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Company responsible for misappropriation by employee

Source : BUSINESS_STANDARD
Last Updated: Sun, May 12, 2013 20:32 hrs
&#8203;Embattled Sahara seeks equity, debt infusion<br>

Companies sometimes attempt to cover up the misdeeds of their employees or use their employees as a front to misappropriate money. Here is a case where strictures have been passed against Sahara India Parivar for collecting money without having a proper accounting system in place.

Sahara India had a Sahara Swarna Yojana Scheme Certificate for its customers, who had to pay money according to a given schedule for getting certain privileges.

Jatkishore Das was one such person, who had enrolled under this scheme in 2003 by investing Rs 1 lakh for a period of 10 years. From this investment, he had taken a loan of Rs 80,000 for medical treatment, and had later repaid it, along with the interest. An endorsement was made by Sahara's branch manager in the pass-book but not in its own records. When several requests and repeated visits to Sahara's office proved futile, a worried Das filed a consumer complaint before the Deogarh District Forum.



Sahara contested the complaint, claiming Das had not repaid the loan amount and it was still due in its records. It claimed repayment of the loan was not possible in this manner and the endorsement was fictitious. The Forum observed the passbook-cum-certificate had an endorsement showing that Rs 80,000 towards the loan and Rs 1,287 towards interest, totalling Rs 81,287 had been paid on December 28, 2006, and there were no dues. The endorsement was authenticated by Sahara's official seal and the signature of its branch manager. There was no allegation that the seal or signature were forged.

The Forum concluded Das could not be faulted for not being aware of Sahara's internal procedures. On the contrary, an investor is expected to believe the procedure followed by the branch manager is the correct one and the endorsement is in order. Sahara would be bound by the act of its branch manager. In case the money had been misappropriated by the branch manager, it would be up to Sahara to take suitable action against him but the investor cannot be faulted and deprived of the benefits due to him. So, the Forum directed Sahara to give credit for the repayment of the loan, and awarded Rs 10,000 as compensation and Rs 1,000 as costs.

Sahara appealed against this judgement to the Odisha State Commission. The company wanted to change its stand in appeal but the State Commission refused to permit it to take a contrary stand to that taken before the District Forum. The State Commission concurred with the view taken by the District Forum, that an innocent customer should not suffer for any illegality or irregularity committed by the company's branch manager. The appeal was, therefore, dismissed.

Sahara then filed a revision petition before the National Commission, where it again tried to change its stand by contending it has discovered a document showing that Das had actually a loan of Rs 1 lakh and not of Rs 80,000. This conflicted with the stand taken earlier by Sahara, and was also contrary to the documents on record. It also contented that the dispute ought to be settled through arbitration as agreed between the company and Das.

The National Commission noted that the investor was supposed to get his passbook-cum-certificate updated, which had been done in the present case. However, it was the company which had failed to follow any prescribed system of accounting, and had behaved in a most irresponsible manner by attempting to disown the entries made by its own branch manager. Yet, the affidavit of the branch manager concerned had not been filed. The Commission noted even the proceedings before it were treated in a casual manner, which became evident as Bipin Chandra Patnaik had signed as branch manager at one place and as junior executive at another. The Commission said it was a pity the company was collecting money without any proper accounting system in place.

The Commission, accordingly, dismissed the revision petition with cost of Rs 50,000, of which half would be payable to Das and the balance to the Consumer Welfare Fund. The costs were to be paid within four weeks, and in case of delay, nine per cent interest would have to be paid thereon. [Judgement dated May 7, 2013, delivered by Rekha Gupta for the Bench comprising herself and V B Gupta.] The significance of this is that a company cannot avoid its liability by blaming its employees. A consumer can fight for his rights and get justice.

The writer is a consumer activist

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