STATE BANK OF INDIA versus SHYAMA DEVI

STATE BANK OF INDIA

SHYAMA DEVI

May 5, 1978

(R. S. SARKARIA, N. L. UNTWALIA AND P. S. KAILASAM, JJ.).

Vicarious liabilily.-··Legal principle which gorerns the 1:icario11s1liability of an .employer for the loss caused to customer thro11gh the niisdefneanour or negligence of an enlp[oyee.

The respondent opened Savings Bank Account being No. 90001 with the appellant's predecessor, the ln1perial Bank of India at its Allahabad Branch, having·been introduced io the B3nk by one Kapil Deo Shukhla, an employee of the bank and close neighbour of the resprndent and friend of her husband, Bhz.g\vati P;asud. On suspicion about the entries in the respondent'i- Vass Book- made by the employees of the Bank; which had been confirming, and ratifying them from time to tiffie, the respondent sent notice dated August. 13, 1948 to tl].e defendant bank: The appellant bank replied by its letter dated 14-8-1948 explaining the·. deposit of several items making up to Rs. 1932-2-0 anj denied the alleged dep.O$i1s of Rs. 105, Rs. 4000, Rs. 8000/- •nd Rs. JOO/-sa\'I ..to have been deposite_d through Kapil Dev Shukla. On .November, 30, 1948, the respo,ndent file.ct: suit iri forma pauperis for the recovery of Rs. 15,54]-10 As. iogether wiili pendente lite and future interest from the appellant's predeCessors. The Trial Court found, except for the items of Rs. 105 and Rs. 4000/ - entered in the pass-book the respondent had deposited other amounts _ mentioned in it and ·that the bank was bound by those entries. Holding that the rules were strictly enforced by the bank and if the bank had accerted an amount larger than the sum of Rs. 5,000/- in contravention of its Rules, the respondent was not debarred from claiming sllch deposit, the Trial Court decreed the respon(jen't'S. su.it (in respect of t\vo items) for Rs. 10,040-10 As. togCther with simple intere~t on this amount from January 1st 1946 to August E~ 14,,1947@ Rs. 1-8-0 per cent per annum and fro~ August 15, 1947 to Decen10er, 194-8 nt RS. 7% per annum. lt v:as further ordere'd that the respondent would'. get sin1plc interest on the decretal amount after dedu.:ting Rs. 1986-2·-As. which have been paid during the pendency of the suit, at 6% per annu1n. Proportionate costs was also awarded to the respondent. Aggrieved by the· said Jord~rs.,. tb-e bank appealed: to the Allahabad High Court- and the respondent filed· crosS objections in respect of the amount of Rs. 4,000/- and Rs. 105/-disalldwed by the Trial Court. The High Court. on reappreciation of the evidence dismissed the bank's appeal and allowed the respondent's cros5 objections decreeing the suit for Rs. 14145-10 annas together with simple interest thereon from January 1, 1946 to August 14, 1947@ Rs. 1-8-0 % 'per annum and from August-15, 1941 to·Decemb~r 1. 1948 at 6% per annum: lt w~-i.s further directed that respondei:i.t' could get pendente lite simple interest from_ the appellant on the decretal amount at 6% per annum and as the an1ount of Rs. 1,986-2~0 had' been paid to the ret>porldent on September, 1950 it would be deducted from the total amount found due to the respondent and the decrctal an1ount :-;caled down pro tarito.

Allowing the defendant's .appe~I by certificate_and dismissing the plaintiff's· claim \v.ith regard to Rs. ll ,000/ - (consisting of iten1s . of Rs. 4,000/- plu!I Rs; 7 ,000/-) and interest thereon, the Court

1-IELD : ( 1) The legal principle which governs the vic~rious liability nf an employer fQr the loss caused. to customer through the inis1emeanour or neglig_ence of an employee are.: (a) The. employer is not liable for 1he act of the servant if the cause of the loss or dan1age aros.e without his actual fault or pdvity or Without the fault or neglett of his t1gents or servants in the course of. their employrQent; (b) the daw~ge complained of must be shown to haYe been caused by any wrongful act of his servant fir agent done \Vithin the scope or course of the servant or agell'fs rn1ploy1nerit, even if the v.-·rongful <ict

a1nountccl to crime; and (c) master i:; liable for h:s servants fnJ.·1d perpe-trated in the course of master's business ,vheth'!r the fr:i.n::I wao;; for thl' 1naster's benefit or not, if it was committed by the servant in the course of his en1ployment. There is no difference in the liability of the master for wrongs whether for fraud or any other wrong committed by servant in the course of his employment and it is question of fact in each case whether it was committed in the course of the employment. [1015 G-H, !016 A, 1017 A-CJ

