JUDGMENT
Mahapatra, J.
1. Defendant No. 4 is the appellant. The appeal arises out of a suit for recovery of Rs. 19025/-with interest thereon, which was brought by the plaintiff on the allegations that he was induced by false representations made by two employees of the appellant bank to part with that money in pursuance of a contract to enter into partnership with defendant No. 1, who was carrying on business in yarns and was a customer of the appellant bank.
His further case was that on the 14th April, 1948 defendant No. 3, who was the Accountant of the Bank, Game to the cycle shop owned by the plaintiff in the company of defendant No. 1 and represented to him (plaintiff) that defendant No. 1 was an honest man and he had a overdraft account with the Bank to the tune of rupees one lac in connection with his yarn business and that it would be profitable for the plaintiff to enter into partnership with him in that business and further, that the money and goods already deposited and to be deposited afterwards in defendant No. 1’s account with the Bank would be operated upon, only on the joint signatures of the plaintiff and defendant No. 1.
On these assurances, which the plaintiff believed to be true, he parted with Rs. 500/- that day by way of cheque drawn in favour of defendant No. 1, at the instance of defendant No. 3, the accountant. On the next day, the plaintiff with two of his friends went to the Bank and there found defendant No. 1 in the room where defendant No. 3, the accountant, was sitting. There, on the dictation given by defendant No. 3, three agreements of partnership were written and they were signed by both the plaintiff and defendant No, 1.
One copy was made over to the plaintiff, another to defendant No. 1 and the third was given to defendant No. 8. The case of the plaintiff originally was that the writing of the agreements was done on the table on which defendant No. 2, the Manager of the Bank used to sit and also in his presence- This was obviously done to bring in both defendant No. 2 and defendant No. 3 associated with the representations made to the plaintiff.
On the same day, that is, 15-4-1948, when the agreements were written in the Bank room, a letter was given, by defendant No. 1 containing instructions that his account in the Bank standing in the name of Bihar Industrial Mills will be operated by both the plaintiff and defendant No. 1 jointly from that day. This letter was left with defendants 2 and 3. On the following day, that is, 16-4-1948, the plaintiff sent a letter, a carbon copy of which has been marked as Exhibit 3 in the case, to the Bank giving notice about the joint operation of the account of defendant No. 1 and holding out threat therein that the Bank would be liable if any withdrawal of goods or money in respect of that account was allowed on the defendant No. 1’s ‘ signature alone.
The plaintiff’s case further was that he Came to know, later on, that all the goods and money had been allowed to be withdrawn by defendant No. 1 by the Bank, through the collusion and connivance of defendants 2 and 3. Finding himself in a helpless condition, the plaintiff instituted a criminal case against all the three defendants, but that ended in conviction of the defendants 1 and 3 and at the first instance, the criminal case against defendant No. 2 ended in his discharge and later, on the second occasion, by his acquittal. Thereafter the present suit was instituted for recovery of the money.
2. Two written statements were filed, one by defendant No. 2 and the other by the Bank, defendant No. 4, both denying the liability. The trial court framed several issues of which three were important, for the purpose of this appeal. They were issue Nos, 5, 6 and 9:
“5. Did the defendants Nos. 2 and 3 enter into a conspiracy with the defendant No. 1 and they by false representations induced the plaintiff to inter into partnership with defendant No. 1 as alleged. If so, what was the legal effect thereof and how far are the respective defendants liable for the same?
6. Did the plaintiff and defendant No. 1 giVe instruction to defendants Nos. 2 and 4 that the goods of the Bihar Industrial Mills would be withdrawn from defendant No. 4 and the account of the same with defendant No. 4 would be operated by and on the joint signatures of the plaintiff and defendant No. 1? If so, what will be its legal effect?
9. Is the suit false and vexatious in so far as it is against defendant No. 4?
3. The learned Additional Subordinate Judge of Patna decreed the plaintiff’s suit against the defendants 1, 3 and 4. It was dismissed against defendant No- 2, on findings that there was no fault of defendant No. 2 if he allowed the goods and money to be withdrawn on the signature ot defendant No. 1 alone and that defendant No. 2 was kept entirely in dark about the agreement filed between the plaintiff and defendant No. 1, he was also kept in dark about the application, regarding the joint signatures, received by the accountant, defendant No. 3, from defendant No. l as well and he was also kept in dark about the application received from the plaintiff or the specimen signatures taken from the plaintiff and defendant No. 1.
On these clear findings, defendant No. 2 was exempted from the liability. About defendant Nos. 1 and 3, it was found that defendant No. 1, in collusion with defendant No. 3, dishonestly and fraudulently withdrew all the money and goods deposited in the defendant bank, causing loss of Rs. 19025/- to the plaintiff and gain to himself (defendant No. 1) and the accountant (defendant No. 3).
The trial court also held that the representations made by defendant No. 3 to the effect that defendant No. 1 was honest and that the partnership business would be profitable to the plaintiff and that the goods and money deposited in the name of Bihar Industrial Mills would be drawn only on the joint signatures of both, the plaintiff and defendant No. 1, were false, fraudulent and dishonest and taking advantage of his position as accountant and his familiarity and intimacy with the plaintiff and the confidence reposed by the plaintiff in him, the defendant No. 3, the accountant, in conspiracy with defendant No. 1 succeeded in inducing the plaintiff to enter into partnership by means of false, dishonest and fraudulent representations, but for which, the plaintiff would not have agreed to enter into partnership with defendant No. 1 and parted with his money to the tune of Rs. 19025/-.
