Law of Torts: Vicarious Liability | Legal Reasoning for CLAT PDF Download

What is Vicarious Liability?

Normally no person is held responsible for the wrongs done by someone else. However, there are a few instances wherein a person can be held liable for the conduct of another person. This liability is known as Vicarious Liability.

The following relationships are the best examples of Vicarious Liability: 

• Liability of the Principal for the act of his Agent:  When a principal authorizes his agent to perform any act, he becomes liable for the actions of a such agent provided the agent has conducted it in the course of performance of duties.
• Liability of the Partners: For the tort committed by a partner of a firm, in the normal course of business of that partnership, other partners are responsible to the same extent as the partner who is at fault. The liability thus arising will be joint and several.
• Liability of the Master for the act of his Servant: The liability of the master for the act of his servant is based on the principle of ‘respondeat superior, which means ‘let the principal be liable.
• Qui Facit per Alium Facit per see: This principle originates from the maxim ‘, Qui Facit per Alium Facit per se’ which means ‘he who does an act through another is deemed in law to do it himself.
• In tort, the wrongful act of the servant is thus deemed to be the act of the master. However, such a wrongful act should be within the course of his master’s business and any act, which is not in the course of such business, will not make the master liable.

Principal and Agent

• Principal is the person who authorises another to act on his behalf while the person who does the act so authorised is called the agent. 
• Principal is held liable for the acts of his agent. The liability is based on the Latin maxim ‘Qui Facit Per Alium Facit Per Se’ which means ‘He who acts through another act for himself’.
• In simple words, this means that the principal is liable for the acts authorised by him and done by his agent.For the principal to be held liable, it is necessary that the act should have been authorised by the principal. The authority can be express or implied.

• Example: For example, A authorises B to find him a buyer for his house. Thus, A has expressly authorised B to find a buyer. Take another example where A authorises B to go abroad to sell fruits. In this case, B has an implied authority to take proper and reasonable care of the fruits so that they do not get spoiled. This is his implied authority.

Master and Servant

The general rule in case of master-servant relationship is that a master is liable for the acts authorised by him and done by the servant during course of employment.

Thus, for the liability of the master to arise, it is necessary that the following conditions are satisfied:

1. The tort was committed by the servant
2. The servant committed the tort during course of employment.

What is the difference between a Servant and an Independent Contractor?

• Servant: A servant is a person employed by another to do work under the directions and control of the master. 
• Independent Contractor: An independent contractor is a person who is employed to do a certain task but the master cannot determine the way in which the job is to be done.

The master is not liable for the acts done by the independent contractor.

• Example: For example, your driver is your servant as you can give directions to him as to how to drive the car but a taxi driver is an independent contractor as he has been told to drive till a certain place. You cannot order him as to how to drive his taxi. There are two tests in distinguishing between a servant and an independent contractor:
• Hire and Fire Test: To apply this rule, check whether the person employed can be fired from his job or not. Does he receive salary as his remuneration for his job? If yes, then this test is fulfilled. However, this test alone does not make a person a servant.
• Direction and Control test: Check whether the person who has to do a job receives directions from the master as to how to do the job. If yes, then he is a servant. If no, he is an independent contractor.
• So, for a person to be called a servant, both the tests have to be satisfied, while in case of an independent contractor, only the first test needs to be satisfied.

Course of Employment

A master can be held liable for the act of his servant only if the act is done under the course of employment.

An act falls under the course of employment if

a) it is authorised by the master; or

b) it is a wrongful mode of doing an authorised act.

