2010 ALL MR (Cri) 700
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.S. DALVI, J.
State Of Maharashtra Vs. Deepak R. Shah & Anr.
Criminal Appeal No.652 of 2001
19th December, 2009
Petitioner Counsel: Mr. D. R. MORE, Mrs. R. V. NEWTON
Respondent Counsel: Mr. HARSHAD BHADBHADE
Other Counsel: Mr. S. V. MARWADI, Ms. MALIKA, INGALE, Mr. ASHOK JADHAV
Law of Torts - Vicarious liability - There is no vicarious criminal liability - No master is liable for criminal acts of servant if the act does not tantamount to a tort since no master employs the servant to commit crime.
In the present case, the Magistrate has directed the State to compensate accused No.1 upon the vicarious liability of the State for the acts of its servants. This vicarious liability is under the law of Torts. The liability is, therefore, necessarily for tortuous acts. No master is liable for the criminal acts of servant if the act does not tantamount to a tort since no master employs the servant to commit crime. There is, therefore, no vicarious criminal liability. To impute vicarious liability on the master, the seminal requirement is to see the liability of the servant in tort. A tort is wrong committed by the servant. Hence for an act which constitutes a wrong, the master would be liable under the maxim Qui facie per alium, facie per se. This liability has to be incurred by the servant in the course of the servant's employment. Whatever liability, even tortuous, that is incurred by the servant outside the course of his duties or the course of employment, cannot hold the master liable. The Magistrate has simpliciter considered that the valuables were seized by the officer and entered in the Muddemal Register against the entry "kept in safe" and "safe". The Magistrate has not considered whether this act was well within the course of the employment of the two officers who seized the property and made entries. That has been a fundamental error. The rules that the officers were required to follow and the procedure that was to be followed, as set out in the statement of Suresh Kandale, show that what the officers had done was completely outside the scope of their duty. They were not required to enter valuables in the Muddemal Register in the first place. They have not entered the valuables in the Safe Deposit Register at all. Consequently, the control of the superior officer, who was in-charge of the relevant branch at the relevant time, could not be upon the two officers, who seized the property and made the entries. Consequently, their act was completely outside the scope of their duties and the course of employment. AIR 1966 SC 1697 - Rel. on. [Para 23,24]
B.K.D. Patil Vs. State of Mysore, 1977(4) SCC 358 [Para 5,29,30]
Sitaram Motilal Kalal Vs. Santanuprasad Jaishanker Bhatt, AIR 1966 SC 1697 [Para 25]
Rickett's case, 1915-1 K 644 [Para 26]
Engehart's case, 1897-1 QB 240 [Para 26]
Leesh River Tea Co. Ltd. Vs. British India Steam Navigation Co. Ltd., AIR 1966(3) The All England Reports 593 [Para 27,28]
State Bank of India Vs. Smt. Shyama Devi, AIR 1978 SC 1263 [Para 28]
Inter Continental Agencies Private Limited Vs. Amin Chand Khanna, AIR 1980 SC 951 [Para 31]
N. Nagendra Rao and Company Vs. State of A.P., 1994(6) SCC 205 [Para 33]
JUDGMENT :- This Appeal is filed by the State of Maharashtra against the Respondents who are the original accused in Criminal Case No.1710/P/2000 in C.R. No.75/1992 filed in the Court of the learned Additional Chief Metropolitan Magistrate, 19th Court, Esplanade, Mumbai. That case came to be filed by the State upon the complaint of Citibank, Fort, Bombay, against the accused in that case. The case came to be investigated and the accused came to be charged for having fraudulently induced the said Bank to sanction and allow withdrawal of the amount of Rs.57,33,796/- under an overdraft facility, upon the forged and fraudulent share certificates and share transfer forms obtained by accused No.2 and made use by accused No.1 by tendering the same as security against the overdraft facility. The accused were also charged with entering into a criminal conspiracy with common intention of accused No.1 to open three accounts in the Bank. The accused were further charged with having fraudulently obtained shares of Hindustan Ciba Geigy and Hindustan Lever Limited from illegal sources and handing over the said shares to the Bank as and by way of security and accordingly, of having committed forgery in respect of those shares which were previously cancelled. The accused were further charged with having opened an account in the name of bogus Firm to cause wrongful loss to the Bank. Consequently, the accused in the case came to be charged with offences punishable under Sections 465, 467, 468, 471, 411, 414 and 420 read with Section 120-B of the Indian Penal Code (IPC).
