Judgment :- A.S.VENKATACHALAMOORTHY, J. The first defendant in O.S. No.100 of 1983 on the file of the Subordinate Court, Kumbakonam, is the appellant. 2. The first respondent/plaintiff filed a suit for recovery of a sum of Rs.32,638.85 being the principal and interest due on two Fixed Deposit Receipts and for costs. 3. The case of the plaintiff can be briefly stated as under:- The plaintiff is a merchant and landlord carrying on business in Kumbakonam. He used to deposit amounts in his name, in his wife's name so also in his son's name with the appellant/first defendant bank. There was repeated canvassing by the bank officials for depositing amounts in the first defendant-bank. On 16.2.1983, the plaintiff went to the first defendant-bank to invest and deposit Rs.20,000/- as fixed deposit. The plaintiff met the 2nd defendant viz., the Special Officer and told him that he would go to the United Commercial Bank of India, withdraw the amount and deposit the same with the first defendant-bank. The 2nd respondent offered the service of a Bank Employee viz., the 3rd defendant by name Haridoss to encash the cheque and asked the plaintiff to draw the cheque of the United Commercial Bank of India in the name of the 3rd defendant Haridoss. Responding to the suggestion, the plaintiff drew a cheque in the name of Haridoss and he encashed the same from United Commercial bank of India, Kumbakonam Branch and the amount of Rs.20,000/- was brought to the first defendant-bank's premises. Necessary challan was filled up in the name of the plaintiff alone for 36 months fixed deposit and the challan and the amount were handed over to the Special Officer. The Special Officer verified the amount of Rs.20,000/- and stated that F.D. receipt will be issued within sometime. Shortly thereafter, the counterfoil of the challan and the F.D. receipt bearing No.9331 were handed over to the plaintiff. The plaintiff was again approached by the bank officials for further deposit and as such, the plaintiff went to the Bank on 25.4.1983. The bank officials promised to give incentives for the deposits and said that they would give interest to the F.D. amount of Rs.10,000/- to be deposited on that day from 17.3.1983. As in the previous occasion, again, the services of employee Haridoss was offered and the plaintiff issued a cheque in the name of Haridoss as done before, as per the instructions. As in the previous occasion, again, the services of employee Haridoss was offered and the plaintiff issued a cheque in the name of Haridoss as done before, as per the instructions. The plaintiff was given the F.D. receipt for Rs.10,000/- with interest to be paid from 17.3.1983 onwards. Here again, the amount was handed over to the Special Officer. Somewhere in September 1983, the plaintiff's brother complained some malpractice in the bank and hence the plaintiff wanted to close all the fixed deposits, savings bank account and recurring deposit account and issued notice to the Special Officer. Though the notice was acknowledged, no reply was received by the plaintiff. Then the plaintiff sought the services of the Union Bank of India. The plaintiff was informed by Union Bank of India, his bankers, that till the date of filing of the suit, in spite of the repeated demands, the United Bank of India could not able to get any reply. Without responding to the request of the plaintiff, the first defendant instituted a complaint with police against its employee Haridoss and the plaintiff was served with summons for the enquiry under Section 65 of the Co-operative Societies Act. Since the F.D. Receipts had already been handed over, the plaintiff is in possession of only photocopies of the same. Defendants 2 and 3 have been added as they are necessary parties. The Bank is directly and vicariously liable to pay the suit amount. Any fraudulent act or entry by defendants 2 and 3 would not in any manner affect the interests of the plaintiff. In fact, during the enquiry under Section 65 of the Co-operative Societies Act, the plaintiff was threatened and coerced to give various false statements and sign certain documents, which the plaintiff refused to do so. In substance, the plaintiff would claim that he is entitled for Rs.32,638.85 due under fixed deposit receipts numbering 9331 and 9311 with interest as stipulated up to 30.09.1983 and from that date onwards at 21% per annum. 4. The first defendant-bank filed a written statement, denying the various allegations. According to the first defendant, the plaintiff used to move closely with the 3rd defendant. The claim that there was canvassing for Fixed Deposits by the bank officials has been denied. 