4. There is no appeal by defendants 1 and 3 and, therefore, those findings against them remain unchallenged.
5. The decree against defendant No. 4 was based upon the principle of vicarious liability. The trial Judge clearly held that defendant No. 4 was not at all involved in any way either with the representations made by defendant No. 3 on 14-4-1948 at the plaintiff’s shop or on the 15th April, 1948 in the Bank premises, but he was of the view that the defendant bank was liable for the fraudulent representations or, at least, for the wilful and gioss negligence of its employee, the accountant (defendant No. 3). In that view, the Bank was held liable for the money claimed in the suit along with defendants 1 and 3.
6. The present appeal on behalf of the Bank will, therefore be restricted to an examination of the principles of vicarious liability, on ground of which, the decree was passed against them. The findings, that I have stated above, in regard to defendants 1 and 3 only bring us to this position that the plaintiff was induced to part with his money and to enter into a faked partnership with the defendant No. 1, on account of false and fraudulent representations made by the Bank accountant to him, about defendant 1’s status in business and the future operation of his account with the Bank.
The relationship between defendant No. 3, the accountant, and defendant No. 4, the Bank, in that of a master and servant. There is no dispute that the accountant was in the employment of the Bank and if he does any act, which he is authorised to do, in course of his service, the master would be liable for the effects thereof. A servant, if he does any authorised act or any act, similar to the class of acts, for which his employment is authorised, will bring his master within the liability that may arise out of the act done by him.
An authorised act, done in an unauthorised way or in a wrong manner, leading to a loss and injury to a third party, will fasten the liability of such effects and the third party can proceed, againsl the master. It is well established that if a servant or an agent or an employee goes beyond the scope of his business or authority or agency and does some thing, for his own benefit and not for the benefit of his master, and if that act done by him is independent of the scope of his authorised business, as has been stated in some decisions, it will be treated as a “frolic of his own” and would not bring his master within the liability to the 3rd party, who may lay an action for damages or otherwise, against the doer of the act.
This position of law has held ground from very ancient time, both in England and in this country, as will appear from a long series of cases dealing with the vicarious liability of the master on account of his servant It was contended by learned counsel for the appellant that the fundamental principle on which vicarious liability of the master will depend, is that the impugned act must be within the scope of the servant’s business or employment and that it must be also for the benefit of the master. For this proposition, reliance was placed on the case of Barwiek v. English Joint Stock Bank, (1867) 2 Ex 259. No doubt, the oft-quoted passage of Willes J. is apparently in support of the contention. The passage, relied upon, was as follows:
“But with respect to the question, whether a principal is answerable for the act of his agent in the course of his master’s business, and for his master’s benefit, no sensible distinction can be drawn between the case of fraud and the case of any other wrong. The general rule is, that the master is answerable for every such wrong of the servant or agent as is committed in the course of the service and for the master’s benefit, though no express command or privity of the master be proved.”
It was argued that, in the Present case, the representations made by defendant No. 3 and the consequences following thereupon, were not for the benefit of the master, namely, the Bank, defendant No. 4. Therefore, even if it was found that the employee of the Bank had caused loss to the plaintiff in, the course of his service by his Misrepresentation, the liability of the master (bank) cannot be invoked. In that very case, Willes, J-before stating the above quoted Passage had said that the principle, on which the vicarious liability of the master was to be determined, had been laid down as a settled rule by Lord Holt in 1700 A. D. in the case of Hem v. Nichols, (1701) I Salk 289.
Reference 1o that very case would show that Sir John Holt, C. J. had stated that
“the merchant was answerable for the deceit of his factor, though not criminaliter, yet civiliter; for somebody must be a loser by this deceit, it is more reason that he that employs and puts a trust and confidence in the deceiver should be a loser, than a stranger”,
It does not appear, as it was observed in a later case to which 1 shall refer soon, Lord Holt, C. J. had laid down the principle that the vicarious liability of the master would be dependent not only upon the scope of the authority of agent or ‘servant, but also, upon the fact that the impugned act is for the benefit of the master. It is true, that, in serveral cases, which learned counsel for the appellant cited, observation of Willes, J. in Barwick’s case, (1867) 2 Ex 259 was taken to mean that both the authorised scope of business and the benefit of the master were necessary to be proved beiore the liability could be awarded against the master.
Those cases cited by the learned Counsel are J. R. Thomson v. Clydesdala Bank Ltd., 1893 AC 282; George Whitechmch Ltd. v. Cavanagh, 1902 AC 117, British Mutual Banking Co. v. Charnwood Forest Rly. Co., (1887) 18 QBD 714; Houlds-worth v. City of Glasgow Bank, (1880) 5 AC 317; Ruben v. Great Fingall Consolidated, 1906 AC 439 and Lloyd v. Grace Smith and Co., (1911) 2 KB 489. Of these cases, the point was directly raised in the latter four cases only.
In the other cases, there was no discussion about the compulsory proof of the benefit of the master for his vicarious liability . In Bank of New South Wales v. Goulburn Valley Butter Co. Proprietary, 1902 AC 543 a company had their account with the Bank. The managing director had also an account there. He arranged to draw a cheque on the company’s account and to credit the same to his own account to reduce his overdraft.
