CHANDRASEKHARA PAI Vs. TOWN CO OPERATIVE BANK LTD

JUDGEMENT

(1.) A certain R.G. Kamath who was a resident of the town of Virajpet in the district of Coorg was the manager of the bank known as the Town Co-Operative Bank, Limited, registered under the Coorg Co-operative Societies Act 1936. On March 14, 1955, a certain Chandrasekhar Pai executed an indemnity bond rendering himself liable in the sum of Rs. 4,500/- as guarantee for the fidelity of Kamath in the performance of his duties as the manager of the bank.

(2.) On July 18, 1957, R.G. Kamath committed suicide. Before he died, he prepared a letter Exhibit A-1 in which he confessed that he had misused a large sum of money belonging to the bank for which, according to him, no one else could be blamed. After Kamath committed suicide, there was an investigation into the affairs of the bank which revealed that as large as a sum as Rs. 1,72,350-14 nP, had been lost by the bank by misapplication of funds and falsification of accounts. In consequence of that revelation, the bank sued Chandrasekhar Pai for the recovery of a sum of Rs. 4,511-42 nP. consisting of sum of Rs. 4,500/- which was the upper limit of his liability and a sum of Rs. 11-42 nP. representing the expenses incurred for the issue of notices. Chandrasekhar Pai resisted the suit principally on the ground that the loss occasioned to the bank was directly attributable to dereliction of duty on the part of the Directors. He also repudiated the truth of the allegation that there was any misapplication of the funds of the bank by Kamath.

(3.) The District Judge who came to the conclusion that there was some foundation for the charge made by Chandrasekhar Pai against the Directors of the bank that there was dereliction of duty on their part and disobedience to the provisions of the bank and gave it decree which it wanted. Chandrasekhar Pai appeals.