• This means that the master can be held liable even for those acts which he has not authorised as long as the act done is in furtherance of the act authorised by the master.
• Now, how do we check whether an act falls under the above-mentioned categories?
• Checking (a) is usually simple. The problem arises in the second part in which one has to determine whether the act done is a wrongful mode of doing the authorised act.
• One method is to see whether the servant was doing the act in question along with the authorised act or not? 
• If yes then then it falls under (b) as he is not supposed to do any other act while performing master’s job.
• For example if a driver smokes while driving, his act falls under (b), but if he gets out of the car and then smokes, his act does not fall under (b)

Extent of Liability of Master

A master is vicariously liable for the acts of his servants acting in the course of employment. Unless the act is done in the course of employment, the servant’s act does not make the employer liable.

• In other words, for the master’s liability to arise, the act must be a wrongful act authorized by the master or a wrongful and unauthorized mode of doing some act authorized by the master.
• If the servant, at the time of the accident, is not acting within the course of employment but is doing something for himself, the master is not liable. It is the link of the master’s business with the servant’s wrongful act which makes the master liable. So the plaintiff to obtain a judgment against the master must establish a relationship between the servant’s act and the master’s business.
• The question will be whether the servant was just doing the job badly or not doing the job at all, doing his own thing instead.
• In other words, if the unauthorized and wrongful act of the servant is not so connected with the authorized act as to be a mode of doing it, but is an independent act, the master is not responsible; for in such a case the servant is not acting in the course of the employment but has gone outside of it.

Effect of Prohibition

It is not the law that whenever a servant does an act which his employer has prohibited him from doing, the act so done falls outside the course of employment. Prohibitions fall under two categories:

• Those which limit the scope or sphere of employment; and
• Those which merely affect or restrict the mode of doing the act for which the servant is employee.Understanding Employment Scope and Liability

If a servant violates a prohibition of the first category, his act will be outside the course of employment and the master will not be vicariously liable; but if the violation by the servant is only of a prohibition of the second category, the servant’s act will still be in the course of employment making the master liable.

The drivers of omnibuses were furnished with printed instructions saying that ‘they must not on any account race with or obstruct another omnibus’. Nevertheless, the driver of the defendant’s omnibus did obstruct a rival omnibus and caused an accident in which the plaintiff’s horses were injured. The defendant was liable because what his driver did was merely an unauthorized mode of doing what he was authorized to do, namely, to promote the defendant’s business.

Dishonest and Criminal Acts

A master is not liable for a dishonest or criminal act of his servant where the servant merely takes the opportunity afforded by his service to commit the wrongful act.

• For example, if a window cleaner steals an article from the room where he is doing the window cleaning work, his master is not liable. 
• Similarly, when a servant assaults another, whom he meets in the course of his work, out of personal vendetta, and the assault has no relation to the master’s work, the master is not liable.
• But if the wrongful act is done for the benefit of the master and while doing his business, the master is liable.
• The master is answerable for every such wrong of the servant or agent as is committed in the course of the service and for the master’s benefit; though no express command of the master is proved.
• The master will also be liable if the servant while doing the wrongful act was acting within the apparent scope of his authority even though the act was done for his own benefit or for the benefit of some person other than the master.
• The managing clerk of a firm of solicitors induced a client of the firm to transfer a mortgage to him by fraudulently representing the nature of the deed and, thereupon, obtained and misappropriated the mortgage money. The solicitors were held liable as their managing clerk in accepting the deed was acting within the apparent scope of his authority although fraudulently for his own benefit.

Employer and Independent Contractor

An independent contractor is one who undertakes to produce a given result without being in any way controlled as to the method by which he attains that result. 

• In the actual execution of the work he is not under the order or control of the person for whom he does it, but uses his own discretion in things not specified beforehand.
• A servant is an agent who works under the supervision, control and direction of his employer.
• If an independent contractor as distinguished from a servant is employed to do some work and in the course of the work he or his servants commit any tort, the employer is not answerable.

