A.H.T. Syngas Technology NV v Future NRG Sdn Bhd (BA-22NCC-104-08/2021)

After the Plaintiff’s claim was dismissed for failing to comply with a Consent Order dated 4 July 2022 regarding payment for security for costs (AHT Syngas Technology NV v. Future NRG Sdn Bhd [2025] MLRHU 2270; [2025] MLJU 3273; [2025] CLJU 2599), both parties proceeded with a full trial concerning the Defendant’s counterclaim against the Plaintiff for the repayment of €200,000.00 ‘friendly loan’ at 5.5% interest per annum (“5.5% Interest”) and an additional 2.0% interest per annum (“2.0% Additional Interest”) if the loan remained unpaid by 31 July 2016.

For the full trial, parties referred to documents in the Common Agreed Bundle of Documents in Enclosure 44 (“B1”) and Enclosure 45 (“B2”), marked as Part B. The authenticity of these documents was not disputed, but their contents were.

The full trial took place on 9 September 2025, 30 September 2025, and 2 October 2025.

On 1 December 2025, I dismissed the Defendant’s counterclaim with costs of RM20,000.00, subject to an allocatur fee.

Basically, the €200,000.00 ‘friendly loan’ was illegal under the Moneylenders Act 1951 (“MLA 1951”) because the Defendant was not a licensed moneylender.

As a result of the aforementioned illegality under MLA 1951, the €200,000.00 ‘friendly loan’ agreement was therefore void under Sections 24(a), (b), and (e) of the Contracts Act 1950 (“CA 1950”).

I also did not allow restitution under Section 66 of CA 1950, even though the Plaintiff had received the €200,000.00 loan from the Defendant.

I will now set forth my full grounds of judgment for doing so.

On 4 April 2016, the Plaintiff sent a letter to the Defendant and applied for a €200,000.00 loan at 5.5% Interest and 2.0% Additional Interest (“First Loan Application”) [pages 60-61 of B1]. In the First Loan Application, the Plaintiff requested that the €200,000.00 loan be disbursed on 7 April 2016.

On 4 April 2016, the Plaintiff sent another letter to the Defendant and applied for a €200,000.00 loan at 5.5% Interest and 2.0% Additional Interest (“Second Loan Application”) [pages 63-64 of B1]. In the Second Loan Application, the Plaintiff also requested that the €200,000.00 loan be disbursed on 7 April 2016.

On 6 April 2016, the Defendant accepted the terms and conditions of the First Loan Application [page 62 of B1].

On 7 April 2016, the Defendant remitted RM866,927.20 to the Plaintiff, which was equivalent to €200,000.00 [pages 1-2 of B2].

On 26 July 2016, the Plaintiff acknowledged receipt of the €200,000.00 loan from the Defendant (“Acknowledgement Letter”) [page 66 of B1].

On 31 July 2016, the Plaintiff was supposed to repay the €200,000.00 ‘friendly loan’ to the Defendant, but did not fulfil this obligation.

On 1 August 2016, the Defendant issued a notice of demand requiring the Plaintiff to repay the €200,000.00 ‘friendly loan’ plus 5.5% Interest within 7 days from the date of the notice of demand (“First Notice of Demand”) [page 178 of B1].

On 11 August 2016, Defendant issued another notice of demand requiring the Plaintiff to repay the €200,000.00 ‘friendly loan’ plus 5.5% Interest within 7 days from the date of the notice of demand (“Second Notice of Demand”) [page 179 of B1].

The Plaintiff denied making any loan application to the Defendant and stated that it only received an advance payment of €200,000.00 from the Defendant, which had already been utilised to offset the amount purportedly owed by the Defendant in relation to the construction of the 1MW coal gasification system for another company named Fitters NRG Sdn Bhd.

The Defendant’s counterclaim concerns the following issues:

Loan or Advance Payment? Did the Defendant give an advance or a ‘friendly loan’ of €200,000.00 (RM866,927.20) at 5.5% Interest and 2.0% Additional Interest to the Plaintiff? (“Issue No.1”).

