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“LIABILITY ARISING OUT OF SPECIAL

RELATIONSHIPS: A CRITICAL ANALYSIS”

Submitted by

KARAN MISHRA
Division- E. PRN-18010223084 Batch-2018-2023

OF
Symbiosis Law School, NOIDA
(Symbiosis International (Deemed
University))PUNE
In
August 2018
Under The Guidance Of

DR.C.J. RAWANDALE,
MR.ANKUR SHARMA

(Symbiosis Law School, NOIDA)


“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
A CRITICAL ANALYSIS”

Appendix ‘B’ – Certificate

CERTIFICATE

The project entitled “LIABILITY ARISING OUT OF SPECIAL


RELATIONSHIPS: A CRITICAL ANALYSIS” submitted to the
Symbiosis Law School, NOIDA for Law of Torts, MV Accident and
Consumer Protection Laws I as part of Internal assessment is
based on my original work carried out under the guidance of DR.
C.J. Rawandale and Mr Ankur Sharma from July to October. The
research work has not been submitted elsewhere for the award of
any degree. The material borrowed from other sources and
incorporated in the thesis has been duly acknowledged. I
understand that I myself could be held responsible and accountable
for plagiarism, if any, detected later on.

Signature of the candidate

Date: 28/08/2018

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
A CRITICAL ANALYSIS”

ACKNOWLEDGEMENT

I would like to express my exceptional thanks of thankfulness


to our Director, Dr C.J. Rawandale who gave me the splendid
opportunity to do this incredible errand that moreover helped me in
learning research frameworks and captivating focuses. Also, I would
like to extend my gratefulness to our Project Guide, Mr. Ankur
Sharma who helped me in gathering the assignment.

Additionally, I would like to thank my seniors who helped me


in settling this errand within the stipulated time. In addition, I
would like to thank the staff for utmost cooperation, who also gave
the approval to use all required equipment and the vital materials to
complete this project.

Karan Mishra

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
A CRITICAL ANALYSIS”

INDEX

1. Bibliography
2. Introduction: Liability Arising Out of Special
Relationships
3. Vicarious Liability: An introduction
4. Types of Relationships
4.1 Master-Servant
4.2 Principle-Agent
4.3 Fiduciary Relationship
5 Damages
5.1 Punitive damages
6 Conclusion

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Bibliography
1. Ratanlal and Dhirajlal,”The law of torts”, LexisNexis
Butterworths Wadhwa Nagpur, 2010

2. Dr. J.N Pandey (2009). Law of Torts. Central Law Publications.

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
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The List of Cases

1)State Bank Of India vs Shyama Devi on 5 May,


1978
Equivalent citations: 1978 AIR 1263, 1978 SCR
(3)1009

2)C.P. Sreekumar (Dr.), MS (Ortho) v. S.


Ramanujam IV (2006) CPJ 365 NC

3)LAUNCHBURY v. MORGANS]1972 March 20, 21,


22;
May 9 Lord Wilberforce, Viscount Dilhorne, Lord
Pearson, Lord Cross of Chelsea and Lord
Salmon

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
A CRITICAL ANALYSIS”

INTRODUCTION

There are certain relationships that are backed by a legal authority


in terms of a statute. These relationships are: -

1) Employer-Employee
2) Master-Servant
3) Principle-Agent

These relationships have a lawful essence in them. If there is any


fault on the part of the Employee/Servant/Agent then there is
sufficient course of action that can be taken by the third party in
order to recover for damages from the master or servant or
conjointly.

Liability is a burden, it falls on a person being legally responsible for


an act or omission. The law may impose a duty to act based on the
relationship between the parties. These liabilities can occur in many
cases few of the examples being:

 Breach of duty can lead to liability for the person who is so


breaching the duty
 Liabilities are generally pecuniary in nature.

A master is generally liable for all the acts of the servant done
within the course of employment, same goes for any other kinds of
similar relationships.

Parties undertaking such relationships usually have assumed


responsibility for the claimant’s safety or well- being but some such
assumption or relationship distinguishes the defendant from a mere
stranger.

