Vicarious liability for employee fraud fails where the wrongdoing is outside employment and for personal gain.

Vicarious liability for an employee's fraud arises only if the wrongful act is committed in the course of employment or as an unauthorised mode of doing an authorised act. Where the employee acts for personal advantage outside the scope of employment, the employer is not liable unless it authorised, ratified, or otherwise connected itself with the conduct. On the stated facts, the employee obtained share certificates and transfer documents and then committed fraud for his own benefit; the company neither authorised nor ratified the acts and took disciplinary and police action after discovery. The employer-company was therefore not vicariously liable.

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Issues: Whether the employer-company could be fastened with liability for the fraudulent and unauthorised acts of its employee on the principle of vicarious liability.

Analysis: Liability of a master for the act of a servant arises only when the wrongful act is committed in the course of employment, or when it is a wrongful and unauthorised mode of doing an act authorised by the master. If the employee acts for his own purposes, outside the scope of employment, the employer is not liable. On the facts, the employee had committed the fraud after obtaining the share certificates and transfer documents and had acted for his own independent advantage. The company was not shown to have authorised, ratified, or connected itself with the wrongful acts, and it had taken action by dismissing the employee and lodging a police complaint once the fraud came to light.

Conclusion: The employer-company was not vicariously liable for the employee's independent fraudulent acts, and the claim against it failed.

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