A customer is estopped from challenging debit entries in a bank statement if the bank statements taken along with the balance confirmation slip amount to accounts stated and acknowledged and the customer neglected to observe ordinary business precautions in scrutinising the bank statements and balance confirmation slips.

( 1 ) THIS suit by the plaintiff M/s. P. Roy Company for the recovery of Rs. 62,708 has been instituted in the following circumstances. The plaintiff, a registered partnership firm and of which Shri Premjus Roy is a partner (now dead) dealt in purchase and sale of shares. The plaintiff had overdraft accounts Nos. 6664 and 6665 and a current account with the Punjab National Bank, Paharganj Branch, New Delhi. The plaintiff had overdraft facilities in the account No. 6664 to the tune of Rs. 52,000 and in the second account No. 6665 to the extent of Rs. 48,000. The account No. 6664 was mainly operated upon by Premjus Roy. Defendant No. 2 Ram Awtar Aggarwal was an accountant in the plaintiff firm and he had worked with the plaintiff from about 1968 till early April 1972. The case of the plaintiff is that in April 1972, defendant No. 2 went on leave and in early May 1972 he wrote to the plaintiff that he would not rejoin the service and this created suspicion in their mind and on checking the records, they found cheque books and pass-books etc. missing and they obtained from the bank duplicate pass books and on checking the accounts they found that Rs. 57,249. 55 had been embazzled by forging the signature of Premjus Roy on cheques and advices on the basis of which bank drafts had been obtained, details of which ate given in annexure a to the plaint. The plaintiff alleged that defendant No. 1 had debited their accounts on the basis of cheques and advices without any mandate from the plaintiff and, therefore, the bank is liable to refund the amount along with interest illegally debited to the account of the plaintiff. The plaintiff further claimed interest at the rate of 12 percent per annum from 16th November 1972 until the amount claimed is paid.

( 2 ) DEFENDANT No. 1 contested the suit and pleaded that the cheques and advices on the basis of which the alleged debits, were made in the account of the plaintiff, are genuine and the debits were correctly made. In the additional pleas the defendant No. 1 submitted that according to the practice between plaintiff firm and the defendant No. 1/batik s Paharganj Branch, statements of accounts concerning the over-draft account No. 6664 were supplied to the plaintiff periodically and the plaintiff never raised any objection about their correctness and further that the plaintiff had confirmed correctness of the accounts for the period upto 30th June 1971 and 3lst December 1971 Vide the letters of confirmation dated 1st August 1971 and 15th February 1972 (Exts. D. 1 and D. 2) and further that on 1st August 1972, Premjus Roy, a partner of the plaintiff firm acting on behalf of the firm had vide the letter dated 1st August 1972 to the Manager of the defendant No. 1/bank s Paharganj Branch closed the over draft account Nos. 6664 and 6665 after paying the amount of Rs. 49,497. 04 which was outstanding against the plaintiff and taken back the securities pledged with the bank. and that the aforesaid acts and omissions on the part of the plaintiff amount to admission and acknowledgement of the accounts and the plaintiff is estopped from challenging the validity and correctness of the debit entries.

( 3 ) THE plaintiff in its replication re-asserted that the cheques and advices in dispute purporting to have been issued by the plaintiff firm were not genuine; and that the signatures of Premjus Roy on the advices for draft and cheques were forged signatures. The plaintiff admitted the contents of para 12 of the written statement but contended that the forgeries could not be detected on comparision of the bank statements with the counter-foils of the cheque books and copies of the letters of advice and that they were only found out when the original cheques and letters of advice were seen.

( 4 ) THE plaintiff further admitted that on 1st August 1972 it had closed the over-draft accounts after paying the balance amount of Rs. 49,497. 04 but contended that after coming to know of the