Thamarai A/P Perumal v SKF SOLUTION SDN. BHD. (dahulunya dikenali sebagai ARCADIA GOLD SDN. BHD.) (BA-11BNCvC-27-08/2022)

THAMARAI A/P PERUMAL

RAJU A/L DORAIRAJU (NO. K/P: 710611-10-5749) … PERAYU-PERAYU DAN ARCADIA GOLD SDN BHD (NO. SYARIKAT. 465432-X) … RESPONDEN [Dalam Mahkamah Majistret Di Shah Alam Dalam Negeri Selangor Darul Ehsan, Malaysia Writ Saman No: BA-A72NCVC-1687-09/2017 Antara Arcadia Gold Sdn Bhd (No Syarikat 465432-X) ... Plaintif

Dan Thamarai a/p Perumal (No. K/P: 721116-10-5876)

Raju a/l Dorairaju (No. K/P: 710611-10-5749) ... Defendan-Defendan (Yang diputuskan oleh Puan Fatina Amyra binti Abdul Jalil, Majistret Mahkamah Majistret Sivil Shah Alam pada 18 Julai 2022)] 07/02/2024 08:29:42 BA-11BNCvC-27-08/2022 Kand. 32 JUDGMENT Introduction [1] In this case, what is not disputed is the fact that the Appellants had taken a loan from the Respondent. Unfortunately, essential questions such as the exact sum of the loan that the Appellants had applied for, the actual amount of the loan that had been approved by the Respondent and the precise sum of the loan disbursed by the Respondent to the Appellants are unclear. Both the Appellants and Respondent have provided conflicting versions of circumstances surrounding this dispute. [2] In addition to having to uncover the true factual situations leading to the filing of the original action in the Magistrates Court, both the courts at first instance and here had to grapple with a number of technical and legal issues that had arisen in this dispute. These relate to the application of a number of key provisions of the Moneylenders Act 1951. The Overriding Issues [3] There are two broad issues in this appeal. [4] The first pertains to the technical issues of law. Under this first broad issue, questions were raised as to –

whether the Respondent/Lender in this appeal was a licensed moneylender;

the legal effect of a moneylending agreement that was not attested in the presence of a Commissioner of Oath; and