2. The complainant Bank having compounded these offences, though not-compoundable, the parties filed Consent Terms. After recording the evidence on behalf of the State, the accused came to be acquitted of the aforesaid charges. Their bail-bonds were cancelled. The document pertaining to the flat of accused No.1 was handed over to the owners of the flat being wife and mother of accused No.1. The cash amount, which was seized by the Police, was returned to the Bank as agreed between the parties. The rest of properties seized by the Police were directed to be returned to accused No.1, as agreed between them.
3. Pending the investigation by two Police Officers, certain movable properties of the accused came to be seized under panchanama and kept with the relevant Police Station by the Police Officers who caused the panchanama to be made and the properties seized to be deposited/kept in the Police Station pending the trial. This was certain cash amount, certain ornaments and certain other moveables being a car, VCP, Deck, etc..
4. Upon the acquittal, accused No.1 applied for return of the properties. He made an Application before the relevant Police officers. The property was not traced. It was consequently not returned. Hence he made an Application before the learned Magistrate, being Application under No.120/N/01 in CC No.1710/P/2000 in CR No.75/1992 under Section 452 of the Criminal Procedure Code.
5. The Application with regard to the return of the ornaments being gold ornaments, weighing 823 Grams as per the panchanama, was essentially pressed, as it was the case of the Appellant/accused No.1 that the gold was not traceable. It was argued on behalf of the State that a case was registered against the concerned Investigating Officer (IO) for offence of mis-appropriation of the said gold. The learned Magistrate considering the judgment in the case of B.K.D. Patil Vs. State of Mysore, 1977(4) SCC 358 issued a notice to the State as to why the compensation should not be paid and distress warrant should not be issued against the State.
6. The Joint Commissioner of Police (Crimes), Greater Mumbai, submitted that the gold, which was seized, was not deposited by the concerned I.O. with the Police Department as per the provisions of Section 102 of the Criminal Procedure Code and hence for the illegal act of the officer, the State could not be held responsible. The reply sets out that the Police Inspector one M. M. Ansari (by then retired) had not deposited the muddemal property in safe custody and consequently, a complaint was filed under C.R. No.286/2001 under Section 409 of the IPC, registered with the Azad Maidan Police Station, Mumbai for misappropriation of muddemal property against the said M. M. Ansari.
7. After considering the Application of accused No.1 in the aforesaid criminal case and the reply of the Joint Commissioner of Police (Crimes), the learned Magistrate passed his order on 23.7.2001, directing the State to pay compensation to accused No.1 and deliver the gold weighing 823 Grams to him on or before 31st August, 2001.
8. The State has challenged the order of compounding of the offences and acquitting the accused dated 4.4.2001 as well as the order of payment of compensation by the State 23.7.2001. The notice has not been issued to the complainant-Bank. The complainant-Bank has not been represented. The State has not pressed the Appeal in respect of the compounding of sentence. The State has, however, essentially pressed the Appeal against the order dated 23.7.2001, directing the State to pay compensation for the offence committed by its servants, who seized the gold of accused No.1 in the aforesaid CC/1710/P/2000 during investigation under CR No.286/2001. The case of the State is made out essentially upon the fact that it has no liability to compensate the accused as the gold was lost due to the negligence of its officers during investigation of the criminal complaint. It is also contended on behalf of the State that a criminal prosecution was lodged against one of the officers. The application for claiming compensation has nothing to do with the said criminal prosecution. It matters not whether the Police Officer, sought to be prosecuted thereunder is convicted or acquitted of the charge levied against him under the criminal law. It may be mentioned that Police Officer has since expired and the criminal case has abated.
10. The application for payment of compensation is made under the liability of the State in tort, though made to the relevant Criminal Court. A fine point of law relating to the liability of the master for the acts of its servants during the course of employment of the servant, therefore, comes into play. It is an admitted position that the gold weighing 823 Grams was, inter alia, seized from accused No.1 under the panchanama. Two of the Police Officers seized the gold under the panchanama. One was the IO Mr. M. M. Ansari (since retired and later deceased) and one was PI (the then PSI) Ashok V. Jadhav, who has appeared upon being called by the Court to ascertain the facts. He has been represented by his Advocates and has been heard. He has produced the case papers of the criminal prosecution filed against the IO, M. M. Ansari as also the papers relating to the seizure of gold.
