N.Sridhar v. Maruthi Jayaraman & Ors.

shares lodged for transfer which came to his Department with the helpand connivence of other employees of second respondent/ seconddefendant and prepared a forged transfer deed attested by a NotaryPublic Thiru.K.Chandran, a lawyer from Madras and presented them forsale to the appellant/ plaintiff on 17.3.1992.(ii)The appellant/plaintiff is a leading stock and share Brokerfor more than 40 years and he is a senior member of the Madras StockExchange. The first respondent/first defendant posing himself asT.Sathyanarayana of H6K, Poonambalam Colony, K.K.Nagar, Madraspresented the 350 shares of the second respondent/ second defendantcompany along with the duly completed share transfer application formon 17.3.1992. The appellant/ plaintiff never had the inclination thatthe first respondent/first defendant had impersonated some one andbrought the stolen scrips and the duly completed transfer formcontained the attestation of a notary public and the appellantaccepted the same for trading and placed it for sale in the market.The certificates were sold in the market and the sale proceeds wererealised to an extent of Rs.4,01,500/-. Later the firstrespondent/first defendant collected a sum of Rs.4,01,500/- by way ofthree cheques drawn on Bank of Baroda in the name of T.Sathyanarayanaand the details are as follows:No.DateAmount47804.4.921,31,500/-47612.4.92 60,000/-4735 27.3.922,10,000/-The three cheques were credited in the accounts of T.Sathyanarayanain the account with bank of India, Thousand lights Branch.(iii)During May 1992, the fraud came to the surface when anindividual from Bombay visited the plaintiff to enquire about the 350shares accepted by the appellant for trading. It was learnt that oneVipul Damani of Bombay sent 350 shares for transfer to the secondrespondent/second defendant and the same was stolen by the firstrespondent/ 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 chequeswere credited to the Bank of India, Thousand Lights Branch in theT.Sathyanarayana's name. It was found out after investigation thatthe first respondent/first defendant had impersonated himself asT.Sathyanarayana and handed over the shares to theappellant/plaintiff's and collected the amount from the appellant andappropriated it.(iv)Subsequently, when the purchasers of the shares from theappellant recovered the entire amount from the appellant with the https://hcservices.ecourts.gov.in/hcservices/ help of the Madras Stock Exchange, when the fraud came to the light.the appellant pursued the matter with the police authorities and thecrime branch police after registered a case in C.C.No.8994 of 1993before the Court of Additional Chief Metropolitan Magistrate, Egmoreagainst the first respondent/first defendant.(v)The second respondent/second defendant as employer of thefirst respondent/first defendant on account of its carelessness andnegligence had allowed their employee to meddle with the sharecertificates lodged for transfer and the first respondent/firstdefendant was taking advantage of the negligence of the secondrespondent/second defendant and the first respondent/first defendantimpersonated himself as T.Sathyanarayana and sold the sharecertificates and appropriated the amount. As a matter of fact, theappellant/ plaintiff was suspended by the Madras Stock Exchange fornot paying the purchaser of the shares in the market. Theappellant/plaintiff was forced to borrow on heavy interest to clearthe dues etc. The first respondent/first defendant and the secondrespondent/second defendant are jointly and severally liable tocompensate the appellant. Hence, the appellant had laid the suitpraying for a judgment and decree against the respondents/defendantsjointly and severally for a sum of Rs.6,06,265/- together withinterest at 18% per annum from the date of plaint till realisationand for costs of the suit.(vi)Before the trial Court, the first respondent/first defendantremained exparte.(vii)The second respondent/second defendant filed a writtenstatement inter alia pleading that the first respondent/firstdefendant was not working in the secretarial division of the secondrespondent/second defendant company but was employed in theSpeciality Coatings Division and that the second defendant'sregistered office was shifted from 826, Anna Road, Tharapur Towers to124 Greams Road, Chennai from 16.12.1991 after satisfying thestatutory requirements and also after intimating the shareholdersindividually and that even though the registered office was shiftedbut the Speciality Coatings Division continued to function from theaforesaid address.(viii)The second respondent/second defendant also took a standthat some transfer deeds along with share certificates were sent tothe old office at Anna Road from where the Speciality CoatingsDivision was functioning, by one Vipul N.Dhami and that the firstrespondent/first defendant who was the Manager of the said Divisiontook possession of the share certificates and after executing a https://hcservices.ecourts.gov.in/hcservices/ forged transfer deed attested by a Notary sold it to the appellant/plaintiff.