Fraud committed by an agent in the course of employment is not independent of the contract between the principal and the third party, and thus is governed by the limitation period for breach of contract, not the limitation period for torts independent of contract.

Judgment

SUBBA RAO, J. :- These appeals by special leave raise a question of limitation.

2. The National Bank of Lahore Limited, hereinafter called the Bank, is a banking concern registered under the Indian Companies Act and having its registered office in Delhi and branches at different places in India. Though its main business is banking, it carries on the incidental business of hiring out lockers out of cabinets in safe deposit vaults to constituents for safe custody of their jewels and other valuables. It has one such safe deposit vault at its branch in Julundur. The respondents herein hired lockers on rental basis from the Bank at Julundur through its Manager under different agreements on different dates during the year 1950. In April 1951 the said lockers were tampered with and the valuables of the respondents kept therein were removed by the Manager of the Jullundur branch of the Bank. In due course the said Manager was prosecuted before the Additional District Magistrate, Jullundur, and was convicted under Ss. 380 and 409 of the Indian Penal Code. The respondents filed 3 suits in the Court of the Subordinate Judge, Jullundur, against the Bank for the recovery of different sums on account of the loss of the valuable contents of the lockers hired by them. The Bank denied its liability on various grounds and also contended that the suits were barred by limitation.

3. The learned Subordinate Judge held that the Bank was liable to bear the loss incurred by the plaintiffs and that the suits were not barred by limitation. On appeal, the High Court of Punjab accepted the findings of the learned Subordinate Judges on both the questions and dismissed the appeals. The present appeals arise out of the said judgment of the High Court.

4. The only question raised in these appeals is one of limitation. Before considering the question of limitation it is necessary to notice briefly the findings of fact arrived at by the High Court. The High Court summarized its findings thus:

"(1) The whole object of a safe deposit value in which customers of a Bank can rent lockers for placing their valuables is to ensure their safe custody. The appellant-Bank had issued instructions laid down a detailed procedure for ensuring that safety but in actual practice the manage alone had been made the custodian with full control over the keys of the strong room and a great deal of laxity had been observed in having no check whatsoever on him.

(2) The lockers had been rented out to the plaintiffs by the Manager Baldev Chand, who was entrusted with the duty of doing so. It was he who had intentionally rented out such lockers to the plaintiffs which had been tampered with byu him. This constituted a fraud on his part there being an implied representation to the plaintiffs that the lokcers were in a good and sound condition.

(3) Although the Bank authorities were not aware of what Baldev Chand was doing, but the fraud, which the perpetrated, was facilitated and was the result of the gros laxity and negligence on the part of the Bank authorities.

(4) The lockers were indisputably being let out by the Manager to secure rent for the Bank." Having found the said facts, the High Court held that the fraud was committed by the Manager acting within the scope of his authority and, therefore, the Bank was liable for the loss incurred by the respondents. Then it proceeded to consider the question of limitation from three aspects, namely, (i) the loss was caused to the respondents, as the Manager of the Bank committed fraud in the course of his employment; (ii) there was a breach of the implied condition of the contract, namely, that only such lockers would be rented out which were safe and sound and which were capable of being operated in the manner set out in the contract; and (iii) there was a relationship of bailor and bailee between the respondents and the Bank, and, therefore, the Bank would be liable on the basis of the contract of bailment. It held that from whatever asp