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Most Revd. Dr. L. Mathias, S.C., the Archbishop of Madras and the President of the Catholic Indian Association and anr. Vs. Kilacheri Agricultural Co-operative Bank - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai
Decided On
Reported in(1938)1MLJ241
AppellantMost Revd. Dr. L. Mathias, S.C., the Archbishop of Madras and the President of the Catholic Indian a
RespondentKilacheri Agricultural Co-operative Bank
Cases ReferredLloyd v. Grace
Excerpt:
- - thambi pillai was the honorary secretary of this association, and it was he who in fact made the deposit, the subject-matter of this suit, as well as other deposits. it may well be that that secretary and treasurer put that money into his pocket -and from the deposit receipt ex......of the bank would call upon mr. thambi pillai. money would then be handed over in cash to the bank's secretary and treasurer, and he would in return hand over to the association's representative a fixed deposit receipt. that fixed deposit receipt obviously comes from a book which is ex. b-1, and mr. thambi pillai, p.w. 1, said in his evidence which i accept, that so far as his recollection goes, the receipt was always a loose receipt. on this particular occasion, namely, 3rd october, 1929, rs. 5,300 was handed over at the request of the bank's treasurer and secretary, a clerk at the catholic association's office filled up the blanks, it was signed by the bank's treasurer and given in exchange. that was the procedure in certainly five of the seven deposits. in the first two, the.....
Judgment:

Gentle, J.

1. This is a suit in which the plaintiffs are suing the defendants for a sum of Rs. 5,300, together with interest, which it is alleged was. deposited by the plaintiffs or by those in whose shoes the plaintiffs now stand, with the defendant Bank, upon fixed deposit for a specified period, and at the end of that period, the money was not returned to the plaintiffs. In the written statement, in addition to formal matters such as not admitting the allegations, it is alleged that the one who received the actual deposit was not authorised by the defendants so to do, and was acting outside his authority when he accepted the deposit from the plaintiffs, that under the rules and bye-laws of the defendant Bank the panchayatdars have a discretion to accept or not to accept a deposit of every description before the Bank is bound by the deposit and that the mere receipt by the person who in fact received this money, namely, the secretary, would not constitute a valid deposit and that the panchayatdars did not indicate their acceptance of the deposit. In other words, it is alleged in the written statement that the secretary of the defendants was acting outside the scope of his apparent and obvious authority to the knowledge of the defendants when the money deposited was paid and further that the Bank have not under its rules and bye-laws accepted responsibility for this deposit to the knowledge of the defendants.

2. On behalf of the defendants, no evidence has been called, and at the close of the plaintiff's case, I was asked to adjourn the further trial for the defendants to be able at a future date to call evidence in support of their case. I refused the application, firstly because this case has been notified for some two or three weeks as being in the list for trial and parties should be ready for trial. If of course a witness is ill or is unable to be here, naturally one adjourns a case to enable the evidence of that witness to be called. Secondly the application, made when it was, in my view, had no support or justification for the grant of an adjournment.

3. The facts are as follows : The Catholic Indian Association of Southern India had funds at their disposal which apparently they desired to invest upon fixed deposits at profitable rates of interest. At all relevant times, Mr. Thambi Pillai was the Honorary Secretary of this Association, and it was he who in fact made the deposit, the subject-matter of this suit, as well as other deposits. In all, seven deposits were made by the Association through the gentleman I have mentioned, and the * method in which they were made was this, with the exception of the first one or two. The defendant Bank has its premises at Kilacheri, and again at material times, the secretary and treasurer was Mr. M. Papayya Naidu. That gentleman was frequently in Madras, and when the Catholic Association desired to make a deposit upon fixed deposit with the defendant Bank, the secretary and treasurer of the Bank would call upon Mr. Thambi Pillai. Money would then be handed over in cash to the Bank's secretary and treasurer, and he would in return hand over to the Association's representative a fixed deposit receipt. That fixed deposit receipt obviously comes from a book which is Ex. B-1, and Mr. Thambi Pillai, P.W. 1, said in his evidence which I accept, that so far as his recollection goes, the receipt was always a loose receipt. On this particular occasion, namely, 3rd October, 1929, Rs. 5,300 was handed over at the request of the Bank's treasurer and secretary, a clerk at the Catholic Association's Office filled up the blanks, it was signed by the Bank's treasurer and given in exchange. That was the procedure in certainly five of the seven deposits. In the first two, the deposits were in fact made at Kilacheri by the local Catholic priest who was requested so to do by the authorities in Madras. In respect of all these deposits, interest has been paid by the defendants to the plaintiffs as and when it-became due, perhaps a little time following the due date. In respect of all the deposits except the last one, the one concerning this suit, the principal monies have been repaid by the defendants to the plaintiffs, and nothing arises in regard to those six earlier transactions. With regard to the last one, Rev. Mora who is the Vicar-General to the Archbishop of Madras, who is P.W. 2, has been called, and whose evidence I accept entirely, and he says that in the course of his duties he received interest in respect of the fixed deposit which is the subject-matter of this suit and he entered in his books at the time of receipt a record of payment of the interest, and interest was payable in the months of October in the years 1930, 1931, 1932 and 1933, since the fixed deposit was for a term of five years from October, 1929, and would be repayable in October, 1934, and that interest was paid in cash by the secretary and treasurer of the defendant Bank at the Vicar-General's office. Father Mora also says that he received interest upon all the other deposits, six in number, made in the way I have already mentioned, in the same manner, namely, by the secretary and treasurer coming to his office, paying in cash amounts from time to time due in respect of interest on those deposits and that he recorded in his books, similarly as he did with this one, receipts of interest. In addition to the deposits which I have already mentioned and made by the plaintiffs or, as I said, those in whose shoes the plaintiffs stand, the defendants have received other deposits, and they have received them, in exactly the same way, namely, their secretary and treasurer, the same man M. Papayya Naidu, going to the houses or offices of the potential depositors, receiving the amount of the deposit, mostly in cash and sometimes by cheque, giving a deposit receipt either loose already filled in or filled in at the house of the depositor, sometimes torn from the counterfoil book, and on, I think, one occasion a mere acknowledgment was given of the receipt of the money paid and the fixed deposit receipt was sent a day or two later to the depositor from the Bank's premises at Kilacheri. Witnesses P.Ws. 3, 4 and 5 speak to these other deposits which are entirely unconnected with those made by the plaintiffs. Those other deposits mentioned by the three witnesses above have been repaid by the defendant Bank except in regard to one of which there is no evidence that it has been repaid nor is there any suggestion put to the witnesses who spoke about it that the defendants repudiated it on the ground that M. Papayya Naidu had no authority from them when he accepted those deposits.