(ix)The second respondent/second defendant after coming to knowof the fraud played by the first respondent/first defendant lodged apolice complaint and the matter was reported to SEBI and all stockexchangers. Further, the first respondent/first defendant wasimmediately dismissed from service of the second respondent/seconddefendant company and therefore, no liability could be fastened onthe second respondent/second defendant.(x)The second respondent/second defendant had no joint liabilitywhatsoever and that Mr.Vipul N.Dhami, who was unaware of the changeof address of the registered office of the company was to be blamedfor this unfortunate occurrence. The second respondent/seconddefendant was an unnecessary party. If the documents had reached thesecretarial department of the second respondent/second defendantcompany the first respondent/first defendant would hot have laid hishands on the same. (xi)Before the trial Court on the side of appellant/ plaintiff,witness P.W.1 was examined and Exs.A.1 to A.13 were marked and on theside of second respondent/second defendant, witness D.W.1 wasexamined and Exs.B.1 to B.23 were marked. 3.The trial Court has framed in all three issues fordetermination. On an appreciation of oral and documentary evidenceand after analysing the same in depth, the trial Court has come tothe conclusion that the appellant/ plaintiff is entitled to claim thesuit amount from the first respondent/first defendant (employee)alone and not from the second respondent/second defendant (employer)and accordingly, passed a decree directing the first respondent/first defendant to pay a sum of Rs.6,06,265/- together with intereston Rs.4,01,500/- at 18% per annum from the date of plaint i.e.30.1.1995 till the date and thereafter at 12% per annum till the dateof realisation etc. and also directed the first respondent/ firstdefendant to pay a cost of Rs.24,948/- to the appellant/plaintiff.4.Dissatisfied with the judgment and decree made in O.S.No.185of 1995 by the trial Court, the appellant/ plaintiff has projectedthis appeal before this Court.5.The point for arises for determination in this appeal is:Whether the liability to pay a sum of Rs.6,06,265/- along withinterest at 18% per annum as claimed in the suit can be fastened onthe second respondent/second defendant (employer) for the tortious https://hcservices.ecourts.gov.in/hcservices/ act of the first respondent/ first defendant (Ex-employee) on theprinciple of vicarious liability in law?6.The learned counsel for the appellant/plaintiff contends thatthe second respondent/second defendant company an employer of thefirst respondent/first defendant is vicariously liable for thetortious act committed by the first respondent during the course ofhis employment with the second respondent/second defendant and thatthe trial Court has committed an error in not taking note of thenegligence aspect of the second respondent/second defendant and thatas an employer the second respondent/second defendant failed in itsduty to take diligent care to prevent the theft of shares andtherefore, the second respondent/second defendant company is squarelyand equally responsible to make good the loss sustained by theappellant/plaintiff has to be allowed to prevent an aberration ofjustice.7.The main thrust of the argument of the appellant/ plaintiffproceeds on the basis that the second respondent/ second defendantcompany as an employer of the first respondent/first defendant, onaccount of its carelessness and negligence had allowed its employeeviz., the first respondent/first defendant to meddle with the sharecertificates lodged for transfer and the first respondent/ firstdefendant took advantage of the negligence of the secondrespondent/second defendant and resultantly, came into the possessionof the certificates and committed impersonation as oneT.Sathyanarayana and sold and appropriated the amount and therefore,the respondents 1 and 2 are jointly and severally liable to pay theamount claimed by the appellant/plaintiff.8.Countering the submissions of the learned counsel for theappellant, the learned counsel appearing for the secondrespondent/second defendant submits that the first respondent/firstdefendant was working only in the Speciality Coatings Division of thecompany and that he was not working in the secretarial division asaverred in the plaint and further the second respondent/seconddefendant company had shifted their residence from 826, Anna Road,Tharapur Towers to 124 Greams Road, Chennai from 16.12.1991 afterfulfilling the requirements of law and also intimating theshareholders individually and that the