The company sued for recovery of the money from the Bank. It was held that the Bank, acting in good faith and without notice of any irregularity, was not bound, before honouring the cheque, to inquire into the state of the account between the company and its managing director, although it was aware of the relationship between the two. In that view the Bank was excluded from the liability. The question of benefit was not thus under consideration.
In, 1902 AC 117, one Wales as a Secretary of a company, gave a certification in connection with transfer of shares to one Raymond, who was his friend and also master, to enable him to obtain money from plaintiff On representation of transfer of his shraes in his favour. The company ultimately refused to recognise the transfer. Action was laid against the company for damages and to enforce the registration of the transfer of shares. No shares or certificate in favour of Raymond were actually lodged with the company before the certification was given by Wales.
In such circumstances, it was held that the company were not aware that a false certification was given by their Secretary Wales. It was observed that Wales had no authority more than to give a certification regarding shares actually lodged and if he gave a certification in respect of shares which had not really been lodged with the company, it was not within the scope of his business or agency. Lord Macnaughten observed in that case
“no doubt the practice of certifying transfers is a convenient one. It facilitates dealing in shares on the Stock Exchange, and so tends indirectly to increase the value of shares as a marketable commodity. But in permitting its secretary to Certify transfers it cannot be supposed that a company authorises the secretary to do more than to give a receipt for certificates which are actually lodged in the office.”
At another place it was observed that at the time Wales wrote the certifications he knew they were false statements and that Raymond possessed no such shares and no certificates had been lodged jn the office of the company. “Wales was acting fraudulently in collusion with Raymond and in no way for the benefit of the company. Learned Counsel argued that benefit of the company was kept in view by the learned Judges who decided the case, but the judgment, if read as a whole would show that the principle of estoppel, found on Secretary Wales’ certification, was the main consideration.
This case, like the one above, will be of assistance in deciding the other point, namely, whether the act of defendant No. 3 was in the scope of business, but, on the question if the benefit of the master must necessarily be proved for vicarious liability, this case is of little importance. In 1893 AC 282, a stockbroker, who was known to be so to the Bank, in which he had his account., paid some money to his own account which he had collected from the plaintiff in connection with purchase of some shares through him.
The Bank, on receipt of that money, discharged its debt from the broker, though the Bank manager knew that the broker was dealing with his client’s money. Ultimately, the plaintiff failed to get the advantage of either of the purchase of the shares Or otherwise and sued for recovery of his money both against the Bank and the broker. It was held that there was no fraud within the knowledge of the Bank committed upon the plaintiff, though the Bank itself was aware that the cheque, given by the broker, was the proceeds of the sale of shares but it did not know and had made no enquiry whether the money paid in was in the broker’s hand as agent or otherwise.
The learned Judge observed that no doubt if the person receiving the money had reason to believe that the payment was being made in fraud of a third person and that the person, making the payment, was handing over, in discharge of his debt, money which he had no right to hand over, then, the person taking such payment would not be entitled to retain the money upon ordinary principles. Neither the scope of agency nor the benefit of the master came for consideration in that case and the decision was rested on the finding that though there was undoubtedly a fraud upon the plaintiff it was not coupled with knowledge or bad faith on the part of the Bank.
7. The other four cases, namely, (1887) 18 QBD 714; (1880) 5 AC 317; 1906 AC 439 and (1911) 2 KB 489, were mostly on the lines adopted in the case of (1867) 2 Ex 259 and reference was made to the oft-quoted passage of Willes, J., but I do not think it necessary to refer to those cases in detail as all of them came for consideration in the House of Lords in the case of Lloyd v. Grace, Smith and Co. 1912 AC 716 which was an appeal against the decision given in 1911-2 KB 489.
The facts of that case were as follows. A widow Mrs. Llyod owned some property one of which she had purchased through a solicitor’s firm. She found that she was not having sufficient income from those properties. She went: to the solicitor’s firm and found the managing clerk of the solicitor, with whom she had the consultation. She was advised to leave her document of title with him with instructions to negotiate for gale of those properties.
She had also a mortgage and she was prevailed upon by the clerk to authorise him to call in the mortgage money and for that purpose she left the mortgage deeds with the clerk. At that time, the clerk had taken two conveyances signed by Mrs. Lloyd which purported to be conveyances both, in regard to the property and the mortgage, in favour of the clerk himself. He made use of the same and raised money and deposited the amount in the Bank.
Mrs. Lloyd brought an action against the solicitor’s firm as well as the clerk claiming the return of the documents and for the damages for the loss sustained by her. The trial court had decreed the claim against the solicitor’s firm, but, on appeal, the decree was reversed, on the ground that the representations, resulting in the delivery of the title deeds and the conveyances to the Solicitor’s clerk, were not done by the clerk for the benefit of his master, in whose employment he was. Reliance was placed on the dictum laid down in Barwick’s case, 1867-2 Ex 259.
When the case came to the House of Lords, Earl Loreburn, delivering judgment, discussed in great detail the real implication of the oft-quoted observations of Willes, J. in Barwick’s case, 1867-2 Ex 259, and came to the conclusion that though “the benefit of the master” was mentioned in the judgment, the real meaning was that the liability of the master will depend upon the scope of agency, in which, the impugned act is committed by the agent. He referred to the observations of Holt, C. J. in the earliest case whose principle was accepted as the foundation of the decision in Bar-wick’s case, 1867-2 Ex 259 and pointed out that what had been laid down by Holt, C, J. was only repeated by Willes, J. in Barwick’s case, 1867-2 Ex 259.