4. The first defendant-bank filed a written statement, denying the various allegations. According to the first defendant, the plaintiff used to move closely with the 3rd defendant. The claim that there was canvassing for Fixed Deposits by the bank officials has been denied. A specific statement is made that the plaintiff used to move only with the 3rd defendant regarding every transaction and he never consulted the officials of the first defendant for any deposit in the bank. The Special Officer was not met by the plaintiff and the Special Officer never stated that he would go to the United Commercial bank to withdraw the amount and to deposit the said amount in the first defendant-bank. A fraud has been played on the Bank by the plaintiff in collusion with the 3rd defendant. According to the bank, no cheque was drawn in the name of the first defendant-bank and that it is not aware of the cheque issued to the 3rd defendant and the encashment of the same by the 3rd defendant. The deposit of Rs.20,000/- was made only by the 3rd defendant in the name of the plaintiff and himself and the real fixed deposit receipt was issued in the name of the plaintiff and the third defendant under either or survivor account. According to the first defendant, even the challan for payment was in the name of both the persons. Instead of giving the real F.D. receipt, the 3rd defendant, taking advantage of his work and custody of blank F.D. Receipts, has chosen to issue a fraudulent F.D. receipt in 9000 series when actually real F.D. receipts were being issued in 5000 series. Therefore, according to the bank, the receipt issued to the plaintiff is a fraudulent one and the 3rd defendant has issued the same to the plaintiff forging the signature of the officials. The prestige and the public confidence in the bank were smashed by the act of the 3rd defendant in collusion with the plaintiff and others. The third defendant has issued several such fraudulent F.D. Receipts. In fact, when the bank came to know of this, the Special Officer took prompt action by issuing a Memo to the 3rd defendant calling for his explanation. The 3rd defendant admitted his guilt and prayed for time till 30.10.1983 to settle the account. Pending further enquiry, the 3rd defendant was put under suspension. In fact, when the bank came to know of this, the Special Officer took prompt action by issuing a Memo to the 3rd defendant calling for his explanation. The 3rd defendant admitted his guilt and prayed for time till 30.10.1983 to settle the account. Pending further enquiry, the 3rd defendant was put under suspension. For the notices received by the plaintiff, no reply could be sent since the equiry regarding the third defendant was pending and accounts were being looked into. According to Bylaw 25, in case of borrowing from non members, the receipt has to be executed by at least 3 members of the Board of Directors of whom the President shall be one. Again, under Bylaw VIII, under the head "current deposit", all entries in the pass book should be done by the authorised officer and the customers have been particularly requested to see that all entries of receipts and payments have to be carefully examined and any error discovered should be pointed out at once. According to the first defendant, the plaintiff ought to have been more vigilant in giving the cheque in the name of a third party viz., third defendant and without verifying the receipts and accounts of the Bank, he cannot claim the amount after knowing the suspension of the third defendant by the Bank. The first defendant however would admit that strangers are entitled to assume that all things connected in a transaction with a bank and pertaining to the internal management have been validly done and would contend that the same has no application to fraudulent and forged instruments. A bank or a limited company cannot be held to be answerable to third parties for the fraudulent acts of its servants or officers when the latter is not acting within the scope of his authorities and when he is acting in breach of the rules and bylaws of the bank. Hence, the plaintiff cannot claim any amount under the forged fraudulent F.D. receipt bearing No.9331. In the statement, the first defendant would explain the procedure by stating that for opening a fixed deposit account, a party should approach the concerned clerk who will give him the F.D. application specimen signature card etc. Then the party should sign before the manager of the bank and he will counter sign the card. In the statement, the first defendant would explain the procedure by stating that for opening a fixed deposit account, a party should approach the concerned clerk who will give him the F.D. application specimen signature card etc. Then the party should sign before the manager of the bank and he will counter sign the card. Then, amount has to be paid under challan and the cashier should receive the amount and make an endorsement "cash received" and seal should be fixed both on the foil and