Vicarious Liability of Bank

 

PETITIONER:

STATE BANK OF INDIA

Vs.

RESPONDENT:

SHYAMA DEVI

 

DATE OF JUDGMENT 05/05/1978

 

BENCH:

SARKARIA, RANJIT SINGH

BENCH:

SARKARIA, RANJIT SINGH

UNTWALIA, N.L.

KAILASAM, P.S.

 

CITATION:

 1978 AIR 1263  1978 SCR  (3)1009

 1978 SCC  (3) 399

ACT:

Vicarious  liability-- Legal principale witch governs thevicarious liability of an employer for the loss caused to  a customer  through  the misdemeanour  or  negligence  of  an employee.

HEADNOTE:

The respondent opened a Savings Bank Account being No. 90001 with the appellant's predecessor, the Imperial Bank of India at its Allahabad Branch, having been introduced to the Bank by  one Kapil Deo Shukhla, an employee of the bank  and  a close  neighbour  of  the respondent and  a  friend  of her husband, Bhagwati Prasad.     On   a  suspicion about the entries in the respondent's Pass Book made by the employees of  the Bank, which had been confirming and  ratifyingthem from time to time, the respondent sent a notice dated August 13, 1948 to the 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  and denied the alleged deposits of Rs. 105, Rs. 4000, Rs. 8000/-  and Rs. 100/said.  to have been deposited through Kapil Dev  Shukla. On November, 30, 1948, the respondent filed a suit in  forma pauperis  for  the recovery of Rs. 1.5,547-10  As.  together with 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 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, the Trial Court decreed the respondent's suit (in respect of two items) for Rs.  10,040-10  As. together with simple interest on this amount from January 1st 1946 to August 14, 1947 @ Rs. 1-8-0 per cent per annum  and from August 15, 1947 to December, 1948 at Rs.  7% per  annum.   It  was further ordered  that  the  respondent would' get  simple interest on the  decretal  amount  after deducting  Rs. 1986-2-As. which have been paid during the pendency of the suit, at 6% per annum. Proportionate  costs was  also awarded to the respondent.  Aggrieved by the said orders, the 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/disallowed by  the  Trial Court. The High Court, on reappreciation of  the  evidence dismissed  the bank's appeal and allowed  the respondent's cross  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,  1947  to  December 1, 1948 at 6%  per  annum.   It was further directed  that respondent could get  pendente lite simple interest from the appellant on, the decretal  amount at 6% per annum and as the amount of Rs. 1,986-2-0 had been paid  to  the  respondent on September, 1950  it  would  be deducted  from the total amount found due to the  respondent and the decretal amount scaled down pro tanto. Allowing   the defendant's  appeal  by   certificate and dismissing the plaintiff's claim with regard to Rs. 11,000/- (consisting  of items of Rs. 4,000/- plus Rs.  7,000/-) and interest thereon, the Court

HELD  : (1) The legal principle which governs the  vicarious liability  of an employer for the loss caused to a  customer through the misdemeanour or negligence of an employee are  : (a)  The employer is not liable for the act of the  servant if the cause of the loss or damage arose without his  actual fault  or  privity or without the fault or  neglect  of his agents or servants in the course. of their employment; (b) the  damage complained of must be shown to have been  caused by any wrongful act of his servant or agent done within the scope  or course of the servant or agent's employment  even if the wrongful Act 1010 amounted  to  a crime; and (c) a master is  liable  for his servants  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 the 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. [1015 G-H, 1016  A, 1017 A-C] Leesh  River  Tea  Co. Lid & Ors.  v.  British India  Steam Navigation  Co. Ltd., [1966] 3 All E.R. 593; Lloyd v.  Grace Smith & Co., [1912] A.C. 636 and United Africa Co.  Ltd.  v, Saka Owoada, [1955] A.C. 130 referred to.

2)  In the instant case, the appellant bank was not  liable to  make good the loss of Rs. 7,000/- (part of Rs.  8,000/- entry) caused to the respondent by the act of K. D.  Shukla, who  was acting as an agent of the dent and not within the scope  of his employment with the bank. Nor could the fact that  false and fictitious entries to cover his fraud were made by Shukla in the pass-book of the respondent and in the ledger account of  Bhagwati  Prasad  and  Sons  make the embezzlement  committed by Shukla an act committed  in the course of his employment with the Bank. [1022 E-G]

(b)  The cheque for Rs. 7000/- drawn by Bhagwati 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.   K. D. Shukla instead of  depositing the cheque with  the bank, as per the  letter  dated  7-10-1946 addressed to the bank manipulated 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 the fraud. [1022 B, D-E] Leesh  River  Tea  Co. Ltd. & Ors. v.  British India  Steam Navigation Co. Ltd., [1966] 3 All E.R. 593 followed.

 (c) 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  employment.   The  false and fraudulent  entry about the deposit of Rs. 4000/in the pass book  could  not  shift the onus to the bank  to  prove the contrary.   The alleged deposit of Rs. 4000/- by  crossed cheque on  17-9-45  is not supported by  the  testimony  of

Bhagwati Prasad.  There was no entry in the cash scroll and no  receipt was produced in token of deposit.  The entry  is obviously false. [1019 C, H. 1020 A]

 

 

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.

1011

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

1012

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.

1013

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

1014

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:

(1)  [1966] 3 All E.L.R.593.

(2)  [1904-07] All E.L.R 460.

(3)  [1965] 2 All E.L.R. 725.

1015

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

1016

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.(1).

(1) [1912] A.C. 716.

1017

la  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,

     (1)   1955 A.C. 130.

     1018

     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