Exceptions:

• Where the employer retains his control over the contractor and personally interferes and makes himself a party to the act which occasions the damage.
• Where the thing contracted to be done is itself wrongful. In such a case the employer is responsible for the wrong done by the contractor or his servants, and is liable to third persons who sustain damage from the wrong doing.
• For instance, if a man employs a contractor to build a house, who builds it so as to darken another person’s windows, the remedy is not against the builder, but the owner of the house. When the trustees of a temple employed a contractor to get electric connection for use of lighting and mike arrangements in the temple from the well of an agriculturist without informing and obtaining the permission of the electricity board and a person was injured as the wires used by the contractor snapped, the trustees were held liable as the act of diverting electricity without permission of the board was an itself an illegal act.
• When legal or statutory duty is imposed on the employer, he is liable for any injury that arises to others in consequence of its having been negligently performed by the contractor.
• If a man does work on or near another’s property, which involves danger to that property unless proper care is taken, he is liable to the owners of the property for damage resulting to it from failure to take proper care, and is equally liable if, instead of doing the work himself, he procures another to do it for him.
• When a person employs a contractor to work in a place where the public are in a habit of passing, which work will, unless precautions are taken, cause danger to the public, an obligation is thrown upon the person who orders the work to be done to see that the necessary precautions are taken, and if the necessary precautions are not taken, he cannot escape liability by seeking to throw the blame on the contractor.
• It is the duty of a person who is causing such work to be executed to see that they are properly carried out so as not to occasion any damage to persons passing by on the highway.
• When the work contracted to be done is from its nature likely to cause danger to others, in such cases there is a duty on the part of the employer to take all reasonable precautions against such danger, and if the contractor does not take these precautions, the employer is liable.
• It is his duty to use every reasonable precaution that care and skill may suggest in the execution of his works, so as to protect his neighbors from injury, and he cannot get rid of the responsibility thus cast on him by transferring that duty to another.
• But the employer will not be liable of the contractor was not acting within the scope of his contract, but was a trespasser when he did the act complained of.
• When the defendant employed a contractor to pull down an old house and erect a new one, and the contractor expressly undertook to support the plaintiff’s house, and to be liable for all damage, it was held that the defendant was liable for the damage.

