BANK VICARIOUSLY LIABLE FOR ACTS OF ITS EMPLOYEES: SUPREME COURT

NEW DELHI: Holding that a bank is vicariously liable for the acts of its employees, Supreme Court has found deficiency in the service of District Cooperative Bank Ltd in Varanasi and directed it to pay a compensation of Rs 25,000 to a man almost three decades after the bank wrongly prevented him from withdrawing his fixed deposit.

A bench of Justices P S Narasimha and Aravind Kumar restored the district consumer forum's order which had granted compensation to the person in 1997 and quashed the National Consumer Disputes Redressal Commission's (NCDRC) order which didn't find fault in the services of the bank which, subsequently, allowed withdrawal of the money.

The matter pertains to non-release of fixed deposit receipts worth Rs 1,60,000 by the District Cooperative Bank Ltd in Varanasi. The petitioner claimed that the bank wrongly prevented him from withdrawing the money. The matter reached the district consumer forum which ordered the bank to return the money with 15% interest and an additional Rs 25,000 in damages.

"It is seen from the record that district forum was satisfied that the appellant had in fact handed over Rs 1,60,000 to the bank's officials. This is evidenced from the bank's ledger. The record discloses that an enquiry committee had been set up that recommended initiation of criminal proceedings against certain officials and the bank had adopted that course. It is also a fact that the fixed deposit receipts were renewed from time to time. The bank is vicariously liable for the acts of its employees," SC said.