2010 (10) TMI 1242 - HC - Indian Laws

Summary

Issues Involved:
1. Liability of the Appellant-State of Goa for the negligence of Respondent No. 2-SBI.
2. Joint and several liability of Respondent No. 2-SBI with the Appellant.

Summary:

Issue 1: Liability of the Appellant-State of Goa for the negligence of Respondent No. 2-SBI
The Appellant-State of Goa floated a loan called "Goa State Development Loan, 2003" and appointed the Reserve Bank of India (RBI) as its manager. Respondent No. 1 applied for the loan within the prescribed time, but the designated branch of State Bank of India (SBI) failed to communicate the receipt of the application to the RBI on time. Consequently, the loan was allotted to a third party, and the money paid by Respondent No. 1 was refunded after 53 days without interest. The trial Court awarded interest at 13.5% per annum for 46 days against the Appellant, holding it liable for the delayed refund. The Appellant contended that it should not be held responsible for SBI's negligence. However, the Court held that the Appellant, as the principal, is liable for the negligence of its agent (SBI) during the course of employment, citing the principle that the principal should bear the risk for the acts committed by the agent in the course of employment.

Issue 2: Joint and several liability of Respondent No. 2-SBI with the Appellant
The trial Court had exonerated Respondent No. 2-SBI from liability, but the Appellant argued that the decree should have been joint and several. The Court agreed, stating that the principal's liability for the agent's negligence is vicarious, and the agent (SBI) should also be held liable. The Court referred to Order 41, Rule 33 of the Code of Civil Procedure, which allows the Appellate Court to pass any decree that ought to have been passed by the trial Court, even in the absence of an appeal or cross-objections by the Respondent No. 1. Consequently, the Court modified the decree to hold both the Appellant and Respondent No. 2-SBI jointly and severally liable to pay the amount of Rs. 16,16,301.40 with interest at 6% per annum from the date of the suit till payment and all costs of the suit.