Some Landmark Cases

• Ashby v. White (Injuria sine damno)
  Injuria sine damno is a breach of a legal right that does not cause the plaintiff any pain, loss, or damage, and whenever a legal right is violated, the person who owns the right has the right to sue. Every person has an absolute right to his or her property, personal immunity, and liberty, and any infringement of this right is actionable in and of itself. A person who has had a legal right infringed on has a cause of action, and even deliberately infringing on a legal right gives rise to a cause of action. The legislation also allows a person who is threatened with infringement of a legal right to file a complaint under the terms of the Specific Relief Act under Declaration and Injunction, even though the injury has not yet occurred.
  For instance, if a person is illegally detained against his will, he may be entitled to large damages for wrongful imprisonment, even if no consequential harm results from the confinement.
• Gloucester Grammar School  Case
  The defendant was a school teacher in a school named Gloucester Grammar School. The defendant for some reason decided to quit his job as a teacher and he decided to open up a new school just adjacent to his previous employer’s school i.e. in the vicinity of Gloucester Grammar School. The defendant further reduced his new school’s fee to 12 pence as against the 40 pence that were being charged by his previous school. Since he was also quite famous with his students at the previous school and the new school’s fee was less than half of the previous school, many students left the previous school and joined the new school. This resulted in pecuniary losses to the previous school ( Gloucester Grammar School )
  The petitioner i.e. the owner of the Gloucester Grammar School decided to bring a suit for recovery of damages against the defendant alleging that the above-mentioned act of opening up a new school in the vicinity of his existing school caused him financial losses and that he should be compensated for the damages caused.
• Bhim Singh vs State of J & K
  Mr. Bhim Singh an MLA of Jammu and Kashmir was arrested and detained in police custody and was deliberately prevented from attending the sessions of the legislative assembly to be held on 11th September 1985. He was arrested on an intervening night between 9th and 10th September 1985 by the station house officer of Quiz Kunda police station, on the allegation that a case under section 153A of Ranbir Penal Code was registered against him for delivering an inflammatory/seditious speech at the public meeting held near parade ground, Jammu on 8th September 1985. He has not produced before the Magistrate till 13th September. There was also a voting session at the assembly and he was not able to vote as he was not allowed to go, where his vote was very crucial but the person to whom he wanted to give the vote won but his right to vote was infringed.
  On the inquiry of the Supreme Court, it was found that Mr. Bhim Singh was illegally detained by the police personnel, aided either by collision or by a casual attitude with the Magistrate, who ordered for remand without production of the arrested person before him. The Court pointed out that the Magistrate acted without any sense of responsibility or genuine concern for the personal liberty and the police arrested the imprisoned with mischievous and malicious intent and it was certainly was a gross violation of the constitutional right of the accused person under article 21 and 22(2).
• Hall vs Brooklands Auto Racing Club
  The defendants were the owners of the racing tracks. The track was oval in shape and there was a grass area around it for the spectators to watch the show. There were safety stands provided on the sides of the track as well.
  Two racers who were approaching the sharp left bend somehow mistakenly took the quick right, and as a result one of the cars ‘shot in the air over the curb’, killing and injuring the spectators. Since the opening of the track in 1907, there was no record of any such incident occurring before.
• Stanley vs Powell
  One of the members of a shooting party accidentally shot at another member, mistaking his movement for that of an animal. The court held that the injury was an accident and the defendant was not liable to pay the compensation as the plaintiff was willfully participating in the action fully aware of the dangers involved in it.
• State Bank of India vs Shyama Devi
  The respondent, Mrs. Shyama Devi, opened a savings account with the Imperial Bank of India at its Allahabad branch. The respondents gave some cash and cheque to one Kapil Deo Shukla, who was a friend of the respondent's husband and employed in the said bank, for being deposited in her account. The said payments were made to Kapil Deo Shukla in his capacity as the respondent's husband's friend. No receipt or voucher was obtained indicating the said deposit. The bank's servant, instead of making the deposits in the respondent's account, got the cheque encashed and misappropriated the amount, He, however, made false entries in the respondent's Passbook and the bank's ledgers outside the course of employment and the appellant bank could not be made liable for the fraud committed by its servant.
• Beard vs London General Omnibus Co.
  The conductor of an omnibus drove the omnibus through side streets, outside of the bus route, at a fast pace in the absence of the bus driver. In doing so, he negligently hit and injured a man. The man sued for damages from the owners of the omnibus.
  The issue arose as to upon whom the burden of proof lay to show whether the conductor was acting within the scope of his employment and whether, accordingly, the employer will be held liable for the injury caused to the man due to his negligent acts.
  The Claimant failed to discharge the burden of proof to show that the employer of the conductor was liable for the conductor’s negligent acts. The Court held that “the onus of proof lay on the plaintiff to show that such an act was within the authority of the conductor” (p 533). The Claimant did provide sufficient evidence to show that the conductor was acting within his scope of employment. On the contrary, evidence concerning, for example, the way in which the conductor was on side streets and not on the usual bus route, shows that he was acting outside of his scope of employment. Therefore, the employer cannot be held responsible for the negligence of the conductor.
• Lloyd vs Grace Smith & Co.
  Ms. Lloyds approached M/s Grace Smith & Co. to seek investment-related advice. The clerk who attended to her asked her to sell her properties and then reinvest the proceeds. Ms. Lloyd signed certain documents, which were supposed to be the sale deed. Actually, it turned out to be a gift deed in favor of the clerk. The clerk disposed of the property and misappropriated the funds. It was held that the company was liable for the fraudulent acts of the clerk.
• Limpus vs London General Omnibus
  The owner of a bus had given express instructions to his driver not to overtake or race with other vehicles. The bus driver defying the instructions overtook another bus, and in the process caused an accident. However, the bus owner was held liable for the negligence caused by the driver in the course of his employment.
• The state of Rajasthan vs Vidyawati
  In this case, a government vehicle, which was driven rashly and negligently by the car driver, who was an employee of the state government, knocked down the plaintiff's husband. In an action against the State of Rajasthan, the court held the state liable. On an appeal, the Supreme Court upheld the above sentence expressed by the Rajasthan High Court.