LCeslz Rh·er Tea Co. Ltd & Ors. v. British India Steanl _i\la1·igation Cn. Ltd., [1966] 3 All E.R. 593; Lloyd v. Grace Smith & Co., [1912] A.C. 636 and lJniled A_frila Co. Ltd. v. Saka Owoada, [19551 A.C. 130 referre:l to.

(2) In the instant case, the appellant bank was not liable to n1ake good the Joss of Rs. 7,000/- (part of Rs. 8,000/- entry) caused to the respondent by the act of K. D. Shukla. \vho was act~ng as an agent of the rlaintifl-rc$po1i-d£·nt and not within_ the -scope of his employment With the bank. ·Nor could the fact that false and fictitious entries to cover his fraud ¥:ere made_. by Shukla in the pass-book of the respondent and in the ledger account of Bhagwati \ Prasad and Sons make the embezzlement committed bv Shuk'a an act com-n1itted i•1 the course of his employmen• with the Bank. [1022 E-G]

the act of K. D. Shukla. \vho was act~ng as an agent of the rlaintifl-rc$po1i- ~

(b) The cheque for Rs. 7000-/- drawn by Bhag,vati Prasad was ·not hari<led over in the normal course of business in the defendant-bank for transfer to respondent's account in the regular manner. K. D. Shukla instead of depoSiting the cheque \Vith the bank, as per the letter dated 7-10-1946 addressed to the bank manipulated to appropriate it himself. In such situation, the act which caused the loss to the respondent could not be said to have been con1mitted by Shllkla in the course of his emoloyment '\\'ith the bank. At the most it could be said that the fact of his being an ernoloyee of the bank and friend of Bhagwati Pru'i~•i gave him an opportunity to commit the fraud. [I 022 ·a;· D-El

Lresh River Tea Cn. Ltd. & Ors. v. Br'tish India Stea1n Jl.lar'gation Co. I td., [1966] 3 All E.R. 593 followed.

( c) The onus was on the plaintiff to sho\v that she paid th? amount• to an .cn1ployee of the bank and was received bv that employee in the course of emoloyment. The false and fraudulent entry Rbont the deposit of Rs. 4000/-in the pass book could not shift the onus t'J the bank to prove the contrary. The alleged deposit of Rs. 4000/w bv cro~sed cheque on 17w9w45 is not suoported bv the testimony of Bhagwati Prasad. There 'vris no entrv in the cash scroil and fl'1 rPceint was produced in token of deposit. Th:: entry is obviouSly false. f1019

C, H, 1020 A]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2476 of 1968. From the Judgment and Decree order dated 3-3-6"- of the Allaha-bad High Court of Judicature at Allahabad in First Appeal No. 343 of 1952.

Y. S. Chitale, J. S. Arora, Ashok .Grover and G. K. R Chowdry ""!( for the Appellant. - ---- -- · ---~- .~, ·'-S. P. Bhargava and M. V. Goswami for the Respondent. · ~ 1·

The Judgment of the Court was delivered by SARKARIA, J.-This appeal on certificate is directed against 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 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 Shnkla, who was an employee of the Bank, and admittedly close neighbour of the respondent and .a friend of her husband, Bhagwati Prasad.

'.--·;-, :,,,..<- -~ ,._....,. B: . ·'"· ·'"·

s: ,._....,. B: I.y: . ·'"· ·'"· ,_S~WAMA JlE.VI .(Sarkar)a, J.)

',,_,.\Ori Noxember .;!O, ,19.48, the ,responde!lt made .a petition i!' f()T!':'fl · _payn~ris Jor,the {ecq~ery of ;Rs. J5,5:i7 /10/- tcige\hei 1vil\l R.~'!efe!'te · }i(e and fu:ure interest ,from the Imperial Bank. This pellt1on was > 'later register;:d as regular suit in 1950 ... :rhe pl~intiff's '.ca~e. as ;pleaded, was as follows : . · The plaintiff had, apart }r'?!n 1,932/.2/- .f!dmitted ,PJ. the defen-·dand-Bank, the under-noted amounts which were ·deEoS1ted ·by· her :from time to tinie' with the ·Bank:· · ,,. · " · · ..

