Mr. 'X' an employee of ABC Ltd, who visits the Bank frequently for deposits and payments, withdrew a sum of ₹ 1 lakh on 16.5.2024. On 17.5.2024 Mr. 'D', director of the Company comes to the bank and informs that the empl

There is no doubt that Mr. 'X' is the known agent of the company for making deposits, withdrawing money etc. However, it should be remembered that the company is the Bank's customer and the Bank can only pay as per the 'mandate' of the company. There is forgery in the signature which means that there is no mandate to pay. The bank is liable to the company. The bank would have been put on guard if the company had advised about his removal from service earlier. However, the omission does not affect the legal position. The bank's stand that the amount was small and that it was paid in good faith is not tenable. The signature is forged and the bank is liable.