Multiple choice

Directions: Given below is a statement of facts of a case. Following the statement are a few principles of law are given in the form of certain propositions. Apply the principles to the facts of the case and encircle the most reasonable answer out of the alternatives given:

Facts: Shaila Devi opened as S.B. Account with Oriental Bank, and a cousin of her by name Mohan, who was a clerk in that Bank, helped her to complete the formalities. Subsequently she used to entrust whatever money she was getting to Mohan along with her pass book and Mohan used to return the pass book with the relevant entries. One day Shaila Devi discovered that Mohan, instead of crediting the money to her account, had been misappropriating it and the entries in the pass book were made by him without authorization. Shaila Devi seeks compensation from Oriental Bank. Principles: A master shall be liable for the fraudulent acts committed by his servant in the course of employment.

  1. Oriental Bank shall be liable because Mohan was acting in the course of employment.

  2. Oriental Bank shall not be liable, because Mohan was not acting in the course of employment.

  3. Oriental Bank was not liable, because Shaili Devi was negligent.
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B Correct answer
Explanation

Mohan was acting entirely for his own personal benefit when he misappropriated Shaila Devi's money. The fraud was outside the scope of his employment duties and was not done in the course of employment. Under vicarious liability principles, a master is only liable for wrongful acts committed by servants in the course of employment, not for personal fraud. Therefore, Oriental Bank is not liable for Mohan's personal criminal actions.

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