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Contract Act (IX of 1872), S. 238-Principal and Agent ­Treasury Contractor employed on basis of a contract of guarantee ­Defalcation of amount by contractor's agent and original contract of guarantee removed from record-Government, in suit for recovery of amount, producing letters of contractor spelling out terms and conditions of such contract-High Court concurring in finding of trial Court that case was established under S. 238 and decreeing suit-No scope, held, left for interference by Supreme Court. Maqbul Ahmad Sheikh, Advocate Supreme Court instructed by Abdul Karim Sheikh, Attorney for Petitioner. Nemo for Respondents. Dates of hearing : 2nd and 3rd March 1970. ORDER MUHAMMAD YAQUB ALI, J.----This petition for special leave to appeal is concluded by concurrent findings of fact. Ijaz Ahmad an employee of the petitioner, defalcated Rs. 2,43,000 from the Kohat Treasury. Out of the sum Rs. 1,70,290 were recovered and for the balance amount the Government filed a suit on the basis of the contract of guarantee entered into by the petitioner at the time of his appointment as Treasury Contractor. The petitioner denied having entered into any such contract and pleaded inter alia that his liability, if any, was limited to Rs. 30,000. It was further claimed that since the Treasury Officer had failed to perform the duties imposed on him by the Rules intended to ensure against defalcation, the petitioner was not liable to reimburse the Government. Lastly, it was contended that defalcation, if any, did not take place in the course of the business assigned to Ijaz Ahmad, as employee of the petitioner, to attract the vicarious liability prescribed for by section 238 of the Contract Act. In the absence of the original contract of guarantee which appeared to have been removed from the record, the trial Judge allowed the Government to lead secondary evidence of its…

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