JUDGMENT

Zaleha Zahari J:

The appellant in this case carries out banking business. It has a branch at Damasara Utama. The respondent was a customer of the appellant having the following two current accounts ie,:

(a) Account No. 30792918-25 (hereinafter referred as " the office account " ); and

(b) Account No. 30792985-36 (hereinafter referred to as " the client 's account " ).

By writ of summons filed on 4 November 1997 the respondent claimed that between the period of February to May 1997 the appellant had wrongfully allowed the encashment of 8 cheques from its office account amounting to RM4,000 and another 26 cheques from its client 's account amounting to RM15,000 the details of which are as follows:

A. The office Account

Date Cheque No. Amount

1. 4 February 1997 987099 RM500

2. 3 May 1997 987056 RM500

3. 5 May 1997 987055 RM500

4. 12 May 1997 987062 RM500

5. 17 May 1997 987063 RM700

6. 19 May 1997 987064 RM500

7. 23 May 1997 987065 RM400

8. 26 May 1997 987068 RM400

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Total RM4,000

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B. The Client 's Account

Date Cheque No. Amount

1. 18 February 1997 987048 RM 600

2. 27 February 1997 987005 RM 500

3. 4 February 1997 987006 RM 400

4. 10 March 1997 987007 RM 500

5. 14 March 1997 987009 RM 400

6. 17 March 1997 987010 RM 500

7. 19 March 1997 987011 RM 400

8. 20 March 1997 987012 RM 300

9. 24 March 1997 987014 RM 500

10. 25 March 1997 987015 RM 300

11. 26 March 1997 987018 RM 800

12. 27 March 1997 987020 RM 200

13. 2 April 1997 987024 RM 500

14. 2 April 1997 987023 RM 700

15. 3 April 1997 987026 RM 600

16. 5 April 1997 987028 RM 700

17. 7 April 1997 987029 RM 500

18. 9 April 1997 987033 RM 600

19. 12 April 1997 987035 RM 500

20. 12 April 1997 987034 RM 500

21. 14 April 1997 987036 RM 2,200

22. 17 April 1997 987039 RM 500

23. 22 April 1997 987042 RM 700

24. 24 April 1997 987043 RM 400

25. 26 April 1997 987044 RM 700

26. 30 April 1997 987046 RM 500

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Total RM 15,000

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The Magistrate Shah Alam, by order dated 14 october 1999, after a full trial, entered judgement against the appellant in the sum claimed amounting to RM19,000 with interest at 8% per annum from 4 November 1997 to date of realization and costs. Dissatisfied with the said decision the appellant lodged this appeal.

on 1 December 2003 after hearing arguments and perusal of the Appeal Record I allowed the defendant 's appeal with costs. My reasons are as follows:

Issues For Determination

From the pleadings and arguments presented the following are the issues for determination:

(a) Whether the magistrate was right on the evidence presented before the court in holding that the respondent had conclusively proved that each and every one of the cheques in issue to be a forgery?

(b) If the answer to the 1st issue is positive, whether in all of the circumstances of this case, the appellant should be held liable in honoring each and every one of the said cheques?

(c) Whether the respondent was under a duty to maintain their cheque books in safe custody?

(d) Whether the respondent had on the facts of this case itself been negligent and therefore estopped from relying on the forged cheques?

(e) Whether on the facts of this case the respondent is deemed to have ratified payments of the cheques in issue by reason of their failure to notify the appellant of any objection to the monthly statements issued by the appellant to the respondent?

The Respondent 's Case

The record shows that the respondent 's case rests on three witnesses, Lim Bee Ting, one of the respondent 's partners (SP1), Hong Kim Piow also a partner in the respondent 's firm (SP2) and lastly , one Monolesa bt Ranjan (SP3) who was the respondent 's financial clerk at the material time in question.

According to para. 4 of the statement of claim the plaintiff claimed that SP3, had forged the signature of SP2, and that the appellant was wrong in debiting and honoring the respective amounts specified in the forged cheques from their accounts with the appellant.

SP1 (the partner responsible