Vicarious liability and appellate powers under Order 41 Rule 33 CPC allowed joint liability for bank negligence and plaintiff's loss.

A principal is vicariously liable for negligence committed by its agent in the course of employment, and the State was therefore responsible for the State Bank of India's failure to communicate the loan application and deposit within the prescribed time and manner. The Court held that the bank's lapse caused the plaintiff's loss and that the State could not avoid liability because the omission was not expressly authorised. It further held that the bank itself remained negligent and could be fastened with joint and several liability under Order 41, Rule 33 CPC, even though the plaintiff had filed no cross-appeal or cross-objection, where complete justice required such relief.

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Issues: (i) whether the appellant-State was liable for the negligence of the State Bank of India in failing to communicate the loan application and deposit to the Reserve Bank of India within the prescribed time and manner; (ii) whether the bank could be held jointly and severally liable with the appellant notwithstanding the absence of a cross-appeal or cross-objection by the plaintiff.

Issue (i): whether the appellant-State was liable for the negligence of the State Bank of India in failing to communicate the loan application and deposit to the Reserve Bank of India within the prescribed time and manner

Analysis: The loan was floated by the State, the Reserve Bank of India acted as manager to the issue, and the designated branch of the State Bank of India functioned as the receiving agency for applications. The bank's failure to send the intimation on the same day, as required by the terms of the issue, was a clear lapse. Where an agent acts in the course of employment, the principal bears responsibility for the agent's wrongful act or negligence. The Court also relied on the principle that the principal cannot avoid liability merely because the negligent act was not expressly authorised.

Conclusion: The appellant-State was liable for the negligence of the State Bank of India and for the loss suffered by the plaintiff.

Issue (ii): whether the bank could be held jointly and severally liable with the appellant notwithstanding the absence of a cross-appeal or cross-objection by the plaintiff

Analysis: The Court held that the bank itself was negligent and ought not to have been exonerated. It further held that Order 41, Rule 33 of the Code of Civil Procedure confers wide appellate power to pass the decree that ought to have been passed, even in favour of or against a non-appealing party, where complete justice requires it. On that basis, the absence of a plaintiff's appeal or cross-objection did not prevent the appellate Court from fastening liability on the bank also.

Conclusion: The bank could be held jointly and severally liable with the appellant, and the appellate Court could grant such relief under Order 41, Rule 33 of the Code of Civil Procedure, 1908.

Final Conclusion: The decree was modified so that both the appellant-State and the State Bank of India were made jointly and severally liable to pay the decretal amount with costs and interest at 6% per annum from the date of the suit till payment.

Ratio Decidendi: A principal is vicariously liable for negligence committed by its agent in the course of employment, and an appellate Court may, in exercise of Order 41, Rule 33, fasten liability on a non-appealing respondent where the justice of the case so requires.

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