THOMAS Vs. STATE BANK OF TRAVANCORE

JUDGEMENT

(1.) The first defendant in O.S. No. 76 of 1966 in the Court of the Subordinate Judge of Irinjalakkuda is the appellant in this appeal. The suit was one to recover a sum of Rs. 74,985.30 being the principal and Rs. 13,237.50 being the interest on the same at 6 per cent per annum from 26th December 1966 till the date of suit with future interest at 6 percent on the principal. The amount is alleged to be due to the plaintiffBank on the basis of certain defalcation charges against the defendants. The facts of the case areas follows There was a bank by name Latin Christian Bank Ltd. with its Head Office at Ernakulam and branch office at several places including the one at Kottapuram. Kottapuram Branch of the Bank was started on 14th December 1950. The first defendant was the agent of the said branch office from the date of its opening till the said Bank amalgamated with the plaintiffBank. The second defendant was the Cashier of the Kottapuram Branch from the date of its opening till the work of the Cashier was taken over from him and entrusted to the first defendant. Thereafter the second defendant was working as Head Clerk till 26th December 1953 on which date he was placed under suspension. The 3rd defendant was the Accountant of the aforesaid Branch from the date of its opening till 2nd December 1963 on which date he entered on leave. The first defendant was working as Agent of the branch office as well as doing the work of the Cashier from the time, the said work was entrusted to him. He was receiving and disbursing the cash from and to the Bank's constituents including subscribers to the kuries conducted by the Bank. The second defendant was maintaining fixed deposit register, gold loan ledgers, Day Book and Cash Book and was also writing generally gold load pledge forms except entering the amount which the first defendant used to enter while sanctioning the loan.

(2.) The alleged defalcation was found out in the following manner. The Accountant, the 3rd defendant, sent a letter dated 5th December 1963 marked as Ext. P-116 in the case pointing out certain irregularities and misappropriation alleged to have been done by the second defendant. The first defendant brought that fact to the notice of the Head Office. P.W. 1, the then Secretary of the Bank and the Accountant of the Head Office checked the accounts on 26th December 1963. Thereafter he along with the staff of the Head Office also checked the accounts of the Kottapuram Branch for a number of days and found that there was considerable defalcation. A moratorium was declared on 22nd February 1964. After that the Reserve Bank nominated and the Latin Christian Bank appointed the firm of Chartered Accountants Varma and Varma to investigate into the affairs of the Bank especially that of the Kottapuram Branch. The Chartered Accountants filed their report, which is marked as Ext. P-3 in the case. The investigation by the auditors evidenced by Ext. P-3 revealed defalcation of the funds of the bank to the tune of Rs. 89,985.30, towards which a sum of Rs. 15,000 is stated to have been paid by the second defendant and credited on 24th February 1964. As per the scheme of amalgamation evidenced by Ext. P-117 in the case the Latin Christian Bank was amalgamated in the State Bank of Travancore with effect from 17th August 1964. It is the State Bank of Travancore, which has brought forward this suit claiming the amounts detailed earlier against the defendants.

(3.) The case of the plaintiff is that the first defendant who was the Agent misappropriated the funds of the bank as well enabled misappropriation by defendants 2 and 3, who are the employees of the bank by his negligence in the discharge of his duties. Defendants 2 and 3 were ex parte in the case. The first defendant appellant contended that he was not negligent in discharging his duties, that he did not violate any of the instruction from the Head Office or the custom of the business in the performance of his duties. According to him, he used reasonable diligence in the performance of his duties and the bank did not sustain any loss, and even if any loss had been occasioned it cannot be due to the direct consequence of his negligence.