal account of
Lal Babu alias K. D. Shukla with the Dass Bank Ltd.
Although in the witness-box-in variance with the story in
the plaint-Bhagwati Prasad did not clearly admit that the,
cheque was handed over to K. D. Shukla yet the inference
deducible from fact no. (2) is that he had probably handed
it over to K. D. Shukla after endorsing or signing on its
back. If in these circumstances, K. D., Shukla, cashed that
cheque and misappropriated the amount, could he be said to
have caused that damage while acting in the course of his
employment with the Bank? It is not disputed that K. D .
Shukla was not, at the relevant times, incharge of the
Savings Bank Counter at which the Savings account of the
Respondent was dealt with. The letter, dated October 7,
1946 shows that Bbagwati Prasad had then advised the
defendant-Bank that the ‘cheque had been “sent” by him to
them for credit of his account. Presumably, he sent it
through K. D. Shukla treating him as his (or plaintiff’s)
agent. K. D. Shukla instead of depositing it with the Bank,
manupulated to appropriate it himself. in such a situation,
the act which caused the loss to the respondent could not be
said to have been committed by Shukla in the course of his
employment with the Bank. At the most, it could be said
that the fact of his being an employee of the Bank and a
friend of Bhagwati Prasad, gave him an opportunity to commit
this fraud.
The rule in Leesh River Tea Co.’s case (supra), squarely
applies to this situation. The appellant-Bank was
therefore, not liable to make good the loss of Rs. 7,000/-
caused to the Respondent, by the act of K. D. Shukla, while
the latter was acting as an agent of the plaintiff and not
within the scope of his employment with the Bank. Nor could
the fact that false and fictitious entries to cover up his
fraud, were made by K. D. Shukla in the Pass Book of the
respondent and in the Ledger Account of Bhagwati Prasad &
Sons, make the embezzlement committed by Shukla an act
committed in the course of his employment with the Bank.
The findings of the High Court with regard to the remaining,
items are not seriously disputed before us.
In view of all that has been said above, we allow the defendant’s appeal and dismiss the plaintiff’s claim with regard to Rs. 11,000/(consisting of the items of Rs. 4000/- plus Rs. 7000/-) and interest thereon. The decretal amount granted by the High Court shall stand reduced by Rs. 11,000/-, and interest thereon. There shall be no order as to costs.
Appeal allowed.
Guest
(Expert) 19 April 2011
Dear Parveen, you could have attached the copy of the judgment in a Word or PDF file instead of posting a long judgment in the rply columns itself.
