In Iiepitigalla Rubber Estates, Ltd. v. The National Bank of India, Ltd. (1909, 2 K.B.1010), with reference to the point that when a pass book is taken out of the bank by a customer or some clerk of his, and is returned without objection there is a settled account between the bank and the customer by which both are bound, Mr. Justice Bray said : " I know of no authority in this country for this proposition." He further said, in commenting upon another case, that it would be absurd to " hold that the taking out of the pass book and its return consti tuted a settled account. It would mean this —that a secretary of a company by going to the bank for his own purposes in order to prevent the discovery of a fraud, and with out knowledge on the part of any of the directors, and getting the pass book (with a pencil entry in it of the balance) can bind the company for all purposes." A customer, however, ‘vill not be able successfully to object to the bank charges in his pass book if they are similar to those of previous half-years to which he never raised any objection when returning his pass book.
By 24 & 25 Viet. c. 98, Section 23, a false entry in a pass book with intent to defraud is forgery of an accountable receipt. And if a banker allows any entry in a company's pass book to be made by an official of the company, in order to mislead an auditor in the examination of the company's account, the banker may be held liable for any loss which the company may sustain.
Although the pass book has continued practically in its present form for a century, Sir John R. Paget states that " the present position of the pass book is perhaps the most unsatisfactory thing in the whole region of English banking law." In view of the various unsatisfactory decisions from a banker's point of view and the uncertainty which, in so many ways, attaches to the entries in a pass book, the importance of having the book carefully and correctly written up cannot be too strongly insisted upon. A manager should give particular attention to pass books which h .ve not been brought in to the bank for some time, and endeavour to obtain them for the purpose of being written up ; and where pass books arc allowed by customers to remain in the bank for a long period, it is advisable to hand them out as opportunity offers. A manager should aim at having as free a circulation of pass books as possible.
It may be of historical interest to mention that before pass books were introduced, it was the practice for a customer to come to the bank and personally examine his own account in the ledger, whereupon he signed his name under the withdrawal entries, while the banker certified the payments-in in a similar way.