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VICARIOUS LIABILITY

Introduction

A person is liable for his own wrongful acts and does not incur any liability for the wrongful acts done by others . But, sometimes liability arises vicariously for the torts committed by others . In such cases , the person has not directly committed the wrong but still he becomes responsible to accept the liability . To raise the liability of person A for the wrongful acts done by person B , A and B should have a certain kind of relationship between them or they should be connected in a certain way.


The common examples of such liability are :-

  1. Liability of the principal for the tort of his agent

  2. Liability of partners for each other’s tort

  3. Liability of master for the tort of his servant


PRINCIPAL AND AGENT

Principal - When a person appoints another to do any act for him or represent him in dealing with third persons so as to bind himself by the acts of such another person , such a person is called the principal.


Agent - An agent is a person employed to do any act for another or represent another in dealing with third persons. Thus , an agent establishes a link between such another person and the third person.


It is based on the principle - “Qui facit alium facit per se”which means that the act of the agent is the act of the principal. The principal is liable for all the acts done by the agent during the course of agency . Whatever the principal can do himself , he may get the same done through the agent , except acts of personal nature .


The Relationship of PRINCIPAL - AGENT

Principal is the one who hires another person like an employer . Agent is the one who is engaged or hired by someone like an employee. As a general rule , an agent or employee is made to do certain tasks by the principal or employer. Thus , if he does something wrong while doing his job , the principal is responsible.


The agent has to be shown acting rightly or wrongly in the course of employment if the principal is to be made responsible. The agent and the independent contractor are two different persons. The agent is engaged by someone else while the independent contractor is not. Though an independent contractor can be hired by a person for an act. The person who hires the contractor is not in a position to authorise the independent contractor . For instance , if you take a three wheeler , you cannot authorise the auto rickshaw driver because it’s not your vehicle , you have only hired him. On the other hand , if you ask your friend to ride your motorcycle , you are authorising your friend and would be responsible if someone is injured.

Also, a company will not be held liable if their hired agents defrauds a friend in their personal relationship as he/she was not acting in the course of employment. For example - If Sam is a clerk at a bank , and Punit, his friend keeps giving his small amounts of money from time to time to deposit in his account, the bank cannot be held liable if it is later found that Sam used to pocket the money instead of depositing it in Punit’s bank account simply because he was the agent at the bank. Here , vicarious liability would not arise since Punit has asked Sam to deposit money because of personal relationship and it was out of his course of employment.


In Lloyd v. Grace, Smith & Co. Ltd.[1] the plaintiff had two properties but the rental income she received was not sufficient . So, she approached a firm of solicitors i.e., the defendant. She was attended by the managing employee who advised her to sell the properties and invest the earnings. She was asked to sign two documents which she was told that they were sale deeds but instead they were gift deeds in the name of the employee. She filed a case for compensation in which the court held that whatever happened , it happened during the course of employment . Compensation will be given in this case.


In State Bank of India v. Shyama Devi [2] the respondent , Mrs. Shyama Devi opened a Saving Bank Account with the plaintiff’s predecessor ( imperial Bank of India ) at its Allahabad Branch. The respondents gave some cash and a cheque to Kapil Deo Shukla, who was a friend of the respondent’s husband and employed in the said bank, for being deposited in her account. The said payments were made to Kapil Deo Shukla in his capacity as the respondent’s husband’s friend. No receipt or voucher was obtained indicating the said deposit. The Bank’s servant, instead of making the deposits in the respondent’s account got the cheque cashed and misappropriated the amount. He, however, made false entries in the respondent’s Pass Book and Bank’s ledgers. It was held by the supreme court that the servant had acted outside the course of employment and the appellant bank could not be made liable for the fraud committed by its servant.


PARTNERS

According to Section 26 of Indian Partnership Act 1932 , For the tort committed by any partner in the ordinary course of the business of the firm, all the other partners are liable thereof to the same extent as the guilty partners.


In Hamlyn v. Houston & Co. [3], one of the two partners of the defendant’s firm , acting within the general scope of his authority as a partner, bribed the plaintiff's clerk and induced him to make a breach of contract with his employer (plaintiff) by divulging secrets relating to his employer’s business. It was held that both the partners of the firm were liable for this wrongful act ( including breach of contract ) committed by only one of them.