whether a copy of the moneylending agreement had been duly stamped and “delivered to the borrower by the moneylender before the money is lent”. [5] The second broad issue relates to the actual sum of the loan. The Parties [6] The First and Second Appellants, namely, Thamarai a/p Perumal and Raju a/l Dorairaju respectively, were the First and Second Defendants in the court below. They were the borrowers of the loan. The Appellants are wife and husband. [7] The Respondent, Arcadia Gold Sdn Bhd, the Plaintiff in the court of first instance, is a company that is involved in the money lending business. The Suit and Decision in the Magistrates Court [8] The endorsement on the Respondent’s Writ was for the following claim: Tuntutan Plaintif terhadap Defendan-Defendan adalah untuk pinjaman tertunggak sejumlah RM92,500.00 di bawah satu perjanjian pinjaman yang diberi oleh Plaintif yang pada masa pemberian pinjaman adalah pemberi pinjam wang berlesen di bawah Akta Pemberi Pinjam Wang 1951 berserta faedah pada kadar 12% setahun dikira atas jumlah tertunggak RM92,500.00 tersebut bermula dari 15/3/2017 sehingga tarikh penyelesaian penuh. Dan RM508.00 (atau sekian banyak wang sebagaimana yang dibenarkan setelah ditetapkan) untuk kos, dan juga, jika plaintif dapat perintah untuk penyampaian ganti, jumlah wang selanjutnya sebanyak RM (atau sekian banyak wang sebagaimana yang dibenarkan setelah ditetapkan)….. [9] The Respondent alleged that the Appellants had borrowed RM100,000 from it and the amounts of RM45,500 and RM54,500 were disbursed to the Appellants through a cheque and in cash respectively and the loan had not been repaid in full. [10] However, according to the Appellants, they had applied for a RM70,000 loan but the amount approved by the Respondent was only RM50,000. The amount disbursed by the Respondent to the Appellants, as evident from a cheque issued by the Respondent, was only RM45,500. The Appellants alleged that the Respondent “telah memanipulasikan dan memalsukan dokumen-dokumen bagi menunjukkan bahawa jumlah pinjaman adalah sebanyak RM100,000.00”. [11] The learned Magistrate had allowed the claims by the Respondent and concluded as follows: l23l Berdasarkan keterangan dan dokumen-dokumen yang dikemukakan semasa perbicaraan, Mahkamah atas imbangan kebarangkalian mendapati bahawa Plaintif telah membuktikan tuntutan mereka dan Mahkamah dengan ini membenarkan tuntutan Plaintif. l24l Mahkamah mendapati bahawa Perjanjian Pinjaman tersebut merupakan suatu Perjanjian yang berkuatkuasa antara Pihak-Pihak dan sekiranya Defendan tidak bersetuju dengan terma-terma dalam Perjanjian tersebut, Defendan mempunyai hak untuk tidak menandatangani Perjanjian tersebut. Dakwaan Defendan bahawa telah menandatangani perjanjian yang telah diubah adalah tidak berasas dan merupakan afterthought, Tiada bukti/keterangan di Mahkamah untuk menunjukkan Defendan telah menandatangani perjanjian yang telah diubah. [25] Oleh yang demikian, berdasarkan pertimbangan-pertimbangan yang telah diperjelaskan, Mahkamah mendapati bahawa Plaintif telah membuktikan tuntutan Plaintif di atas imbangan kebarangkalian dan dengan itu Mahkamah membenarkan tuntutan Plaintif dengan kos RM5,000.00. The Applicable Law and the Arguments Before This Court [12] On the issue of whether the Respondent in this appeal was a licensed moneylender, it was the Appellants’ contention that the Respondent is not a licensed moneylender and that the transaction was carried out in breach of section 5 of the Moneylenders Act 1951. At the time when the transaction was carried out, the Respondent was carrying out its business under the name of Arcadia Gold Sdn Bhd. The name of this company was later changed to SKF Solution Sdn Bhd. [13] In addition to section 5, it should also be pointed out that there is one other germane provision in the Moneylenders Act 1951 that relates to this issue, namely, section 15. [14] For purposes of expediency, these provisions are reproduced: Licence to be taken out by moneylender

(1) No person shall conduct business as a moneylender unless he is licensed under this Act.

Any person who carries on business as a moneylender without a valid licence, or who continues to carry on such business after his licence has expired or been suspended or revoked shall be guilty of an offence under this Act and shall be liable to a fine of not less than twenty thousand ringgit but not more than one hundred thousand ringgit or to imprisonment for a term not exceeding five years or to both, and in the case of a second or subsequent offence shall also be liable to whipping in addition to such punishment. Contract by unlicensed moneylender unenforceable

No moneylending agreement in respect of money lent after the coming into force of this Act by an unlicensed moneylender shall be enforceable. [15] The Respondent’s reply to the above averment was twofold. First, the Respondent referred this Court to paragraph 1 of the Appellants’ Defence (in the action at the Magistrates Court) whereby the Appellants had admitted that “Plaintif adalah sebuah Syarikat pemberi pinjaman wang berlesen yang berdaftar di bawah Akta Pemberi Pinjam Wang 1951”. Citing the Court of Appeal decision in Kerajaan Negeri Selangor & Satu Lagi v Mach 8 Sdn Bhd [2022] 7 CLJ 26; [2022] MLJU 1005; [2022] 5 MLra 758, the submission of the Respondent was that the Appellants are not allowed to approbate and reprobate on the issue of whether the Respondent is a licensed moneylender. [16] Second, the Respondent raised the issue that this point was never pleaded by the Appellants. The learned Magistrate had upheld this contention at para [21] in her grounds of judgment. [17] On the legal effect of a moneylending agreement that was not attested in the presence of a Commissioner of Oath, the Appellants placed reliance on section 27 of the Moneylenders Act 1951. Section 27 reads as follows: Attestation of moneylending agreement

(1) A moneylending agreement shall be attested by an Advocate and Solicitor of the High Court, an officer of the Judicial and Legal Service, a Commissioner for Oaths, District Officer, Justice of the Peace or such other person as may be appointed by the Minister generally for such purpose.