German law or Malaysian Law? Which law, German or Malaysian, should be applied to dispose of the Defendant’s Counterclaim? (“Issue No.2”)

Status Of The Loan Under MLA 1951 If the Defendant lent €200,000.00 to the Plaintiff at 5.5% Interest and 2.0% Additional Interest, what is the status of the said €200,000.00 ‘friendly loan’ under MLA 1951? (“Issue No.3”).

Recovery Of The Principal Loan Disbursed Can the Defendant recover the principal ‘friendly loan’ of RM866,927.20 (€200,000.00) from the Plaintiff under Section 66 of CA 1950 if the ‘friendly loan’ is found to be illegal under MLA 1951 and void under Section 24 of CA 1950? (“Issue No.4”).

Set Off Can the Plaintiff utilise the €200,000.00 to offset the amount purportedly due and payable by the Defendant for the construction of the 1MW coal gasification system for Fitters NRG Sdn Bhd? (“Issue No.5”). ANALYSIS & FINDINGS Issue No.1: Did the Defendant give an advance or a ‘friendly loan’ of €200,000.00 (RM866,927.20) at 5.5% Interest and 2.0% Additional Interest to the Plaintiff?

There is no dispute that the Plaintiff received the sum of €200,000.00 from the Defendant, as pleaded in:

item 13 of paragraph 12 of the Statement of Claim; and

paragraph 10 of the Reply to the Defence and Defence to the Counterclaim.

The Plaintiff, however, denied ever receiving the €200,000.00 as a loan.

The Plaintiff claimed that €200,000.00 was received as an advance payment for the construction of the 1MW coal gasification system for Fitters NRG Sdn Bhd.

I cannot agree with the Plaintiff’s claim that the €200,000.00 was an advance rather than a loan, and I will set out my reasons below.

Although the Defendant accepted the First Loan Application and transferred €200,000.00 to the Plaintiff, both loan applications need to be examined to determine the Plaintiff’s intention in submitting the loan applications and the Defendant’s reason for transferring the €200,000.00 to the Plaintiff.

In Michael C. Solle v. United Malayan Banking Corporation [1986] 1 MLJ 45; [1984] 1 MLRA 181; [1984] 1 CLJ 151, the Federal Court held that: “The principles of construction to be applied to the undertaking are similar to those applied to an ordinary contract. The intention of the parties are to be gathered from the language used. They are presumed to have intended what they said. The common and universal principle is that an agreement ought to receive that construction which its language will admit, which will best effectuate the intention of the parties, to be collected from the whole of the agreement.”

In the First Loan Application, the Plaintiff made an application to borrow €200,000.00 from the Defendant [pages 60-62 of B1]

In the Second Loan Application, the Plaintiff made another application to borrow €200,000.00 from the Defendant [pages 63-64 of B1]

In both the First Loan Application and Second Loan Application, the Plaintiff used the word ‘loan’ more than 13 times, as shown in Table 1 below: Table 1 No. Para.

title Loan of €200,000.00 Loan of €200,000.00 for 1MW

2nd para. We hereby would like to request for a loan/advance of €200,000.00 (Euro Two Hundred Thousand) from you (“Loan”) We hereby would like to request for a loan/advance of €200,000.00 (Euro Two Hundred Thousand) from you (“Loan”)

3rd para. The terms and conditions of the above Loan shall be as follows: The terms and conditions of the above Loan shall be as follows:

4th para. Loan Sum €200,000.00 Loan Sum €200,000.00 5. 5th para. Date of Release of the Loan Sum to Syngas Technology NV (“AHT”) Date of Release of the Loan Sum to Syngas Technology NV (“AHT”)

6th para. Manner of Release of the Loan Sum to

7th para. Interest on the Loan sum Interest on the Loan sum 8. 8th para. Date Repayment of the Loan Sum to Future NRG Sdn Bhd Date Repayment of the Loan Sum to Future NRG Sdn Bhd 9. 8th para. This Loan will be used for the 1MW Coal System which will be installed at the Lingshan site. This Loan is subject to the 1MW Coal System which will be installed at the Lingshan site.

8th para. - This Loan shall be paid back by the funds which are raised for this project.

8th para. This Loan shall be paid back by 31 July 2016. This Loan shall be paid back at 31 July 2016.

