1. The plaintiff is the appellant and the State of Madhya Pradesh (the defendant) is the respondent in this appeal. The suit out of which this appeal arises was filed by the plaintiff, the Bilaspur Central Co-operative Bank Ltd., against the State of Madhya Pradesh claiming Rs. 50,843-6-2 on the following facts :

2. At Pendra Road, in the Bilaspur district, the Central Co-operative Bank Ltd. maintains a branch. There being no arrangement for keeping the cash of the branch, a request was made to the Inspector-General of Police for permission to keep the cash box at the end of each day in the police station house malkhana at Pendra Road.

The Inspector GeneraI of Police gave his assent and every evening the cash box properly locked and sealed used to be deposited in the police station house malkhana, and a receipt thereof used to be obtained on a Dak Book. This went on from 1949 till 11th April 1950, when the cash box duly locked and sealed was deposited in the evening but was found missing the next morning. Subsequently, the box with its hasp broken was found in a field, but the contents of the box, were missing.

The police investigated the case of theft but without result, and in the end they returned the broken box and the lock to the Bank. The Bank, after serving a notice under Section 80 of the Code of Civil Procedure, brought the present suit for Rs. 46,946-7-0, which was the amount alleged to have been in the box when it was deposited, and Rs. 3,896-15-2, interest at 7 per cent per annum from 12-4-1950 till the date of suit by way of damages.

3. The trial Court held that the subordinate police officers were dishonest and that the defendant was not responsible for the consequences arising from the acts of the subordinates not in the course of employment or otherwise. In the result, the trial Court dismissed the suit of the plaintiff, and hence this appeal.

4. Before dealing with the points which have been urged in this appeal, it is necessary to refer fro the correspondence which ensued between the Bank and the Inspector-General of Police, and also the conditions under which the box used to be received. Ex. P. 5 (or Ex. D-2) is a letter containing the request of the Bank for permission to deposit the box in the police station, Pendra Road. After, giving the reasons why this permission was being sought, the Bank wrote as follows :

"Under the circumstances we request you to grant your permission to lodge our iron chest in the police station houses at Akaltara and Pendra Road. The cash balance of the branch office will be kept in this chest at the close of the office hours at 5 P.M. and brought the next day at 11 A.M. We hope vou will be kind enough to grant the permission as requested for and thus help the cause of co-operation The government has already granted permission for lodging our cash boxes in the Bilaspur Treasury and the Janjgir Sub-treasury."

The Inspector-General's permission granted on the above request reads as follows :

"The Bilaspur Central Co-operative Bank, Ltd., is permitted to deposit its cash chests in the Police Stations Akaltara and Pendra Road in the Bilaspur district provided the chests are properly locked and sealed, and on the clear understanding that the police can take no responsibility for the contents of the box as laid down in Police Regulations 697 and 698 in Part V, Chapter IV of the C. P. and Berar Police Regulations.

Sd/-Illegible A.I.C.

for I. G. of Police, C. P. and Berar.

5. On the 11th April 1950 the cash box was locked and sealed, and a paper describing the contents was pasted on it, and the box was duly delivered to the Head Constable of the thana, who-signed in token of receipt in a Dak Book (Ex. P-3). The entry reads :

"Cash box containing Rs. 46,946-7-0 (Rs. Forty six thousand nine hundred forty six and annas-seven) and duly locked and sealed."

It is submitted that on the next morning some of the doors of the thana which used to be locked every night were found open but not broken into. It is also admitted that no other property in the-malkhana was stolen that night and only this box was found missing.

It is also admitted that the police found the box in a field 230 yards from the malkhana, and that the lock was intact but the hasp had been broken and the contents removed. It is also admitted that on the night in question, according to the duty register, constable Khelanram was the sole person guarding the police station.

6. The defendant did not admit that the box contained Rs. 46,946-7-0 and pleaded that the contents of the box were not verified by the Police officers. There is no doubt that the box came in a sealed condition from the Bank to the police station house, though a slip of paper showing what it contained was pasted on the box and an endorsement to the same effect was also made in the Dak Book.