The evidence in that case, Barwick’s case, 1867-2 Ex 259, however, divulged that the guarantee which had been given by the Manager of the Bank, which was the basis of the action against the Bank, indicated that the representation could not but be for the benefit of the master. That was an additional reason why the liability of the master was decided upon, but the main reason, according to Earl Lorebum in the Barwick’s case, (1867) 2 Ex 259, was that the representation made by the Manager of the Bank was within the scope of his business.
Early Loreburn referred to several other cases in which the judgment of Willes, J. was followed. The cases decided in (1887) 18 QBD 714 and 1906 AC 439 were considered in greater detail and Earl Lorebum overruled the view taken in them. The decision of (1911) 2 K. B. 489 was set aside and Mrs. Lloyd was granted a decree. After this case, it cannot be said that in order to fix up the liability of a master, the plaintiff will have to show not only that the agent was working within the scope of his authority but also for the benefit of the master.
I am, therefore, of the view that in the instant case before us, if it is found that defendant No. 3, the accountant of the Bank, in the course of his business had made those representations to the plaintiff and had given assurances to him which resulted in his loss, the Bank, defendant No. 4, will come for liability to the plaintiff. The plaintiff would not suffer if the benefit of the Bank was not related with the assurances or representations of the defendant No. 3 or if it was not proved that, as a matter of fact, the Bank did benefit from the acts of the plaintiff which followed such fraudulent representations of its employee.
8. The case made out in the plaint against defendant No. 4 was (paragraph 6) that
“written instructions were given to the Bank and to the defendant No, 2 of these points (about joint operation of the defendant No. 1’s account) and the defendants Nos. 2 and 3 themselves and the defendant No, 4 through the defendant No. 2 assured the plaintiff that they would carry out these instructions and arrangement and the specimen signature of the plaintiff with the endorsement of the defendant No. 1 was also taken and delivered to the defendant No. 2.”
The specific case against defendant No- 4 cannot thus be missed. In other words, the liability of defendant No. 4 was sought on the basis that it was on account of what was assured by the defendant No. 2 (and not defendant No. 3) and what was done by or told to defendant No. 2 (not defendant No. 3).
This positive Case does not appear to have been kept in view during the trial, because, I find that during evidence, the case of the plaintiff was that, the liability of the defendant No. 4 was on account of the representations and assurances made both by defendant No. 2 and. defendant No. 3 and on account of the failure on their part to carry out the alleged instructions given in regard to the joint operation of the defendant No. l’s account with the bank. The plaintiff should not have been allowed to lead evidence on that line, because, he could not have made out a case of vicarious liability on a footing different from the categorical statements in the plaint. In that view, defendant No. 4 could not be held liable to the plaintiff, on the finding of innocence of defendant No, 2.
9. Let us now consider what was the case of the plaintiff during the trial. His case was that he was led to part with his money by the representations made by defendant No. 3. That has been found in his favour by the court below. Defendant No. 1 gave written instructions to defendant No. 3 to the effect that his account will be operated both by himself and the plaintiff jointly. The instruction was not carried out by the Bank, the result of which was that all the money paid by the plaintiff to that account was allowed to be withdrawn by defendant No. 3, the plaintiff having no benefit either from the money or the goods.
Defendant No. 1 did not contest the suit or appear as a witness. D. W. 1 for defendant No. 2 was the defendant No. 2 himself, the Manager of the Bank. Another witness examined on the Bank side was a Special Officer of the Bank. According to their evidence, which has not at all been shaken or attempted to be shaken in cross-examination, the practice and rules of the Bank were that an overdraft account, standing in the name of one, could not be allowed to be operated by any person either jointly or severally except the person in whose favour it had been sanctioned by the Head Office.
It was not within the competency of any of the Bank employees, far less the accountant, to allow any other person to operate such account or to carry out instructions to that effect, even if given, by the person in whose favour the overdraft account stands. This part of the evidence was not challenged in cross-examination. This practice is also in conformity with what has been stated to be the Bank practice by several authors like Sheldon and Davar. Nothing has been pointed out by learned counsel for the .respondents from any of the authoritative books or otherwise, to indicate that it was open to defendant No. 3 to allow such joint operation of the account of defendant No. 1, even on the instructions given by defendant No. 1 himself.
The only course open, if the defendant No. 1, in pursuance of the agreement of partnership with the plaintiff, wanted to do so, was that the old account should have been asked to be closed and a new overdraft account should have been asked to be opened in the names of the plaintiff and defendant No. 1, in which case necessary guarantee would have been taken from the plaintiff as well as from defendant No. 1. This was not followed nor is there any evidence of the plaintiff to indicate that any attempt in this direction was even thought of
The plaintiff, as P. W. 6, clearly stated that after the arrangement about partnership, he told the accountant, defendant No. 3, that the account should stand in the names of both himself (plaintiff) and defendant No. 1, but neither he nor defendant No. 1 did apply in writing to the Bank or to anyone of the Bank, to open a new overdraft account in their joint names in place of the old one, which stood in the name of Bihar Indust. Mills and was being operated by defendant No. 1 alone.