9th para. In the event that the Loan Sum is not repaid by 31 July 2016, there will be an additional penalty of 2% interest per annum on the outstanding Loan Sum in addition to the interest on the Loan Sum of 5.5.% per annum. In the event that the Loan Sum is not repaid by 31 July 2016, there will be an additional penalty of 2% interest per annum on the outstanding Loan Sum in addition to the interest on the Loan Sum of 5.5.% per annum.

10th para. Any amendment or revision to the terms and conditions of the above Loan shall be subject to the prior written agreement of the parties. Any amendment or revision to the terms and conditions of the above Loan shall be subject to the prior written agreement of the parties. 14 28. The term ‘advance’ appeared only once in either the First Loan Application or the Second Loan Application.

Even if the Plaintiff relied solely on the word ‘advance’, the sum of €200,000.00 would still be regarded as a loan and not an advance payment because of the following reasons:

the word ‘advance’ cannot be read in isolation from the entire contents of the First Loan Application and Second Loan Application. The word ‘advance’ must be read together with the repayment term, especially the 5.5% Interest and 2.0% Additional Interest, which suggests a moneylending arrangement between the Defendant and the Plaintiff;

if it were an advance payment made by the Defendant, it would be illogical and absurd for the Plaintiff to impose upon itself the obligation to repay the alleged advance payment by 31 July 2016, subject to 5.5% Interest and 2.0% Additional Interest;

since the Plaintiff prepared both the First Loan Application and Second Loan Application, any ambiguity should be construed adversely against the Plaintiff in accordance with the contra proferentum rule. In other words, should there be any ambiguity, the loan applications should be construed in favour of the Defendant, i.e. the Plaintiff applied for a €200,000.00 loan from the Defendant. Regarding the contra proferentum rule, I rely on the following authorities:

in Kandasami v Mohamad Mustafa [1983] 1 MLRA 495; [1983] 2 CLJ 55; [1983] 2 MLJ 85, Lord Brightman in delivering the decision of the Privy Council said this: “There is a principle of construction that if a document inter partes contains an ambiguity which cannot otherwise be satisfactorily resolved, it is to be construed adversely to the party who proffered it for execution. Neill v. Duke of Devonshire [1882] 8 App Cas 135, 149, Norton on Deeds 2nd Edn, p 127.”

(ii) in Malaysian Motor Insurance Pool v Tirumeniyar Singara Veloo [2019] 6 MLRA 99; [2019] 10 CLJ 731; [2019] MLJU 1195, Alizatul Khair Osman Khairuddin FCJ (as she then was) in delivering the decision of the Federal Court held that: [98] Coming to the contra proferentum rule, it provides that where a term is ambiguous such ambiguity ought to be construed against the party who prepared it. In general contracts, common law courts have been quick to apply against ‘unfair terms’ like exclusion or exemption clauses. But the rule sees particular application in insurance contracts. This point is aptly summarised in MacGillivray on Insurance Law (12th edn), at pp 317-318: “The common law rule of construction, that verba chartarum forties accipiuntur contra proferentum, means that ambiguity in the wording in a policy, or slip, is to be resolved against the party who prepared it. It has been said that a party who proffers an instrument cannot be permitted to use ambiguous words in the hopes that the other party understand them in a particular sense and that the court which has to construe them will give them a different meaning, but the ambiguity usually arises inadvertently from including conflicting standard printed clauses in the same policy. (Emphasis Added)”

I do not believe Gero Ferges’ (“PW1”) testimony regarding the advance payment, as it was inconsistent and conflicted with the repeated use of the word ‘loan’ as shown in Table 1. PW1’s testimony also contradicted the Acknowledgement Letter, which was issued by the Plaintiff. In the Acknowledgement Letter, the Plaintiff stated: ‘Loan given by Future NRG €200,000.00’ (see Tindok Besar Estate Sdn Bhd v. Tinjar Co [1979] 1 MLRA 81 at paragraph [38]). Furthermore, during cross-examination, PW1 adopted a different stance and claimed that the €200,000.00 was a down payment. : And later on, I don’t know for what reason, you requested for a loan, €200,000 as per the document. Right? : No. : What no? There is a document in front of you. : We did not request for a loan, we asked for down payment.