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The master is usually liable for the torts committed by the servant
during the course of employment because it has a historic
significance and also there is a maxim that rightly states
Respondeat Superior and qui facit per alum facit per se, it is
expected of a master to be in a better position for paying the
damages than the servant. There ought to be a remedy against
someone who can pay the damages is the public policy which makes
an obligation for the master to be held liable instead of the servant.

Liabilities arising out of these relationships are pecuniary in nature


and a third party who has been so legally injured by the servant can
sue the master and claim damages and furthermore if the master
feels like the act so done by the servant was done despite explicit
instructions then the master can sue the servant and recover the
same amount.

Damages

“Damage” means harm or a loss suffered by a person as a result of


some wrongful act of other. The sum of money awarded by the
court to compensate “damage” is called “damages”.1 Damages are
the principal remedy in law of torts. Damages can be categorized
into Compensatory, Restitutionary, Exemplary or Punitive,
Aggravated, Nominal and Contemptuous.

Punitive or Exemplary damages

Punitive damages are awarded for the purpose of punishing a


person so that a person becomes cautious of his conduct.

1
Ratanlal and Dhirajlal,”The law of torts”, LexisNexis Butterworths Wadhwa Nagpur, 2010, Pg.no. 13

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
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Punitive damages are concerned with the conduct of the defendant


rather than the damage suffered by the claimant. 2 The notion of
punitive damages gives a deterrent effect

 admitted at common law, and contains an element of


restitutionary damages.

Exemplary damages also sets an example for deterring the future


acts against the law like in the case Stella Liebeck v. McDonald's
Restaurants, P.T.S., Inc. and McDonald's International, Inc3 plaintiff
was awarded $640,000 for the injury.

Vicarious Liability

This principle states that the employer is liable for the tortious acts
of the employee even though it is beyond the authority but provided
that it is done under the course of employment.

Master is hence liable for the acts of the servant since the master is
considered to be in a better position than the servant. Thus, making
it a little appropriate for the master to discharge the liabilities owed
to the third party.

Research Questions

 How the Concept of Punitive damages ensure


deterrance?

 How law helps in maintaining Status Quo


after the breach of the duties in these
relationship?

2 Paula Gilikar and Silas Beckwith, “Tort”


3 1994 Extra LEXIS 23 (Bernalillo County, N.M. Dist. Ct. 1994), 1995 WL 360309 (Bernalillo
County N.M. Dist. Ct. 1994),

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
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“State Bank Of India vs Shyama Devi on 5


May, 1978
Equivalent citations: 1978 AIR 1263, 1978
SCR (3)1009”

STATEMENT OF FACTS

The respondent opened up a savings account in the Imperial Bank


of India where KD Shukla worked and one of the reasons for the
respondent to open the account in this bank was due to the fact
that KD Shukla was their neighbor as well as good friend. Further
things so happened: -

 There was an informal arrangement set between the two


parties that the former will deposit the money in the bank
given by the respondent. K.D Shukla duly deposited the
amount partially and embezzled the rest.
 On suspicion about the deposits, respondent’s husband
wrote a letter to the bank for an affirmative feedback
regarding the deposits so being made into the account.
 The bank acknowledged the part payment made but was
inadvertent about the other part payment.

ISSUES

 Whether KD Shukla’s act of embezzling the money fall


under the course of employment of the bank?
 If yes, then to what extent is the bank responsible for the
acts of the employee?

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
A CRITICAL ANALYSIS”

RULE

Vicarious liability- Legal principle which governs the liability of an


employer for the loss caused to a third party or a customer through
the misdemeanor or negligence on the part of the employee, then
this principle shall follow.

