{"id":987,"date":"1963-02-07T00:00:00","date_gmt":"1963-02-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/bank-of-bihar-ltd-vs-mahabir-lal-ors-on-7-february-1963"},"modified":"2016-12-15T14:04:13","modified_gmt":"2016-12-15T08:34:13","slug":"bank-of-bihar-ltd-vs-mahabir-lal-ors-on-7-february-1963","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/bank-of-bihar-ltd-vs-mahabir-lal-ors-on-7-february-1963","title":{"rendered":"Bank Of Bihar Ltd vs Mahabir Lal &amp; Ors on 7 February, 1963"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Bank Of Bihar Ltd vs Mahabir Lal &amp; Ors on 7 February, 1963<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1964 AIR  377, \t\t  1964 SCR  (1) 842<\/div>\n<div class=\"doc_author\">Author: M R.<\/div>\n<div class=\"doc_bench\">Bench: Mudholkar, J.R.<\/div>\n<pre>           PETITIONER:\nBANK OF BIHAR LTD.\n\n\tVs.\n\nRESPONDENT:\nMAHABIR LAL &amp; ORS.\n\nDATE OF JUDGMENT:\n07\/02\/1963\n\nBENCH:\nMUDHOLKAR, J.R.\nBENCH:\nMUDHOLKAR, J.R.\nSUBBARAO, K.\nDAYAL, RAGHUBAR\n\nCITATION:\n 1964 AIR  377\t\t  1964 SCR  (1) 842\n\n\nACT:\nNegotiable lnstrument--Firm presents cheque to\tBank--Amount\nkept  in  the hands of Potdar of Bank-If  payment  to  firm-\nStatement  in judgment about happening in  court---Challenge\nif  and when permitted-Vicarious liability for criminal\t act\nof servant-Negotiable Instruments Act, 1881 (XXVI Of  1881),\nss. 85, 118.\n\n\n\nHEADNOTE:\nRespondents  1 and 2 carried on business under the name\t and\nstyle  of  M\/s.Jogilal Probhu Chand.  Under  a\tcash  credit\nagreement  in favour of the Bihar Sharif Branch of the\tBank\nand  on\t the strength of a promissory note executed  by\t the\nfirms,\tthe firm drew a cheque on the Bank which was  passed\nfor  payment.  The High Court found that the money  was\t not\npaid  to the firm but was kept in the hands of the Potdar  a\nservant or agent of the Bank for being paid to another\tfirm\nat  Patna.   This person accompanied the respondents  up  to\nPatna but failed to meet the respondents at the shop of\t the\nPatna firm which was the place agreed upon.  Before the High\nCourt  the counsel for the present appellant  conceded\tthat\nthe Potdar had taken the money with him.\nBefore\tthis  Court  it\t was  contended\t on  behalf  of\t the\nappellant that no concession was made as stated in the judg-\nment  of the High Court, to the effect that the Potdar\ttook\nthe  money  with  him.\tIt was further\tcontended  that\t the\npayment to the Potdar should be deemed to be payment to\t the\nfirm. Reliance was alsoplaced  on  ss. 85 and 118  of  the\nNegotiable  instruments Act,1881.     Finally\t it    was\ncontended that the Bank could not beheld responsible for\nthe money misappropriated by the Potdarbecause his act\twas\na criminal act.\nHeld,  that where a statement appears in the judgment  of  a\ncourt  that  a particular thing happened or did\t not  happen\nbefore\tit,  it ought not ordinarily to be permitted  to  be\nchallenged by a party unless both parties to the  litigation\nagree that the statement is erroneous.\n 843\nThe  money not having passed into the actual custody of\t the\nfirm  or that of the custody of a person who was servant  or\nagent of the firm, the firm cannot be held liable for it.\nIn  order to avail of the provisions of s. 85 of  the  Nego-\ntiable Instruments Act it has to be established that payment\nhad  in fact been made to the firm or to a person on  behalf\nof  the firm.  Section 118 of the Act was held not  to\thave\nany bearing upon the case at all.