The attestor shall explain the terms of the moneylending agreement to the borrower, and shall certify on the agreement that the borrower appears to understand the meaning of the terms of the agreement.

Any moneylending agreement which is not attested in accordance with this section shall be void and have no effect and shall not be enforceable. [18] The reply by the Respondent to this point was simply that this was never pleaded by the Appellants. The Respondent also relied on the decision of the Federal Court in Iftikar Ahmed Khan v Perwira Affin Bank Bhd [2018] 1 CLJ 415; [2018] 2 MLJ 292; [2018] 1 MLRA 202. The learned Magistrate had also upheld this contention at para [22] in her grounds of judgment. [19] On the issue of whether a copy of the moneylending agreement had been duly stamped and “delivered to the borrower by the moneylender before the money is lent”, the Appellants argued that there was non-compliance with section 16 of the Moneylenders Act 1951. Section 16 provides as follows: Moneylending agreement to be given to the borrower

(1) No moneylending agreement shall be enforceable unless the agreement has been signed by all the parties to the agreement and a copy of the agreement duly stamped is delivered to the borrower by the moneylender before the money is lent.

A moneylender who executes a moneylending agreement which does not comply with this section shall be guilty of an offence under this Act and shall be liable to a fine not exceeding ten thousand ringgit or to imprisonment for a term not exceeding twelve months or to both. [20] The Appellants further maintained that section 16 of the Moneylenders Act 1951 must be read together with Regulation 10(3) of the Moneylenders (Control and Licensing) Regulations 2003 (P.U.(A) 400/2003) which provides as follows:

Moneylending agreement …..

A borrower shall be entitled, from a moneylender, to a complete set of the moneylending agreement including all annexures, if any, for the moneylender to execute the agreement with the borrower free of charge. [21] The Appellants also urged this Court to take note of the observations made by the Court of Appeal in Powernet Industries Sdn Bhd v Golden Wheel Credit Sdn Bhd [2020] 7 AMR 657; [2020] 10 CLJ 374; [2020] 12 MLJ 412; [2020] MLRAU 250, relating to the rationale underlying the provision in section 16 of the Moneylenders Act 1951. [22] It was the Appellants’ contention that a copy of the said agreement was only given to the First Appellant. [23] The essence of the Respondent’s reply to the above submission was that there is only one agreement and thus only one copy was available. The Respondent argued that the Moneylenders Act 1951 does not require that a stamped copy of the moneylending agreement to be delivered to every borrower. As the Second Appellant had authorized the First Appellant to accept on his behalf, and the fact that both the First and the Second Appellants are the wife and husband respectively, according to the Respondent, the issue of non-compliance with section 16 of the Moneylenders Act 1951 does not arise. [24] In relation to the second broad issue of the exact sum of the loan that the Appellants had applied for, the actual amount of the loan that had been approved by the Respondent and the precise sum of the loan disbursed by the Respondent to the Appellants, there were conflicting testimonies. The Decision of This Court [25] On the arguments advanced by the parties concerning the point that the Respondent is allegedly an unlicensed moneylender but that this point was never pleaded by the Appellants, the Appellants sought to rely on Order 18 rule 11 of the Rules of Court 2012. If I understood the Appellants correctly, they sought to convince me that “a point of law need not be pleaded”. [26] This Court is perplexed as to how Order 18 rule 11 of the Rules of Court 2012 can be of any assistance to the Appellants. Order 18 rule 11 provides as follows: Points of law may be pleaded (O. 18, r. 11)

A party may by his pleading raise any point of law. [27] This provision is permissive in nature. While it is trite that parties are only permitted to plead material facts and not the law or evidence, raising a point of law is permitted. Accordingly, this Court is of the considered view that reliance on Order 18 rule 11 of the Rules of Court 2012 by the Appellants is flawed. [28] In actual fact, the pertinent provision is Order 18 rule 8 of the Rules of Court 2012. Order 18 rule 8 expressly provides for matters which shall be specifically pleaded. For ease of reference, it states as follows: Matters which shall be specifically pleaded (O. 18, r. 8)