Here, in this case, KD Shukla is the employee of the bank and any
tortious act done by the employee shall hold the employer
accountable

Analysis

Shyama Devi, the respondent opened up the bank account in one


such banks where their neighbour and friend worked. The
respondent gave him the money to be deposited into the bank
every now and then. One day upon suspicion, she wrote a letter to
the bank seeking an affirmative feedback regarding the same, much
to her despair she comes to know that the money has been
embezzled with and their neighbour is no more an employee of the
bank. KD Shukla the employee of the bank who carried and so
deposited the money went absconding, as being the employee of
the bank, the bank should be held liable for the wrongs committed
by the employee during the course of employment. Being the
employee of the bank, the master i.e the bank was held vicariously
liable for the damages caused to the respondent.

CONCLUSION

It was made that if KD Shukla or had it been any other employee of


the bank forging entries in the pass book, the plaintiff could not be
made to suffer and that the bank would be held liable for such acts

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
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so committed by their employees in the course of employment. It is


contented that in the face of the entries in the pass book, the
burden had shifted on the bank to show, how it was not liable to
make good the loss. The vicarious liability of an employer for the
loss caused to a customer through misdemeanour or negligence of
an employee. It was held by the court that the bank be held liable
for the payment so embezzled along with the 6% interest on that
siphoned money be made to the respondent.

“C.P. Sreekumar (Dr.), MS (Ortho) v. S.


Ramanujam IV (2006) CPJ 365 NC”

STATEMENT OF FACTS

The Complainant was riding a bike one morning and he was


suddenly hit by a motor bike and he instantly fell from his cycle
resulting in injuries. The complainant got himself admitted to the
opposite party hospital.

 After taking the x-ray, it was diagnosed that he has


sustained a hairline fracture in the neck. The hospital had
operated upon the patient very lightly without due care
since it was just a hairline fracture to them.
 The opposite party decided to take an x-ray and during the
transit the shifting of the patient who was not to be
subjected to any shake or jerk in the body, the staff, while
shifting the patient to the x-ray from first floor to the
ground, subjected him to rough handling which
consequently led to more widening of the fracture
 The opposite party conducted a Hemi-Arthroplasty surgery
by removing the original bone.
 While rolling the appellant with plaster of Paris bandage in
the affected leg from bed to hand stretcher the fracture got
worse.

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“LIABILITY ARISING OUT OF SPECIAL RELATIONSHIPS:
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ISSUES

1)Whether the Hospital staff were negligent in


their conduct?
2)If yes, then to what extent can the liability be
fixed?

Rule
Negligence is the omission to do an act which a man of ordinary
prudence wouldn’t do under the similar circumstances. It is a legal
duty to take care which results in damages occurring to the other
party

Essentials of Negligence

 A legal duty to take care


 Breach of said duty
 Damage to the plaintiff as a result of such breach

Analysis
In this case, the height of negligence has been reflected upon the
part of Doctor resulting in permanent disability of a young man of
42 years limiting the rest of his life on crutches. The plaintiff was
initially admitted for a hairline fracture but due to the negligence on
the part of the Doctor and the staff the situation worsened and a
Hemi-Arthroplasty was to be performed which led to removal of the
original bone. There were many instances of negligence

 Rolling the patient while he was on plaster of paris


bandage in the wounded leg from bed to the stretcher.
 During transit he suffered many jerks due to rough
handling While carrying him on the stretcher through the
stair case, he suffered wide jerks due to rough handling
 While shifting him from hand stretcher to X-ray table etc.
The complainant contended that the weight of the leg
placed on the other wounded one widened the fracture
 Ward boy Elango and the other three construction workers
carried the patient and because to their brutally negligent

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conduct the patient’s leg got twisted and cried tears with
unbearable pain.

CONCLUSION
The tragic end to this case could have been avoided if the Doctor
and staff had been careful enough in their conduct. They were duty
bound to take utmost care which they failed to, resulting in severe
damages. The hairline fracture could have been easily fixed had not
been the Doctor and the staff negligent. Due to the Negligence and
brutal ways of carrying out the operations at the hospital, severe
surgery was required to be operated upon the plaintiff which
resulted in permanent loss of a bone in the leg and the plaintiff be
forever left to live on crutches. In this pathetic situation a healthy
bank employee for a mere hairline fracture was subjected to a total
hip replacement. He has become totally disabled and has to walk on
crutches for life time only due to the negligent conduct which
exacerbated the situation. The plaintiff provided adequate texts to
prove the medical negligence on the part of the doctor and also for
the deficiency of service. In the view of the fact that tremendous
mental agony was resultant, the plaintiff be adequately
compensated. The court awarded huge compensation to the plaintiff
in order to cover past, present and future expenses.