\nJugjivandas Jamnadas v. The Nagar Central Bank, Ltd.  (1925)\nI. L. R. 50 Bom. 118, distinguished.\nVicarious  liability may in appropriate cases, rest  on\t the\nmaster\twith  respect to his servant's acts  but  it  cannot\npossibly  rest\ton a stranger with respect to  the  criminal\nacts of a servant of another.\nGopal  Chandra Bhattacharjee v. The Secretary of  State\t for\nIndia  (1909) I. L. R. 36 Cal. 647 and Cheshire\t v.  Bailey,\n[1905] 1 K. 9. 237, distinguished.\n\n\n\nJUDGMENT:\n<\/pre>\n<p>CIVIL, APPELLATE JURISDICTION : Civi Appeal No. 340 of 1960.<br \/>\nAppeal from the judgment and decree dated March 11, 1958, of<br \/>\nthe Patna High Court in F. Appeal No. 230 of 1950.<br \/>\nSarjoo Prasad and R. C. Prasad, for the appellant.<br \/>\nN.C.  Chatterjee,  M. K. Ramamurthy, R. K.  Garg,  S.  C.<br \/>\nAgarwala and D. P. Singh, for the respondent No. 1.<br \/>\n1963.\tFebruary 7. The judgment of the Court was  delivered<br \/>\nby<br \/>\nMUDHOLKAR, J.-This is an appeal by a certificate granted  by<br \/>\nthe Patna High Court allowing the appeal preferred before it<br \/>\nby  the defendants 1 and 2 and dismissing the claim  of\t the<br \/>\nplaintiff  Bank (the appellant before us) for a sum  of\t Rs.<br \/>\n35,000\/-.\n<\/p>\n<p><span class=\"hidden_text\">844<\/span><\/p>\n<p>According  to  the  Bank,  defendants 1\t and  2\t carried  on<br \/>\nbusiness  at  Bihar  Sharif  under the\tname  and  style  of<br \/>\nMessrs.jogilal\t Prabhu\t Chand.\t  On  February\t 17,   1941,<br \/>\nthey,executed a cash credit agreement in favour of the\tBank<br \/>\nunder  which cash credit facilities were sanctioned up to  a<br \/>\nlimit  of Rs. 50,000\/against cloth bales on  certain  terms.<br \/>\nUnder  that agreement a sum of Rs. 15,000\/- was advanced  to<br \/>\nthe  Firm  on that very day.  On August 28,  1947  the\tFirm<br \/>\nexecuted  a  promissory note in favour of the  Bihar  Sharif<br \/>\nbranch\tof  the\t Bank for Rs. 50,000\/-\tand  approached\t the<br \/>\nManager\t for  immediate\t advance of  Rs.  35,000\/-  as\tthey<br \/>\nrequired  that amount for paying the price of certain  cloth<br \/>\nallotted  to them by M\/s.  Manohardas  jainarain,  wholesale<br \/>\ndealers\t  of  Patna.   Then  according\tto  the\t  Bank,\t  an<br \/>\narrangement  was  entered  into between\t the  Firm  and\t the<br \/>\nManager\t of the Bihar Sharif branch of the Bank under  which<br \/>\nthe  Firm  was\tallowed\t to draw  on  the  security  of\t the<br \/>\npromissory note on its agreeing to pledge the bales of cloth<br \/>\nas  further  security  after they  were\t received  from\t the<br \/>\nwholesalers.  On the basis of this agreement, the Firm\tdrew<br \/>\na  cheque for Rs. 35,000\/- on August 29, 1947 in  favour  of<br \/>\nthe  second  defendant, which was, according  to  the  Bank,<br \/>\nactually  passed  for payment by the Manager  of  the  Bihar<br \/>\nSharif\tBranch\tof the Bank and the amount was paid  to\t the<br \/>\nsecond defendant.  Further, according to the Bank, on August<br \/>\n30, 1947 a &#8220;false and mischievous&#8221; telegram purporting to be<br \/>\nfrom  defendant\t No.  2, Mahabir Lal, was  received  by\t the<br \/>\nManager\t of the Bihar Sharif branch of the Bank saying\tthat<br \/>\nthe Potdar of the Bank who was sent along with him with\t the<br \/>\nmoney  by  the\tManager had not deposited it  and  that\t the<br \/>\nPotdar\tcould  not  be traced.