Anuar Bin Dato' Zainal Abidin J:

This is an appeal by United Asian Bank Bhd. (which, since the lodging of the appeal, has changed its name to Bank of Commerce Bhd,) against the decision of Zakaria Yatim J., given at Kuala Lumpur on 4 June 1991 whereby the learned Judge entered judgment against the appellant in the sum of RM1,491,424.34 together with interest on the sum of RM397,660 at the rate of 8% per annum from 25 August 1983 until the date of realisation. On 13 October 1992 after hearing arguments we dismissed the appeal with costs. We had at the time indicated that we would give written reasons for our decision and we accordingly do so now.

The facts of this case are fairly simple and straightforward. The appellant carries on banking business. It has a branch at Jalan Ipoh, Kuala Lumpur. The respondent was a customer of the appellant having an account at the said branch. The respondent's account No. 20-090 with the appellant was opened on 25 January 1978, by means of a document intituled "Account Opening Form". A directors' circular resolution dated 16 January 1978, accompanied the respondent's application to open the account and in it any 2 of the respondent's 3 directors were nominated as the authorised signatories to operate the account. The form by which the account was opened is, by reason of the way in which the case has been argued by the appellant, important and merits full reproduction. It is in these terms:

Account Opening Form

[Limited Companies] 25 January 1978 Account No. 20-090

The Manager,

United Asian Bank Berhad

Jalan Ipoh

Sir,

We request you to open a Current Deposit Account in our name in the books of the Bank.

We hand you herewith:-

(1) Certificate of Incorporation (for inspection and return).

(2) Copy of Memorandum and Articles of Association.

(3) Certificate of the Registrar of Joint Stock Companies that the Company is entitled to commence business (for inspection and return).

(4) Certified Copy of a Resolution of the Board of Directors regulating the conduct of the account, together with specimens of the signature of the authorised signatories (Please see reverse of this form).

or

Power of Attorney containing authority to open Banking Account and to operate thereon together with specimen of signature.

We agree to comply with, and to be bound by, the Bank's rules for the time being for the conduct of such accounts.

Kindly furnish us with a Pass Book and a book of cheque forms.

Title of Account Tai Soon Heng Construction Sdn. Bhd.

Address No. 18 Jalan Suppiah Pillay, Sentul, K.L.

Yours faithfully, Sgd Tai Soon Heng Construction Sdn. Bhd. ................................................................................ Direc- Suppiator

(Emphasis added)

It is pertinent to note that the bank's rules referred to in the form were never produced in evidence. Nor was evidence given as to the existence of such rules.

At all material times, one Wong Chow Seng ("Wong") was the respondent's accounts clerk. Between November 1979 and November 1982 Wong cleverly forged several cheques of the respondent drawn on the appellant bank. All these cheques were honoured by the appellant and the respondent's account with it was debited in consequence. Wong was not an authorised signatory to negotiable instruments, including cheques, drawn by the respondent on the appellant.

In August 1982 the respondent employed a new accounts clerk who, in December of that year, discovered the fraud perpetrated by Wong. Consequently on 9 December 1982, the respondent's Managing Director, Yong Kai Meng (PW4 in the court below), lodged a police report (Exhibit P4) complaining of the forgeries that had been discovered as at that date. Further forgeries were later discovered and PW4 lodged another report on 14 April 1983. It transpired that a total of 97 cheques had been forged by the fraudulent Wong, all of which had been honoured by the appellant. Wong was later charged under s. 420 of the Penal Code in respect of