Speciality Coatings Divisiononly continued in the said registered office address, notwithstandingthe fact that the registered office was shifted and the firstrespondent/first defendant who was the Manager of the SpecialityCoatings Division took possession of the documents sent by VipulN.Dhami of Bombay and later sold it to the appellant/plaintiff andimmediately when the second respondent/second defendant came to knowof the fraud committed by the first respondent/first defendant lodged https://hcservices.ecourts.gov.in/hcservices/ a police complaint and reported the matter to the SEBI and all StockExchange authorities and hence, no liability could be tagged on tothe second respondent/second defendant.9.The learned counsel for the appellant/plaintiff in support ofhis contention that the second respondent/second defendant was topay the suit amount to the appellant because of its negligence relieson the decision of Director of Public Prosecutions V. Kent and SussexContractors, Limited 1944 Company Cases page 133 wherein it is heldas follows:"The agents of a company made a return incompliance with the Motor Fuel Rationing (No.3)Order, 1941, which return to their knowledge wasfalse in material particulars: Held, that thecompany was guilty of an offence againstregulation 82 of the Defence (General)Regulations, 1939, notwithstanding that it is onlythrough its human agents that a company can havethe intent to deceive or can make a falsestatement knowingly."10.He also further relies on the observations made in page 135and 136 of the aforesaid judgment which are extracted hereunder:"The respondents were charged with producing areturn false in a material particular with intentto deceive and, secondly, with making a statementwhich they knew to be false in a materialparticular. I should add this, that Mr.James HenryOrpin was charged with analogous offences or anoffence at any rate connected with the offencessaid to have been committed by the first-namedrespondents, the Kent and Sussex Contractors, Ltd.When the information came to be heard certainevidence was given, and as found by the specialcase the respondent company sent in certainreturns made for the purposes of the Motor FuelRationing Order signed by Mr.M.G.Knowler, thetransport manager of the respondent company, inrespect of a vehicle which was in fact controlledby the respondent company. That return was falsein material particulars and it was known by him tobe false in material particulars. It was contendedon that evidence by the appellant that theoffences charged were proved to have beencommitted, but the respondents met thatcontention, according to the special case, by a https://hcservices.ecourts.gov.in/hcservices/ contention that a body corporate could not in lawbe guilty of the offences charged as an act ofwill or state of mind implicit in the commissionof the offences and that, therefore, therespondent company was not guilty of the offencescharged and accordingly the respondent Orpin mustalso be acquitted. The magistrates accepted thatcontention. They thought that the contentions onbehalf of the respondents were right and dismissedthe information. We have to say whether they cameto a correct determination and decision in pointof law. The special case appears to me to raise aquite clear question of law, whether a bodycorporate, in this case a limited company, can inlaw be guilty of the offences charged, or whethera company is incapable of any act of will or stateof mind. When, however, counsel for therespondents came to argue the case before us itappears that he was not fully satisfied with theway the case was stated or the question raised forthe opinion of this Court, and he has laid anargument directed to a question which, so far Iunderstand it, seems to me different from thatwhich appears to be raised by the special case.The question is whether a company can be heldto have an intention or knowledge which itsagents, the officers of the company, have, andtherefore, whether in the circumstances of thiscase the respondent company was capable of formingthat intention or having that knowledge.I think it is only right that we should dealwith the question which appears to be raised bythe special case. It may be that other contentionsraised by counsel for the respondents will have tobe considered in determining that question. For mypart I think it is a little easier than it wouldhave been, because counsel has not disputed theproposition that the company can in the abstractbe found to have the intention to do somethingwilfully. The position of a company, so far ascriminal offences are concerned, is that it cannotbe charged with or rather it cannot be foundguilty of certain criminal offences, such astreason, nor other offences for which it isprovided that death or imprisonment is the onlypunishment. The law has been stated in a way whichhas made