The main legal point established in the judgment is that a corporate body cannot be held vicariously liable for the illegal acts of its employees if the plaintiff fails to adhere to the provisions of the Foreign Exchange Management Act, 1999.

1. This second appeal is focussed by the original first defendant, animadverting upon the judgement and decree dated 22.01.2010 passed in A.S.No.628 of 2007 by the Additional District Judge, Second Fast Track Court, Chennai, reversing the judgment and decree of the XVIII Assistant Judge, City Civil Court, Chennai in O.S.No.107 of 2006. The parties are referred to hereunder according to their litigative status and ranking before the trial Court.

2. Compendiously and concisely, the relevant facts absolutely necessary and germane for the disposal of this Second Appeal would run thus:

(a) The plaintiff filed the suit seeking the following reliefs:

(i) To grant Rs.4,37,860/- along with interest at 12% per annum from the date of filing of this suit till decree and thereafter till payment; and

(ii) for costs.(Extracted as such)

(b) The first defendant filed the written statement resisting the suit.

(c) Whereupon the trial Court framed the issues.

(d) During trial, on the side of the plaintiff, P.Ws.1 to 3 were examined and Exs.A1 to A28 were marked. On the side of the defendants, one Mr.Mahesh Pralhad Joshi was examined as D.W.1 and Exs.B1 to B4 were marked.

(e) Ultimately the trial Court dismissed the suit as against D1, but decreed the suit as against D2 who remained ex parte, as against which appeal was filed by the plaintiff. Whereupon, the first appellate Court reversed the judgment and decree of the trial Court and decreed the original suit as prayed for as against D1 also.

3. Being aggrieved by and dissatisfied with the judgment of the first appellate Court, the first defendant filed this appeal on various grounds and also suggesting the following substantial questions of law.

"(1) Whether the First respondent is entitled to a decree for the recovery of money based on a illegal transaction admitted by PW1 to be illegal and in violation of the foreign exchange laws of India and Reserve Bank of India regulations?

(2) Whether there is any vicarious liability of the appellant company for the illegal transactions fraudulently entered into between the first respondent/plaintiff and the employee of the appellant viz. the second respondent entered into by them with full knowledge in violation of the reserve bank of India regulations and the foreign exchange laws?

(3) Whether there is any vicarious liability of the appellant for the unauthorised acts of the second respondent acting beyond the scope of his authority and employment?

(4) Whether the judgment of the appellate court is not perverse in reversing the judgment and findings of the trial Court?"

4. After hearing both sides, I thought fit to frame the following substantial questions of law:

(1) Whether the first appellate Court was justified in decreeing the suit, reversing the judgment and decree of the trial Court in dismissing the suit, on the ground that even though as per P.W.1, the plaintiff did not adhere to the legal procedures in issuing the foreign exchange, the plaintiff was entitled to file the suit and recover the dues from D1 also?

(2) Whether the first appellate Court properly appreciated the concept vicarious liability? and whether in the absence of any correspondence between D1 the Corporate personality and the plaintiff, another Corporate personality relating to purchase of foreign exchange and also in the absence of production of evidence on plaintiff's side as pointed out by the trial Court in its judgment, was justified in decreeing the suit?

(3) Whether there is any perversity or illegality or non-adherence to Order 41, Rule 31 of CPC in the judgment and decree passed by the first appellate Court in decreeing the original suit after reversing the judgment and decree of dismissal, passed by the trial Court?

5. The learned counsel for the appellant/D1 would put forth and set forth his arguments, which could pithily and precisely be set out thus:

(a) D2 and the plaintiff colluded together and indulged in certain activities which are against the Foreign Excha