1. ) Nandakumar a/l Subramaniam v 1. ) Setia Invest Sdn Bhd (BA-22NCC-137-10/2022)

NANDAKUMAR A/L SUBRAMANIAM

SHANTHI RAMA RAO NAGARATHNAM (NO. K/P: 611023-75-5012) …PLAINTIF-PLAINTIF

SETIA INVEST SDN BHD (NO. PENDAFTARAN SYARIKAT: 200601009456)

MOHAN A/L THANGARASU

MURUGAN A/L CHADAYAN (NO. K/P: 731129-04-5197) …DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT Introduction 1. This is a suit to recover RM7.1 million based on a Deed of Settlement dated 11-1-2021 (“Deed of Settlement”) secured by an Irrevocable Letter of Continuing Personal Guarantee and S/N 5xobR1hlEOg5Xmp2Hi/1A Indemnity dated 11-1-2021 (“Guarantee”). The Deed of Settlement is said to record the indebtedness due and owing on 3 friendly loans totalling RM8 million, given by the Plaintiffs to the 1st Defendant on 30-1-2014 (RM2 million), 27-2-2015 (RM4 million) and 7-10-2015 (RM2 million). Background facts 2. The terms of the original friendly loans are not known as they were not pleaded, nor were any documentation adduced. However, mixed up in the financial transactions between the parties, there were the following other agreements which were adduced in evidence:

Investment Agreement dated 29-4-2015 between DNS Security Services Sdn Bhd and the 1st Plaintiff (“Investment 1”)

Supplemental Investment Agreement (Silver Line Services Sdn Bhd) dated 29-4-2015 between the 2nd Defendant and the 1st Plaintiff (“Investment 2”)

Supplemental Investment Agreement (Setia lkhlas Resources Sdn Bhd) dated 29-4-2015 between the 2nd Defendant and the 1st Plaintiff (“Investment 3”) S/N 5xobR1hlEOg5Xmp2Hi/1A

The primary investment agreements to which the 2 supplemental investment agreements relate were Investment Agreement dated 15-3-2010 and Share Sale Agreement dated 19-5-2009, but they too were not adduced in evidence.

For the purposes of this action, the Deed of Settlement was not disputed, nor was there any dispute that on behalf of the 1st Defendant, 8 repayments totalling RM900,000.00 had been made to the Plaintiffs to reduce the indebtedness thereunder:

The 1st Defendant contended that more than RM900,000.00 had been repaid to the Plaintiffs to reduce the friendly loan sum. The pleaded case is that the Plaintiffs had agreed that the debt under the Deed of Settlement be repaid by installments, and the Defendants had been paying RM20,600.00 per month S/N 5xobR1hlEOg5Xmp2Hi/1A consistently since June 2018. The 2nd Defendant testified that the RM20,600.00 were paid via third parties who owed him (namely, DNS Security Services Sdn Bhd who paid RM10,000.00 monthly and one Dhinagaran a/l Jayabalan who paid RM10,600.00 monthly).

Apparently acknowledging that the payments were received, the Plaintiffs contended that the RM20,600.00 are not loan repayments but monthly dividend payments pursuant to the investment agreements.

Capitalizing on this admission, the 1st Defendant only led evidence that sought to prove that RM1,091,800.00 was paid between June 2018 and November 2022 (i.e. 53 months at RM20,600 per month). He had some proof of these remittances but it was not complete. He claimed to have also paid in cash but there were no records of the cash payments. The Defendants were thus content to prove that only RM6,008,200.00 remained due and owing based on the acknowledged RM20,600.00 monthly payments, and not RM7.1 million as contended by the Plaintiffs.

Thus, the trial centred around the sole factual determination to be made in this case i.e. what was the purpose of the RM20,600.00 monthly payments made to the Plaintiffs between June 2018 and November 2022 – whether they were payments towards the friendly loan sum of RM8 million as contended by the S/N 5xobR1hlEOg5Xmp2Hi/1A Defendants or whether they were dividends payable under the investment agreements as contended by the Plaintiffs. Analysis and findings 9. This Court observed that there was probably more than meets the eye in this case and neither the 2nd Defendant nor the Plaintiffs who testified at the trial came across as particularly forthright in their account of their financial arrangements. Though not pleaded, it was alluded to by the 2nd Defendant that the “investment agreements” he signed in 2015 were loans for the purpose of financing the PLKN project MOHAN Saya ambil loan masa itu kita ada buat berniaga business PLKN. Selepas tahun 2018 PLKN ditutup jadi tak ada income, mereka pun tahu. S/N 5xobR1hlEOg5Xmp2Hi/1A

The essence of the 29-4-2015 investment agreements are summarised as follows:

Investment 1: For a RM150,000.00 investment, the 1st Plaintiff would receive an annual dividend of between RM25,000.00 to RM30,000.00.

Investment 2: For 30% shares in Silver Line Services Sdn Bhd and 30% shares in Vista Ceria Sdn Bhd purchased in 2010, the 1st Plaintiff would receive monthly dividends in the sum of RM12,000.00 for 3 years (totalling RM432,000.00) and then RM20,000.00 monthly for an indefinite period thereafter.

