the customer will be treated as settlement of the account and acknowledgement of its correctness to date. The Bank will not be responsible for any loss arising from the neglect of these precautions.” (Bank of Baroda Current Account Rule) Similarly, the State Bank of India requires that— “The entries should be carefully examined by the constituent, and, if any errors or omissions are discovered,the attention of the Bank must be drawn to them immediately. The Bank will not be responsible for any lossarising from neglect of this precaution.” It is thus apparent that the current account rules, which form the basis of agreement between the banker and thecustomer, impose a duty on the customer to carefully examine the entries. If he is negligent in performing thisduty and thereby some loss is caused, the banker shall not be liable for the same. Effect of False Entry in the Pass Book The liability of a banker to his customer in case his employee commits an act of embezzlement and makes falseentries in the Pass Book was considered by the Supreme Court in State Bank of India vs. Shyama Devi (A.I.R.1978 S.C. 1263) . The Supreme Court laid down the legal principle which governs liability of an employer for theloss caused to a customer through the misdemeanor or negligence of an employee as follows: “The employer is not liable for the act of the servant if the cause of the loss or damage arose without his actual fault or privity or without the fault or neglect of his agent or servant in the course of his employment. Precautions to be taken by the Banker and the Customer 1. The Pass Book must be sent by the customer to the bank periodically and regularly for recording thenecessary entries, so that mistakes, if any, may be detected by the customer soon thereafter. ReserveBank has advised the banks to issue a simple receipt to the tenderer of savings bank Pass Book if it isretained by the Bank for updating. 2. The Pass Book must be initialed by the accountant or other responsible officer of the Bank, who mustascertain the accuracy of the balance on the date of recording the entries, otherwise the customer will beentitled to act upon the same, if it is wrongly stated. 3. The customer must tally the entries with his own record—either the account books or he counterfoils ofpay-in-slips and cheques, etc. If any accuracy is found, the customer must inform the bank immediatelyto get the mistake rectified. 4. While sending the Pass Book to the customer, the banker should take steps to ensure the secrecy of itscontents. The Pass Book must be sent in a closed cover. GARNISHEE ORDER AND ATTACHMENT ORDER Garnishee Order
The obligation of a banker to honour his customer’s cheques is extinguished on receipt of an order of the Court,known as the Garnishee order, issued under Order 21, Rule 46 of the code of Civil Procedure, 1908. If a debtorfails to pay the debt owed by to his creditor, the latter may apply to the Court for the issue of a Garnishee Order onthe banker of his debtor. Such order
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- Fall '19