• Kasturi Lal vs the State of UP
  One of the partners of a firm of jewelers had gone to Meerut, to sell gold and silver. While walking through the market with his goods, he was intercepted and arrested by the police on grounds of suspicion that he was in possession of stolen goods. He was kept in the police lock-up and his goods were kept in the police custody. In the meanwhile, Kasturilal was released but the goods could not be returned, as the head constable had run away with them. In a suit brought against the State of UP for damages, it was held that the state was not liable, for the loss had occurred while the government was discharging a sovereign function (police function).
• Rylands vs Fletcher
  The owner of a mill, employed a contractor to construct a reservoir on his land to provide water to his mill. While digging, the contractor failed to notice some disused shafts beneath the ground and as such, did not block them up. Thereafter, he filled the reservoir with water. That night, the water broke through some of the shafts and flooded the neighbor Y's mine. The court held that X was liable for the damage caused to Y, even though the damage could not be attributed to his negligence.
• Donoghue vs Stevenson
  A man bought a bottle of ginger beer for his girlfriend manufactured by the defendant. The lady drank the contents of the bottle directly. Later, she poured the remaining contents into a glass. To her utter shock, she noticed a dead snail popping out of the bottle. She fainted and fell ill, as she had already consumed a portion of the drink. It was held that the manufacturer was liable to the lady for 'negligence'.

CLAT Level Passage Based Question

Vicarious liability in Indian law operates under similar principles to those in many other jurisdictions, but it is deeply rooted in the Indian legal framework and judicial interpretations. This principle holds one party responsible for the actions of another, particularly in employer-employee relationships. In India, vicarious liability is governed by various statutes and case law, ensuring that victims have a means of redress and promoting accountability.

Key Elements of Vicarious Liability in Indian Law

1. Relationship: The existence of a specific relationship, typically an employer-employee relationship, is essential. This relationship forms the basis for holding one party accountable for the actions of another.

2. Course of Employment: The wrongful act must have been committed in the course of employment. This means that the employee's actions must be related to their job duties and occur during their employment. Acts outside this scope generally do not result in vicarious liability.

3. Control: The employer must have a degree of control over the employee's actions. This implies that the employer has the authority to direct and manage the employee's activities.

Statutory Provisions and Judicial Interpretations

Indian Contract Act, 1872The Indian Contract Act, 1872, lays the foundation for vicarious liability through principles of agency. Section 182 defines an agent as a person employed to do any act for another or to represent another in dealings with third persons, establishing the groundwork for vicarious liability.

Indian Penal Code, 1860

The Indian Penal Code (IPC), 1860, also touches upon vicarious liability. For instance, Section 34 of the IPC deals with acts done by several persons in furtherance of common intention, holding each person liable as if the act were done by them alone. This section, while not directly addressing employer-employee relationships, reflects the broader principle of shared liability.

Judicial Interpretations

Indian courts have played a significant role in shaping the concept of vicarious liability. Notable cases include:

1. State Bank of India v. Shyama Devi (1978): The Supreme Court held that an employer could be held liable for fraudulent acts committed by an employee in the course of employment, emphasizing the employer's responsibility to supervise and control their employees.

2. Municipal Corporation of Delhi v. Subhagwanti (1966): In this case, the Supreme Court held the Municipal Corporation liable for the negligence of its employees that resulted in the collapse of a clock tower, causing multiple deaths. This case highlighted the importance of employers maintaining safety and vigilance in their operations.

