X appointed Y as his agent to operate his account and route business transactions through Y’s personal account also. Y misappropriated the proceeds of a cheque in the name of X but deposited them in his personal account. X sends notice to the bank for negligence and conversion.

The bank is liable for the conversion as Y has done something that bank should not have apparently.

The bank is liable since it is a case of conversion.

The bank is not liable because X had given specific authority to Y to use his personal account also.

The bank is not liable because for agent’s action, the principal is liable.