We see no reason, however, to doubt that the box did contain the amount. Ex. P. I is the cash book of the Bank, and Ex. P. 2 is the detailed book of accounts showing the amounts on hand from day to day. The evidence on the part of the plaintiff clearly establishes that this amount was put into the box, as was the usual custom for a long time, and the box was sent to the police thana with a clerk and a peon of the Bank.

This evidence is admissible: see paragraph 427. American Jurisprudence, Vol. 6 (Revised). We have, therefore, no difficulty in holding that the amount was in fact in the box, and indeed somebody knew that this large sum had been sent on this night to the thana; otherwise, the theft would not have taken place. The question, therefore, is about the degree of cure which the police had to take of this box and also the responsibility of the defendant for the acts of its employees. We accordingly frame the following questions for decision in this appeal :

(a) whether the police officers took the care enjoined on them by law, for the protection of the box entrusted to them for safe, keeping; and

(b) whether the State Government is liable for the acts of its employees in case negligence or conversion on their part is established.

7. The trial court held that the police officers were dishonest while taking care of the box and further that the posting of a single sentry with so much money in the Police Thana was not proper care as contemplated by the police Regulations themselves. The State Government challenges this finding find further relies upon the understanding on which the box was received, viz. that the police were not responsible for the contents of the box.

The State Government also avers that the deposit with the police was a gratuitous act and was-not for consideration. The State Government, therefore, denies its liability on this ground and also on the added ground that even if negligence be established the State Government is not responsible for the tortuous acts of its employees.

8. The first question to decide is whether there was any negligence or dishonesty on the part of the subprdinate police officers. Certain facts are admitted. The box was brought to the station house at 5 p.m. It was received by head constable Darbarilal; vide Ex. D-1. During the night Khelanram was assigned the duty of sleeping at the thana : vide Ex. D-2. Thus, there was only one person sleeping at the thana throughout the night.

9. Head constable Darbarilal was required to go to Bilaspur by the morning train, and Ex, D. 5 shows that he left at 2 a.m. According to constable Sheokumar (D. W. 4), he actually left at 2-45 or 3 a.m. Sheokumar had returned to the thana at 1 a.m. to find Darbarilal there. Darbarilal then asked him to serve a summons on one Kadu. Constable Sheokumar did that and returned after an hour with a tonga. According to him, the front door of the thana was closed, and they both returned to their quarters.

Head constable Darbarilal gave the keys of the thana to Sheokumar with instructions that they should be handed over to head constable Sunderlal. Sheokumar said that he had handed over the keys to head constable Sunderlal in the morning when constable Parmesttwardin and Sunderlal were going to the thana. Sheokumar could not say if the back door of the thana was shut or not. He, however, stated that Khelanram was found sleeping, and they did not wake him up or tell him to guard the station house.

10. According to Sub-Inspector A. R. Khan (D. W. 3), the news of the loss of the box was received in the morning at 7 a.m. Ex. D. 7 (certified copy of roznamcha sanha dated 11-4-1950) was recorded in the morning. It shows that the door of the guard room of the thana, the door of the thana and the door of the malkhana were open. No lock was forced open and no door broken down.

Even, the malkhana lock was opened with a key, and the lock and the key were left on the door : vide Ex. D-3. This is all that one gets from the evidence in the case. Of the other police constables and head constables, Sunderlal (who had the key), Ramkrishna and Panneshwardin were not examined. Head constable Darbarilal was said to be dead and Khelanram to have left service.

11. The picture of the duty of care exercised in respect of the box is simple to reconstruct. There is nothing to show that the doors of the thana were shut properly when it was left to the sole charge of Khelanram. The possession of the keys by Sunderlal is not accepted by him. The keys apparently remained with Sheokumar till the morning.

According to Police Regulation No. 628 they ought to have been with the Station House Officer. Khelanram apparently slept through the night. We do not know in what part of the thana he slept that night. It was ah April night, and it is more than likely that it was in the open or at least in the verandah. Police Regulation 632 lays down :

"It is neither necessary nor practicable to post a full guard night and day at smaller station-houses. Sentries should invariably be on duty when there are prisoners in the lock-up or, as should seldom happen, when there is an unusually large sum of money in the cash-chest. At other times it will suffice if a constable sleeps in the station-houses at night and is present during the day when the moharrir is absent."