He frankly admitted that no agreement in that respect was reached between him and the defendant No. 1 and the Bank. Thus there is no escape from the conclusion that, as a matter of fact, the prescribed procedure, in regard to a joint overdraft account, was not followed either by the plaintiff or the defendant No. 1 or both and as such, neither the defendant No. 3 nor any other officer of the Bank and far less the Bank itself, could dishonour any of the cheques that were subsequently presented by the defendant No. 1 for the purpose of withdrawal from his account or withdrawal of the goods that he had pledged to the Bank in connection with that overdraft account.
The result of this, as it is alleged by the plaintiff, has been the loss of the plaintiffs money. I am proceeding on the supposition that in fact a written instruction about the joint operation of the account was given by the defendant No. 1 to the defendant No. 8 on 15-4-1948. How far that is to be believed or not, is a different question but even accepting that as a fact, the only conclusion is that the action of the Bank or its employees, in allowing defendant No. 1 to withdraw the money and goods from his account on. his own signature alone, in disregard of instructions, if any, given by him previously about joint operation by himself and the plaintiff, was perfectly justified and did not amount to any wrongful act. There will be, therefore, no vicarious liability arising out of that act
10. Next to be considered is about the assurance given by defendant No. 3 that the account standing in the name of defendant No. I will be operated by the defendant No. 1 and the plaintiff jointly. Was this assurance within the scope of authority of the Bank Accountant? The only evidence that has been elicited from D. W. 1 is that the Bank had not any duty cards in respect of its different employees nor any rules had been framed thereabout. Defendant No. 3 was in charge of day to day affairs of the Bank under the supervision of defendant No. 2 and that he had no authority to open any overdraft account in the Bank by himself.
We have to gather the scope of business entrusted to defendant No. 3 from this evidence alone. It is not the plaintiffs case that tile assurance alleged to have been given by defendant No. 3 about the joint operation of the account was with the approval oil the defendant No. 2. Further, it has been found by the court below that defendant No. 2 was completely in dark about any such thing. Thus, even if it can be suggested that defendant No. 3 could, within the scope of his legitimate duties, give such assurance to any customer, that was, according to the evidence of D. W. 1, subject to the supervision of the Bank Manager.
In absence of any approval from him, assurance given by defendant No. 3 would not be within the scope of his authority. It was contended for the plaintiff respondent that though the accountant was not specifically authorised to do any such act, yet he had been placed in charge of such acts, that would legitimately give rise to an impression in the mind of the customers that he was competent to hold out assurances about the manner of operation of accounts, particularly of overdraft accounts.
There is no basis for this contention. No evidence was either led or suggested to any of the defendants’ witnesses. Accountant, as I understand, is in charge of keeping of the accounts of the Bank. It is in evidence that he was also filling in the cheques and other forms, when the customer was not able to do so in English at the request of the customer. The manager (defendant No. 2) conceded that that was also the practice in his Bank.
Filling of the forms at the instance of the customer is not the same as holding out assurance about the-future operation of any account. Nowhere it has been suggested that the defendant No. 3 had ever acted in that manner in regard to any other customer, much less about any overdraft account. The practice spoken to by D. W.’s 1 and 2 about the application for overdraft accounts and sanction by the Head office of the same and other formalities in the form of execution of agreement and promissory note in that connection, leaves no doubt that the defendant No. 3 by himself had nothing to do with the opening or operation of a overdraft, much less, in deviation from the way in which the sanction of the Head office was given about the operation of such account.
It was contended for the respondent that such act on the part of defendant No. 3 was, incidental to his legitimate duties. In support of this contention, reliance was placed on some cases. In the case of (1880) 5 AC 317, H bought from the City of Glasgow Bank, a co-partnership registered under the Companies Act 1862, £, 4000 of its stock in February, 1877. He was registered as partner, received dividends and otherwise acted as a partner ever since.
The Bank, however, went into liquidation in October, 1878 with immense liabilities and H was entered on the list of contributories and paid calls. In December 1878, H raised an action against the liquidators, to recover damages in respect of the stun he had paid for the stock; the money he had already paid in calls; and the estimated amount ot future calls. He founded his right to relief upon the grounds of fraudulent misrepresentations made by the directors and other bank official to him,
It was held that even though the fraudulent” misrepresentations might, if the bank had been a going concern, have entitled him to rescind his contract, rescission being now impossible, they afforded no ground for an action against the liquidators and therefore the action was irrelevant. The passage in the judgment, on which the learned counsel relies is as follows:
“There are strong reasons given by the noble and learned Lords who have already spoken in this case for holding that when one has been induced by the fraud of the agents of a joint stock company to contract with that company to become a partner in that company, he can bring no action of deceit against the company whilst he remains a partner in it. There are reasons which would not apply to every case in which a contract has been induced by fraud,, as for example, if an incorporated company sold a ship, and their manager falsely and, fraudulently represented that she had been thoroughly repaired and was quite seaworthy, and so induced the purchase and the purchaser first became aware of the fraud after the ship was lost, and the underwriters proved that she had not been repaired and was in fact not seaworthy and so that the insurance was void, when it would be too late to rescind”.
Neither the facts nor the reasons given in support of the decision in that case are applicable here. In case of a ship which was purchased on a representation that she had been thoroughly repaired will certainly give rise to an action against the owner whose agent having authority to negotiate the sale, had made a fraudulent representation about the seaworthy condition of the vessel. Here the facts are entirely different.