it, I think, clearer as time has passed https://hcservices.ecourts.gov.in/hcservices/ that there are a number of criminal offences forwhich a company can be convicted. There is aconvenient citation from the judgment in R.V.CoryBrothers & Co. (96 L.J.K.B., at P.764; (1927) 1K.B., at p.816). In that judgment there is acitation from the judgment of Patteson, J.. in R.v. Birmingham and Gloucester Railway (11 L.J.M.C.,at p.136); 3 Q.B., at p.232) as follows (it beginswith a note by Holt, C.J.: " 'A corporation is notindictable but the particular members of it are.'"): " 'What the nature of the offence was to whichthe observation was intended to apply does notappear; and as a general proposition it is opposedto a number of cases, which show that acorporation may be indicted for breach of a dutyimposed upon it by law, though not for a felony,or for crimes involving personal violence, as forriots or assaults.' " Under the Defence (General)Regulations, 1939, it is very common for offencesto be created in which certain ingredients arerequired to be found and this particular caseseems to me very clearly to be one of such cases.They are offences in which it is not material toconsider whether there is or is not mens rea,which I understand to mean criminal intention, butthey are cases which state the ingredients, as forinstance, in this case where one of the necessaryingredients in one of the offences is intent todeceive. When that intent to deceive is stated tobe necessary it seems to me quite idle to go insearch of the right answer to the question whethermens rea or not is involved."11.Continuing further in the above decision, the learned counselfor the appellant relies on the following observations:"The penalty is imposed upon the owner for the actof the servant"- of course, the result could onlybe reached where any person is given express orimplied authority or is estopped from saying thathe had not. "Once it is decided that this is oneof those cases where a principal may be heldliable criminally for the act of his servant,there is no difficulty in holding that acorporation may be the principal. No mens reabeing necessary to make the principal liable, acorporation is in exactly the same position as aprincipal who is not a corporation." It is https://hcservices.ecourts.gov.in/hcservices/ necessary to bear in mind the position of acompany, which is quite different from that of aprivate individual, a real person. It could not beput better than Lord Blackburn puts it in the caseof the Pharmaceutical Society V. London andProvincial Supply Association, Ltd. (49 L.J.Q.B.,at p. 742; 5 App. Cas. At p.870). He says: "Acorporation may in one sense, for all substantialpurposes of protecting the public, possess acompetent knowledge of its business, if it employscompetent directors, managers, and so forth. Butit cannot possibly have a competent knowledge initself". Then he says: "Nor, 'I think, can acorporation be supposed to be a 'person' known asa chemist and druggist.' "12.Moreover, he also brings it to the notice of the observationsmade in page 141 of the aforesaid judgment which are as below:"It has been laid down over and over again thatwhere a statute absolutely prohibits the doing ofan act it is sufficient to show that the personaccused did the forbidden act intentionally andthat it is not necessary to go further and provewhat is commonly known as mens rea or anyintention other than to do the thing forbidden".In the cas with which we are dealing the firstcharge was one of doing something with intent todeceive. The second charge was that of making astatement which the company knew to be false in amaterial particular."13.Further, in the aforesaid decision at page 142, it is held asfollows:"I see nothing whatever in any of the authoritiesto which we have been referred which requires usto say that a company is incapable of being heldguilty of those offences"14.Further, he relies on the decision of the Hon'ble SupremeCourt in Sitaram V. Santanuprasad Jaishanker Bhatt in AIR 1966Supreme Court 1697 whereby and whereunder it is held as follows:"A master is not responsible for the negligence orother wrongful act of his servant simply becauseit is committed at a time when the servant isengaged on his master's business. It must becommitted in the course of that business, so as toform a part of it, and not be merely coincident in https://hcservices.ecourts.gov.in/hcservices/ time with it. The scope of employment of a servantneed not of course be viewed narrowly, but theessential element that the wrong must be committedby the servant during the course of theemployment, i.e. in doing the master's businessought always to be present. Salmond, 13th Edn.,p.124, Ref.; 1942 AC 509 and (1911) 2 KB 775,Ref.; 1915-1 KB 644 and (1956) 1 WLR 376 and(1900) 2 QB 530 and 1897-1 QB 240, Expl. (Paras 30, 31)"15.Continuing further, he also presses into service thefollowing observation made in the aforesaid judgment at page 1705which are extracted as follows:".... a master is not responsible for thenegligence or other wrongful act of his servantsimply because it is committed at a time when theservant is engaged on his master's business. Itmust be committed in the course of that business,so as to form a part of it, and not be merelycoincident in time with it."