Principles:-
1. A master shall be liable for the fraudulent acts of his servants committed in the course of employment.
2. Whether an act is committed in the course of employment has to be judged in the context of the case.
3. Both master and third parties must exercise reasonable care in this regard.
Facts
Rama Bai was an uneducated widow and she opened a S.B. account in Syndicate Bank with the help of her nephew by name Keshav who was at that time working as a clerk in the Bank. Keshav used to deposit the money of Rama Bai from time to time and get the entries done in the passbook. After the years or so, Keshav was dismissed from the service by the Bank. Being unaware of this fact, Rama Bai continued to hand over her savings to him and Keshav misappropriated them. Rama Bai realized this only when Keshav disappeared from, the scene one day and she sought compensation from the Bank.
Possible Decisions
(a) Syndicate Bank shall be liable to compensate Rama Bai.
(b) Syndicate Bank shall not be liable to compensate Rama Bai.
(c) Rama Bai cannot blame others for her negligence.
Possible Reasons
(i) Keshav was not an employee of the Bank when the fraud" was committed.
(ii) The Bank was not aware of the special arrangement between Rama Bhai and Keshav.
(iii) It is the Bank's duty to take care of vulnerable customers.
(iv) Rama Bhai should have checked about Keshav in her own interest.
Your decision with the reason.

(a)(iii)

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(c)(iv)

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(b)(ii)

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(b)(i)

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Solution

The correct option is C (b)(ii)
The bank is not liable to compensate. The bank was unknown of the fact of Rama Bhai and Keshav. A servant is locked in less than a contract of administrations though a self employed entity is locked in less than a contract for administrations. The obligation of the business for the wrongs submitted by his servant is more difficult than his risk in regard of wrongs submitted by a self employed entity. In the event that a servant does an unfair demonstration over the span of his business, the master is at risk for it. The servant, obviously, is additionally obligated.
Hence, C is the correct option.

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Similar questions

Q. Given below are Legal Principles followed by a Factual Situation. Apply the principles followed by a factual Situation. Apply the principle to it and select the most appropriate answer for question among the four choices given.
LEGAL PRINCIPLE: A master shall be liable for the fraudulent acts of his servant committed in the course of employment. Whether the act is committed in the course of employment has to be interpreted in the context of each case. Both the maser and third parties must exercise reasonable care in this regard.
FACTUAL SITUATION: Rani was an illiterate widow and she opened Saving Bank Account with ICICI Bank with help of villager who was an Accountant in the Bank. He used to deposit the cash of Rani every month and entries were made in the Pass Book and in computer system. After two to three years the villager who was accountant in said ICICI Bank was removed from job of accountant. Being not aware of such removal Rani used to give cash every month to villager to deposit into the Bank in her Saving Account. But the villager used such cash as its own. Rani found one day that such villager died of road accident and Rani thereby claimed all of her cash with interest from Bank.
FEASIBLE DECISIONS:
(A) ICICI Bank is liable to compensate to Rani.
(B) ICICI Bank is not liable to compensate Rani.
(C) Rani cannot blame others of her own wrong.
FEASIBLE REASONS:
(1) Rani was not aware that accountant was removed from the bank.
(2) ICICI Bank was not aware of the transaction between Rani and her villager.
(3) It is the duty of ICICI Bank to take care of such type of customers.
(4) Rani should have checked about villager in her own interest.
Your Decision with Appropriate Reasons:

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