Clearly, we are not placed with a case where any of the employees of the Bank by their representation induced the plaintiff to become a partner with the Bank itself or to be associated with the affairs of the Bank as a member thereof, in such a way as to be ultimately saddled with liability of the Bank at a future date. The assurance given by defendant No. 3 was in regard to the benefit that was likely to accrue to the plaintiff out of the dealings’ by defendant No. 1 in his yarn business or in regard to his account in the Bank.
To me, it is clear that the respondent cannot derive any assistance from the reported decision either on facts or on the principle enunciated therein. In the other case, Canadian Pacific Rly. Co. v. Leonard Lockhart, AIR 1943 PC 63 a carpenter was employed to do repairs and other kind of similar work for a railway company but had been forbidden to use, for his own transport, a car which was not insured for third party.
He, however, in violation, used the ‘car which had not been so insured and for the purpose of going to a destination in connection with his repair work and while doing so, caused an accident. It was held that the prohibition against the use ot the car which had not been insured for third party did not amount to prohibition of total or any use of the car. It did not amount to a prohibition of use of car in connection with his legitimate work.
What he had been prohibited was, not to use the car which had not been insured in a particular manner. The use of the car on that occasion was held to be incidental to the execution of that work for which he was employed and in that view, the master was held liable. If it could have been shown in the instant case that defendant No. 3 was held in direct charge of overdraft accounts and had authority to create or sanction the same in favour of a customer and while doing so, if he had transgressed any of the limitations imposed Upon him in respect of that land of work and by such transgression any loss was caused to the plaintiff, he (plaintiff) could have an action against the Bank itself, because, that would have been treated to be incidental, though not justifiable, to the legitimate duties assigned to the employee.
In the case of London County Council v. Cattermoles, 1053-2 All ER 582 the defendant was the owner of a garage. He had employed P to move, by push, by hand vehicles inside the garage, from place to place, to make room for other cars to take their position in the garage. He had no driving license. He was not expected to take out cars outside the garage. What he did was, with A view to making room for an incoming car in the garago he took out a car by driving it on the highway, to take a turn and return to the garage.
While doing so, he caused an accident. The question was, whether his driving the car out of tile garage to the street though for a short while, would be within the scope of his business or duties. It was held that ‘the employee was authorised to move vehicles. The only wrong that he committed was instead of moving it with hand he moved it with engine power. Moving being his legitimate duty, the other form of moving was held to be incidental to that. It was wrongful act on his part certainly, but that being incidental to his legitimate duties, the master, namely, the defendant, the owner of the garage, was held to be liable.
How this case can be applied here unless there was evidence to show that defendant No. 3 was entrusted with the overdraft accounts in such a way that he could have given effect to or sanctioned one particular kind of instructions from the account owner, but, in the instant case, he had deviated from that line and adopted a different course. The analogy of the above mentioned reported decision cannot therefore be attracted here, The other case, namely, Limpus v. London General Omnibus Co. Ltd., (1862) 158 ER 993 is of no assistance to the plaintiff.
There the question was about the propriety of direction to jury. The learned Judge, with reference to the facts of the case, had directed the jury that if on evidence it wag found that the servant did a work independent of the master and of his own account and not connected with the business assigned to him, the master would not be liable, but if he did an authorised act in an unauthorised or wrongful manner, then the master would be clothed with liability.
This kind of direction was impeached in appeal but it was found that there had been no impropriety with the same. That was a case in which a driver of the defendant master drove an omnibus in front of a rival omnibus belonging to the plaintiff, which was thereby overturned. The evidence was that the master had given positive direction not to place that omnibus before another but he had violated the same while moving the omnibus which resulted in the accident and the loss was caused to the plaintiff.
The driving of the omnibus was within the scope of legitimate business of the servant and, therefore, the result, following any wrongful act done in discharge of that duty, roped in the master. The next case referred to was Heaven v. Fender, (1883) 11 QBD 503. The facts there are hardly applicable, even by way of analogy to the present case. There the defendant, a ‘dock owner, had put up a staging outside a ship in his dock under a contract with the shop owner.
The plaintiff was a workman in the employ of a ship painter who had contracted with the ship owner to paint the outside of the ship and in order to do the painting went on and used the staging, when one of the ropes by which it was suspended from the vessel gave way and the plaintiff fell in consequence into the dock and was injured. The question was whether the dock owner, the defendant, who was to supply the staging, was liable for damages to the plaintiffs.
It was held that the plaintiff being engaged On work in the performance of which the defendant was interested, he was obliged to him to take due care to see at the time he supplied the staging and ropes, that they were in a fit state to be used. For the neglect of such duty, he was liable to the plaintiff for the injuries lie sustained. I fail to under stand how the plaintiff can make use of this case to his advantage. Similarly, the case of Anamalai Timber Trust Ltd. v. Trippunithura Devaswom, AIR 1954 Trav. Co. 305 is of no avail.
There, the mahout of an elephant assaulted the elephant when it showed disinclination to carry an oversized log and the result was that the elephant succumbed. The owner of the elephant brought an action against the master who had employed the mahout to carry the logs on the elephant. There was no doubt that the legitimate scope of the employee was to carry logs on the elephant and while doing so he caused the loss to the plaintiff by belabouring the elephant in a manner which he should not have done. It was in that context, that the master was held liable for the wrongful act of the mahout.
