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 false entries in the Pass Book was considered by the Supreme Court in State Bank of India v. Shyama Devi (AIR 1978 S.C. 1263) . The Supreme Court laid down the legal principle which governs liability of an employer for the loss 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.