11. It is contended on behalf of Respondent No.1/accused that the relevant officers have been negligent and the State must pay compensation for the negligence of its officers. It is sought to be shown by the accused that the officers had acted within the course of their duties in seizing the gold during investigation of the aforesaid criminal complaint. If that is so, the property, which came to be seized (muddemal) was required to be kept by the Police Officers in trust for the party to whom it is directed to be returned at the end of criminal trial. Since it was directed to be returned to accused No.1, accused No.1 must get the gold or its equivalent value. At the time the Application was made before the learned Magistrate, its equivalent value was shown to be Rs.3 Lakhs.
12. It is argued on behalf of the State that the State would not be responsible for the illegal act committed by its officers. Since the concerned IO Mr. M. M. Ansari, who was the PI and his assistant one Ashok Jadhav, who was the PSI had not deposited the muddemal property in safe custody as per rules, by entering in the Safe Deposit Register and had kept the property merely in "safe", they had not acted in the course of his employment and, therefore, the State of Maharashtra, as the employer or master, could not be held liable for their act as its servants.
13. It is argued on behalf of the PI Jadhav that the relevant rules relating to the deposit of the seized property as muddemal were breached not by him but by the PI, who was the IO of the case M. M. Ansari and that he being a Junior Officer, who assisted the PI, was not liable.
14. Mr. Marwadi has produced before me the investigation papers in the criminal complaint filed against M. M. Ansari under Section 409 of the IPC, which shall be referred to presently. Mr. Marwadi has also shown me the panchanamas recorded during the investigation of the aforesaid complaint of the Bank under which, inter alia, the gold came to be seized and the relevant entries came to be made by the two Police Officers with respect to the custody and deposit of that valuable property seized during investigation.
15. It would be essential to see at first how the investigation was carried out in the aforesaid complaint. It is common ground that two panchanamas were prepared on 25.11.1992, under which several properties came to be seized. Two officers PI one M. M. Ansari, who was the IO in the case, and PSI A. V. Jadhav were both present at the time of the seizure. The panchanamas show the articles seized with their value and description. Copies of the panchanamas were handed over to accused No.1 at 2 hours on 26.12.1992 when the panchanama procedure came to be completed. The panchanamas show that the panchas were called by the aforesaid two officers. The panchanama is naturally signed by one of the officers. (It is stated to have been signed by the IO Ansari). The station diary entry of the case for 25.12.1992, inter alia, shows that both these officers had left along with the accused who came to be arrested earlier in the day for making the panchanama. The station diary entries further show that the properties were seized and taken charge of under the panchanama and entry in the muddemal vide No.119/92 has been made and further that the aforesaid two officers left for investigation in the aforesaid CR No.75/92 at 23 hours and returned at 3.30 hours on the next day. It further shows that the entry in Muddemal Register vide No.120, has been made.
16. The Muddemal Register shows entry No.119 made by PI Ansari as well as PSI Jadhav under No.5580. It shows the various movables deposited in the safe as "kept in safe". One television has been shown to be returned to and received by accused No.1 on 12.5.2001. The movables, which were seized, have been enumerated and described on pages 13 to 18 of the Muddemal Register. From pages 15 to 17, the entries show the words "safe" against the movables, presumably denoting that it was kept in the safe. The last entry being cash of Rs.4,30,000/- is shown deposited in Citibank.
