Negligence in account management leading to forgery liability can absolve the bank from responsibility under amendments to the Bills of Exchange Act.

The Claim

[1] Messrs Kumar Jaspal Quah & Aishah (suing as a firm), the respondent in this appeal, initiated a civil suit against Public Bank Berhad, Account No 3077927830 (the account) on 9 September 2008 the sums of RM10,000.00 pursuant to cheque no 259116 (marked as Q1 in DW1's Signature Verification Report dated 20 December 2012) and RM102,000.00 in cheque no 259117 (marked as Q2 in the above report) both dated 4 September 2008 (the cheques) and that consequently prays for the said sums to be paid to the respondent. The respondent, in addition, apart from claiming for costs, also claimed interest at 8% per annum from 9 September 2008 or such date when the appellant wrongfully debited the said sums from the account until date of judgment and thereafter further interest calculated at 4% until full payment.

[2] The appeal in the present instance has been brought by the appellant in light of the High Court's decision in allowing the respondent's claim against the appellant. We heard counsel for both parties and at the conclusion of the arguments allowed the appeal.

Summary Of Material Facts

[3] Before we embark upon a consideration of the merits of, and the reasons for allowing the appeal, it would be desirable to lay down some of the material facts. The respondent at the relevant time was the holder of the account with the appellant that was maintained at the latter's Jalan Raja Chulan branch. At that point of time, Dato' Vijay Kumar s/o Muthusamy Natarajan (PW1) who was the consultant of the respondent, was the signatory of the account. PW1 was occupying a smaller office of the respondent at Promet along with a sole accounts clerk named Sanesh Kumari, Diana Chee who was his personal assistant and a couple of other staff that was separate from the main office of the respondent at Midvalley where the partners of the respondent and other accounts personnel were situated.

[4] The circumstances which ultimately culminated in the respondent's claim against the appellant began with PW1's trip to Australia. During his absence, the cheque book and the combination to the safe as well as all the accounts files were left in the custody of Sanesh Kumari. As events turned out, the cheques were presented to the appellant's branch on 9 September 2008. The appellant honoured and paid the cheques for the total sum of RM112,000.00 purportedly drawn on the account by PW1 as the signatory with the cheque for the sum of RM10,000.00 payable to Tamilanpan a/l Chelliah and the cheque for the sum of RM102,000.00 payable to Sanesh Kumari. PW1, upon his return from Australia, discovered that the entire accounts room gutted and all the files and jewellery that were in the safe removed. Sanesh Kumari had vanished. The respondent discovered the wrongful payments from the account on 7 October 2008 when it received the Statement of Account for the month of September.

[5] The respondent subsequently, by a letter dated 7 October 2008 sent to the appellant, alleged that the payments for the cheques for the total sum of RM112,000.00 were not authorised by it claiming that the appellant had wrongly debited the sum from the account and that the signature appearing on the cheques were forged or had been placed without the authority of the respondent.

Defence

[6] The appellant's defence essentially, was that the signatures on the cheques were not forged, and even if they were, the respondent negligently contributed to the forgery. Briefly, PW1 at the relevant time was the only person authorised by the respondent to sign all cheques issued from the account based on a letter of instruction