DISTRICT BOARD OF BHAGALPUR Vs. PROVINCE OF BIHAR

JUDGEMENT

(1.) THIS appeal has been brought by the District Board of Bhagalpur from a judgment and decree, dated 10-8-1948, of the Subordinate Judge of Bhagalpur. The District Board of Bhagalpur sued the State of Bihar through the Collector of Bhagalpur for the recovery of a sum of rs. 18,925/5/6 in circumstances presently to be stated. The learned Subordinate Judge dismissed the suit. The point raised in this appeal is of very considerable importance as it involves the examination of the question whether, if it be found that the officers of the Government attached to the local treasury were negligent in paying out certain sums of money belonging to the plaintiff District Board to the detriment of the plaintiff, the Government is liable to make good the loss as the master or the principal of the officers of the treasury. The answer to the question will depend upon the extent of vicarious liability of the Government for acts or omissions of its subordinate officers or agents.

(2.) FOR a proper appreciation of the question ill issue, it is necessary to state how a District Board comes to have a fund of its own kept in deposit with the Government treasury. Under Section 52 of the Bihar and Orissa Local Self Government Act (Bengal Act 3 of 1885), as amended by subsequent Acts, there is formed for each district a fund called the "District Fund", and income and proceeds from certain sources are placed to the credit thereof and this District Fund is vested in the District Board and, under Section 53 of the said Act, provisions are made for the application of the District Fund, which it is unnecessary to state at this stage. Under Section 138 of the same Act, the Local Government has been empowered to make rules, consistent with the Act, lor any District Board or Local Board for certain purposes. Acting under the provisions of this section, the Local Government have made rules known as the Account and Audit Rules, published in notification No. 2009 T. M. dated 9-11-1901. In these Rules, provisions are made regarding the transactions between the District Board and the treasury. Rule 22 provides that the District Fund shall be lodged with the Collector of the district, who shall keep a separate account thereof; Rule 23 provides that all sums due by any person to the District Board and all moneys collected by authorised servants of the Board as well as some other collections should be sent direct to the treasury to be credited to the District Fund; and Rule 25 provides that, all moneys remitted to the treasury to the credit of the District Board and all payments made by the treasury on cheques or otherwise on account of the District Board shall be entered in a pass book, and the pass book shall remain in the custody of the Chairman, and it shall be sent to the treasury on the 10th and also on the last working day of every month and on other day on which the District Board may require the posting to be done. Then, on receipt of the pass book by the treasury officials, the receipts and payments up-to-date and certain credits shall be entered therein, and, when the pass-book is received on the last working day of the month, the account shall be balanced and signed by the Treasury Officer. Thereafter, the book shall be returned to the office of the District Board. Rule 26 provides that the pass book is not a District Fund account book but a copy of the accounts kept in the treasury of the money paid to the credit of and disbursed on account of the District Board, and must, therefore, always be written up only by the Government treasury department by whom the original account is kept; Rule 27 provides that no entry or mark shall, under any circumstances, be made in the pass book by any one connected with the District Board's office; Rule 28 provides that the Chairman shall examine this pass book from time to time and shall immediately call the attention of the Treasury Officer to any discrepancy that may appear between the credits and debits shown in the pass book and those shown in accounts of the District Board's office and Rule 29 prescribes the form of the pass book. Thereafter, there follow certain rules regarding payment of claims. Rule 37 provides that all payments exceeding Rs. 50/- shall be made by cheque unless there be any special circumstances rendering payment in cash desirable. Rule 38 provides that the cheque book shall be supplied by the Treasury Officer only, and no other form shall be used, and further that the cheque books and the counterfoils of used cheques shall be kept in the custody of the Accountant, and Rule 40 provides that cheques for sums not exceeding Rs. 500/- shall be signed by the vice Chairman or by the Chairman, or, if both be absent, by a member of the Finance Committee, while cheques for sums exceeding Rs. 500/ shall be signed by the Chairman & the Vice-Chairman, and, if one of them be absent, such cheques shall be signed by the Chairman or the Vice-Chairman present and another member of the Finance Committee. It is not necessary to refer to the other rules.

(3.) TWO points were raised in this appeal: (1) whether the payments by the treasury upon the admittedly forged cheques, exhibits 6 to 6 (g), were made by reason of negligence on the part of the officers of the treasury, and (2) if that be so, whether the State of Bihar can be held to be vicariously liable for the negligence of the officers of the treasury.