In all these cases the fundamental question for consideration was whether there was anything Within the scope of the servant’s business which would indicate that the impugned act directly or indirectly was to be done under the authority of the master by the servant and whether in doing that, there had been either a deviation in the manner of execution of it or another act incidental to it. As long as this is not established by evidence against defendant No, 3 vis-a-vis the Bank and the duty assigned to him, the plaintiff cannot succeed in invoking the principles laid down in any of the cases referred to above, to fasten any liability upon defendant No. 4. the Bank.
11. On the other hand, the three cases reported in (1902) AC 117, 1902 AC 543 and 1893 AC 282, to which I have already referred, justify the conclusion in the present case that the Bank would not be liable for the assurance, which defendant No. 3 had given to the plaintiff, about the joint operation of the defendant 1’s account in the Bank, because, he was like the Secretary of the Company who was authorised only to give a certification about the shares or certificate of shares actually lodged with the company — only incharge of maintaining the account — overdraft account and not anything beyond that.
Learned counsel for the respondent referred to some passages in Salmond on Torts. They do not take us any more than the cases, to which I have already referred. The general principles stated there can be put in the following way. The master will be liable for any wrongful act of a servant which is authorised by his master; he will be liable for the wrongful and” unauthorised way of doing an act which is authorised; he will be liable for any wrong done in the performance of an act, for which the servant has been put in a particular position by his master; and, he will be liable for any wrongful act which has been done as incidental to the legitimate act assigned to the servant.
There is no dispute about any of these principles and the cases, to which I have referred, have established that; but, on coming to the facts of the present case they cannot be fitted into any of the four categories stated above and in that view, the assurance about the joint operation of the account of defendant No. 1, which led the plaintiff to put his money into defendant No. 1’s account or to pay him in cash, cannot be said to be within the scope of business or agency or authority or duties of the defendant No. 3 as an employee and accountant of the Bank. Defendant No. 4, therefore, will not be liable for any consequences following from that assurance.
12. The other question that arises is, what will be the effect on the defendant No. 4 of the representations and assurances given by defendant No. 3 on the 14th and 15th of April, 1948. The other representations were that defendant No. 1 was an honest man, he had an overdraft account in the Bank to the tune of one lac of rupees and that it would be profitable for the plaintiff to enter into partnership with him in the yarn business. Of these three representations, the last one is a future contingency and, cannot amount to a representation of an existing fact.
The second one is correct inasmuch as defendant No. 1 had such overdraft account in the Bank. The first one that defendant No. 1 was an honest man cannot be said to be wrong in. any way, because it has not been pointed out from any evidence or from any other material on the record, that prior to 14th April, 1948 he had done anything wrong either in the Bank or outside to the knowledge Of defendant No. 3 or for the matter of that, any act that would not be consistent with his honesty and goodness.
The learned counsel for the respondent contended that the representation about the overdraft account was fraudulent, inasmuch as, it was not disclosed by defendant No. 3, which he could have done, that the overdraft account had already been overdrawn, the extent, to which credit was to be expanded on pledge of goods, had been exceeded. In support of this contention reference was made to Exhibit F, the stock register of the Bank and the ledger of the overdraft account (Exhibit G).
From nowhere of these accounts it would appear that any overdraft extent had been exceeded. The arrangement was, according to the evidence, that defendant No. 1, would keep under pledge with the Bank goods (yarns) and against that goods, would receive money from the Bank, by way of advance. As and when he would take any release of the goods, he would have to deposit the corresponding amount with the Bank, thereby reducing his overdraft. This appears to have been followed from Exhibits F and G.
Thus there does not appear to have been any misrepresentation by defendant No. 3 when he say that defendant No. 1 had an overdraft account with the bank to the tune of one lac of rupees. I do not see therefore how it can be said that there was any misrepresentation on account of these three things, which induced the plaintiff wrongly to agree to enter into the partnership with the defendant No. 1. Assuming that any of the representations was fraudulent and it led the plaintiff to enter into the partnership, those representations were not made within the scope of the business assigned to defendant No. 3 by the Bank.
D. W. 1 has stated that it was neither his nor the accountant’s business to secure any partner for any customer. There is no evidence that any such kind of work was indulged in by any of the employees of the Bank either before or after April, 1948. There is no denial of the fact that both the plaintiff and defendant No. 1 were knowm to defendant No. 3, a.s both of them had accounts with the Bank. The way in which the plaintiff readily agreed to be a partner with defendant No. 1’s business, without making enquiry about his residence or position in the yarn business, indicates that the inducement could not have been caused only by the representation made by defendant No. 3.
It is not natural for any man of business because the plaintiff himself was engaged in business, to jump into a partnership with another without making ‘enquiry about the solvency o£ that person. The Bank itself, it was contended by learned Counsel for the plaintiff, was to benefit by the plaintiffs joining as a partner, because money would be paid by the plaintiff to the defendant’s overdrawn account, by which the Bank will reduce the overdrawing. By the arrangement which is established on evidence, the Bank was to realise 6 per cent interest from defendant No. 1.
Reduction of overdrawing would reduce the receipt of interest by the Bank. There is no basis for the suggestion made that there had already been any excess of the limit of the overdraft. Thus the plaintiffs joihjng with defendant No. 1 in partnershin could, not have worked to any benefit to the Bank either by way of receipt of money or by way of reduction of its liability. If any benefit would have accrued, it was to defendant No. 1.