Investment 3: For 20% shares in Setia Ikhlas Resources Sdn Bhd purchased in 2009, the 1st Plaintiff would receive monthly dividends in the sum of RM15,000.00 for 1 year (totalling RM180,000.00), RM16,000.00 the following year (totalling RM192,000.00), RM18,000.00 for the following 8 months (totalling RM144,000.00) and then RM23,680.00 monthly for an indefinite period thereafter.

In respect of both Investment 2 and 3, it was provided that in the event the Government of Malaysia stopped the Program Latihan Khidmat Negara (PLKN) activities and/or terminated Silver Line S/N 5xobR1hlEOg5Xmp2Hi/1A Services Sdn Bhd’s contract in relation thereto, the 2nd Defendant shall repurchase the shares from the 1st Plaintiff for at least RM3 million (in the case of Silver Line Services Sdn Bhd and Vista Ceria Sdn Bhd) and RM2 million (in the case of Setia Ikhlas Resources Sdn Bhd).

Perhaps the Plaintiffs did also extend the friendly loans of RM8 million at or around the same time in 2014/2015 in addition to the lucrative investment agreements summarised in paragraph 10 above. Regardless, things went awry in 2018 after the Government of Malaysia terminated the PLKN project. The 2nd Defendant defaulted on his repayments to the 1st Plaintiff and following this, the Deed of Settlement between the 1st Defendant and the Plaintiffs were signed. The Deed of Settlement stated that RM8 million was due and owing as an unpaid friendly loan at the time it was signed on 11-1-2021, and that it was repayable within 12 months.

Having reviewed the facts and evidence, this Court finds on a balance of probabilities that the monthly RM20,600.00 payments received by the Plaintiffs were not loan repayments towards reducing the RM8 million friendly loans. If they were, the payments prior to 11-1-2021 should have been reflected in the Deed of Settlement.

The explanation offered by the 2nd Defendant was that he did not realize that the monthly RM20,600.00 payments already received had not been deducted when Deed of Settlement was S/N 5xobR1hlEOg5Xmp2Hi/1A drawn up and signed. The short answer to that is that the 2nd Defendant is bound by the Deed of Settlement whether or not he read it. He must prove some vitiating factor to vitiate the agreement if he does not want to be bound by it. However, it was not his case at the trial that the Deed of Settlement is void or voidable for any reason.

The 2nd Defendant contended that RM20,600.00 must be found to be loan repayments because they are not dividends as evidenced by the fact that the figures do not match - only RM2,500.00 monthly was payable as dividends for Investment 1, RM20,000.00 monthly for Investment 2 and RM23,680.00 monthly for Investment 3.

However, this Court finds that there were other payments in evidence that had been made to the 1st Plaintiff, namely the monthly payments of RM2,500.00 which were probably dividend returns under Investment 1 which continued to be paid through DNS Security Services Sdn Bhd, though they were admittedly falsely identified in DNS Security Services Sdn Bhd’s bank statements and internal records as salary payments.

It is therefore not improbable that the RM20,600.00 were monthly dividends for Investment 2, although it is again noted that the RM10,000.00 (making up the RM20,600.00) monthly payments via DNS Security Services Sdn Bhd were falsely described in DNS Security Services Sdn Bhd ‘s bank statements as S/N 5xobR1hlEOg5Xmp2Hi/1A consultancy fees. The reasons why it is not improbable are as follows:

Investments 2 and 3 contemplated that the 2nd Defendant would have to buy back his shares in Silver Line Services Sdn Bhd, Vista Ceria Sdn Bhd and Setia Ikhlas Resources Sdn Bhd from the 1st Plaintiff for a total payment of at least RM5 million in 2018 (the PLKN project was terminated in 2018).

The 2nd Defendant testified that he paid back RM3 million for Investment 3 and this evidence was not challenged, but he did not say the same for Investment 2. Thus, dividend was conceivably still payable under Investment 2.

Based on the totality of the evidence presented, the Court finds the Plaintiffs’ version of events to be more probable than that of the Defendants.

Conclusions The primary liability of the 1st Defendant under the Deed of Settlement was proved on a balance of probabilities. When the onus of proof shifted, the 2nd Defendant did not manage to discharge it sufficiently to turn the case against the Plaintiffs. The 3rd Defendant did not turn up to defend and neither did the 2nd Defendant say anything to challenge the Guarantee. Accordingly, the Plaintiffs claim is allowed as follows: S/N 5xobR1hlEOg5Xmp2Hi/1A

Outstanding sum of RM7,100,000.00;

Interest at the rate of 5% per annum on RM7,100,000.00 from 12-01-2022 until the date of full and final settlement; and

Costs of RM50,000.00. Bertarikh : 4 Ogos 2025 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam bagi pihak Plaintif-Plaintif: Ravindra Kumar Rengasamy (bersama Mohamad Danish Zaini) Tetuan Raja, Darryl & Loh Peguam bagi pihak Defendan-Defendan: Balamurali A/L Ramusamy Tetuan R.B. Murali & Associates S/N 5xobR1hlEOg5Xmp2Hi/1A