I believe Ngu Wang Keat’s (“DW1”) testimony that no advance payment was made to the Plaintiff by the Defendant. DW1’s testimony was consistent with the First Loan Application, the Second Loan Application, the Acknowledgement Letter and Accounts Details & Transaction History issued by OCBC Bank (Malaysia) Berhad [page 2 of B2].

There is no evidence that the Plaintiff requested the Defendant to make any advance payment to the Plaintiff for the construction of the 1MW coal gasification system for Fitters NRG Sdn Bhd.

I say so because of the following reasons:

under the Heads of Agreement dated 15 September 2014, the Plaintiff and Defendant agreed to incorporate a Malaysian company called AHT NRG Sdn Bhd to develop gasification and cleaning technology, and for the Defendant to purchase a biomass-gas generator from the Plaintiff (“Incorporation Agreement”) [page 1-3 of B1]. There is no mention of the need for the Defendant to pay an advance payment for the construction of the 1MW Coal Gasification System in the Incorporation Agreement. In any event, the Incorporation Agreement is not relevant to the matter at hand because the 1MW Coal Gasification System would be constructed for Fitters NRG Sdn Bhd and not AHT NRG Sdn Bhd;

under the Heads of Agreement dated 7 July 2015 (“HOA

7.7.2015”) [pages 4-10 of B1] and the Heads of Agreement dated 22 July 2015 (“HOA 22.7.2015”) [pages 19-25 of B1], the Plaintiff agrees to build and sell the 1MW coal gasification system to Fitters NRG Sdn Bhd for €2,000,000.00. In return, the Plaintiff will hold 8.66% of the shares in Fitters NRG Sdn Bhd. Under the HOA

7.7.2015 and HOA 22.7.2015, there was no requirement for the Defendant to make any payment or advance payment to the Plaintiff. As alluded to earlier, the Plaintiff will hold 8.66% shares in Fitters NRG Sdn Bhd as a consideration for constructing the 1MW Coal

under the Subscription Agreement dated 22 July 2015 [pages 26-42 of B1], the Defendant would subscribe to 465,909 shares of the Plaintiff at €3.00 per share, totalling €1,397,727.00 (“Subscription Agreement”). It is undisputed that the Defendant had paid the subscription for the shares in full. So, the issue of an advance payment also did not arise under the Subscription Agreement. : Are you saying that the Defendant did not pay for the subscription in full? : The subscription was paid in full, yes

To refute the receipt of the €200,000.00 loan, the Plaintiff should have produced its bank account and transaction records of Commerzbank AG IBAN DE82 3704 0044 0503 3246 00, BIC COBADEFFXXX (“Commerzbank”).

In Tan Aik Teck v Tang Soon Chye [2007] 6 MLJ 97; [2007] 2 MLRA 58; [2007] 5 CLJ 441, the Court of Appeal held that: “The plaintiff admitted that there was no loan agreement in respect of the loan given to the defendant. The loan given could only be proved by the two cheques which were paid into the defendant's account and also the admission by the defendant that he had put the money into his bank account. Since the defendant had admitted that he had received the two cheques and had credited them into his account, I am of the view that the plaintiff had discharged his burden that the money was a loan unless proven otherwise by the defendant. As such, the burden is on the defendant that the money given to him by the plaintiff was not a friendly loan.”

The Plaintiff neither called any witness from Commerzbank nor produced its bank account and transaction history records.

Since the Plaintiff chose not to call any witnesses or produce its Commerzbank account and transaction records to impugn the receipt of the €200,000.00 loan, an adverse inference should be drawn against the Plaintiff (Section 114(g) of the Evidence Act 1950). Fourth Reason The Plaintiff Admitted Receiving The €200k Loan

Based on the OCBC Bank statement (page 2 of B2), the €200,000.00 was disbursed to the Plaintiff on 7 April 2016.

It is pertinent to note that after the remittance of €200,000.00 (RM866,927.20), the Plaintiff issued the Acknowledgement Letter [page 66 of B1].

The word ‘loan’ was used repeatedly in the Acknowledgement Letter, as demonstrated in Table 2 below: Table 2 No. Item Contents 1. Title of the letter : “Offsetting of your Loan against our Claims”

First sentence : “Herewith we declare to offset your loan with our claims as follows”

Second item : “Loan given by Future NRG €200,000.00”

Based on the Acknowledgement Letter, it is clear that:

the Defendant disbursed the €200,000.00 loan to the

the Plaintiff received the €200,000.00 loan from the Defendant.