Whatever act was done or appears to have been done by defendantNo. 3 for bringing the plaintiff into partnership with defendant No. 1 cannot but be for the benefit of defendant No. 1 alone. There might have been some scope for some unlaw, ful gain for defendant No. 3 in his private capacity, but, at least, there is no evidence or suggestion to that effect. Thus it cannot be said that anything done by defendant No. 3 was or could be within the ambit of .the duties that had been cast upon him as an employee of the Bank. In that view, the defendant No. 4 would not be liable.
13. The view, that I have taken does not make it necessary to go to some other questions that were discussed at the Bar, namely, whether the written instructions by defendant No. 1 about his account were given to defendant No. 3 on the 15th April, 1948. It would be enough to say here that Exhibits 2 and C are said to be the two copies of agreement that were written by the plaintiff and defendant No. 1,. on the dictation of defendant No. 3 in the Bank room on 15-4-48 and they were made over to one another.
A similar copy signed by both of them was given to defendant No. 3 for taking necessary action thereon. It appears from exhibit 2 that there is a postcript (Exhibit C) in which it was stated that a letter containing such direction had already been given to the Bank, I fail to appreciate how the endorsement could have been made on the 15th April, 1948 on this copy of the agreement and for what purpose. If it was to acquaint the plaintiff with that situation, it was not necessary, because, according to the plaintiffs evidence, he was present when the written instruction was given to the Bank.
If this was a part of information to be contained in the agreement itself by way of a postscript, it would have also found place in Exhibit C. Secondly, it is not the case that the exchange of the agreement was subsequent to making over the copy to the Bank. The way in which the postscript has been written raises a great suspicion about its existence at the time when it purports to have been made. In usual course, if actually three copies were written, one for the plaintiff, the other for defendant No. 1 and the third for the Bank, there must have been exchange between the persons concerned first and then a copy was given to the Bank, in which case, the postscript appears to be unjustified.
Beyond this, there is no other evidence that such written instructions were given by defendant No. I except the oral statements of the plaintiff and his mother witness. No receipt was taken from the Bank’s employee as a token of receipt or such instruction, which, particularly for the plaintiff, was of great importance. The plaintiff on the next day, that is, 16-4-1948 wrote a letter like Exhibit 3 and took particular care, not only to obtain in the Peon Book a signature in token of receipt of that letter from the Bank, but also to mention the description of the letter sent thereunder.
A man of that caution and prudence would not have omitted to take a written token from the Bank if really written instruction about future operation of defendant No. 1’s account was, in fact, given on the 15th of April, 1948. But, as 1 have stated above, it is not necessary to go into that question at a greater length. I have proceeded on the assumption that such instruction was given and even then, I have come to the conclusion that it would not in any way be binding against the defendant No. 4.
14. For the appellant, it was contended that
Exhibit 3 was not admissible because it was a
carbon copy and had not been proved by the person
who had prepared that copy through a mechani
cal process. The typist has not been examined. The
plaintiff himself is ignorant of English. He is
incapable of reading or knowing it. He only stated
that Exhibit 3 was a carbon copy of the original
letter. The Bank denied the receipt of that letter-
The trial court drew an adverse inference against
the Bank because the register showing receipt of
letters was not produced, though it was in the
custody of the Bank.
It appears that after D. W. 1 was cross-examined about the existence of this Register, an application was made to admit into evidence that register, but that was ruled out by the trial court. That register was not called for from the Bank, though some other papers were asked for, at the instance of the plaintiff. There was no necessity for the Bank to produce this register, because it denied the receipt of that letter in the written statement. It was open to the plaintiff to take necessary action, if he so chose, by calling for the register from the Bank.
Nothing more had happened on or after the 15th April, which called for a letter like Ext. 3. This leads me to think that this letter was brought into existence at a later stage to afford some basis for the plaintiff’s action. Carbon copy can only be admitted into evidence under Section 68, provided the person doing that or who had been a witness to the mechanical process comes to depose about it. The plaintiff is ignorant of English and cannot type. He cannot be said to be a competent person to depose about it. In that view it was also not duly proved.
15. For the reasons given above I am clearly of the view that the Bank, defendant No. 4, did not incur any vicarious liability on account of any of the acts done by defendant No. 3, in consequence of which the plaintiff suffered the loss. The trial court wrongly applied the principle of law in this connection. It was of the view that the act of defendant No. 3 was of gross and wilful negligence in discharge of his duties as an accountant. There is no basis for this, either in evidence or in the pleadings. The case referred to by the trial court reported in Dayaram Poddar v. Sham Mohan Kaul, AIR 1946 Cal 163 is hardly applicable to the facts of the present case.
A driver of a motor car caused an accident while driving that car. Undoubtedly his legitimate duty was to drive the car and in doing that he committed a wrongful act. It was held that the master would be liable for the loss. I fail to understand how that could be applied here. Reference was also made by the trial Judge to the Berwick’s case, with which I have already dealt at some length and the principles laid down there, I have shown, are of no assistance, to proceed against the Bank.
16. The result is that the decree against defendant No. 4 cannot be sustained. The appeal is allowed with costs, against the plaintiff respondent, of both the courts. The decree passed by the trial court will be modified accordingly.
Tarkeshwar Nath, J.
17. I agree.