(31)The scope of employment of a servant neednot of course be viewed narrowly, but theessential element that the wrong must be committedby the servant during the course of theemployment, i.e. in doing the master's businessought always to be present."16.However, the learned counsel for the second respondent/seconddefendant, in aid of his argument that no liability can be roped inon the second respondent/second defendant company, cites the decisionof Hon'ble Supreme Court in Sitaram V. Santanuprasad JaishankerBhatt in AIR 1966 Supreme Court 1697 at page 1704 wherein it is interalia held as follows:"27.The law is settled that a master isvicariously liable for the acts of his servantacting in the course of his employment. Unlessthe act is done in the course of employment, theservant's act does not make the employer liable.In other words, for the master's liability torise, the act must be a wrongful act authorised bythe master or a wrongful and unauthorised mode ofdoing some act authorised by the master. Thedriver of a car taking the car on the mater'sbusiness makes him vicariously liable if hecommits an accident. But it is equally wellsettled that if the servant, at the time of the https://hcservices.ecourts.gov.in/hcservices/ accident, is not acting within the course of hisemployment but is doing something for himself themaster is not liable. There is a presumption thata vehicle is driven on the master's business andby his authorised agent or servant but thepresumption can be met. It was negatived in thiscase, because the vehicle was proved to be drivenby an unauthorised person and on his own business.The de facto driver was not the driver or theagent of the owner but one who had obtained thecar for his own business not even from the masterbut from a servant of the master. Prima facie,the owner would not be liable in suchcircumstances."17.Besides this, the learned counsel for the second respondentalso cites the following observations made in paras 30 and 31 of theaforesaid judgment at page 1704 and 1705 which are as follows:"30.In Rickett's and Engelhart's cases, 1915-1 KB644 and 1897-1 QB 240 (respectively) each servantwas acting, on the mater's business at the time.If the two servants in the Engelhart's case hadgone for a picnic or the boy had borrowed the cartto give a joy ride to his friends, the masterwould not have been liable although the effectcause would still have been the elder servant'snegligence. The difference lies in this that inthe two cases the negligent act took place in theexecuting of the master's business and in theexamples suggested by us, no question or mater'sbusiness or the scope of the servant's or agent'semployment arises, because the acts are clearlyoutside that scope. Going for a picnic or lendingthe cart so that the co-servant's friends may gofor an outing is not in the course of the master'semployment. Beard's case, 1900-2 QB 530 whencompared with Rickett's case, 1915-1KB 644 bringsout the difference. In (1928) 44 TLR 294 themaster himself lent the car to the servant for thelatter's private work and the master was not heldresponsible for the negligence of the servant incausing injury because neither was the journey onthe master's account not was the master in controlat the time. Sir John Salmond has summed up thelaw thus: https://hcservices.ecourts.gov.in/hcservices/ "......a master is not responsible for theneglignece or other wrongful act of his servantsimply because it is committed at a time when theservant is engaged on his master's business Itmuch be committed in the course of that business,so as to form a part of it, and not be merelycoincident in time with it."31. The scope of employment of a servant need notof course be viewed narrowly, but the essentialelement that the wrong must be committed by theservant during the course of the employment, i.e.,in doing the master's business ought always to bepresent. In Century Insurance Co. V. NorthernIreland Road Transport Board, 1942 accused 509 thedriver of a petrol lorry while transferring petrolfrom the lorry to an underground tank, struck amarch to light a cigarette and threw it on thefloor, and there by caused a fire and explosionwhich did great damage. The masters were heldliable because the negligence was in the dischargeof the duty by the servant. Although the act oflighting the cigarette was something the driverdid for himself and was by itself quite harmless,it could not be regarded in the abstract and was anegligent method of conducting the master's work.Similarly, in Smith v. Martin and Kingston-upon-Hull Corpn. 