This pellt1on was pl~intiff's '.ca~e. as . · ,PJ. the defen-her · · .. ··

Rs. 105 -do;posited on September 17, 1945 Rs. 4000 -deposited on September 17, 1945 Rs. 8000 -deposited--on December 7, 1945 ·Rs. -100 :-dep0sited on June 20, -1946 ·· ;Rs. 12205

::These amounts were entered· in the respondent's Pa~s 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 ix:rmanent clerk named Kapil Dea Shukla in the .employ of the defendant. Bank,. who. exercised· much .influence on other. emp!Oyees of the. Bank· and ·used ' to ·work at dilkrent counters: The "Bank viewed: his actions with approval and acted with negligence. The· plaintiff as ,)Veil as other constituents regarded .him, as an . employee ·and· responsible person of the ,Bank· and quite. often used to hand over the money and letter of instructions to him, while this clerk nsed to obtain the signature 'of the officer on the Pass Book as usual. The plaintiff used,to ,believ<> that, the money .had ,been deposited ,and she was satisfied. on perusal . of the Pass Book. She had never ·any occasion for sus-' picion . . n

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 .d.Onicd 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 jf , 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 a_nd he. used to work at the . counter, .but not at the Savings _Bank counter, where the Savings ,account of,the plaintiff was dealt.with. Sh11kla was no,lo!lger.in the ,service of the .Bank. 'fhe:Bank further'pleaded that the amount. of _Rs. 12,205/-, as .detailed above, ,was never d\'posited with it, nor

[J978J 3 S.C.R .

· were the alleged deposits constituting this amount ·ever coiifirmed or •ratified by it • . The Bank further stated that only an aggregate amount cf 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 in trod need to-the Bank by the sa"d Kapil Deo· Shukla. who was her. close neighbour.-c and 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 actmg in collusion with her husband, -- showed wrong amounts in her Pass Book, the Bank was noLliable for any Joss. that might have accrued to her.

The parties went io 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) Ar~ these amounts mentioned in the plaintiff's Pass. Book ? If so, is the defendant bound by the entries therein ?

( 3) Did the plaintiff ~ke any deposit in contravention of any rule -of the Bank ? If so, to what effect?

On Issues (1) and (2); ihe trial court found that, except for the items of Rs~· 105/- and Rs. 4,000/- entered ~n the Pass Book, the respondent had deposited the other amounts mentioned in it and that the Bank was bound by those entries. Pn Issue No. (3), if 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 res-~­pondent's suit (in respect of two items) for Rs. ,10,040/40/-; to- -gether with simpfo interest on this amount from January 1, 1946 to August 14, 1947 @ Rs. 1/8/C per cent per annum, and from August 15, 1947 to December 1948 @-Rs. 1/-/- per cent per annum .. It was furtbor ordered that the respondent would get simple interest." on the decretal amount (after deducting Rs. 1,986/2/-which • had been paid during the pcndency of the su:t) @ 6% per annum. ·Pro-portionate costs were also awarded to th~ respondent,

s. B. ;. l'. SHYAMA DEVI (Sarkuria, !.)

Aggrieved, the Bank 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. 105/-, disallowed by the trial court..

The High Ccurt 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 cheque drawn by Bhagwati Prasad on the account of Bhagwati Prasad & Sons in Bharat Bank Ud., Allahabad, and that Bharat Bank paid the amount of the cheque to Dass Bank Ltd., A'llahabad, 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., Alrahabad. "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 he of L. Anthony, had not been proved to be forged inasmuch as L. Anthony had not been examined, and that ii 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 sum-moned 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 Savings Bank account in the name of the res-ponclent, and that ii 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 accept-ed Bhagwati Prasad's statement that amount had 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 per annum

