NATIONAL BANK OF LAHORE LTD versus SOHANLAL SEHGAL AND OTHERS

Citation: [1965] 3 S.C.R. 293 · Decided: 05-03-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

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NATIONAL BANK OF LAHORE LTD 
v. 
SOHANLAL SEHGAL AND OTHERS 
March 5, 1965 
293 
[K. SuBBA RA:o, J. c. SHAH AND R. s. BACHAWAT, JJ.] 
Limitation Act, 1908, First Schedule, Articles 36 and 115-Scope of 
The respondents hired Jockers in the safe deposit vaults from the 
appellant bank at J ullundur through its manager under different 
agreements on various dates during 1950. In April 1951, the lockers 
were tampered with and the valuables of the respondents kept in 
them were removed by the Manager. In due course the Manager was 
prosecuted and convicted for theft. The respondents filed three suits 
against t)le bank for the recovery of different sums being the value of 
the contents of ihe lockers which had been removed. The bank denied 
its liability on various grounds and also contended that the suits were 
barred by l\mitation. 
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The trial court held that the Bank was liable to bear the loss 
incurred by the respondents and that the suits were not barred by 
!imitation. On appeal, the High Court accepted the findings of the 
trial court on both the questions and dismissed the appeals. 
In the appeal before the Supreme Court, only the question of 
limitation was raised. It was contended on behalf of the appellants 
on the facts found that the suit was barred by !imitation as the theft 
of the valuables by the Manager was a tort committed by him dehors 
the contracts entered into by the appellant with the respondents and, 
therefore, Article 36 of the Limitation Act which required that a suit 
must be instituted within two years applied, and not Art. 115, which 
provided for a period of limitation of three years; that the suits were1 
not based on a breach of contract committed ty the bank but only the 
theft committed bi its agent dehors the terms of the contract. 
HELD: The suit claims, being ex contractu, were clearly govern· 
ed by Article 115 of the First Schedule to the Limitation Act and not 
by Article 36. [298 FJ 
There were clear allegations in the plaint that the appellant com-
mitted breach of contract in not complying with some of the condi-
tions thereof and that the appellant understood those allegations in 
that light and traversed them. [298 E] 
Even ii the respondents' claim was solely based on the fraud com-
mitted by the manager during the course of his employment, such a 
claim could Il'J! fall under Art. 36. To attract.Art. 36, the misfeasance 
must be :ndcpendent of contract. The fraud of the manager commit-
ted in the course of his employment must be deemed to be a fraud 
of the principal, i.e. the Bank must be deemed to have permitted its 
manager to commit theft in violation of the terms of the contracts. 
While under the contracts the bank was under an obligation to pro-
vide good lockers and not to permit access to the safe except to 
persons mentioned in the contracts, in v'oJation of these terms the 
bank gave defective lockers and gave access to the manager, thus 
facilitating the theft. In either case the wrong committed was not 
independent of the contract but directly arose out of the breach of 
contract. [298 G, HJ 
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SUPR.E:M:E COURfr REPORTS 
[1965] 3 s.c.11. 
C1v1L APPELLATE JURISDICTION: Civil Appeals Nos. 929, 930 
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and 931 of 1963. 
Appeals by special leave from the judgment and decree dated 
October 11, 1961 of the Punjab High Court in Regular First 
Appeals Nos. 136, 137 and 138 of 1959. 
Hans Raj Sawhney and B. C. Misra, for the appellant (in all 
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the appeals). 
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B. R. L. Iyengar, S. K. Mehta and K. L. Mehta, for the res-
pondents (In C.A. No. 229 of 1963). 
V. D. Mahajan, for the respondent. (In' C.A. No. 930 of 1963). 
Kanwar Rajendra Singh and Vidya Sagar Nayyar, for the res-
pondent (In C.A. No. 931 of 1963). 
The Judgment of the Court was delivered by 
Sobba Rao, J. These appeals by special leave raise a question 
of limitation. 
. The National Bank of Lahore Limited, hereinafter called the 
Bank, is a banking concern registered under the Indian Ccmpanies 
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Act and having its registered office in Delhi and branches at 
different places in India. Though its main business is banking, it 
carries on the incidental business of hiring out lockers out of cabi- · 
nets in safe deposit vaults to constituents for safe custody of their 
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jewels and other valuables. It has one such safe deposit vault at its 
branch in Jullundur. The respondents herein hired lockers on rental 
basis from the Bank at J ullundur through its Manager 

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