\t The  telegram\tcontained  a<br \/>\nfurther\t request  that the amount of Rs.  35,000\/-  be\tmade<br \/>\navailable to the firm immediately.  On September 1, 1947 the<br \/>\nManager\t informed  the\tFirm that  the\tallegations  in\t the<br \/>\ntelegram  were altogether false. -On September 9,  1947\t the<br \/>\nManager<br \/>\n<span class=\"hidden_text\"> 845<\/span><br \/>\nreceived  a  letter signed by Mahabir Lal alleging  that  in<br \/>\ncollusion   with   the\t Potdar\t he,   (the   Manager)\t had<br \/>\nmisappropriated the sum of Rs. 35,000\/-.  These\t allegations<br \/>\nare said by the Bank to be false and the suit &#8216;Out of  which<br \/>\nthis  appeal arises was instituted for the recovery  of\t the<br \/>\namount for which the cheque was drawn by the Firm on  August<br \/>\n29, 1947 and actually cashed by the Manager.<br \/>\nThe  defendants\t denied\t the claim of  the  Bank  as  false.<br \/>\nAccording to them, the suit was a counterblast to a criminal<br \/>\ncase instituted by them against the Manager- and the  Potdar<br \/>\nof  the Bihar Sharif brunch of the Bank charging  them\twith<br \/>\nmisappropriation.   While the defendants admitted that\tthey<br \/>\nhad  made arrangements with the Bihar Sharif branch  of\t the<br \/>\nBank  for a loan of Rs. 35,000\/- as alleged by the Bank\t for<br \/>\ntaking delivery of 42 bales of cloth which had been allotted<br \/>\nto them by M\/s.\t Manohardass jainarain, wholesale dealers of<br \/>\nPatna, they contended that the second defendant was informed<br \/>\nthat under the rules the Bank could advance a loan only upon<br \/>\nthe  goods actually kept in the custody of the\tBank.\tThey<br \/>\nfurther\t alleged  that\tthe Manager said that  in  order  to<br \/>\noblige\tthe  Firm he was prepared to advance,  Rs.  35,000\/-<br \/>\nprovided   certain   conditions\t  were\t fulfilled.    Those<br \/>\nconditions  were : (1) that the Firm should execute  a\tloan<br \/>\nbond  as  well\tas a promissory note  for  Rs.\t50,000\/-  as<br \/>\nfurther\t security ; (2) that the firm should draw  a  cheque<br \/>\nfor  Rs,  35,000\/- endorsed to self ; (3)  that\t the  second<br \/>\ndefendant  should further agree that instead of\t taking\t the<br \/>\namount in cash with himself he should let the amount be sent<br \/>\nby the Manager, Mr. Kapur, through Ram Bharosa Singh, Potdar<br \/>\nof  the Bank for being paid to M\/s.  Manohardass  jainarain,<br \/>\nand  (4) that after paying the amount the said Potdar  would<br \/>\ntake delivery of the bales of cloth allotted to the Firm and<br \/>\nbring them to the premises of the Bank at Bihar Sharif where<br \/>\nthey would remain pledged until the loan was repaid.\n<\/p>\n<p><span class=\"hidden_text\">846<\/span><\/p>\n<p>The  Firm  thus\t denied\t that the  sum\tof  Rs.35,000\/-\t was<br \/>\nactually  paid\tor advanced to them by the  Manager  of\t the<br \/>\nBihar  Sharif branch of the Bank.  According to the Firm,  a<br \/>\ncheque\twas  drawn at 5.00 a. in. on the  next\tmorning\t and<br \/>\nafter  it was handed over to Mr. Kapur, he went\t inside\t the<br \/>\ntreasury of the Bank alone with the potdar and returned with<br \/>\nsomething  wrapped in a gamchha and tied it round the  waist<br \/>\nof  the Potdar and said that the latter would hand over\t the<br \/>\nmoney to  M\/s.\tManohardass jainarain, take delivery of\t the<br \/>\ngoods and bring them to the premises of the Bank where\tthey<br \/>\nwould  be  kept in pledge.  