MASTER AND SERVANT

The definition of a ‘servant’ in law is much wider than our ordinary , everyday usage - it is more than just maids and cleaners - it includes anybody who is employed by another person.

A servant is a person employed by another person to do work under the latter’s direction and control. If a servant does a wrongful act in the course of his employment, the master is liable along with the servant. Thus, the wrongful act of the servant is deemed to be the act of the master as well. This is based on the doctrine “ Respondent Superior” - Let the principal be liable.


Conditions for the lability of the master are:

  1. The tort was committed by the ‘servant’

  2. The servant committed the tort in the course of his employment

The liability of the master is not limited only to the acts , which he expressly authorizes to be done but he is also liable for torts committed by his servant on his own accord in the course of employment.


Relationship of ‘MASTER - SERVANT’

Master is the one who hires and servant is the one who is hired. A servant , however, is different from an independent contractor who is asked to do certain work by another but is not under the “direction and control” of such a person. Another test which is used to identify a master servant relationship is the hire and fire test. If the person can hire and fire , then he is the master. If the relationship is more of a deal then it’s a case of an independent contractor.


In Mersey Docks & Harbour Board v. Coggins & Griffith ( Liverpool ) Ltd. [4], plaintiffs gave cranes on hire and sometimes along with the driver. Defendant took a crane along with a driver on hire. A person suffered injury due to driver’s negligence . The court held that since the general supervision control was retained with the plaintiff who is the original employer, they are liable.


In Cassidy v. Ministry of Health [5] , a doctor performed surgery negligently because of which the patient lost his hand. The court held that although doctors are professionals and they do not tolerate any interference in their work, still in such cases hire & fire test can be applied to impose liability on the hospital. Therefore, the hospital is liable.


An act can be considered in two possible ways :

  1. In the course of employment

  2. Outside the course of employment


IN THE COURSE OF EMPLOYMENT

Authorised acts done wrongfully : The master will be liable if the servant commits a wrongful act while performing his authorized task given by the master. That wrongful act may or may not be connected to his professional task.


OUTSIDE THE COURSE OF EMPLOYMENT

Unauthorized act done wrongfully : The master will not be held if the servant commits a wrongful act when the servant is not performing any authorized task given by the master.


VICARIOUS LIABILITY OF THE STATE

Article 300 of the Indian constitution states that the Government of India may sue or be sued by the name of the Union of India and the Government of a State. However, under what circumstances that can be done is not stated. Following a number of High court & Supreme court judgments, it appears that courts hold the state liable for the torts committed by its servant only in the exercise of non sovereign functions. In the exercise of sovereign function, the State cannot be made liable for the tortious acts committed by its servants.


In Kasturilal Ralia Ram Jain v. State of Uttar Pradesh [6] , two jewellers visited a city with lots of gold and other valuables. Some police officers of the state seized the gold and kept it in police malkhana. The gold was misappropriated by a constable. Jewellers demanded compensation. The court held that police function is a sovereign function. So, the government will not be held liable. It is a case of personal liability.


CONCLUSION

Vicarious liability is the principle of law that holds one party liable for the wrongful acts of another. The person by whom the tort is committed , the act should be under his course of employment.


REFERENCES

[1] Lloyd v. Grace, smith, & Co. , (1912) A.C. 716

[2] State Bank of India v. Shyama Devi , A.I.R. 1978 S.C. 1263

[3] Hamlyn v. Houston & Co. , (1903) 1 K.B. 81 : 51 W.R. 99 : 72 L.J.K.B. 72 : 87 L.R. 500.

[4] Mersey Docks & Harbour Board v. Coggins & Griffiths (Liverpool) Ltd. , (1947) A.C, 17 : (1946) 2 A11 E.R. 345, 351

[5] Cassidy v. Ministry of Health, (1951) 1 A11 E.R. 574.

[6] Kasturilal Ralia Ram Jain v. State of Uttar Pradesh, 1965 AIR 1039, 1956 SCR (1)375



This article is written by Parul Tikia of Maharaja Agrasen Institute Of Management Studies.