Practical Applications

1. Workplace Accidents: Employers in India can be held liable for accidents caused by their employees during work. For example, if a factory worker negligently operates machinery resulting in injury, the employer may be held responsible for the damages.

2. Harassment and Discrimination: Indian law holds employers accountable for harassment or discrimination perpetrated by their employees if it occurs within the workplace or during work-related activities. This ensures a safe and respectful work environment.

3. Torts Committed by Employees: Employers may be held liable for torts such as fraud or defamation committed by their employees during their employment. This underscores the need for employers to implement robust oversight mechanisms.

1. An employee, Ravi, works as a delivery driver for FastTrack Couriers, a delivery company based in Mumbai. While making a delivery during his regular working hours, Ravi negligently hits a pedestrian, Priya, causing serious injuries. Priya files a lawsuit against FastTrack Couriers for compensation. Additionally, Ravi is found to have committed fraud by falsifying delivery records to steal goods worth ₹50,000 over the past few months. FastTrack Couriers claims that they were unaware of Ravi's fraudulent activities and argues that they should not be held liable for his actions.

Under Indian law, for FastTrack Couriers to be held vicariously liable for Ravi’s accident, which of the following must be true?

A. Ravi was acting outside the scope of his employment.

B. Ravi was acting within the scope of his employment.

C. Ravi’s actions were intentional and malicious.

D. FastTrack Couriers explicitly directed Ravi to hit Priya.

2. Sunita works as a manager at Metro Mart, a large retail chain. One day, during her shift, she instructs a subordinate, Arun, to clean the storage area. While cleaning, Arun negligently leaves a heavy box precariously placed on a high shelf. Later, a customer, Meera, is injured when the box falls on her. Meera decides to sue Metro Mart for her injuries. In a separate incident, it is discovered that Sunita has been embezzling funds from the company over the past year. Metro Mart claims they had no knowledge of Sunita's embezzlement activities and that they should not be held liable for her fraudulent acts.

What argument could Metro Mart use to defend against the vicarious liability claim for Arun’s negligence?

A. Arun was an independent contractor

B. Arun was not acting within the scope of his employment

C. Sunita was not involved in the incident

D. Meera contributed to her own injuries

3. Ajay is a software engineer working for TechSolutions Pvt. Ltd., an IT company based in Bangalore. During his employment, Ajay is assigned to handle sensitive customer data. Without authorization, he accesses and sells confidential customer information to a third party. When this unauthorized data breach is discovered, several customers file lawsuits against TechSolutions for breach of privacy and data protection. TechSolutions claims that Ajay acted independently and outside the scope of his employment and argues that they should not be held liable for his actions.

Which legal principle would support TechSolutions’ defense that they should not be held liable for Ajay’s actions?

A. Res ipsa loquitur

B. Doctrine of common intention

C. Ajay acted outside the scope of his employment

D. Employer’s control over the employee

4. Vikram is a real estate agent working for Prestige Realty, a prominent real estate agency in Chennai. During a property showing, Vikram negligently misrepresents the features of a house, claiming it has modern amenities and no structural issues. Based on Vikram's representation, a prospective buyer, Anjali, purchases the property. Shortly after the purchase, Anjali discovers that the house has significant structural problems and lacks the amenities Vikram promised. Anjali files a lawsuit against Prestige Realty, seeking damages for the misrepresentation.

What key factor will be considered to determine whether Prestige Realty is liable for Vikram’s misrepresentations?

A. Whether Vikram was an independent contractor

B. Whether Vikram’s actions were authorized by Prestige Realty

C. The amount of damages claimed by Anjali

D. Prestige Realty’s knowledge of Vikram’s previous misrepresentations

Solutions: 

1. Solution

  View Answer

2. Solution

B. Arun was not acting within the scope of his employment.

  View Answer

3. Solution

C. Ajay acted outside the scope of his employment

  View Answer

4. Solution

B. Whether Vikram’s actions were authorized by Prestige Realty

  View Answer