The principle of estoppel prevents a party from denying the validity of a signature when their conduct leads others to reasonably rely on that signature, despite allegations of forgery.

[1] Majuikan Sdn Bhd ("Majuikan"), the appellant in this appeal, was the 2nd defendant in the court below. Barclays Bank Plc ("Barclays"), the respondent, was the plaintiff. Majuikan is a wholly owned subsidiary of Lembaga Kemajuan Ikan Malaysia ("LKIM"), a Malaysian statutory body. Barclays is a bank registered in England.

[2] The 1st defendant, Malaysian Sea Best Sdn Bhd ("Malaysian Sea Best"), is not a party in this appeal. Judgment in default of appearance has been entered against it. Malaysian Sea Best has also been wound up.

[3] For uniformity and ease of understanding, we will refer to the parties as follows:

Appellant/2nd defendant: Majuikan

Respondent/plaintiff: Barclays

1st defendant: Malaysian Sea Best

B. The Subject Matter: Per Aval Endorsement

[4] Barclays sued Majuikan on the basis of a Promissory Note (dated 1 March 2006) containing a "Per Aval Endorsement" by Majuikan. The maker/issuer of the Promissory Note was the 1st defendant, Malaysian Sea Best. The claim under the Per Aval Endorsement was for a total sum of Euro 10,000,000.00 to be paid by Majuikan to Barclays, it being in the nature of a guarantee for a financing facility granted to Malaysian Sea Best by HSBC Bank, USA ("HSBC USA"), who was the original payee. Barclays sued as holder in due course for value of the Promissory Note. HBC USA had, by a Transfer Power (dated 15 March 2006), transferred all of its rights, interest and title in the Promissory Note to Barclays. The Transfer Power stated:

"Transfer Power This Transfer Power is to be attached to and made a part of that certain promissory note (reference the "Sea Best/Euro/HSBC 1 note") dated as of 1 March 2006, made by Malaysian Sea Best Sdn Bhd. In favour of HSBC Bank USA, National Association, having a principal amount of Euro 10,000,000. 00. For value received, the undersigned hereby assigns and transfers unto Barclays bank plc, without recourse, all of its rights, titles and interest in such Sea Best/Euro/HSBC 1 note."

[5] The Transfer Power is endorsed by HSBC USA as assignor/transferor Under the terms of the Promissory Note, Malaysian Sea Best promised to pay against the Promissory Note to the order of HSBC USA the amount of Euro 10,000,000.00, payable at the counters of Malayan Banking Berhad (Semenyih Branch) on 1 March 2008. Barclays, as holder in due course, presented the Promissory Note for payment on 3 March 2008 (1 March 2008 being a public holiday). It was dishonoured for non-payment. Barclays then gave notice of this dishonour and demanded that Majuikan pay the amount due on the Per Aval Endorsement.

[6] An "Aval" operates as a guarantee for payment. See the concise description given in Byles on Bills of Exchange and Cheques (23rd edn):

"... payment of a bill may be guaranteed by the signature of a third person appearing on the bill. This is called an aval. A signature by way of aval is created by the placing of a signature on the bill together with the words "bon pour aval", "bon pour aval pour les tires" or some comparable wording. If, therefore, the aval is given