counter-foil of the challan and the amount paid will be noted in the chitta. Thereafter the F.D. sanction assistant will receive the application, signature card and challan and he will enter the particulars in the F.D. account book, fill up the F.D. Receipt and put the seal of the bank on the centre of foil and counter foil of the F.D. receipt so that half of the seal will be on the party's F.D. receipt and the other half in the bank's counterfoil. Thereafter, all the papers will be sent to the Manager and he will verify everything and after satisfying himself, he will note down the amount in his chitta and will sign the F.D. receipt both foil and counterfoil and he will send it to the Secretary. The Secretary, after checking everything, will put his full signature on the party F.D. receipt and he will put his initials in the counterfoil and will send it to the Special Officer. The Special Officer will in turn check the whole thing and after satisfying himself, he will sign and then send it to the Section Clerk. The Section Clerk will get the signature of the party in the counterfoil and will give the original F.D. receipt to the party. There is a categorical statement in the written statement that this procedure has not been followed in the instant case. The claim that on 25.4.1983 the plaintiff met the Special Officer has been denied, as the latter was on leave on that day. It is averred in the statement that from the facts and circumstances, it is clear that everything has been done by the 3rd defendant presumably at the instance of the plaintiff without the knowledge and consent of the higher authorities of the bank and against the rules and bylaws of the bank and behind the back of the first defendant. It is averred in the statement that from the facts and circumstances, it is clear that everything has been done by the 3rd defendant presumably at the instance of the plaintiff without the knowledge and consent of the higher authorities of the bank and against the rules and bylaws of the bank and behind the back of the first defendant. Therefore, the plaintiff is not entitled to claim any amount under F.D. receipt No.9311. The other contentions made in para Nos.7, 8 and 9 of the plaint have been denied. 5. The trial court framed as many as five issues for consideration and both the parties let in oral and documentary evidence. The trial court, after elaborately considering the oral and documentary evidence, came to the conclusion that the plaintiff has proved his case and thus entitled for a decree for Rs.32,188.85 with interest on Rs.30,000/- at the rate of 9% p.a. from the date of plaint up to the date of decree and thereafter at 6% p.a. till relisation. 6. Learned Advocate General appearing for the appellant reiterated the stand taken by the first defendant-bank. Learned Advocate General contended that it cannot be said that the third defendant acted in the course of employment and that being so, the Bank cannot be made liable. Secondly, it is contended that when the plaintiff received the fixed deposit receipts, he should have verified as to whether the same has been duly signed by all the officials required as per the Bylaws. Had he verified, he could have found out and complained to the Bank authorities. That apart, it is also submitted that apart from verifying that aspect, he should have also verified that while the earlier F.D. receipt carried latter number, the F.D. receipts issued subsequently carried earlier numbers and from this also, the plaintiff could have found out that something is wrong and informed the bank authorities. 7. Learned counsel appearing for the plaintiff/1st respondent would submit that it is only on the suggestion of the 2nd defendant/Special Officer, services of the 3rd defendant were utilised by the plaintiff. That apart, it is also contended that it is the 3rd defendant, who was in charge of the F.D. Section, in the sense that he was the concerned clerk in the bank, who used to receive money and issue the F.D. receipts. That apart, it is also contended that it is the 3rd defendant, who was in charge of the F.D. Section, in the sense that he was the concerned clerk in the bank, who used to receive money and issue the F.D. receipts. A further submission has been made to the effect that the claim that the 3rd defendant did not act in the course of employment is without any basis. So far as the case of the bank that there was negligence on the part of the plaintiff, in that, he failed to verify whether the F.D. receipts have been signed by all the officials concerned, it is submitted that all that the plaintiff has to verify is whether the same has been signed. The bylaws streamline the internal management of the bank and the first defendant-bank has not placed any material to show that the plaintiff was put on notice about the bylaws