JUDGMENT

CHANDRACHUD, CJI.:— In April, 1962, the appellant was appointed as a clerk in the Hoshairpur Central Co-operative Bank Ltd., which is respondent 3 to this appeal. On August 10, 1976 he was transferred as Branch Manager of the Dholbaha branch of the Bank. On Oct 22, 1977 one Labh Singh s/o. Harnam Singh opened an account in the Dholbaha Branch under an introduction given by one Balram Singh. Two days later, Labh Singh deposited in that account a draft in the, sum of Rs. 5,000/- issued by the Royal Bank of Canada on the Chartered Bank, New Delhi. The amount due on the draft was credited by the Bank in Labh Singhs account, on November 14. On that very day, Labh Singh withdrew a sum of Rs. 2,500/- from his account. Three days later, be withdrew the remaining amount of Rs. 2,500/-. Soon thereafter, a person claiming to be the real Labh Singh in whose favour the draft was issued by the Royal Bank of Canada, complained to the Chartered Bank, New Delhi, that the draft was stolen and that the money due thereon was fraudulently collected by the person in whose name an account was opened in the Dholbaha Branch. On Nov. 10, 1978, the Executive Committee of respondent 3-Bank resolved t