It would appear from this that in view of the large sum of money, which though not in the police cash chest was in the box belonging to the Bank, a sentry should have been posted. Constable Khelanram was not posted as a sentry, but to sleep there: Police Regulation No. 626 provides as follows :

"During the day, leave of absence for a specified time may be granted to one-third of the men-off duty. The time of leaving the station-house, the leave granted and the time of return should be entered in the genera] diary. During the night, the guard on duty will sleep in the station-house and the rest of the men in their quarters."

It, therefore, shows that all the duty of care which; was taken was according to the strict letter of Regulation 626 to make one constable sleep at the station house with all the doors probably open. The extent of the duty of care must be gathered from the conduct of the persons in charge and the Regulations. It seems that neither Regulation 632 was followed nor was reasonable care even otherwise taken. The learned Judge has pointed out that the leek of the malkhana was opened with the proper key which was left in the lock.

According to the learned Judge this was a well-planned affair, and he suggested that some police officer or officers were involved in it. Even taking the most generous view of the facts as disclosed in the evidence, it cannot be gainsaid that the police officers in charge of the thana did not lock the malkhana or close the doors of the station house. Unless this generous construction is placed upon the evidence, one is driven to the conclusion that the thana must have been opened by someone possessing the keys.

12. The case, therefore, boils down only two aspects :

(1) That the subordinate police officers or some of them were dishonest and the theft at the malkhana took place either through their contrivance or with their help; and (2) that it took place due to gross negligence on their part in not shutting the doors of the thana and locking the malkhana, The dishonesty of the subordinate police officers is merely a guess on the part of the lower Court, but their negligence is fully established.

13. The contention that the bailment was gratuitous has no significance. The distinction between mandatum and depositum made by Holt, C.J: in Coggs v. Bernard, (1703) 3 Salk 11, was not accepted even in England and the consideration in the case of a gratuitous bailment was taken to be in the shape of the trust reposed in entrusting one's, valuables to the care' of another. This distinction lost all its importance by the time the Indian Contract Act came to be passed, and fortunately in the Contract Act the duty of care in the case of a bailee is uniform, whether it is gratuitous or for hire or for gain.

The distinction having disappeared, we must hold that the bailment, gratuitous as it was, laid a duty of care upon the police officers who had received the box from the Bank. The distinction between gross and simple negligence has also disappeared, and gross negligence is said to be negligence with a vituperative epithet.

14. It was contended, however, that the Inspector-General of Police had clearly indicated that the police officers would not be responsible for the contents of the box. But the Inspector-General of Police in the same memorandum said that the box should be securely locked and sealed, which meant that the police officers accepted the responsibility for a sealed box but did not concern themselves with its contents or their verification.

However, in the present case the box was bodily removed and when found the lock was intact but the hasp was broken. The responsibility of the police officers is not discharged by handing over the broken box, with its contents rifled, to the Bank.

The box was interfered with and was not delivered in the state in which it was received, and that being so the responsibility for the contents cannot be avoided by that kind of writing.

We accordingly hold that by accepting the bailment of the box the police officers must be deemed to be responsible for the security of the box as a whole. There are cases to show that such a condition is not meant to exonerate the bailee from the responsibility in respect of the contents. The respon-bility of the bailee, which the law requires remains, and that is to take such care of the goods bailed to him as a man of ordinary prudence would under similar circumstances take of his own goods of the same bulk, quality and value as the goods bailed.

After all, it was well understood that the box contained cash. It was being received for several months previous to this and it must have been known that the contents of the box were mentioned in a slip pasted on the lid. In these circumstances, the presence of that proviso in the letter of consent issued by the Inspector-General of Police when receiving the box for safe custody loses all its force and meaning.

15. This brings us to the question whether a master is responsible for the acts of his dishonest or negligent servant. At one time the law was that the master was responsible for the honesty and care of his servants only if they were acting during the course of employment. This rule of law taken from torts was made applicable to cases of bailment and conversion by a dishonest servant was held not to impose any liability upon the master.

In the same way, want of care on the part of a servant was treated as a mitigating circumstance for the master. The law, in our opinion, should not be stated in such broad terms. In our opinion, this would put a premium upon the employment of dishonest and incompetent servants. The law should be that the duty of care which the master undertakes includes in itself the duty to sec that honest and competent servants are employed.