1911 2 KB 775 at P.784 a schoolauthority was held liable when a teacher, duringschool hours sent a girl aged 14 wearing a printpinafore to poke the fire and to draw out thedamper in a grate in the teachers' common room andthe child was burnt. It was held that theteacher's duty was to provide education in thewidest sense and included expecting obedience fromthe pupils and this was an act of negligence inthe discharge of such duty."18.He also presses into service another decision of Hon'bleSupreme Court in State Bank of India V. Shyama Devi in AIR 1978Supreme Court 1263 at page 1264 wherein it is among other things heldthat 'In such a case, the fact that false and fictitious entries tocover up his fraud were made by the employee in the Pass Book of theclient and in the Ledger Account of the husband could not make theembezzlement committed by the employee an act committed in the courseof his employment with the bank. Consequently, the bank was notliable to make good the loss caused to the client by the act of the https://hcservices.ecourts.gov.in/hcservices/ employee because the latter in such a case would be deemed to haveacted as an agent of the client and not within the scope of hisemployment with the bank."19.The learned counsel for the second respondent has referred toSec.51, 53 and 108 of the Companies Act which refers to service ofdocuments on company, service of documents on merits by company, andthe transfer not to be registered except on production of instrumentof transfer.20.In Ex.A.1 the order form dated 17.3.1992 in the name ofT.Sathyanarayana, addressed to appellant/plaintiff, wherein a requestwas made to sell the 350 shares to second respondent/second defendantat the market rate. A perusal of Ex.A.4 xerox copy of FIR shows thatthe Manager-Secretarial of the second respondent companyMr.R.Janakiraman is the complainant. In the said complaint, theft,forgery and cheating in connection with the transfer of shares hasbeen made mention of. Based on the Ex.A.4, the police have registereda case in X. Cr.No. 1917/92 under Section 379, 467, 468, 419, 420 r/w471 and 34 I.P.C. Ex.B.16 is the letter of the second respondentcompany dated 29.10.1992 addressed to the first respondent informinginter alia that the company has terminated the services withimmediate effect and without notice pay. In Ex.B.16 the facts andcontents of affidavit, deed of indemnity and agreement regardingsecurity dated 28.10.1992 made by the first respondent has beenreferred to. Pertinently, Ex.B.19 affidavit of first respondent/firstdefendant categorically avers in para 2 of his affidavit that he wasextremely sorry for the misdeeds committed by him and he sincerelyrepent for the same and that he has requested the second respondentcompany not to dismiss him but only to terminate his services if hisservices are not required any longer and therefore, he voluntarilywaive the notice period in regard to terminate of his services andrequested the company to treat his case sympathetically etc.21.It is the evidence of P.W.1/appellant/plaintiff that he is ashare broker and that Sathyanarayana has informed through Ex.A.1 totransfer the 350 shares of second respondent company standing in hisname and that the said Sathyanarayana has encashed the cheques givenby him and that he has incurred a loss for which the secondrespondent/ second defendant company is responsible and that anemployee working in the second respondent company has stolen theshares and sold them and that as against the first respondent/firstdefendant, a case is going on before the criminal Court and thataction has been taken against him for selling the stolen shares bythe stock authority and that it is not correct to state that for thelaw sustained by him the first respondent/first defendant alone isliable and that the second respondent company is not liable. https://hcservices.ecourts.gov.in/hcservices/

22.It is the candid evidence of D.W.1 (Manager of secondrespondent company) that the first respondent/first defendant hasimpersonated the shares in the name of Sathyanarayana and thatEx.B.16 is the termination order of the first respondent. Ex.B.22 isthe xerox copy of the final report filed before the criminal Courtagainst the first respondent/first defendant by the Inspector Generalof Police, Central Crime Branch, Egmore. In short, the charge inEx.B.22 against the first respondent/first defendant is to the effectthat he after stealing the share certificates to the value ofRs.4,01,500/- and forged the signature and the instruments receivedthree cheques to an extent of Rs.2,10,000/-, Rs.60,000/-,Rs.1,31,500/- amounting in all to an extent of Rs.4,01,500/- byimpersonating himself as Sathyanarayana and encashed the same byopening