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2021 Supreme(Online)(KER) 40402
HIGH COURT OF KERALA
N.NAGARESH, J
MUMTHAS C – Appellant
Versus
TAHSILDAR, REVENUE RECOVERY – Respondent
WP(C)/32296/2016
Sri.P.Samsudin, Sri.Jithin Lukose, Sri.Abdul Shukoor Mundambra, Sri.Babu Varghese (Sr.), Sri.T.Madhukumar, Sri.P.K.Mohamed Jameed, Sri.M.Raghukumaran, Sri.Alexander.C.V., Surya Binoy, Smt. Deepa Narayanan
The principal is vicariously liable for the fraudulent acts of its agent, preventing unjust recovery measures against unsuspecting individuals.
Headnote:
Fraud - Writ Petition - Article 226 - Vicarious Liability of Principal - Concerns the improper recovery from salaries of petitioners despite fraudulent activity by an agent. The court determined that the principal (KSFE) is liable for the agent's actions, mandating that recovery not occur from the petitioners' salaries.
Fact of the Case:
Petitioners, teachers, challenged recovery of loan dues from their salaries, asserting fraud committed by an agent of the KSFE using their signed salary certificates. They claimed no agreement existed for the loan in question, and were victims of manipulation.
Finding of the Court:
The court found that the petitioners were misled and fraudulently made sureties for the 5th respondent's loan, with manipulation by the KSFE's agent. It ruled that KSFE bears vicarious liability for the agent's fraudulent actions.
Issues: Whether the KSFE can recover loan dues from the petitioners based on fraudulent actions of its agent, despite the petitioners not being willing guarantors.
Ratio Decidendi: The court highlighted the principle of vicarious liability, asserting that a principal is responsible for the actions of its agents, particularly in instances of fraud.
Final Decision: Writ petition allowed; recovery from petitioners' salaries is prohibited.
JUDGMENT
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Petitioners 1 and 2, who are Primary Departmental Teachers working in Ugrapuram and Manjeri in Malappuram District, have filed this writ petition seeking to quash Exts.P1 and P2 communications issued by the 2nd respondent- Manager, Pandikkad Branch of the Kerala State Financial Enterprises Limited, directing the employers of the petitioners to recover the entire loan dues of the 5th respondent, who is a subscriber of a chitty, from the salary of the petitioners at the ` rate of 10,000/- per month.
2. The petitioners state that they have no transactions with the 2nd respondent-Pandikkad Branch of the KSFE, though they are subscribers of chitty conducted by the KSFE, Manjeri Branch. The petitioners were enrolled in the chitty by one Rahmathulla, who is the husband of the 6th respondent. The 6th respondent is a Staff Nurse in Government service. The 6th respondent is also a subscriber of chitty of KSFE. The petitioners state that Rahmathulla, the husband of the 6th respondent, compelled the petitioners to stand as surety for the chitty prized by the 6th respondent. The petitioners gave their salary certificates as surety for the chitty of the 6th respondent.
3. The petitioners contend that the said Rahmathulla misused the salary certificates of the petitioners and submitted documents to show that the petitioners have agreed to stand as guarantors to the chitty-loan of the 5th respondent. The manipulations were made with the connivance of the then Branch Manager of the KSFE, Pandikkad Branch. The petitioners swear that they have not gone to the Pandikkad Branch office of the KSFE and have not signed or executed any documents in the Branch Office so as to create any guarantee or security in favour of the 5th respondent. While using the salary certificates of the petitioners as guarantors to the 5th respondent, no documents were forwarded to the employers of the petitioners for cross checking.
4. As a bolt from the blue, the 2nd respondent- Manager of the Pandikkad Branch of KSFE issued letters to ` employers of the petitioners seeking to recover 10,000/- from their salary. When the petitioners made enquiries with the 6th respondent, she gave evasive replies. The petitioners learnt that a fraud has been played on them by the 5th respondent, 6th respondent, Rahmathulla and the 2nd respondent.
5. The petitioners submitted Exts.P3 and P4 complaints to the Manager, KSFE, pointing out the fraud played on them. The petitioners specifically stated that they gave their salary certificates for standing as surety of the 6th respondent. They further stated that Rahmathulla and his wife, the 6th respondent, came to their residence, stated that marriage of Rahmathulla‘s daughter has been fixed on 15.02.2015 and salary certificates of the petitioners are required to renew and enhance the loan in the name of the 6th respondent. Though the petitioners were reluctant, since it was for marriage of the young daughter of Rahmathulla, the petitioners gave their salary certificates. It was misusing the salary certificates that the petitioners were made sureties of the 5th respondent.
6. The petitioners submitted complaints to the Vigilance and Anti Corruption Bureau also as evidenced by Ext.P5. On a discreet enquiry on that complaint, the Dy.S.P., VACB found the allegations to be prima facie true. The Dy.S.P., VACB forwarded Ext.P6 letter to the Director, Vigilance and Anti Corruption Bureau, Thiruvananthapuram recommending to register a case and investigate. While investigation is pending in the matter, the 2nd respondent took coercive steps against the petitioners for recovery of the amount due from the 5th respondent. The petitioners thereupon submitted Exts.P7 and P8 complaints to their employers. As the response of the employers was not encouraging, the petitioners have approached this Court.
7. The 5th respondent in respect of whose dues recovery is sought to be made from the salary of the petitioners, filed a counter affidavit.
