Question

The question contains some basic principles and fact situations in which these basic principles have to be applied. A list of probable decisions and reasons are given.

Principles:

1. A master shall be liable for the fraudulent acts of his servants committed in the course of employment.
2. Whether an act is committed in the course of employment has to be judged in the context of the case.
3. Both master and third parties must exercise reasonable care in this regard.

Facts:

Rama Bhai was an uneducated widow and she opened a'S.B. account with Syndicate Bank with the help of her nephew by name Keshav who was at that time working as a clerk in the Bank. 'Keshav used to deposit the money of Rama Bhai from time to time' and get the entries done in the passbook. After a year or so, Keshav was dismissed from the service by the Bank. Being unaware of this fact, Rama Bhai continued to hand over her savings to him and Keshav misappropriated them. Rama Bhai realized this only when Keshav disappeared from, the scene one day and she sought compensation from the Bank.

Possible Decisions

(a) Syndicate Bank shall be liable to compensate Rama Bhai.
(b) Syndicate Bank shall not be liable to compensate Rama Bhai.
(c) Rama Bhai cannot blame others for her negligence.

Possible Reasons

(i) Keshav was not an employee of the Bank when the fraud" was committed.
(ii) The Bank was not aware of the special arrangement between Rama Bhai and Keshay.
(iii) It is the Bank's duty to take care of vulnerable customers.
(iv) Rama Bhai should have checked about Keshav in her own interest. Your decision with the reason

Options

• (a) (iii)

• (c) (iv)

• (b) (ii)

• (b) (i)

Answer 1

(b) (ii)

Explanation:

It is not possible for a bank to be aware of the special arrangement of every customer.