an account in the Bank of India, Thousand Lights Branch,Chennai.23.One cannot loose sight of an important fact that for themaster's liability to arise, the act must be a wrongful oneauthorised by the master or a wrongful one and unauthorised mode ofdoing some act authorised by the master. If the servant at the timeof accident is not acting within the course of employment but isdoing something for himself, certainly the master cannot be heldliable in the eye of law, in the considered opinion of this Court.Moreover, if the unauthorised and wrongful act of an employee/servantis not so connected with the authorised act has to be a mode of doingit, but is an independent act, the master is not responsible; for insuch a case the servant is not acting in the course of the employmentbut has gone outside of it as per the decision Canadiyan PacificRailway Company V. Leonard Lock-hart, AIR 1943 P.C. at page 63. As amatter of fact, whether master's vicarious liability is in issue hasto answer two questions:(a)The first question is to see whether an employee/ servant isliable? If the answer is Yes, (b)The second question is to see whether the employer is toshoulder the employees liability?24.No wonder, the first question assumes significance that thequestion of master's liability can arise only when the servant isliable. The second question must be answered by factual determinationof the issue whether the employees wrongful act or act of omission orcommission committed by him has been done in the course of hisemployment. https://hcservices.ecourts.gov.in/hcservices/

25.It is the settled principle of law that it is for theclaimant to establish that he has suffered an injury as theforeseeable result of the employers breach of duty. Duty, Breach andCausation are the three essentials of liability and the existence ofa duty remains subject to the tests of foreseeability, proximity,fairness, justice and reasonableness that apply in the realm of Lawof Torts, in the considered opinion of this court.26.As far as the present case is concerned, that the firstrespondent/first defendant employee was not serving in thesecretarial division of the second respondent/second defendantcompany but was in the Speciality Coatings Division of the secondrespondent/second defendant and further that the firstrespondent/first defendant after being possessed of the documentssent by one Vipul N.Dhami of Bombay committed malevolent conduct andindulged in misdemeanour activity and after coming to know of thefraud committed by the first respondent/first defendant, the secondrespondent/second defendant had terminated his services for hisinvolvement in connection with the fraudulent and forged sharetransfer. The second respondent/ second/defendant company had alsolodged a FIR with the police and action was also taken by them whenthey came to know of the fraud committed by the firstrespondent/first defendant and one cannot ignore a vital fact thatafter lodging a police complaint the fraud matter was brought to thenotice of SEBI and all Stock Exchangers authorities.27.On a careful consideration of respective contentions and onan overall assessment of the facts and circumstances of the case inan integral fashion, this Court is of the considered view that thefirst respondent/first defendant employee had committed the fraudafter being in possession of the documents, transfer deeds and sharecertificates sent by N.Dhami and even though the firstrespondent/first defendant was employed under secondrespondent/second defendant, the second respondent/second defendantcompany could not be saddled with the liability to pay the suitamount claimed by the appellant/plaintiff because of the fact thatthe acts of misdeeds, omissions and commissions pointing out to themisdemeanour or malevolent conducts of the first respondent/firstdefendant, all these were of individual, independent and personalunauthorised wrongful acts of the said employee and in that view ofthe matter, the liability could not be tagged on to the secondrespondent/second defendant company on the footing of tortiousliability to extend the vicarious liability of an employer andtherefore, the appeal has no merits and resultantly, the same fails.28.In the result, the appeal is dismissed. The judgment anddecree passed by the trial Court in O.S.No.9100 of 1995 are affirmed https://hcservices.ecourts.gov.in/hcservices/ by this Court for the reasons assigned in this appeal. However,9having regard to the facts and circumstances of the case, the partiesare directed to bear their own costs in this appeal. Sd/Asst.Registrar/true copy/Sub Asst.Registrarsgl To1.The II Assistant Judge, City Civil Court, Madras. 2.The Section Officer, VR Section, High Court, Madras.104.1 cc To Mr.V.Balasubramanian & Associates, SR.241761 cc To M/s. Kind & Partridge, Advocate, SR.23615A.S.No.10 of 2002MBS(CO)SRA(10/7)