4. To this evidence, there is none called in rebuttal or in denial by or on behalf of the defendants. When the learned Counsel cross-examined the plaintiffs' witnesses, he never suggested that anything they had said was inaccurate at all. Some of them were asked whether they had read the bye-laws of the defendant Bank, and they all denied having read them except P.W. 5, Father Soma, who said that after he had made a deposit he subsequently became a member of the Bank and then he did read the bye-laws, but then he was never asked to identify them or to deal with them. He was asked to give what they contained, but I pointed out to the learned Counsel, that if they were written they would speak for themselves when they were proved in evidence, but no copy was ever put to the witness for him to identify it. It is not contended by the defendants that the man who carried out all these transactions, M. Papayya Naidu, was not their secretary and treasurer nor that he was unauthorised to receive deposits. Undoubtedly, he was the secretary and treasurer, and he had authority to receive deposits. It is alleged in the written statement that there was a limitation upon his authority to the extent that he could receive these deposits only at the business premises of the defendant Bank and not outside. Firstly, there is no evidence before me that there was any such limitation upon his authority. Secondly, if there was such a limitation, then it would be incumbent upon the defendant Bank to prove that such limitation was brought to the knowledge of Mr. Thambi Pillai at the time or before he effected the deposit of Rs. 5,300, the subject-matter of the suit, so that when he paid to the Bank's secretary and treasurer that money, he would know that it was being received without any authority from his principal so to receive it in the way it was then being paid to him. As I said, it is not contended that the secretary and treasurer had no authority to receive money and to receive fixed deposit and that he was not their agent so to do and it was not in the course of his employment so to act. Every act done by an agent in the course of his employment on behalf of his principal and within the apparent scope of his authority binds the principal, unless the agent is in fact unauthorised to do that particular act and the person with whom he is dealing is aware that the agent in doing as he does is exceeding the authority given by the principal. This man had authority to receive deposits. Before the one, the subject-matter of this suit, evidenced by Ex. A-1, was effected, there were certainly four other deposits made by Mr. Thambi Pillai in the same way as this one was made, namely, either at the house or the office of that gentleman in Madras. In respect of those four deposits, I say four because of the total of seven, two of them were effected at Kilacheri, the defendants had paid before the date of this deposit and have paid since the date of this deposit interest upon those earlier deposits, and they have also at the date or some time thereafter of maturity and the expiration of the period mentioned in the fixed deposit repaid the principal. Therefore, upon the evidence before me, not only was there authority which one can describe as apparent, but there was, by the conduct of the defendants in ratifying the deposits accepted by the secretary and treasurer by paying interest and repaying the capital, express notice to Mr. Thambi Pillai. Whilst the principal moneys deposited were not repaid until a year or two after the deposit in question was made, and the repayment of the principal would not of course be express notice to Mr. Thambi Pillai, but the payment of interest however was so, and the subsequent repayment of the principal by these defendants shows to me that they expressly authorised their secretary and treasurer to receive deposits in this way. Ex. A-3 a letter from the defendants to the plaintiffs dated 2nd April, 1930, signed by the gentleman who received the deposits, but written from the office of the company, deals with all the deposits which have been made up to that time, and it was apparent then that there were negotiations between the parties regarding an earlier repayment than the time fixed. There was no suggestion that that letter was written by the secretary of the defendant Bank without authority nor that the panchayatdars or those who would be in authority over this man had not the facilities for seeing the correspondence and copies which would be kept in the ordinary way. The question of the responsibility for the return of this fixed deposit arises after 3rd October, 1934. In Ex. A-4, dated 12th October, 1934, written by the plaintiffs to the defendants, the deposit receipt, Ex. A-1, was sent and request made for a fresh deposit receipt to be issued. It was contemplated then that the plaintiffs should continue these deposits.