and that the plaintiff was called upon to verify at every stage as to whether the bylaws have been followed while issuing the F.D. receipts. In fact, the bank has admitted that the plaintiff is entitled to assume that all things connected in a transaction with the bank and pertaining to the internal management have been validly done. 8. For better appreciation, at the outset, this Court considers it necessary to refer to certain statements made in the statement filed by the bank. In the written statement, it is specifically admitted in para No.4 that the 3rd defendant, taking advantage of his work and custody of the blank F.D. receipts, had chosen to issue fraudulent F.D. receipts to the plaintiff. There is yet another categorical admission that strangers are entitled to assume that all things connected in a transaction with a bank and pertaining to the internal management have been validly done. There is no denial of the fact that at the relevant time, the 3rd defendant was the concerned clerk in the F.D. Section. In the written statement itself, the procedure to be followed, when a person approaches the bank for the purpose of depositing money in F.D. Account, has been set out as under:- " Further for opening a fixed deposit account a party should approach the concerned clerk who will give him the F.D. application specimen signature card etc. In the written statement itself, the procedure to be followed, when a person approaches the bank for the purpose of depositing money in F.D. Account, has been set out as under:- " Further for opening a fixed deposit account a party should approach the concerned clerk who will give him the F.D. application specimen signature card etc. Then the party should sign before the manager of the bank and he will counter sign the card. Then amount has to be paid under chalan and cashier should receive the amount and made an endorsement "cash received" and seal should be fixed both on the foil and counter-foil of the challan and the amount paid will be noted in the chitta. Then the F.D. sanction assistant will receive the application, signature card and challan and he will enter the particulars in the F.D. account book and he will fill up F.D. receipt and he will put the seal of the Bank on the centre of foil and counter foil of the F.D. receipt so that half of the seal will be on the party's F.D. receipt and the other half in the bank counter foil. Then everything will be sent to the Manager and he will verify everything and after satisfying himself he will note the amount in his chitta and he will sign the F.D. receipt both foil and counter foil and he will send it to the Secretary. The Secretary will check everything and he will put his full signature on the party F.D. receipt and he will put his initials in the counterfoil and he will send it to the special officer. The special officer will again check the whole thing and after satisfying himself he will sign and then send it to the section clerk. The section clerk will get the signature of the party in the counter foil and will give the original F.D. receipt to the party. This is the procedure and in the above case nothing has been done. " (emphasis supplied) 9. From the above, it is clear that one has to sign the F.D. application form before the Manger of the Bank and the Manger will counter sign the card. Again, it is stated that the Manager, before signing the F.D. receipt, should verify everything and only after satisfying himself, he has to affix his signature. " (emphasis supplied) 9. From the above, it is clear that one has to sign the F.D. application form before the Manger of the Bank and the Manger will counter sign the card. Again, it is stated that the Manager, before signing the F.D. receipt, should verify everything and only after satisfying himself, he has to affix his signature. As already pointed out, in the written statement itself, it is admitted that this procedure has not been followed. From this, two things are evident, ie., not only the 3rd defendant did not follow the procedure but also the manager of the bank. It is not the case of the bank that the manager of the bank got the signature of the plaintiff in the specimen signature card etc. When the officers concerned themselves have committed mistakes and irregularities, it would be futile to contend that the plaintiff should have been very vigilant. The position may be different if the plaintiff has approached a watchman in the bank for the purpose of depositing some money in F.D. and that Watchman handed over certain bogus or fabricated F.D. receipts to the plaintiff. 