Thereafter the  Potdar  and\t the<br \/>\nsecond\tdefendant, along With one Mahadeo Ram, a servant  of<br \/>\nthe Firm left for Patna by bus.\t On reaching the ekka  stand<br \/>\nof  Patna, the Potdar asked the second defendant to  proceed<br \/>\nto the premises of M\/s.\t Manohardas jainarain saying that as<br \/>\nhe had to go to, the Patna City Branch of the Bihar Bank, he<br \/>\nwould follow later.  He assured the second defendant that he<br \/>\nwould  bring  along with him the sum of Rs.  35,000\/-.\t The<br \/>\nsecond\t defendant  then  went\tto  the\t promises  of\tM\/s.<br \/>\nManohardass jainarain and waited for the Potdar to turn\t up.<br \/>\nAs he did not come within a reasonable time, he went to\t the<br \/>\nPatna  City  Branch of the Bank only to\t discover  that\t the<br \/>\nPotdar\twas  not there either.\tIt was after this  that\t the<br \/>\ntelegram mentioned in the plaint was sent to Mr. Kapur and a<br \/>\nreport\tlodged\twith  the  Police  at  Patna.\tThe   second<br \/>\ndefendant says that on his return to Bihar Sharif on  August<br \/>\n30,  he\t saw  Mr.  Kapur and told the  whole  story  to\t him<br \/>\nwhereupon  Mr. Kapur said that he should not worry and\tthat<br \/>\nhe would see to it that the bales were released soon by M\/s.<br \/>\nManohardass  jainarain.\t  Nothing,  however,  happened\tand,<br \/>\ntherefore, the defendants filed a criminal complaint against<br \/>\nMr. Kapur a,; well as the Potdar.  Eventually, however,\t the<br \/>\ncomplaint filed by the defendants failed.\n<\/p>\n<p><span class=\"hidden_text\"> 847<\/span><\/p>\n<p>\t      In its judgment the trial court has said<br \/>\n\t      &#8220;Moreover even if it be accepted for the\tsake<br \/>\n\t      of  argument that Ram Bharosa Singh went\twith<br \/>\n\t      the-  money along with Mahabir Lal as  alleged<br \/>\n\t      according to the term of the contract he would<br \/>\n\t      be deemed to be a temporary servant of Mahabir<br \/>\n\t      Lal  for\tthat purpose which fact\t is  evident<br \/>\n\t      from   the   defendants&#8217;\tevidence   also\t  as<br \/>\n\t      according\t to their evidence Mahabir  Lal\t met<br \/>\n\t      the cost of his Nashta (breakfast) and fare of<br \/>\n\t      the bus.&#8221;\n<\/p>\n<p>Apparently because of this, when the Firm&#8217;s appeal was being<br \/>\nargued\tbefore the High Court, the Bank&#8217;s counsel Mr. B.  C.<br \/>\nDe  conceded  that Ram Bharosa Singh, Potdar, did  take\t the<br \/>\nmoney  to  Patna  where\t he  went  along  with\tthe   second<br \/>\ndefendant,  which implies that the defendant No. 2  was\t not<br \/>\nactually  paid the amount for which the cheque was drawn  by<br \/>\nthe  Firm.  In this connection we would quote the  following<br \/>\nstatement appearing in the judgment of the High Court<br \/>\n\t      &#8220;Mr.  B. C. De, who appeared for the plaintiff<br \/>\n\t      conceded at the outset that, in fact,  Rambha-<br \/>\n\t      rosa  Singh,  Potdar, had taken the  money  to<br \/>\n\t      Patna  City to pay to the Firm of\t Manohardass<br \/>\n\t      jainarain\t as  is the case of  the  contesting<br \/>\n\t      defendants.   He\thowever,  urged\t that,\teven<br \/>\n\t      then,  the defendants would be liable for\t the<br \/>\n\t      claim  of\t the plaintiff.\t He urged  that\t Rs.\n<\/p>\n<p>\t      35,000\/-\thad gone out of the coffers  of\t the<br \/>\n\t      Bank against the cheque for Rs. 35,000  issued<br \/>\n\t      by  the defendants.  