17. These are admittedly the only documents executed by the two officers. Hence it is seen that upon the complaint being filed and accused No.1 being arrested, the investigation commenced. In the course of investigation, the aforesaid two officers visited the residence of accused No.1. They seized various movables under panchanama. They were both present at the time the movables were seized and recorded in the panchanama during the course of the night of 25.12.1992 to the early morning hours of 26.12.1992. They left the Police Station in the late hours on 25.12.1992 and returned in the early hours on 26.12.1992. They made relevant station diary entries. After returning to the Police Station, they made entries in the Muddemal Register to show that the articles were kept in safe. The amount of Rs.4,30,000/-, which was shown to be deposited in Citibank account, has been deposited in a separate savings account opened in the joint names of the Senior PI of General Branch, Crime Branch, CID, Mumbai and the IO Ansari. Rs.10,000/- are shown as the initial deposit therein. Rs.4,30,000/- have been deposited in cash in that account on 27th February, 1993. The credit entry is made on 2nd March, 1993. On 3rd March, 1993, Rs.4,20,000/- have been transferred to a multi-deposit which came to be issued, leaving a balance of Rs.20,000/- in that account. The rest of the account shows the interest that accrued due on the balance amount of Rs.20,000/- together with interest which came to Rs.25,258/- as on 9.9.2002. The complaint between the complainant-Bank and accused No.1 came to be settled on 4.4.2001. This account came to be closed on 9.9.2002. The Bank has been returned the cash amount of Rs.4,30,000/- as per the agreement between the Bank and accused No.1 on 4.4.2001, as recorded in the Consent Terms.
18. It is seen that the complaint under C.R. No.286/01 filed in the Azad Maidan Police Station on 3.7.2001 for offences that have taken place from 25.12.1992 to 25.6.2001 is against the IO M. M. Ansari alone. There is no complaint filed against PI Ashok V. Jadhav (the then PSI). The complainant has stated about the movables being kept against the term "safe" by the IO. The complaint shows the inquiry made with Jadhav upon the filing of the case in respect of misappropriation of the property. A. V. Jadhav has stated that the procedure cited hereinabove shows that the property was properly kept in safe custody under the aforesaid entries. That has been his contention before this Court also. It has to be seen from the statements recorded in that complaint and the Rules whether the valuable property, being the gold seized under Panchanama, was indeed to be entered in the muddemal register and shown as "safe" and whether such a procedure is enough or whether there is any other procedure to be followed in such cases. The muddemal recovered by the officers of the General Branch, is entered in the Muddemal Register maintained. The valuable items are required to be entered in the Safe Deposit Register of the Branch and those articles are kept in the safe of the Branch under lock, key and seal. The custody of those valuable articles was to be kept with the PI (Adm.) of the Branch. PI (Adm.) may be the IO himself or another officer. He is supposed to check the valuable items before accepting the same for keeping in safe. There was no entry about the valuable muddemal entered in the Safe Deposit Register, made by either of the officers who seized the gold during investigation, though under entry Nos.119/92 and 110/92 in the Muddemal Register, the word "safe" is mentioned against those entries. There is no endorsement of the IO himself as PI (Adm.) or of any other officer as PI (Adm.). The entries made in the Muddemal Register are fundamentally incorrect.
19. The valuable articles were to be got verified from the Government Valuer. The valuables are not even shown to have been valued by the jewelers who are the registered valuers of the State. The jeweler has shown no record of weighing any ornaments at the relevant time. No certificate of any such valuation is also obtained.
20. The investigation papers of C.R. No.286/01 only show the statement of various parties, including A. V. Jadhav recorded. They essentially show the disclaimer of liability at their end, except the statement of one Suresh Kandale, which sets out the required procedure.
21. I have been shown Standing Order No.28, which lays down the rules for custody and disposal of properties seized by the Police. Rule 4 of the Standing Order No.28 shows that all cash and valuables should be kept in the safe in-charge of the Selection Grade Sub-Inspector (Administration), pending disposal and the provisions of paragraph 56 of the Bombay City Police Manual should be followed. The aforesaid papers of the investigation in the aforesaid criminal case do not show compliance of Rule 4 by either of the officers who came to be in custody of the valuables being the gold ornaments. Though Ashok Jadhav, one of the officers, who investigated the case and who is still alive has appeared, represented by his Advocates, he has not produced the documents relating to who was the Selection Grade Sub-Inspector (Adm.) at the relevant time, or the Bombay City Police Manual to show the procedure regarding entries to be made in the Safe Deposit Register for valuables seized by the Police.
22. A mere entry in the Muddemal Register stating against the seized articles that they were "kept in safe", without any entries by the officers in whose charge these articles were kept, is not the sufficient compliance of the procedure required. The entries show the acts of the aforesaid two officers. Obviously one is the Senior Officer and the other is his Assistant. Both the officers are expected to know the rules and follow them. Both the officers have taken charge of the articles. Both the officers have kept them in the safe, but have not brought it to the knowledge of the Selection Grade Sub-Inspector (Adm.) or entered them in the Safe Deposit Register. No other officer has countersigned these entries.
