PRINCIPAL AND AGENT
The liability of the principal for the wrongful act of his agent rests on the grounds that the principal is a person who has selected the agent and that the principal having delegated the performance of certain class of acts to the agent, the principal should bear the risk of exceeding his authority in matters incidental to the doing of acts. S. 182 of Indian Contract Act defines the concept of Agent and Principal An agent is a person employed to do any act for another or to represent another in dealings with third person. The person for whom such act is done, or who is so represented is called the principal.
The principal will be liable for the act of agent in the following circumstances-
The liability of the principal for the wrongs of his agent is a joint and several liability with the agent. The injured party may sue either any one of them or both of them. A principal is bounded by all the acts of his general agent; but where he appoints an agent for a particular purpose, his only wrong to the extent of the authority beyond. An agent is personally liable for fraud to third persons and he cannot excuse himself on the ground that the acted as agent for the contract of agency cannot impose any obligation on him to commit or assist in the committing of fraud.
Where one person authorizes another to commit a tort the liability for that ill be not only of that person who has committed it but also of that who authorized it. It is based on the general principal "Qui facit per alium facit per se" which means that the act of an agent is the act of the principal. For any act authorized by the principal and done by the agent both of them are liable. Their liability is joint and several.
The authority to do the act may be express or implied. The principal generally does not expressly ask his agent to do the wrongful act, but when the agent acts in the ordinary course of the performance of his duties as an agent, the principal becomes liable for the same.
In State Bank of India Vs. Shyama Devi: The plaintiff's husband gave some amount and cheque o his friend, who was an employee in the defendant bank, for being deposited in the plaintiff's account. No proper receipt for the deposits was obtained. The bank employee misappropriated the amount. It was held by the Supreme Court that the employee, when he committed the fraud, was not acting in the scope of bank's employment but in his private capacity as the depositor's friend, therefore the defendant bank could not be made liable for the same.