The Bank was,  therefore,<br \/>\n\t      not  responsible as to who, in fact,  got\t the<br \/>\n\t      money after it was duly presented and honoured<br \/>\n\t      by the Bank.&#8221;\n<\/p>\n<p>The High Court then pointed out that Mr. De placed  reliance<br \/>\nupon  certain  decisions  of the Calcutta  and\tBombay\tHigh<br \/>\nCourts and s. 85 of the Negotiable<br \/>\n<span class=\"hidden_text\">848<\/span><br \/>\nInstruments Act.  Before us, however, it is urged on  behalf<br \/>\nof the Bank that no such concession was made by Mr. De.\t The<br \/>\nsecond\tdependent has filed an affidavit which counters\t the<br \/>\nStatement made on behalf of the Bank.  In our opinion  where<br \/>\na  statement  appears  in the judgment of  a  court  that  a<br \/>\nparticular  thing happened or did. not happen before it,  it<br \/>\nought  not ordinarily to be permitted to be challenged by  a<br \/>\nparty  unless of course both the parties to  the  litigation<br \/>\nagree  that  the  statement is wrong, or  the  court  itself<br \/>\nadmits\tthat the statement is erroneous.  If the High  Court<br \/>\nhad  proceeded\ton an erroneous impression that Mr.  De\t had<br \/>\nconceded  that\tthe money was taken along with\thim  by\t Ram<br \/>\nBharosa\t Singh\tto Patna, there was nothing easier  for\t the<br \/>\nBank  than  to prefer an application for review\t before\t the<br \/>\nHigh  Court  after  the judgment was pronounced\t or  if\t the<br \/>\njudgment  was  read  out  in  court  immediately  draw\t the<br \/>\nattention  of  the  court to the  error\t in  the  statement.<br \/>\nNothing\t of the kind was done by the Bank.  It is  too\tlate<br \/>\nfor  the Bank now to say that the statement was\t wrong.\t  It<br \/>\nappears\t to  have been argued on behalf of the Bank  in\t the<br \/>\ntrial  court alternatively that even on the assumption\tthat<br \/>\nthe money was taken to Patna by Ram Bharosa Singh, the\tsuit<br \/>\nmust be decreed.  We, therefore, see nothing strange in\t Mr.<br \/>\nDe making a concession of the kind attributed to him by\t the<br \/>\nHigh  Court.  In the circumstances we decline to  go  behind<br \/>\nwhat is contained in the judgment of the High Court,  quoted<br \/>\nearlier.\n<\/p>\n<p>The  next question is whether the sum of Rs. 35,000\/-  could<br \/>\nbe said to have been paid by the Bank to the Firm.  Upon the<br \/>\nadmitted  position that the amount of Rs. 35 000\/-  was\t not<br \/>\nactually  received by the Firm in the sense that it was\t not<br \/>\nhanded\tover to the second defendant who had  presented\t the<br \/>\ncheque. could it be said that it must be deemed to have been<br \/>\npaid to the firm since it was handed over<br \/>\n<span class=\"hidden_text\"> 849<\/span><br \/>\nto  the Potdar for taking it to Patna ? It is no doubt\ttrue<br \/>\nthat the Potdar did accompany the second defendant to  Patna<br \/>\nbut  it is difficult to hold that he being a servant  or  an<br \/>\nagent  of  the\tBank  could  also  be  said  to\t have\tbeen<br \/>\nconstituted by the Firm as its agent for carrying the  money<br \/>\nto  Patna.   It is not the Bank&#8217;s case that it\twas  at\t the<br \/>\nsuggestion of the defendant No. 2 that the money was  handed<br \/>\nover to the Potdar.  Perhaps it was not the normal duty of a<br \/>\nPotdar to carry money on behalf of the Bank for payment to a<br \/>\nparty  at its place of business.  But even if it is not,  we<br \/>\ncannot\toverlook  the fact that the  arrangement  which\t was<br \/>\narrived\t at  between  the Firm and Mr.