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TMI Blog1960 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... ccrued due on the said two deposits. The petitioner (bank) promptly denied its liability and replied to her letter stating that only a sum of Rs. 1,000 had been deposited under fixed deposit receipt No. 1293. The respondent filed the suit S.C No. 926 of 1956 for a decree directing the bank to pay Rs. 237-8-0 for the interest accrued due on the fixed deposits. The petitioner, who was the defendant in the suit, contended that the fixed deposit receipt No. 1293 for a sum of Rs. 2,300, and No. 1192 for a sum of Rs. 550 were not issued by the bank, that there was no entry in the account books of the bank either for the alleged deposit of Rs. 2,300 or Rs. 550, that the fixed deposit receipts were never signed by the directors except the secretary and that the fixed deposit receipts now held by the respondent are bogus ones and not binding on the bank. The learned district munsif who tried the suit found that the fixed deposit receipts were not genuine and the secretary of the bank Committed a forgery by affixing the signatures of three directors. Nevertheless he came to the conclusion that as the secretary was authorised to receive the money according to the bye-laws of the bank, the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel referred to a leading case, viz., Ruben v. Great Fingall Consolidated [1906] A.C. 439. The facts in that case are similar to our case. The plaintiff advanced in good faith a sum of money to the secretary of the defendant company for his own purposes on the security of a share certificate of the company issued to them by the secretary. This certificate was in point of form in accordance with the articles of association inasmuch as it bore the seal of the company and appeared to be signed by the directors and counter-signed by the secretary. The seal of the company was, however, affixed to it by the secretary fraudulently and without authority and the signatures of the two directors were forged by him. On the discovery of the fraud, the plaintiff filed a suit against the company on the certificate issued by the secretary. Their Lordships held that the documents were forged and could not bind the company unless some official acting with his authority had warranted that it was genuine. Even assuming that the secretary might be taken to have impliedly warranted this he had no colour of authority, actual, usual, or apparent to do and, therefore, the company was not bound. Lord L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is a forgery within the language of the Forgery Act. It contains a false statement, namely, that the manager is acting for the company and it purports to bind the company. That statement is in fraud of the company, and those two elements appear to make the document a forgery within the Forgery. Act. That being so, I feel bound by the decision of the House of Lords to-hold that in this case, it is not open to the plaintiffs to say: 'This matter, whether authority has or has not been delegated to Clarke, the, Manchester manager, is a matter of internal management about which I need not inquire under the rule in Royal British Bank v. Turquand [1931] 1 Ch. 498 Atkin L.J. also observed : "This is the ordinary case of a person having exercised or purported to exercise an authority to bind the company in fraud of the company, outside the scope of his ordinary ostensible authority...: To my mind, inasmuch as the act was done within the ostensible authority of the agent, the principal is not precluded from setting up the want of authority." In South London Grayhound Race Course Ltd. s case ( supra ) the articles of association of the company required that the "seal of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority to receive the fixed deposits and every act done by him in the course of his employment would bind the bank. He drew our attention to a case decided in our High Court by Gentle J. in Mathias v. Milator Agricultural Co-operative Bank [1927] 1 K.B. 826. The facts in that case are; the plaintiff's association used to make deposits with the defendant bank through its secretary. In the course of their dealings the secretary of the bank received fixed deposits even outside the bank premises and used to issue fixed deposit receipts. It was contended by the bank that the secretary had authority to receive the deposits only at the bank premises but as be received the deposits outside the bank premises his conduct in receiving the money and his act in giving the fixed deposit receipt was outside the scope of his authority. But this was negatived. Gentle, J. observed: "It is not contended that the secretary and treasurer had no authority to receive money and to receive fixed deposits and that he was not their agent so to do and it was not in the course of his employment so to act. Every act done by an agent in the course of his employment on behalf of his principal and within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether in the law of agency, or in the law of master and servant. In Gower's Modern Company Law, at page 157, the learned author has put the whole proposition of law in a nutshell thus: "If a document purporting to be sealed by or signed on behalf of the company is proved to be a forgery, it does not bind the company. But the company may be estopped from disclaiming the document as a forgery if it has been put forward as genuine by an official acting within his actual, usual, or apparent authority and if a transaction is binding on the company under the foregoing rules the company will be liable notwithstanding that the official has acted fraudulently or committed forgery." Similarly Bowstead in his well known book, A Digest of the Law of Agency, has stated under article 82 : "No principal is bound by any act of his agent which is not done within the agent's actual or implied authority unless the principal in fact authorised the agent to do the particular act." In Smith's Law of Master and Servant, the learned author states the rule thus at page 229 : "A person may be liable for a fraud committed by his agent or servant, if the agent or servant committed it while a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors and thereby committed a fraudulent act. Certainly the fraudulent act of the secretary of the bank would not bind the bank. Though the learned district munsif gave a finding that the fixed deposit receipts were not genuine, still he was of the view that as the secretary was authorised to receive the money, the petitioner bank should be held responsible. We think that this is not a correct view according to law and according to the bye-laws of the bank. We hold that the fixed deposit receipts bearing No. 1293 for a sum of Rs. 2,300 and No. 1192 for a sum of Rs. 550 issued by the secretary are not valid receipts and they are not binding on the petitioner bank. The learned district munsif has also given a finding that in any event the bank is liable to pay interest for the fixed deposit of Rs. 1,000 as found in -the account books of the bank under the heading F. D. No. 1293 dated 24th January, 1955- We agree with him. In the result, we set aside the judgment and decree of the learned district munsif and declare that the plaintiff is entitled to interest on the fixed deposit of Rs. 1,000 above referred to. The suit is otherwise dismissed. No costs. - - TaxTMI - TMITax - Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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