23. It will have to be seen whether under such circumstances the Police Officers can be taken to have acted in and within the course of their employment. The learned Magistrate has directed the State to compensate accused No.1 upon the vicarious liability of the State for the acts of its servants. This vicarious liability is under the law of Torts. The liability is, therefore, necessarily for tortuous acts. No master is liable for the criminal acts of servant if the act does not tantamount to a tort since no master employs the servant to commit crime. There is, therefore, no vicarious criminal liability. To impute vicarious liability on the master, the seminal requirement is to see the liability of the servant in tort. A tort is wrong committed by the servant. Hence for an act which constitutes a wrong, the master would be liable under the maxim Qui facie per alium, facie per se.
24. This liability has to be incurred by the servant in the course of the servant's employment. Whatever liability, even tortuous, that is incurred by the servant outside the course of his duties or the course of employment, cannot hold the master liable. The learned Magistrate has simpliciter considered that the valuables were seized by the officer and entered in the Muddemal Register against the entry "kept in safe" and "safe". The learned Magistrate has not considered whether this act was well within the course of the employment of the two officers who seized the property and made entries. That has been a fundamental error. The rules that the officers were required to follow and the procedure that was to be followed, as set out in the statement of Suresh Kandale, show that what the officers had done was completely outside the scope of their duty. They were not required to enter valuables in the Muddemal Register in the first place. They have not entered the valuables in the Safe Deposit Register at all. Consequently, the control of the superior officer, who was in-charge of the relevant branch at the relevant time, could not be upon the two officers, who seized the property and made the entries. Consequently, their act was completely outside the scope of their duties and the course of employment. It is, in this respect, that the law relating to the vicarious liability of the master for the tortuous acts of its servant within the course of the employment of the servant would have to be seen.
25. In the case of Sitaram Motilal Kalal Vs. Santanuprasad Jaishanker Bhatt, AIR 1966 SC 1697, this tortuous liability has been considered by a Bench 3 Judges of the Supreme Court, giving a majority and minority view. It has been held per majority that the master is vicariously liable for the acts of his servant acting in the course of his employment. For the master's liability to arise the act must be a wrongful act authorized by the master or a wrongful, unauthorised mode of doing some act authorised by the master. If the servant is not acting within the course of his employment, but is doing something for himself, the master is not liable. Similarly it is held that the master is not responsible for the negligence or other wrongful acts of the servant simply because it is committed at the time when the servant is engaged in the master's business. It must be committed in the course of that business or has to form part of it. In that case the master's vehicle was being driven not by the driver but by the cleaner who wanted to obtain the RTO's licence. He committed an accident. It was observed that the de facto driver was not the driver or the agent of the owner, but who had obtained the car for his own business not even from the master but from a servant of the master. Hence it was held that the owner would not be liable in such cases. It was further observed that the driver was not even impliedly authorised by the owner to coach the cleaner so that the cleaner might become the driver and drive the taxi.
In this case also, the two officers have acted on their own account. They have not followed the requisite procedure. In fact, they have seen to it that though the valuables were seized, they were kept in the Muddemal Register and not the Safe Deposit Register. They have not informed the superior officer and if one of them was the officer-in-charge, he has not followed the procedure which he is enjoined to follow and of which he has knowledge. Their act is, therefore, not in the course of their employment. It is outside the employment. It is a wrongful act, not authorised by the master in the course of employment, but done for themselves. It is, therefore, not done on account of the master or as an agent of the master, albeit negligently or unauthorisedly. It was not even done in execution of the master s business of keeping valuables in the Safe Deposit Register. Hence it cannot be taken to be a negligent method of conducting the work of the State of Maharashtra, who was its master. It was an act completely outside the course of their employment since it was against the established rules and procedure. It may be mentioned that it must be present to the minds of both the officers that they should apply more care and caution to the valuables which were seized than to the other muddemal seized. They have applied the same yardstick for all and enumerated all the items together and entered them in a single Register - a Register which was meant for the non-valuable muddemal properties alone. Consequently, they were acting on their own and not acting on behalf of the State in the course of their employment.