\tKapur  was  also  an<br \/>\nunusual\t one, Mr. Kapur admittedly had no authority  to\t pay<br \/>\nRs.  35,000\/- to the Firm before the goods or  documents  of<br \/>\ntitle  relating to the goods were placed in the\t custody  of<br \/>\nthe  Bank.  Since Mr. Kapur wanted to help the Firm  without<br \/>\nat  the\t same time breaking the rules of the Bank,  what  he<br \/>\nmust  have intended in handing over the money to the  Potdar<br \/>\nwas  to\t constitute  him as the agent of the  Bank  for\t the<br \/>\npurpose\t   of\tpaying\t the   money   to   the\t  Firm\t  of<br \/>\nManohardass.jainarain and taking simultaneously delivery  of<br \/>\nthe  goods and the documents of title relating to the  goods<br \/>\nfrom  that  Firm.  There would have been no  point  in\tthe,<br \/>\nPotdar\taccompanying  the  second  defendant  to  Patna\t and<br \/>\ncarrying money along with him if he were not to be the agent<br \/>\nof  the\t Bank.\t It  is the  Firm&#8217;s  case  that\t the  second<br \/>\ndefendant  did\tnot go alone to the Bank on the\t morning  of<br \/>\nAugust 29, but that he went along with his servant  Mahadeo.<br \/>\nTwo  of\t them  being together, they could  surely  not\thave<br \/>\nwanted\ta  third  person to go along with  them.&#8217;  just\t for<br \/>\ncarrying  the cash.  We are therefore, of the  opinion\tthat<br \/>\nthe  money not having passed into the actual custody of\t the<br \/>\nFirm  or that of the custody of a per-son who was a  servant<br \/>\nor agent of the Firm, the Firm cannot be held liable for it.\n<\/p>\n<p><span class=\"hidden_text\">850<\/span><\/p>\n<p>In  regard to s. 85 of the Negotiable Instruments Act,\t1881<br \/>\n(26  of 1881) and the decision of Jagjivandas,\tJamnadas  v.<br \/>\nThe  Nagar Central Bank Ltd., (1), which is founded on\tthat<br \/>\nsection\t upon  which  reliance was placed  before  the\tHigh<br \/>\nCourt, it is sufficient to say that before the provisions of<br \/>\ns.  85\tcan assist the Bank, it had to be  established\tthat<br \/>\npayment had in fact been made to the Firm or to a person  on<br \/>\nbehalf of the Firm.  Payment to a person who had nothing  to<br \/>\ndo with the Firm or a payment to an agent of the Bank  would<br \/>\nnot be a payment to the Firm.  Section 118 of the Negotiable<br \/>\nInstruments Act on which reliance was placed before us\tdoes<br \/>\nnot have any bearing upon the case at all.\n<\/p>\n<p>It  was then urged on behalf of the Bank that even  assuming<br \/>\nthat  the money was misappropriated by the Potdar  the\tBank<br \/>\ncould  not be held responsible for his act because  his\t act<br \/>\nwas  a\tcriminal  act.\tIn support of  this  contention\t the<br \/>\nlearned\t counsel relied upon the decisions in Gopal  Chandra<br \/>\nBhattacharjee v.    The Secretary of , State for India\t(1),<br \/>\nand Cheshire  v.    Bailey(2).\t The rule of law upon  which<br \/>\nthese  decisions  are  based is that the  liability  of\t the<br \/>\nmaster for the misconduct of the servant extends only to the<br \/>\nfraud  of  his\tservant\t committed  in\tthe  course  of\t his<br \/>\nemployment  and for the master&#8217;s benefit and that  a  master<br \/>\nis,  not liable for the misconduct of the servant  committed<br \/>\nfor  the servant&#8217;s own private benefit.\t It is difficult  to<br \/>\nappropriate  how  these cases are of any assistance  to\t the<br \/>\nBank.\tHere,  what  the  Bank wants  to  do  is  to  fasten<br \/>\nliability upon the Firm with respect to the amount for which<br \/>\nit  had\t drawn\ta cheque.  