and from August 15, 1947 to December I, 1948 at 6 per cent per annum. It was further directed that the respondent could get pe11-dente /itse simple interest from the appellant on the dccretal 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 certificate granted by the High Court under Article 133 of the Constitution read w:th 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 plaint. was that tbo 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 Gitua-tio'n, K. D. Shukla could not be said to have been acting in due course of his employment er 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 no: liable. Strcs; 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 plac•cd on th principles enuncia:-ed in Leesh River Tea Co., Ltd. & Ors. v. British India Steam Navi-gation Co., Lid.('); Ruben and Laden burg v. Great Fingall('); and Morris v. C. W. Martin & Sons Ltd.(') As against the above, Mr. Bhargav submits that tho.; 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 th•c Bank. It is poi'nted 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 thF loss, and here is no reason why discriminatory treatment should have been meted out to the plaintiff. It is argued that evidence on the reccrd suggests that K. D. ~ Shukla could be called upon to hdp other clerks, also, in transactions .r. with the Bank; that there could be no collmion between Bhagwatl Prasad and K. D. Shukla. became no man in his senses, would collude with another to cause delit-:rate 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 •he account of the plaintiff, ' was handed over bv him at tho Bank's counter. With regard to all the disputed items, it is urged that the entries in the Pass Book showing thes~ deposits in the plaintiff's accounts were, prima facie, sufficient

(ll [1966] 3 Ail E.L.R.593.

12) [1904-07] All E.L.R 460.

(3) [1965] 2 All E.L.R. 725.

to establish the plaintiff's claim and cast liability on 1hc appellant. Our attcntio'n has also been drawn to the entries in th•c Bank's ledger showing the deposit of this amount of Rs. 4,000/- in the account ot the plaintiff. It is maintained that if K. D. Shukla or any other em-ployee of the Bank made th<sc entries falsely in the Pass Book or Ill the Ledger, the plaintiff could not be made to s'Uffer and 1hat the Bank would for that fraud committed by the Bank's employees in tho course of their cmployme'nt, 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 bo made out at the trial. It will bear repetition that in the plaint, it was pleaded that the plainiiff "quite often used to hand over th;, money and letter of i'nstructions to him (K. D. Shukla), while this Clerk used to obtain the signatures of the oflicer on the Pass Book as usual. Th·" 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 occ~sion for suspicion" before August 1946.

At the trial, the plaintiff herself did not appear in the witness-box, inst•zad, her husband Bhagwati Prasad appeared as wL'ness. 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\5 Savings Bank account; and that he had deposited the amounts in cash or ch•eque at the counter behi'nd 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 with regard 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 a'nd the latter used to return the same to her after completion. H;, how-ever, conceded :

"If he was present in the Bank, I may hav•c deposited or paid some amount through him."

At this juncture, the witness was confronted with the contents of para-graph 3 of the plaint. Thereupon, he admited that what was stated th•,rein was correct. Bhagwati Prasad further admitted tha: K. D. Shukla was residing four or five houses away from his house a'nd he was known to the witness for the past I 0 or J 1 years.

. Before dealing with the contentions canvassed, it would be useful iC; notice the settled le~al principles which govern the vicarious liability ot an employer for. the loss caused t~ customer through the mis-demeanour 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

ll'!JXI :\ s.c.~

his actual fault or privily and without the fault or neglect of his agents of servants in the course of their employment. This princ;ple is best illustrated by the decision of the House of Lords in Leesh River Tea Cc., Ltd. & Ors. v. British llldia Steam Navigation Co., Ltd. (supra). The facts of that case were that dming her voyage ship called at an intermediate port to discharge part of her original cargo and load some fresh cargo. The shipowners engaged stevedore company to dis-clmrge and load. servant of the stevedore company stole brass plate, \vhich was cover that could be ren1oved to give access to storm valve. lts removal rendered !he ship unseaworthy as sea water could enter when the 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 rnd damaged part of the original cargo. In au action for damages by the owners of the damaged cargo, the shipowners con-tended 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 privily and "without the fault er 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 ship-owners for the purpose of unloading and loading cargo. There is no doubt that this gave him the opportunity to efiect 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 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 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 by any wrongful act of his servant or agent done within the scope or course of the servant's or agent's employment, even if the wrongful act amount-ed to crime. For this proposition, Salmon, L.J. referred to Lloyd v. 'Grace, Smith & Co.(1).

s. B. I. v. SHYAMA DEVI (Sarkaria, !.)