10. We do not see any substance in the submission of the learned counsel for the appellant that the plaintiff is guilty of contributory negligence in that he should have verified the F.D. receipts to find out whether the Fixed Deposit receipt has been issued as per the bylaws. As already pointed out, the bank has admitted that strangers are entitled to assume that all things connected in a transaction with a bank and pertaining to the internal management have been validly done. That apart, it is not the case of the first defendant/bank that the plaintiff was served with a copy of the bylaws and that the plaintiff, before investing amount in the F.D., has made a declaration that he is aware of the various bylaws of the bank. 11. Learned counsel appearing for the appellant would draw the attention of this Court to a Ruling of the Supreme Court reported in AIR 1978 SC 1263 (State Bank of India vs. Shyama Devi) and submit that the 3rd defendant did not act in the course of his employment and that the whole thing has been perpetuated only by the fraudulent acts of the plaintiff along with the 3rd defendant. The above ruling relied on by the appellant would not apply to the facts of this case. That was a case where a client of the bank paid certain amount to an employee of the bank for crediting it to her account and the Supreme Court, in that case, ruled that the onus was on the client to show that she paid the amount to the employee of the bank and was received by that employee in the course of his employment with the bank. As already pointed out, in this case, the plaintiff handed over the cheque to the 3rd defendant, who is the concerned clerk in the bank and secondly, as per the procedure, the Manager of the bank should have obtained a signature of the plaintiff in the application specimen signature card etc., but however, the Manager failed to do so. 12. Reliance is also made on a Judgment of a single Judge of this Court in A.S. No.804 of 1986 (Syndicate bank, Coimbatore vs. T.M.Khader Shah and another). We may straight away say that the said ruling would not apply to the facts of this case. That was a case where the plaintiff opened a Pigmy Deposit Account on 15.2.1980 with first defendant-bank. The 2nd defendant, who was an employee of the first defendant-bank was collecting a sum of Rs.100/- per day from the plaintiff and he misappropriated the same. It could be seen from the said Judgment that the plaintiff was informed about the rules and regulations relating to the said scheme and the plaintiff was informed that weekly card system was introduced to ensure that the savings were properly accounted for and by that system, the balance upto the end of previous week could be verified. In the communication sent to the plaintiff, he has been informed that the depositors should authenticate the correct weekly collections and sign the confirmation part which would be retained by the bank and the depositors would be issued counterfoil showing the balance of previous week duly confirmed by the bank and the weekly collections authenticated by the depositors and confirmed by the collecting representatives would be given and that the plaintiff, in acceptance of the same, has also signed. In the evidence also, in that case, the plaintiff admitted that he was aware of the weekly card system and what is expected is issuance of weekly card. In the evidence also, in that case, the plaintiff admitted that he was aware of the weekly card system and what is expected is issuance of weekly card. However in that case, the plaintiff was given a pass book and there was no initial in the said book by the officials. In those circumstances, the court held as against the plaintiff. We deem it necessary to point out what the learned single Judge has observed in that case. " Though the bank has also acted in a negligent manner in not sending weekly confirmation reports to the plaintiff, yet the negligence is not sufficient to enable the plaintiff to claim the amount collected by the second defendant in some other account other than Pigmy Deposit Account". Suffice to say that the negligence on the part of the bank cannot be taken in such a light manner. Any how, we are not concerned with that in this appeal and we are not here to examine as to whether that reasoning is correct or not. 13. Before winding up the discussion, we deem it necessary to refer to a ruling of the Supreme Court reported in (1998) 4 SCC 310 (Union Bank of India v. Vishwa Mohan), wherein the Supreme Court has ruled thus:- " ... It needs to be emphasised that in the Banking business, absolute devotion, diligence, integrity and honesty needs to be preserved by every bank employee and in particular the bank officer. If this is not observed, the confidence of the public/depositors would be impaired. ..." 14. In this view of the matter, we hold that the first defendant-bank is liable to make good the loss to the plaintiff. Consequently, we confirm the judgment and decree of the trial court and dismiss the appeal. 15. In the result, the appeal is dismissed with costs.