Back
1994 Supreme(Cal) 41
High Court of Calcutta
A.N. Ray, J.
Shakuntala Devi Prahladka – Appellant
Versus
Punjab National Bank – Respondent
Decided On : Feb 01, 1994
A bank is liable for the fraudulent acts of its employees and must compensate customers for any losses suffered as a result of such acts.
Headnote:
BANKING - Joint Savings Bank Account - Fraudulent Transfer of Funds by Bank Employee - Liability of Bank - Interest on Blocked Funds - Damages for Dishonoured Cheque.
Fact of the Case:
A joint savings bank account was opened by the plaintiffs, mother and son, with the defendant bank. Three sums were deposited into the account: Rs.100 for opening the account, Rs.2,02,800 received from LIC for the death of the son's younger brother, and Rs.35,208. The total amount deposited was Rs.2,38,108. The bank manager, A.B. Das, fraudulently transferred Rs.2 lakh from the plaintiffs' account to Bhajan Finance on the same day the account was opened. The plaintiffs filed a suit against the bank claiming the principal sum, interest, and damages for the dishonor of a cheque.
Finding of the Court:
The court found that the bank was liable for the fraudulent act of its employee, A.B. Das, and that the plaintiffs were entitled to the principal sum of Rs.2,38,108 with interest at 18% per annum from the date of opening the account until payment. The court also awarded damages of Rs.15,500 for the dishonored cheque and costs of the suit at Rs.25,000.
Issues: 1. Whether the plaintiffs acted in collusion with the branch manager A.B. Das as alleged by the bank. 2. Whether a sum of Rs.2 lakh paid by A.B. Das to the plaintiffs extinguished the liability of the bank. 3. The rate of interest payable on the principal sum. 4. Whether the defendant wrongfully and illegally dishonored the cheque for Rs.31,000/- drawn in favor of Suresh Construction Pvt. Ltd. 5. Whether the plaintiffs suffered loss of earning/profit to the extent of Rs.1,80,000/- for the alleged dishonor of the cheque.
Ratio Decidendi: 1. The court held that there was no evidence to support the bank's allegation that the plaintiffs were involved in the fraudulent transfer of funds by A.B. Das. 2. The court held that the fraudulent transfer of Rs.2 lakh by A.B. Das did not extinguish the bank's liability to pay the plaintiffs the moneys deposited in the savings bank account. 3. The court held that the bank was liable to pay interest on the principal sum at the rate of 18% per annum from the date of opening the account until payment, as the bank was in breach of its duty to pay the plaintiffs' money on demand. 4. The court held that the bank was liable to pay damages for the dishonored cheque as it had failed to take due care and regard in honoring the cheque, and that the plaintiffs were entitled to damages in the amount of Rs.15,500.
Final Decision: The court decreed that the plaintiffs were entitled to Rs.2,38,108 with interest at 18% per annum from the date of opening the account until payment, damages of Rs.15,500 for the dishonored cheque, and costs of the suit at Rs.25,000.
1. THE Suit is filed by the first plaintiff who is the mother of the second in respect of a Joint Savings Bank A/c. opened by them in the Zakaria Street Branch of the defendant bank on or about the 11th of January, 1983.
2. IN the said account three several sums were paid in, a sum of Rs.100/- for opening the account, a sum of Rs.2,02,800/- being the money paid to the plaintiff by the LIC for the unfortunate demise of the second plaintiffs younger brother and another sum of Rs.35,208. 00. The aggregate amount paid into the account was Rs.2,38,108. 00 and it has, at the stage of arguments, been concerned by Mr. M. R. Singla that this principal amount is indubitably payable by the defendant to the plaintiffs.
3. ALTHOUGH such a concession was made at the very end of the suit the defendant Bank had not at any stage paid the money into Court or otherwise seen to it that the plaintiff receive the principal sum without prejudice to the rights and contentions of the defendant as to their points in the suit. Accordingly the grant of interest pendente lite and further interest from 1985 will follow as a matter of course.
4. THE parties went to trial on the following issues :-
1. Did the plaintiffs act in collusion and conspiracy with the Branch manager A. B. Das as alleged in the written statement ?
2. Was a sum of Rs.2 lakh paid by the said A. B. Das to the plaintiffs as alleged in the written statement and if so, did the same extinguish the liability of the Bank ?
3. To what interest, if any, are the plaintiffs entitled upon the said sum of Rs.2 lakh?
4. Did the defendant wrongfully and illegally dishonour the cheque for Rs.31,000/- drawn in favour of Suresh Construction Pvt. Ltd. ?
5. Did the plaintiffs suffer loss of earning/profit to the extent of Rs.1,80,000/- for the alleged dishonour of the cheque Are the plaintiffs entitled to any decree on the admitted sum lying due to their credit in Savings Bank Account?
5. TO what reliefs, if any, are the plaintiffs entitled?
6. Regarding the first issue it appears that the Branch Manager of the defendant bank viz. one A.B. Das caused a fraudulent transfer of Rs.2 lakh to be made from the account of the plaintiffs to the account of one Bhajan finance. The last document of Ext. 'a' which is the Judge's Brief of documents shows that even according to the Bank such "unauthorised transfer took place on 14.1.83 i.e. almost as soon as the joint account was opened by the plaintiffs.
7. There has been no indication from any of the papers before me or from the evidence of Rabindra Kumar Acharya who was the only witness of the Bank that the plaintiffs or any of them was in any manner connected with the fraud perpetrated by A. B. Das.
6. I have hesitation in answering, the first issue in favour of the plaintiff. The allegation in the written statement that the plaintiffs acted along with the Branch Manager A. B. Das was made without any basis or ground whatsoever. It is quite clear, therefore, that the sum of Rs.2 lakh fraudulently removed by A. B. Das to Bhajan Finance could not in any manner extinguish the liability of the Bank to pay the moneys deposited in the savings Bank Account as and when demanded by the plaintiffs. The second issue need not, therefore, be any further dwelt upon.
7. THE plaintiffs drew a cheque, upon one Suresh Construction Pvt. Ltd. and the same was twice dishonoured. The amount of the cheque was Rs.31,000/ -. The first return of the cheque was made upon the ground that the account number was wrongly quoted in the cheque but the cheque was represented after due correction of the account number.
8. FOR the second time the cheque was returned dishonoured with the endorsement of the Bank (see page 25 of Ext. A) that the drawer's signature is not in the Bank's record. The said communication of the Bank is dated 14.12.84. On the 2nd of August, 1983 the fraud of A.B. Das had already produced its results and certain books of the Bank had been seized consequent thereupon. Mr. Singla