5. There was no reply from the defendants, but they wrote Ex. A-5 to the Deputy Registrar of Co-operative Societies on 15th October, 1934. In that letter, they informed the Deputy Registrar that whilst the deposit receipt records the payment of Rs. 5,300 in the counterfoil in the book retained among the Bank's books there is entered a deposit of Rs. 100 in the name of M. Papayya Naidu, the Bank's secretary and treasurer* and that no details were found in their accounts regarding this transaction. Then they ask in what way a reply should be made. The matter apparently was one which was the subject of enquiry or decision by the Registrar of Co-operative Societies. I am not concerned in any way with the result of his decision, whatever it may be. But from that time, although several letters were written to the defendants by the plaintiffs and by their learned Counsel, no real reply was received and never was it suggested to the plaintiffs that when their secretary and treasurer accepted from the plaintiffs this deposit he was acting outside the authority which he had received from the defendants. That allegation appeared for the first time in the written statement in October, 1935. Although many defences are raised in the written statement, learned Counsel for the defendants told me to-day that he relies only upon two, and these are as follows: - (1) The secretary was not acting within the scope of his authority in issuing a receipt different' from the counterfoil; in other words, in entering apparently the entry of Rs. 100 as received in the counterfoil of A-1 and Rs. 5,300 in A-1 itself, he was acting outside the scope of his authority; (2) that as the defendants are incorporated under the Co-operative Societies Act, they are a Bank and therefore as a Bank, every transaction which they carry out must be carried out by them at their business premises. So far as the first contention goes, I have no evidence as to the scope of this man's authority except that he was appointed and at all material times acted as the secretary and treasurer. He received the deposits in the ways I have mentioned, which deposits were honoured by the defendants by payment of interest and subsequent payment of principal. It may be and probably is true that he had no anthority to make different entries in any way upon receipts and upon their counterfoils, but if it is so, that can be no answer to the claims of the plaintiffs. I have dealt earlier with the responsibility of a principal in regard to the acts of the agent. To my mind, this case is a fortiori one of an agent's apparent authority and also of express authority to act in the way in which he did. So far as the second defence raised is concerned, I was referred to the case of Thompson v. Bell (1854) 10 Ex. 10 in support of the contention made. That case lends not the slightest support to the second defence which is relied upon to-day and it is abundant authority that the claim of the plaintiffs should succeed. That was a case where a woman paid to the manager of a Bank monies to be invested upon mortgage security. The Bank manager misappropriated the money, and his principals, the bank, were held responsible. Lloyd v. Grace, Smith & Co (1912) A.C. 716 (H.L.) was a case in which the managing clerk of a firm of solicitors in England defrauded a lady of property and monies, and in carrying out the fraud he used his principal's office. The lady concerned believed, as in fact the case was, that the clerk was the principal's clerk, and she also believed that in executing the documents she executed and in following the advice which he gave he was acting for and on behalf of his principals, when he had himself appropriated the proceeds from the property. His principals, although personally entirely innocent, were held responsible for his frauds. I wish to refer only to the words of Mr. Justice Willes which were cited with approval by Lord Macnaughton in the last named case in which Mr. Justice Willes said (p. 733):

In all these cases it may be said, as it was said here, that the master had not authorised the act. It is true, he has not authorised the particular act, but he has put the agent in his place to do that class of acts, and he must be answerable for the manner in which that agent has conducted himself in doing the business which it was the act of his master to place him in.

6. I merely refer to this in dealing with the question of the responsibility of the present defendants in regard to the monies received by their secretary and treasurer. It may well be that that secretary and treasurer put that money into his pocket - and from the deposit receipt Ex. A-1, and the counterfoil of that deposit receipt Ex. B-1, the difference between the two amounts would indicate that that is the case - but that does not in any way excuse the defendants being responsible. In my view, as I said earlier, this is an a fortiori case of the responsibility of the principals for the acts of their agents.

7. The result is that this suit succeeds, and there will be a judgment and a decree in favour of the plaintiffs for a sum of Rs. 5,856 being the amount of principal and interest up to the date of suit, and for interest at the rate of 6 3/4 per cent, from the date of the institution of the suit up to this day; the amount of all interest and principal together with all costs, which I award to the plaintiffs, will carry interest at the rate of 6 per cent. Certified for two counsels.


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