Before the  Firm  could  be\tmade<br \/>\nliable, the amount for which the cheque was drawn had to  be<br \/>\nshown to have been paid to the Firm.  On the contrary it was<br \/>\nhanded\tover  by the Bank to its Potdar\t avowedly  with\t the<br \/>\nobject\tof paying it to the firm of  Manohardass  jainarain,<br \/>\nbut  was  not  in fact so paid by  him.\t  Assuming  that  he<br \/>\nmisappropriated the money how<br \/>\n(1)  (1925) I.L.R. 50 Bom. 118.\t (2) (1900) I.L.R.  Cal.  36\n<\/p>\n<p>647.<br \/>\n\t\t   (3) [1905] 1 K.B. 237.\n<\/p>\n<p><span class=\"hidden_text\"> 851<\/span><\/p>\n<p>can the Bank seek to hold the Firm of the defendants liable?<br \/>\nThis is not a case where the defendants are seeking- to hold<br \/>\nthe Bank liable for a criminal act of one of its servants or<br \/>\nemployees.  But it is a case where the Bank wants to  fasten<br \/>\nliability on the Firm for the criminal act of the Bank&#8217;s own<br \/>\nservant.  Such a proposition is insupportable in law.\tFor,<br \/>\nvicarious  liability may, in appropriate cases, rest on\t the<br \/>\nmaster\twith  respect to his servant&#8217;s acts  but  it  cannot<br \/>\npossibly  rest\ton a stranger with respect to  the  criminal<br \/>\nacts  of a servant of another.\tThe principle on  which\t the<br \/>\nmaster&#8217;s liability for certain acts of the servant rests  is<br \/>\nthat the servant, when he commits such act, acts within\t the<br \/>\nscope  of  his\tauthority.  If the servant  was\t not  acting<br \/>\nwithin\tthe scope of his authority, the master would not  be<br \/>\nliable and it is the person who did the particular act, that<br \/>\nis  the\t servant, would alone be liable.  If a\tthird  party<br \/>\nsustains damage or loss by reason of an act of the  servant,<br \/>\nhe can hold the servant liable and also if the servant&#8217;s act<br \/>\nfalls  within  the  scope of his duties\t or  authority,\t the<br \/>\nmaster\tas  well.   That principle  can\t obviously  have  no<br \/>\napplication for founding a liability against a stranger from<br \/>\nwhom the servant can in no sense be regarded as deriving any<br \/>\nauthority.  We arc, therefore, clear that whether the  money<br \/>\nhad  been misappropriated, by the Potdar or by the  Manager,<br \/>\nit  is\tthe Bank who is their employer that  must  bear\t the<br \/>\nloss.  The drawers of the cheque, that is, the Firm to\twhom<br \/>\nno  part  of the money was paid by the Bank cannot  be\theld<br \/>\nliable\tto make it good to the Bank.  For these\t reasons  we<br \/>\naffirm the decree appealed from and dismiss the appeal\twith<br \/>\ncosts.\n<\/p>\n<p>Appeal dismissed.\n<\/p>\n<p><span class=\"hidden_text\">852<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Bank Of Bihar Ltd vs Mahabir Lal &amp; Ors on 7 February, 1963 Equivalent citations: 1964 AIR 377, 1964 SCR (1) 842 Author: M R. Bench: Mudholkar, J.R. PETITIONER: BANK OF BIHAR LTD. Vs. RESPONDENT: MAHABIR LAL &amp; ORS. DATE OF JUDGMENT: 07\/02\/1963 BENCH: MUDHOLKAR, J.R. BENCH: MUDHOLKAR, J.R. SUBBARAO, K. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-987","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bank Of Bihar Ltd vs Mahabir Lal &amp; Ors on 7 February, 1963 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/bank-of-bihar-ltd-vs-mahabir-lal-ors-on-7-february-1963\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bank Of Bihar Ltd vs Mahabir Lal &amp; 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