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Can the post office/bank be held liable for the fraud or wrongs committed by its employees?: Supreme Court

[08 February 2022] The 3-judge bench of L. Nageswara Rao, Sanjiv Khanna and BR Gavai, JJ has held that the post office/bank can be held liable for the fraud or wrongs committed by its employees.
The Court observed that the Post Office, as an abstract entity, functions through its employees. 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 damned by the fraud and wrongful acts of the officers of the bank/post office. 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. Thus, the post office, like a bank, can and is entitled to proceed against the officers for the loss caused due to the fraud etc., but this would not absolve them from their liability if the employee involved was acting in the course of his employment and duties.

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