Employer's Vicarious Liability - The judgment established the principle that an employer cannot be held vicariously liable for the fraudulent acts of an employee if the acts are individual, independent, and personal unauthorised wrongful acts of the employee.

1. The appellant/plaintiff has preferred this appeal against the judgment and decree dated 20.10.2000 made in O.S.No.9100 of 1995 by the learned II Assistant Judge, City Civil Court, Madras, in dismissing the suit claim of Rs.6,06,265/-along with interest at 18% per annum from the date of plaint till date of realisation etc. against the second respondent/second defendant company liability to pay the suit amount.

2. The essential facts of the case are set out below:

(i) The first respondent/first defendant was employed in the secretarial Department of the second respondent/second defendant who had access to the share certificates lodged for transfer. The first respondent/first defendant in the course of his employment stole 350 shares lodged for transfer which came to his Department with the help and connivence of other employees of second respondent/ second defendant and prepared a forged transfer deed attested by a Notary Public Thiru.K.Chandran, a lawyer from Madras and presented them for sale to the appellant/ plaintiff on 13. 1992.

(ii)The appellant/plaintiff is a leading stock and share Broker for more than 40 years and he is a senior member of the Madras Stock Exchange. The first respondent/first defendant posing himself as T.Sathyanarayana of H6K, Poonambalam Colony, K.K.Nagar, Madras presented the 350 shares of the second respondent/ second defendant company along with the duly completed share transfer application form on 13. 1992. The appellant/ plaintiff never had the inclination that the first respondent/first defendant had impersonated some one and brought the stolen scrips and the duly completed transfer form contained the attestation of a notary public and the appellant accepted the same for trading and placed it for sale in the market. The certificates were sold in the market and the sale proceeds were realised to an extent of Rs.4,01,500/-. Later the first respondent/first defendant collected a sum of Rs.4,01,500/- by way of three cheques drawn on Bank of Baroda in the name of T.Sathyanarayana and the details are as follows:

No.

Date Amount 4780

4. 92 1,31,500/-

4761

4. 92 60,000/-

4735

23. 92 2,10,000/-

The three cheques were credited in the accounts of T.Sathyanarayana in the account with bank of India, Thousand lights Branch.

(iii) During May 1992, the fraud came to the surface when an individual from Bombay visited the plaintiff to enquire about the 350 shares accepted by the appellant for trading. It was learnt that one Vipul Damani of Bombay sent 350 shares for transfer to the second respondent/second defendant and the same was stolen by the first respondent/ first defendant and handed it over to the appellant/ plaintiff and all of them visited the bankers of the appellant viz., Bank of Baroda, at Errabalu Chetty Street, and found out that cheques were credited to the Bank of India, Thousand Lights Branch in the T.Sathyanarayanas name. It was found out after investigation that the first respondent/first defendant had impersonated himself as T.Sathyanarayana and handed over the shares to the appellant/plaintiffs and collected the amount from the appellant and appropriated it.

(iv) Subsequently, when the purchasers of the shares from the appellant recovered the entire amount from the appellant with the help of the Madras Stock Exchange, when the fraud came to the light. the appellant pursued the matter with the police authorities and the crime branch police after registered a case in C.C.No.8994 of 1993 before the Court of Additional Chief Metropolitan Magistrate, Egmore against the first respondent/first defendant.

(v) The second respondent/second defendant as employer of the first respondent/first defendant on account of its carelessness and negligence had allowed their employee to meddle with the share certificates lodged for transfer and the first respondent/first defendant was taking advantage of the negligence of the second respondent/second defendant and the first respondent/first defendant i