(1) A party shall in any pleading subsequent to a statement of claim plead specifically any matter, for example, performance, release, any relevant statute of limitation, fraud or any fact showing illegality —

which he alleges makes any claim or defence of the opposite party not maintainable;

which, if not specifically pleaded, might take the opposite party by surprise; or

which raises issues of fact not arising out of the preceding pleading. [29] By virtue of the provision in Order 18 rule 8 of the Rules of Court 2012, the failure by the Appellants to plead the fact showing that the Respondent was an unlicensed moneylender and thus rendering the agreement as unenforceable and illegal was fatal to the Appellants’ case. [30] Likewise, this Court is in agreement with the learned Magistrate who had rejected the Appellants’ defence based on a breach of section 27 of the Moneylenders Act 1951. At para [22], the learned Magistrate explained: l22l Bagi Seksyen 27 pula, Defendan-Defendan juga tidak pada bila-bila masa telah plead mengenai isu ini. Defendan-Defendan mendakwa bahawa Perjanjian Pinjaman tersebut adalah tidak sah kerana Pesuruhjaya Sumpah telah membuat pengakuansaksi di luar Pejabat berdaftar tanpa kebenaran Ketua Hakim Negara. Mahkamah berpadangan pertamanya isu ini 'tidak pernah dipleadkan, kedua sekiranya benar, ia ladalah satu kesalahan dari segi tatatertib sahaja dan tidak menyebabkan Perjanjian Pinjaman tersebut tidak sah. Defendan-Defendan juga tidak pada bila-bila masa sapina Pesufuhjaya Sumpah tersebut untuk mengambil keterangan beliau. [31] On the issue of whether there had been non-compliance with section 16 of the Moneylenders Act 1951, the learned Magistrate had answered this question in the negative. The learned Magistrate explained as follows: [17] Berdasarkan pembacaan kepada seksyen 16 tersebut, Mahkamah berpadangan Plaintif telah pun menyerahkan Perjanjian Pinjaman tersebut kepada Defendan-Defendan, Tiada keperluan dalam seksyen 16 yang menghendaki Plaintif menyerahkan Perjanjian Peminjam tersebut kepada kesemua peminjam-peminjam. Tambahan, Pihak-Pihak dalam kes ini adalah pasangan suami isteri. Oleh itu, bagi isu (b), Mahkamah berpadangan bahawa Defendan-Defendan telah diserahkan sesalinan Perjanjian Pinjaman tersebut. [32] This Court is unable to agree with the above decision of the learned Magistrate on this issue. Instead, this Court answers the question in the affirmative. [33] The courts in this country have repeatedly said that the Moneylenders Act 1951 is a piece of social legislation. (See for example, the observation by Lee Swee Seng JCA in Mahmood Ooyub v Li Chee Leong and Other Appeals [2020] 1 LNS 660; [2020] 6 MLJ 755; [2021] 1 MLJA 609.) Hence, the provisions in the said Act must be read in favour of borrowers. While it is true that there is only one agreement in the instant case, copies can be made for every borrower (when there is more than one borrower). On this ground alone, the agreement becomes unenforceable and the appeal is allowed. [34] In view of the Court’s finding that there was a breach of section 16 of the Moneylenders Act 1951, the said loan agreement was thus unenforceable. [35] The amount of RM84,750 allowed by learned Magistrate up to 14 December, 2020 together with interest at 5% from the date of Judgment and costs of RM5,000 are hereby set aside. [36] In the event that the Court of Appeal disagrees with the above decision of this Court, it is this Court’s finding, based on the available evidence and testimonies of the witnesses, that the actual amount of the loan received by the Appellants was indeed RM45,500. If the amount of the loan had indeed been RM100,000, it would have been prudent for an experienced moneylender like the Respondent to issue a cheque for that amount, instead of partly in the form of a cheque and partly in cash, as allegedly made at the request of the Appellants. [37] Henceforth, even if the above loan agreement were one that was valid and enforceable, the Appellants had fully settled the loan. This is because as of 2 May, 2019, the Appellants had repaid a sum of RM69,900 to the Respondent. [38] This appeal is allowed with Costs of RM10,000 (subject to allocator) to be paid by the Respondent to the Appellants. Dated: 31 October, 2023 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: B. Thinagaran for the Appellants (Messrs. Thinagaran & Associates and R.B. Murali & Associates) Kathiravan Raveenthran for the Respondent (Messrs. Che Mokhtar & Ling)