After the acceptance of the terms and conditions of the First Loan Application, the loan remittance, and the issuance of the Acknowledgement Letter, the Plaintiff cannot now argue that it received the €200,000.00 as an advance payment. The Plaintiff cannot approbate and reprobate (Cheah Theam Kheng v City Centre Sdn Bhd (In Liquidation) & Other Appeals [2012] 2 MLRA 125; [2012] 6 CLJ 16; [2012] 1 MLJ 761, Nabors Drilling (Labuan) Corporation v. Lembaga Perkhidmatan Kewangan Labuan [2020] 10 CLJ 732; [2020] 6 MLRA 314; [2020] 12 MLJ 54, MK Cooling Services & Anor v Chong Kek Fong [2025] MLRHU 1959; [2025] MLJU 2818; [2025] CLJU 2254).

The Plaintiff is also estopped from denying that, by issuing the First Loan Application and Second Loan Application, the Plaintiff really intended to borrow €200,000.00 from the Defendant (Boustead Trading (1985) Sdn Bhd v. Arab Malaysian Bank Berhad [1995] 1 MLRA 738; [1995] 3 MLJ 331; [1995] 4 CLJ 283, DRB-Hicom Berhad v. Jurutera Perunding Gea (M) Sdn Bhd [2010] 6 MLRH 540; [2010] CLJU 1906; [2010] MLJU 2097).

If it had been merely an advance payment or benevolent loan, the Plaintiff would not have agreed to repay the sum €200,000.00 at 5.5% Interest and 2.0% Additional Interest.

If the Plaintiff did not intend to apply for a loan at 5.5% Interest and 2.0% Additional Interest from the Defendant, the Plaintiff should have withdrawn both the First Loan Application and the Second Loan Application before the €200,000.00 was disbursed to the Plaintiff.

Instead of withdrawing the loan applications, the Plaintiff accepted the transfer of the €200,000.00 loan without any protest.

If no loan application had been made, the Plaintiff should have promptly returned the €200,000.00 to the Defendant, but the Plaintiff failed to do so.

Instead, the Plaintiff acknowledged receipt of the loan as specified in the Acknowledgement Letter.

Based on the unconditional and unequivocal acceptance of the First Loan Application, the loan remittance, the transaction and history records issued by OCBC Bank (Malaysia) Berhad and the Acknowledgement Letter, I am of the view that the Defendant did not make any advance payment of €200,000.00 to the Plaintiff.

Instead, the Defendant lent €200,000.00 to the Plaintiff at 5.5% Interest and 2.0% Additional Interest. Issue No.2 Which law, German or Malaysian, should be applied to dispose of the Defendant’s Counterclaim?

The Learned Counsel for the Defendant argued that the Court should apply German law, not Malaysian law, to the €200,000.00 loan counterclaim.

To the Defendant, since the acceptance of the First Loan Application was communicated to the Plaintiff in Germany, German law should be applied (James Capel (Far East) Ltd v YK Fung Securities Sdn Bhd (Tan Koon Swan, Third Party) [1996] 2 MLJ 97; [1996] 1 AMR 930; [1996] 2 CLJ 55).

I disagree with the Defendant’s contention that German law should be applied for the following reasons:

firstly, there is no contractual provision regarding the choice of law, and neither party pleaded that the main suit and counterclaim should be heard and disposed of in accordance with German law. The application of German law was raised for the first time by the Defendant after the issue of the illegality of the €200,000.00 ‘friendly loan’ under MLA 1951 was raised during the written submissions stage (Merong Mahawangsa Sdn Bhd & Anor v. Dato’ Shazryl Eskay Abdullah [2015] 5 MLRA 377; [2015] 8 CLJ 212; [2015] 5 MLJ 619). No evidence was adduced by either party on the choice of law during the full trial. Since neither party proved nor pleaded German law, there is a presumption that German law aligns with Malaysian law. In European Profiles Ltd v. Sentinen Steel (Malaysia) Sdn Bhd [1993] MLRH 73; [1993] 4 CLJ 577; [1993] MLJU 193, VC George J (as he then was) had this to say: “In any event the burden of proving foreign law lies on the party who bases his claim or defence on it. In the English case, Lloyd v. Guibert [1865] LR 1 QB 115 at 129 it was held that if the party basing his claim (or defence) on foreign law adduces no evidence or insufficient evidence of the foreign law, the Court applies English law. Some English Courts have gone to the extent of stating that there is a principle that foreign law is presumed to be the same as English law until the contrary is proven, e.g. Dynamic AG v. Rio Tinto Co. [1918] AC 260 at 295, The Parchim [1918] AC 157 at 161 and Casey v. Casey [1949] P. 420 at 430 (CA); [1949] 2 All ER 110.” (emphasis added)

secondly, the disbursement of the €200,000.00 loan was performed in Malaysia through the Defendant’s OCBC Bank (Malaysia) Berhad account. To remit the €200,000.00 to the Plaintiff, the Defendant had to deduct RM866,927.20 from its OCBC Bank (Malaysia) Berhad account. Before the remittance, the Defendant had RM1,085,229.34 in its bank account. After remitting RM866,927.20 to the Plaintiff, the Defendant had only RM198,302.14 left in its bank account (pages 1-2 of B2). Clearly, the funds for the loan emanated from Malaysia;

thirdly, there are only two notices of demand issued by the Defendant for the repayment of the €200,000.00 ‘friendly loan’. Neither the First Notice of Demand nor the Second Notice of Demand required the Plaintiff to repay the €200,000.00 ‘friendly loan’ in Germany or in accordance with the German law;

fourthly, MLA 1951 aims to prevent illegal moneylending. However, the Defendant urges this Court to apply German law so that reference should not be made to MLA 1951 and CA 1950, which I refuse to do. Allowing that would violate public policy against illegal moneylending;

fifthly, the Learned Counsel for the Defendant argued that even if the loan was illegal under MLA 1951 and void under Section 24 of CA 1950, the principal loan sum of €200,000.00 should be refunded by the Plaintiff to the Defendant pursuant to Section 66 of CA 1950. If German law were applicable, the Defendant would not have invoked Section 66 of CA 1950. By invoking Section 66 of CA 1950, the Defendant agrees that the counterclaim should be decided in accordance with Malaysian law.

Based on the above reasons, I am of the view that the counterclaim should be decided in accordance with Malaysian law, not German law. Issue No.3 If the Defendant lent €200,000.00 to the Plaintiff at 5.5% Interest and 2.0% Additional Interest, what is the status of the said €200,000.00 ‘friendly loan’ under the MLA 1951?

The Defendant maintained that it only lent €200,000.00 ‘friendly loan’ at 5.5% Interest and 2.0 % Additional Interest to the Plaintiff [paragraphs 19 and 32-36 of the Defence and

In order to ascertain the status of the ‘friendly loan’, reference should be made to Section 2 of MLA 1951, which defines the words “moneylender”, “moneylending” and “interest” as follows: “moneylender” means any person who carries on or advertises or announces himself or holds himself out in any way as carrying on the business of moneylending, whether or not he carries on any other business. “moneylending” means the lending of money at interest, with or without security, by a moneylender to a borrower. “interest” does not include any sum lawfully charged in accordance with this Act by a moneylender for or on account of stamp duties, fees payable by law and legal costs but, save as aforesaid, includes any amount by whatsoever name called in excess of the principal paid or payable to a moneylender in consideration of or otherwise in respect of a loan.

Based on Section 2 of MLA 1951 and considering the Defendant’s Defence and Counterclaim, Reply To The Defence To The Counterclaim, as well as the First Loan Application, the loan remittance, the transaction and history records issued by OCBC Bank (Malaysia) Berhad and the Acknowledgement Letter, I am of the view that the ‘friendly loan’ of €200,000.00 at 5.5% Interest and 2.0% Additional Interest falls within the definition of moneylending.

