Collettes Limited v. Bank of Ceylon – sllr 1984 volume 2 page 253

In the case between Collettes Limited (plaintiff) and Bank of Ceylon (defendant), the court addressed the liability of a bank for losses resulting from a prolonged fraud orchestrated by the plaintiff’s sales manager, involving diversion and misappropriation of cheques and the falsification of bank statements. It was held that the bank was not liable for the losses sustained by Collettes Limited, as the bank neither facilitated nor was complicit in the fraudulent acts of the plaintiff’s employee, and that the burden of proof regarding the mode of statement delivery and bank procedures fell on the plaintiff, which was not discharged. The principle reaffirmed was that a principal (such as a bank) will not be held responsible for the acts of employees outside the scope of their employment, nor