"(27) The law is settled that a master is vicariously liable for the acts of his servant acting in the course of his employment. Unless the act is done in the course of employment, the servant's act does not make the employer liable. In other words, for the master's liability to arise, the act must be a wrongful act authorised by the master or a wrongful and unauthorised mode of doing some act authorised by the master. The driver of a car taking the car on the master's business makes him vicariously liable if he commits an accident. But it is equally well settled that if the servant, at the time of the accident, is not acting within the course of his employment but is doing something for himself the master is not liable. There is a presumption that a vehicle is driven on the master s business and by his authorised agent or servant but the presumption can be met. It was negatived in this case, because the vehicle was proved to be driven by an unauthorised person and on his own business. The de facto driver was not the driver or the agent of the owner but one who had obtained the car for his own business not even from the master but from a servant of the master. Prima facie, the owner would not be liable in such circumstances."
His Lordship has referred to Rickett's case, 1915-1 K 644 where a master was held liable for the driver's negligence and performance of the master's work. In that case, the driver of a vehicle seated by the side of the conductor when the omnibus was turning round. The act of turning the vehicle was within the employer's business and not something outside it. The driver asked the conductor to drive the omnibus for the master's business. Hence he did the master's work in the negligent way. The master was, therefore, held responsible. His Lordship has also referred to Engehart's case, 1897-1 QB 240 in which there were two persons engaged for the master's business, one was to drive the car and the other was to deliver parcels. The driver left the car unattended. The delivery boy caused the accident by driving it. The master was held responsible since it was the negligent act of the driver leaving a car with the delivery boy. That negligence was in the course of the master's business. Hence the servant was acting on the master's business. His Lordship has thereafter considered what would have happened if in Rickett's case and Engehart's case the driver had gone for a joy ride to his friends. The master would not have been liable for any negligence. It is, therefore, held that a difference lies in these two cases. The negligent act took place in the execution of the master's business. It was not outside the scope of their duty. If the journey was not on the master's account and the master was not in control, he could not have been responsible for the negligence or the wrongful act of the servant. Consequently, it is observed that only for the negligent method of conducting the master's work and for an act of negligence in discharge of such duty, the master would be liable. If the act is not in the course of employment, but outside it and the servant was not doing the master's work or acting within the course of his employment, he cannot be taken to be acting in the master's business. The control of the master would be only within the scope of his authority. The master cannot be liable when the servant is not doing his duty but is doing something on his own account when he should be properly acting for the master. Consequently, it is held at page 1706 thus :
"The true rule in such cases is the one stated by Cockburn, C.J., in Storey Vs. Ashton, (1869)4 QB 476 thus :
"....... that the master is only responsible so long as the servant can be said to be doing the act, in the doing of which he is guilty of negligence, in the course of his employment as servant."
or as Lush, J. put it,
"the question in all such cases as the present is whether the servant was doing that which the master employed him to do"."
27. In the case of Leesh River Tea Co. Ltd. & ors. Vs. British India Steam Navigation Co. Ltd., AIR 1966(3) The All England Reports 593 (CA), also a judgment of 3 Judges holds similarly. That was a case of theft of a cover-plate of a storm valve by a stevedore whilst the ship was being loaded. One of the stevedores, a servant of the shipping company, stole a small brass plate cover of about three inches by four inches in size which covered a storm valve. The thief left a hole in the ship. It was undetected until the end of the voyage and it could not have been prevented or previously detected by any reasonable care on the part of the ship's officers or crew. However, because of the theft which left a hole, water entered the ship. Some cargo was damaged. Justice Sellers observed that the removal was not ship's work. The thief was not performing any duty for the ship owners at all. The Stevedore in his capacity as thief was held not to be the servant of the shipping company. The act was completely outside the scope of his employment as a stevedore. The ship owners were only liable for the act of the stevedore as the servant when he was acting on behalf of ship-owners. Justice Danckwerts observed that the stevedore was to be the agent of the ship-owner for the purpose of loading and unloading of the cargo. The stevedore was concerned with the cargo and not with the ship or parts of the ship. His act of stealing was completely outside the scope of his employment on behalf of the ship-owners. Justice Salmon observed that what was being done by the stevedore had anything to do with the management of the ship. The vital question was whether the stevedore was an agent or servant of the ship owners when he stole the plate. If he handled the cargo negligently and damaged it, the ship owners would be responsible, but the thief had nothing to do with the handling of the cargo. The stevedore's employment merely afforded him an opportunity of stealing the plate though the ship owners owed a duty to the cargo owners to take care of the ship. There was no breach of that duty by the theft of one of the stevedores.
