Banks, Post offices, vicariously liable for fraud, wrongs by employees during employment: Supreme Court

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The Court was hearing an appeal assailing the order of the National Consumer Disputes Redressal Commission (NCDRC) that had dismissed the complaint filed against the post office authorities and held that authorities cannot be held vicariously liable for the fraud committed by their employee with respect to encashment of Kisan Vikas Patras (KVPs).

The post office shall be entitled to proceed against the defaulter officers for the loss caused due to the fraud or wrongful act, but this would not absolve them from their liability.

"Such acts of bank/post office employees being within their course of employment will give a right to the appellants to legally proceed for injury, as this is their only remedy against the post office,"

While holding the post office vicariously liable for the acts of its employee, the Court observed that:

"Employees, as individuals, are capable of being dishonest and committing acts of fraud or wrongs themselves or in collusion with others. Such acts of bank/post office employees, when done during their course of employment, are binding on the bank/post office at the instance of the person who is damnified by the fraud and wrongful acts of the officers of the bank/post office."