In United Africa Company Ltd. v. Baka Owoade([1]) the Privy Council laid down that master is liable for his servant's frand perpe-trated in the course of master's business, whether the fraud v,as 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 master for wrongs whether for fraud or any other wrong committed by servant in the course of his employment, and it is 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, transport contrac-tor, 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 mis-appropriated 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 plaintifI or of the Bank in the cours<; of bis employment ~ This ques-tion, 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 i<>ue, 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 witl1 regard to the item of Rs. 4,000/- in favour of the plaintiff. y

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 fo re-examine the same ourselves.

The main items shown in the Pass Book, ~s deposited in the respon-dent'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 Sep-tember 17, 1945, Bhagwati Prasad testified:

"Rs. 4000/- was deposited by cheque on 17th Septem-ber 1945. It was presented in the Bank on 10th September,

(I). 1955]AC. 130.

1945 ...... The counterfoil (Paper No. 4 of List 41/C) of · Rs. 4000/- relates to this cheque, showing the amount depo-sited on 17th September 1945. This is crossed cheque. _I had written 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 crossed cheque. He did not issue this cheque in Shyama Devi's name. This crossed cheque was banded 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 iri 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 new Pass Book could be issued and the amount of the cheque 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, 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 cheaue. so that it could not be credited to anyb!)dy 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 'self' cheque. He denied the suggestion that be signed the cheque on 10th September 1945 on its back, as he ca~hed it at the Calcutta National Bank. He expressed ignorance if the payment of this cheque was paid by the Calcutta National Bank.

As testified by Shri A. Ganguli, who was Agent of the Imperial Bank at Allahabad in Augmt 1946, the procedure for making deposits in an account with the Bank, was as follows :-

"When 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 main-tained by him, certifies the voucher on the back by his signa-ture 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 entrv. 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 togetber with the voucher and Ledger is sent to the official for attestation. The pass-book need not necessarily be lodged with the Bank at the time of making the deposit but it must be produced when with-drawal is effected. In the cash voucher that is, tendered, the ledger's sigilature 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 crossed cheque drawn in favour of 'self', it could be deposited in the account of the drawer or the endorsee of the cheque only. lt was not explained how 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. Bhagwati Prasad ,;ays that he had handed over 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 officiafs of the defendant-Bank who appeared as witnesses. Bhag:wati Prasad was 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 very suspicious feature. The entry in the pass-hook, showing the deposit of Rs. 4000/-on 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 Septem-ber, 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 l!ccount 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 employ-ment. The false and fraudulent entry about the deposit of thi& amount in the Pass Book, could not shift the onus on the Bank to prove the contrary.

of thi& This deposit

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 plaiilfiff was thus:

"On 7th December, 1945 I deposited Rs. 8000/-. I gave letter that sum of R!i, 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 over 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/- had 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, th() 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 depositor cannot pay sum larger than Rs. 5000/-at time, nor can he deposit sum exceeding Rs. 10,000/- in 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 with-drawn from the current account of Bhagwati 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. Gan-G guli 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 item 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 Bhagwati Prasad's word of mouth. It did not accept Mahadeo Prasad's testimony, who was.

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at the material time, Sub-Accountant of the Bank to the effect, that the initials '!Jurporting to be his against the items of Rs. J 05 /-, Rs. 4000/-, Rs. 400/, Rs. 432/- in the Ledger Account, were not executed by him, but "ere imitations of his initials.

The High Court, at the appellate stage, admitted additional do~u­mentary evidence consisting of certmn 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 false entry. The first of these letters is dated 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 f.or credit of his account. From our records we are unable to trace this entry in our books. I shall, there-fore 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 ;nstant, 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 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 yon."

In reply, Dass Bank Ltd., informed the Imperial Bank by their letter, <lated 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 en the 21st November, 1945.

Further our records shows that the above was not pre-sented, 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: (!) That the cheque for Rs. 7000/-drawn by Bhagawati Prasad was nilt 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. Shukl:; 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 Bhagwati Prasad had then advised the defendant-Bank that the cheque had been "senf' by him t<1 them for credit of his account. Presumably, he sent it through K. D. Shakia 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 situation, the act which caused the Joss 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 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 K reduced by Rs. 11,000/-, and interest thereon. There shall be no order as to costs.

Appeal allowed.

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