It has been stated in several American cases, which have our respectful concurrence and which are summarised in the Sixth Volume of American Jurisprudence (Revised Edition). Bailments, Para-graph 224, that the reason usually given for this rule is that the duty of safe return is one imposed by bailee's contract, from which he cannot, by any conduct of his own alone, much less by shifting, the responsibility to his servant, release himself, and that the liability in such a case grows out of the fact that tie bailee has failed to do the thing he agreed to do, rather than, as in tort, out of the theory that the servant is acting for the master. The learned authors then stated the law as follows:

Any other rule, it is said, would have a tendency to tempt a bailee to lessen his personal liability for damages by delegating to irresponsible servants the care of the property. The rule is also supported by some authorities which take the view that where the servant is entrusted with the custody of the thing bailed by the bailee, the scope of his employment includes fulfilment of the duties owned to the bailor by the bailee under the contract of bailment, and for conduct violative thereof, his master is liable under the rule of respondent superior.

In another part of the book (paragraph 265, page 371) the learned authors say:

Furthermore, if the bailee, through such an agent or servant, undertakes to perform some absolute duty which, he assumed by the bailment, he is generally held liable upon his contractual obligation for any loss or injury growing out of a violation of such duty, notwithstanding it is brought about by some unauthorized act of the employee, nor otherwise within the scope of the employment, and though the bailee himself may have exercised due diligence in the selection of his agent and in other respects.

16. We are of the opinion that too narrowing down of the duty of care on the part of the bailee by allowing him to plead the negligence or dishonesty of his servant is liable to make the operation of Section 151 of the Contract Act completely nugatory in such type of cases. We are clearly of the opinion that the old rule which brought the test of the law of torts in hire agreements, should not be made applicable to all cases of bailment, particularly of valuables.

In such cases the duty of the employer includes the duty to select honest and eompelcnt servants, and the duty of the servant includes, in the course of his employment, the duty to look after the property bailed to the master. We state this as the law applicable to the present case. We say again that there is nothing beyond a strong suspicion to show that the subordinate police officers were dishonest and privy to the theft of the box. The investigation by the police did not result in any such discovery. Negligence, however, was patent.

17. We accordingly hold that in the case of a master and servant, where the master is the bailee, and the servant is either dishonest or negligent, the master must be held liable, if the negligence of the servant is established and the master can be shown to have employed dishonest servants or not supervised their actions.

18. This brings us to the question whether the State Government is liable for the negligence of its servants and whether the State Government can be held to be bound by what the Inspector-General of Police undertook. We must state once again that the entrustment had a foundation in contract, in which the consideration is to be found in the trust reposed in the Government. We state again that we do not find, as was done in the court below, that the subordinate police officers were guilty of dishonesty or conversion or theft. We proceed on the negligence of the subordinates. The degree of care needed is laid down in Section 151 of the Indian Contract Act.

We are satisfied that there was gross negligence in carrying out the bailment. The Inspector-General of Police was acting within his powers to grant the permission: vide Police Regulations 697 and 698. The Co-operative Bank is a Government-supervised Bank and enjoys a character which is more akin to a Government Department than to a purely private Bank. The request of the Bank was joined by a request by the Registrar, Co-operative Societies, C.P, and Benr. We hold that the Inspector-General of Police acted under the above Regulations. We, therefore, hold also that the Government was bound by the action of the Inspector-General of Police.

19. The result, therefore, is that the Government was bound to take care of the box like any other bailee. The fact that there was theft is of no consequence, because the ordinary care to look the malkhana and to close the doors was not adopted. There was no posting of a sentry, and only one constable was asked to sleep at the thana, which he probably did only too well. In these circumstances, we hold that the Bank was entitled to get back what it had lost, on strict proof of the con-tents of the box.

20. The appeal, is therefore, allowed. The decree of the trial Court is set aside, and in its place the claim for Rs. 46,946-7-0 is decreed. We disallow interest during the pendency of the suit, but future interest from the date of our decree shall be payable till realization at 4 per cent, per annum simple. The costs, both here and in the Court be low, shall be borne by the respondent-defendant.