“LAUNCHBURY v. MORGANS]1972 March


20, 21, 22;
May 9 Lord Wilberforce, Viscount
Dilhorne, Lord Pearson, Lord Cross of
Chelsea and Lord Salmon”

STATEMENT OF FACTS

A motor car belonged to the husband and the wife both and was
insured in the name of the wife but regarded as “Our Car”

The husband used it to go places especially to the workplace and


the wife used to go for shopping at the weekends. The husband had
informed the wife if at all he is unable to drive due to the fact of
being drunk, then his sober friend will drive him to home or else

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he’ll telephone the wife to come and pick him up as the case may
be. One day this situation arose and the husband had asked his
friend C to drive him home. They visited number of public places,
where C has accompanied three respondents into the car and they
all went along the way. While in the way due to C’s negligent
driving, an accident occurred in which the husband and the C were
killed and the rest injured. The respondents brought a suit against
Wife of the husband in their personal capacity as well as her being
the administratrix of the husband’s estate.

ISSUES

1) Whether Wife was liable under the doctrine of


vicarious liability?
2) Whether C was the wife’s agent during the course of
action?

RULE

Doctrine of Vicarious liability has been followed here, since there


seems like a Principle-Agent relationship though not fully
ascertained but prima facie it is.

Vicarious liability refers to a situation where someone is held


accountable for the actions or omissions of the other. In the
workplace aspect, an employer can be held accountable for the acts
or omissions of its employees, provided it can be shown that they
took place in the course of their employment.

ANALYSIS

Here, in this case, the respondents cannot hold the wife liable for
the act of C, since C was alone negligent in doing the task. C drove
all the three respondents along with the husband to a place
opposite to the house of the husband hence acting out of the task

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he was so supposed to carry out, making him liable for his acts
alone. There was a duty of care on the part of C which was owed to
the fellow passengers and the said duty was so breached resulting
in damages to each party.

CONCLUSION

The preposition “our car” has no authority nor any reason in law
why a family car should be in any special position. If the preposition
were to be applied then all the members of the family will be held
liable whenever, wherever and whoever drove and resulted in
damage to the third party. There is no question of the care having
been used for the appellant’s purposes since the car was supposed
to be dropping the husband at his home, and that too was not
taking place during that time rather the car was moving away from
the place where they were meant to go. The court

There are things that were pointed out in this case on which the
vicarious liability couldn’t be held against the wife: -

 Mere permission to drive is not enough


 The owner must have an interest or concern in the use to
which the car is being put
 That interest need not be exclusive in nature
 Whether or not the owner has a sufficient interest is a
question of fact.

It was held that the wife Mrs. Morgan was by law required to insure
against the claims by the third parties but not against the claims
made by the passengers, and whether or not she insured against
such claims is irrelevant to the question whether she is vicariously
liable for C’s negligence. If she was not insured against claims by
passengers, the she would, if liable, have, so far as she could, to
meet the damages out of her own pocket.

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CONCLUSION

The law of torts has a huge ambit and still remains uncodified. The
main principle of law of torts is to provide compensation for the
damages suffered by a party. The law of torts has also evolved over
a period of time, there are certain concepts that have been
introduced by the judges of the common law system as well as the
judges in India. The concept of Punitive damages has also been
introduced, it is one such concept that provides for deterrence in
the conduct of the person who has so breached the legal right of the
other.

The law of torts provides for compensation that helps maintain the
status quo if not exactly what was in the first place but then will at
least work as a substitute. Compensation is essential in order to
cover expenses of the past, present and future and usually the torts
infringed are of such nature that a compensation can bring status
quo of the party whose right was so infringed.

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