Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer?

Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity

Open App

CLAT Exam > CLAT Questions > Principle: A principle is liable for the act...

Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.

Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.

a)
Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.
b)
Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.
c)
Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.
d)
Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.

Correct answer is option 'B'. Can you explain this answer?

Join for Free

Join for Free

Most Upvoted Answer

Principle: A principle is liable for the acts of his agent performed ...

Mohanlal had given the money to Sohanlal as he was his friend and in a personal capacity. Sohanlal was not acting as the agent of Mohanlal then.

Answered by Glance Learning Institute · View profile

Free Test

FREE

Practice Test for AILET - 17
150 Ques | 90 Min

Start Free Test

View all free CLAT tests

Community Answer

Principle: A principle is liable for the acts of his agent performed ...

Explanation:

Utopia Bank is not liable to Mohanlal
- Utopia Bank cannot be held responsible for the actions of Sohanlal, as he committed the fraud in his private capacity and not as part of his duties as an employee of the bank.
- Mohanlal's decision not to collect a receipt for the deposit does not absolve Sohanlal of his actions, but it also does not make Utopia Bank liable for the loss.

Principle not applicable
- The principle of liability for the acts of an agent in the ordinary course of his duties does not apply in this case, as Sohanlal's misappropriation of funds was not within the scope of his employment with Utopia Bank.
- Mohanlal's lack of due diligence in not obtaining a receipt does not shift the responsibility to Utopia Bank.

Conclusion
- In this scenario, Utopia Bank cannot be held liable to Mohanlal for the actions of Sohanlal. Sohanlal, as an individual, is responsible for misappropriating the funds, and Mohanlal's failure to collect a receipt does not change this outcome.

View all answers Start learning for free

Explore Courses for CLAT exam

Similar CLAT Doubts

Principle:A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts:Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlals account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.

View answer

Principle 1 – The Principal is liable for all acts of the agent done in the course of employment.Principle 2 – When a servant commits a mistake while acting on behalf of his master, causing loss to the plaintiff thereby, the master will be liable for the same.Principle 3 – Generally, the employer is not liable for torts committed by an independent contractor working for him.Exception – The employer will be held liable for the acts of an independent contractor if he authorizes the doing of an illegal act.Explanation – An independent contractor is one who is not under the complete direction and control of the employer.Principle 4 – If the servant acts negligently in the performance of his duties or displays reckless behaviour, thereby causing loss to the plaintiff, the master will be held liable.Principle 5 – If the servant does an act in defiance of an express prohibition, and the act is outside the course of employment, then the master cannot be held liable for harm arising out of such an act.Facts – Ojaswi is an old woman who lives alone in the outskirts of the city. Every month, she has to deposit a sum of Rs. 2000 in the nearby branch of the State Bank of Shamirpet. Pranesh, her neighbour, works as a teller at that branch and offers to deposit the money for her. Trustingly, Ojaswi hands him the money at the end of the month and asks him to deposit it in her bank account. Pranesh never gave her a receipt stating that the amount had been deposited, but made false entries in her passbook nonetheless. Six months later, it is brought to her notice that Pranesh has been misappropriating all the money. She wishes to sue the State Bank of Shamirpet and claim damages for her loss.Would the Bank be liable?

View answer

Directios: Questions 4 – 7 are based on the same set of Principles. Answer accordingly.Principle 1 – The Principal is liable for all acts of the agent done in the course of employment.Principle 2 – When a servant commits a mistake while acting on behalf of his master, causing loss to the plaintiff thereby, the master will be liable for the same.Principle 3 – Generally, the employer is not liable for torts committed by an independent contractor working for him.Exception – The employer will be held liable for the acts of an independent contractor if he authorizes the doing of an illegal act.Explanation – An independent contractor is one who is not under the complete direction and control of the employer.Principle 4 – If the servant acts negligently in the performance of his duties or displays reckless behaviour, thereby causing loss to the plaintiff, the master will be held liable.Principle 5 – If the servant does an act in defiance of an express prohibition, and the act is outside the course of employment, then the master cannot be held liable for harm arising out of such an act.Facts – Ojaswi is an old woman who lives alone in the outskirts of the city. Every month, she has to deposit a sum of Rs. 2000 in the nearby branch of the State Bank of Shamirpet. Pranesh, her neighbour, works as a teller at that branch and offers to deposit the money for her. Trustingly, Ojaswi hands him themoney at the end of the month and asks him to deposit it in her bank account. Pranesh never gave her a receipt stating that the amount had been deposited, but made false entries in her passbook nonetheless. Six months later, it is brought to her notice that Pranesh has been misappropriating all the money. She wishes to sue the State Bank of Shamirpet and claim damages for her loss. Would the Bank be liable?

View answer

Principle Master will be liable for the wrongful acts of his servants in course of employment.Facts Shikha was an old widow, who opened an account with the Canara Bank, whereby she would deposit Rs 100 everyday in the bank. Mukesh was a neighbour, who used to collect the amount and deposit them in bank. Mukesh used to get a small commission from the bank for money deposited. One day it was discovered that Mukesh, who had not deposited the money for more than 3 months had vanished with the amount. Shikha filed a suit against the Canara Bank.Decision

View answer

PRINCIPLE: Vicarious liability is the liability of the Master or Principal for the tort committed by his servant or agent, provided the tort is committed in the course of employment. The Master or Principal is not liable for private wrongs of the servant /agentFACTS: X hands over some cash money at his house to Y, who is X’s neighbour and is also cashier in a bank, to be deposited in A’s account in the bank. Instead of depositing the money, Y misappropriates it.Which of the following statements depict correct legal position in this given legal situation?

View answer

Top Courses for CLATView all

Current Affairs: Daily, Weekly & Monthly

Legal Reasoning for CLAT

Lucent for GK

Crash Course for CLAT

CLAT Mock Test Series 2026

Top Courses for CLAT

View all

Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer?

Share with a Friend

Answer this doubt

Question Description
Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer? for CLAT 2025 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CLAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer?.

Solutions for Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free.

Here you can find the meaning of Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Principle: A principle is liable for the acts of his agent performed in the ordinary course of the performance of his duties as an agent.Facts: Mohanlal gave one lakh rupees cash to his friend Sohanlal, who was an employee of Utopia Bank, to be deposited in Mohanlal's account with Utopia Bank. Because he gave the cash to be deposited to his friend, Mohanlal did not bother to collect the receipt of deposit. Sohanlal misappropriated the amount.a)Utopia Bank is liable to Mohanlal as Sohanlal collected the cash while being an employee of Utopia Bank and then misappropriated it.b)Utopia Bank is not liable to Mohanlal as Sohanlal's act of fraud was committed in his private capacity.c)Utopia Bank is liable to Mohanlal for the fraud committed by Sohanlal, and in turn Sohanlal is liable to Utopia Bank for the fraud he committed.d)Neither Utopia Bank nor Sohanlal is liable to Mohanlal, as Mohanlal did not even insist on the receipt of deposit from Sohanlal.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice CLAT tests.

Explore Courses for CLAT exam