In this case, the act of the officers in entering in the Muddemal Register the valuables and not thereafter accounting for them, was also not the work of the State of Maharashtra. They were not employed to enter valuables in the Muddemal Register. Hence by doing so, they were acting outside the scope of their employment. The State, therefore, cannot be liable for such acts. Their act would have afforded them an opportunity to misappropriate the valuables thereafter. The State owes a duty to the citizens to return the muddemal and the valuables as directed by the Court. However, the muddemal was not being returned by the State of Maharashtra upon mis-appropriation pursuant to the seminally wrong procedure adopted by the two officers who must be taken to have known the right procedure which was required to be followed. The State, therefore, did not commit breach of that duty to the citizens. The act was completely outside the scope of their employment. If the officers had followed the rules and the procedure established thereunder as shown in the Standing Order No.28, and as shown in the statement of Suresh Kandale cited above, and then if the muddemals or the valuables were lost, the State would have been liable for the acts of its servants done in the course of their employment.
28. In the case of State Bank of India Vs. Smt. Shyama Devi, AIR 1978 SC 1263, the vicarious liability of the employer for the tortuous of his servant has been fully considered. In that case, a Bank employee manipulated the amounts of several depositors. Though one of the customers deposited certain amounts, which were required to be credited in her Savings Bank Account, the Bank employee fraudulently misappropriated and converted the same to his own use. It was observed that he was not acting as the agent of the Bank in the course of his employment by such mis-demeanour which resulted in embezzlement of the Bank funds and defrauding the customers. It was held that such an act could not be said to have been committed by the employee in the course of his employment with the Bank. In paragraph 21 of the judgment, the settled legal principles, which govern the vicarious liability of the employer for the loss caused to a customer through the mis-demeanour or negligence of the employee is observed to have been required to be first considered. It was observed that the Bank employee instead of depositing the amount of the customers, manipulated and appropriated it to himself. He acted for himself and not in the course of his employment. His employment gave him an opportunity to commit fraud, but the employer could not be held liable for the fraud committed. Following the case of Leesh River Tea Co. Ltd. (supra), it was held that the embezzlement committed by the employee is not an act committed in the course of his employment with the Bank. Hence the Bank was not held liable.
29. The learned Magistrate relied upon the case of B.K.D. Patil (supra) which dealt with the property lost or destroyed during the pendency of the trial. It is true that if the property is collected and kept albeit during the investigation of the case, but pending the trial, it would be custodia legis. It would have to be returned to whoever is entitled as directed by the Court at the end of the trial, but that proceeds upon the basis that the property is properly seized and kept in the custody of the officer responsible for keeping it. If the relevant procedure is followed and the property is kept in custody of the Police pending the trial, the State would be liable to return the property or compensate the person entitled to its return, if the property is later lost. The properties thus kept custodia legis would have been kept so by the Police Officer in the course of his employment. If it is lost by any negligence or even theft, the State would be liable.
30. The learned Magistrate has relied upon the rule but not the exception. If the property is not taken and kept by following the requisite procedure, it cannot be taken to have been seized and kept in the course of the employment of the officers seizing and keeping the property. B.K.D. Patil's case (supra) cannot then apply for imputing the liability upon the State for its return. In the case of B.K.D. Patil (supra), a complaint of theft of ornaments and cash was made. The articles were recovered under panchanama. The accused was identified in a Test Identification Parade (TIP). The articles were produced in Court and were verified. Their value was determined by the goldsmith. The sanction of the higher Authorities was obtained for the funds for payment of the fees of the goldsmith. Thereafter the Sub-Inspector kept the articles in the guard room in a trunk with a list of articles and a corresponding entry made in the Register. The Inspector was later transferred. His successor took charge. He also verified the articles kept in the trunk. New Inspector found the articles in the trunk intact. When the articles were called upon to be produced in Court, it was found that the trunk had only stones and no articles. A complaint of theft was immediately filed. It was observed in paragraph 6 of the judgment that where the property was stolen, lost or destroyed and there was no prima facie defence made out that the State or its officers had not taken due care and caution to protect the property, its value had to be paid by the State. In that case, it was observed that the property was lost in spite of due care and caution having been taken by the officers and due to circumstances beyond their control.
