Legal Question in Business Law in India

The chief accounts officer of AB Insurance Company, who was in service with the company for over 15 years, was the custodian of the cheque books. He has forged the signature of the managing director on 50 cheques and misappropriated a total amount of Rs.15 lakhs during a period of four years. On discovery of the forgery, the company wanted the bank to recredit the account with the amount in question. The bank refused to comply with the request and took the following defense:

(i) Even if the cheque were forged, the company has acquiesced to the payment.

(ii) The company was stopped from its claim because it had not objected to the payments which were brought to its notice through monthly statements and half yearly account.

(iii) The company was stopped from its claim since it was negligent in entrusting the custody of the cheque books to the accounts officer leading to contributory negligence.

(iv) The suit was time barred since the company had not objected to the payment for a period of four years.

- In view of the above defense taken by the bank, the company has proceeded against the bank and the chief accounts officer and the issue is whether the suit is maintainable.

TASK 1

Introduction of the subject matter being discussed and the principle enunciated in the Law.

TASK 2

Enumerate the facts of the decided case on the point.

TASK 3

Explain the decision pronounced by the Court of Law in each of the decided cases including some of the recent cases decided by Supreme Court/High Court.

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