The case of B.K.D. Patil (supra), therefore, lays down the basic principles of vicarious liability of the master for the acts of its servants done in the course of their employment. The due care and caution, the making of the list, the handing over of the trunk at the time of transfer by the officer, the articles being found intact by the new officer, and the articles being valued as per rules showed that the officers acted as per the prescribed procedure. Whatever may have happened to the articles thereafter was, therefore, the liability of the State. Our case is completely different. The officers have not followed the rules. The officers have not even entered the articles in the correct Register (the Safe Deposit Register). They have not valued the ornaments. They have not kept it under lock, key or seal. Their act is not in the course of their employment. It is not as per the procedure, which they were enjoined to follow. It is outside the scope of their employment. The State, therefore, cannot be liable for their acts.
31. In the case of Inter Continental Agencies Private Limited Vs. Amin Chand Khanna, AIR 1980 SC 951, three buses were seized by the Police. Interim receiver was appointed to ply the buses, if possible. After the charge-sheet was filed, an application was moved to release the vehicles from attachment and to hand over possession to the Appellant. The vehicles were not found. Their whereabouts were not known. The Appellant was directed to obtain a decree in Civil Court. It was held that the Court had a duty to inquire and determine as to what happened to the vehicles and what should be done to restore the property to the Appellant. It has not been held that without such inquiry the property must be returned or its equivalent value be paid to the accused.
32. The inquiry contemplated is precisely the exercise undertaken by this Court, which the learned Magistrate has not entered upon. Upon such inquiry from one of the two officers (one having expired), the rules which the officers were to follow, the procedure which was contemplated, the documents which were to be executed are seen. The officer has produced the charge-sheet in the criminal case filed against the PI, (and not the PSI - it is not known why) which shows the procedure to be followed for deposit of the valuables upon seizure. The inquiry leads to conclusion that the act of both the officers was not in the course of their employment.
33. In the case of N. Nagendra Rao and Company Vs. State of A.P., 1994(6) SCC 205, the goods were confiscated by a Custom Officer. They were perishable. He was directed by superiors to sell or dispose of the goods. He failed to do so. That was a negligent act. The State was held vicariously liable. It was observed that either the goods, which were confiscated had to be sold to prevent loss or if they were not of the category to be confiscated the officers were obliged to return the goods. The relationship of bailor and bailee existed between the officers of the State and the person whose goods were confiscated. The obligation was not discharged by the officers. It was observed that no prima facie case was made out by the State. The officers were not shown to have taken due care and caution to protect the property. Hence the State was directed to make the payment required under its vicarious liability.
In this case, the defence of the State is seen in the procedure which was required to be followed but which was not followed, though knowledge of that procedure has to be imputed upon the officers. Consequently, the liability of the State cannot exist for the wrongful act outside the scope of duty of the officers.
34. It may be mentioned that the act of the officers with regard to the deposit of the cash amount of Rs.4,30,000/- is different. It was agreed to be kept in Citibank and an account has been opened in the name of the Senior Inspector of Police of GBCB CID and the Inspector of Police being the IO M. M. Ansari. Thereafter the amount has been kept in the Fixed Deposit in Citibank. It has been returned when the case came to be compounded. The officers took due care and caution and followed due procedure with regard to the cash amount. Had the cash amount not been found, the State may have been liable. But once the officers followed due procedure, that eventuality did not arise.
35. After making due inquiry and ascertaining the requisite procedure required, it is seen that the act of the officers was not in the course of their employment. The State is, therefore, not liable. The order of the learned Magistrate dated 23.7.2001 is, therefore, illegal and is required to be set aside.
36. However, I may hasten to add that this does not mean that accused No.1, whose property has been mis-appropriated, has no remedy in law. His remedy is against the two officers who have seized the property from him and who have caused entries to be made in the Muddemal Register even for the valuables.
37. The Appellant/Applicant has taken out an Application for an inquiry into the acts of the erring officers to be made by the State to recover the amount equivalent to the present market value of the gold and for creating a charge over the properties of the officers and for other incidental reliefs. The inquiry has been made. The Appellant/Applicant would be entitled to make an Application in the Court of the learned Magistrate for return of the amount of the gold lost or for recovery from the assets and properties of the 2 officers or from the estate of the deceased officer after serving notice upon them.