It is important to note that although it involves only a single transaction under the First Loan Application, the Defendant is now presumed to be carrying on the business of moneylending until proven otherwise, as outlined in Section 10OA of the MLA 1951, which provides that: “Where in any proceedings against any person, it is alleged that such person is a moneylender, the proof of a single loan at interest made by such person shall raise a presumption that such person is carrying on the business of moneylending, until the contrary is proved.” (emphasis added)

It is important to note that before the Defendant can carry on the business of moneylending, the Defendant must first be a licensed moneylender as provided by Section 5(1) of MLA 1951: “No person shall carry on or advertise or announce himself or hold himself out in any way as carry on or advertise or announce himself or hold himself out in any way as carrying on the business of moneylending unless he is licensed under this Act.”

If the Defendant is carrying on the business of moneylending without a licence and is found guilty, the Defendant may be fined or imprisoned in accordance with Section 5(2) of MLA 1951, which provides that: “Any person who carries on or advertises or announces himself or holds himself out in any way as carrying on the business of moneylending 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 two hundred and fifty thousand ringgit but not more than one million 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.”

In this case, the Defendant has not produced any evidence that it has a licence to carry on the business of moneylending.

In the absence of the licence to carry on the business of moneylending, the €200,000.00 ‘friendly loan’ agreement between the Plaintiff and Defendant is tainted with illegality and unenforceable as provided by Section 15 of the MLA 1951: “No moneylending agreement in respect of money lent after the coming into force of this Act by an unlicensed moneylender shall be enforceable.”

Given the reasons above, the Defendant’s act of lending money at interest to the Plaintiff without a licence would be illegal, even if done only once.

Since giving the €200,000.00 ‘friendly loan’ at interest without a licence was illegal under MLA 1951, the ‘friendly loan’ agreement between the Plaintiff and Defendant was void under Section 24(a), (b) and (e) of CA 1950. Issue No.4 Can the Defendant recover the principal loan of RM866,927.20 (€200,000.00) from the Plaintiff under Section 66 of CA 1950 if the ‘friendly loan’ is found to be illegal under MLA 1951 and void under Section 24 of CA 1950?

When the ‘friendly loan’ transaction is illegal under MLA 1951 and void under Section 24 of CA 1950, the next question to consider is whether the Defendant can recover the principal sum lent to the Plaintiff under Section 66 of CA 1950, which provides that: “When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.”

The Learned Counsel for the Defendant contended that pursuant to Section 66 of CA 1950, even if this Court found that the ‘friendly loan’ at interest was illegal under MLA 1951 and void under Section 24 of CA 1950, the principal loan of €200,000.00 should be refunded by the Plaintiff to the Defendant.

The Learned Counsel of the Defendant relied on two recent decisions by the Court of Appeal in Golden Wheel Credit Sdn Bhd v. Dato’ Siah Teong Din [2025] 6 MLRA 77; [2025] 10 CLJ 742; [2025] MLJU 2245 (“Golden Wheel”) and KBH Marine Industry & Anor v. Ace Credit (M) Sdn Bhd & Other Appeals [2025] MLRAU 336; [2025] CLJU 2683; [2025] MLJU 3510 (“KBH Marine”), which allowed restitution under Section 66 of CA 1950 in moneylending transactions.

With due respect, the decisions of the Court of Appeal can be distinguished because they involved licensed moneylenders, whereas the Defendant in this case is not a licensed moneylender.

In Golden Wheel, Faizah Jamaludin JCA had this to say: “[59] Differing from Mahmood Ooyub and Triple Zest, the Moneylending Agreements involved a licensed moneylender, and the interest rates charged were within the statutory limits set by the MLA 1951, despite being erroneously for unsecured loans. Although the agreements were in the wrong prescribed form, they were, nonetheless, in a form prescribed by Regulations 2003 and clearly identified themselves as moneylending agreements. The terms accurately represented their intended purpose, with no attempt to conceal the nature or object of the transactions, in contrast to the agreements in Mahmood Ooyub and Triple Zest.” (emphasis added)

In KBH Marine, the Court of Appeal affirmed the decision of the High Court in allowing a restitution under Section 66 of CA 1950, among others, because Ace Credit (M) Sdn Bhd was a licensed moneylender.

Since the Defendant is an unlicensed moneylender, I will rely on the decisions in Mahmood Ooyub v. Li Chee Loong & Other Appeals [2021] 1 MLRA 609; [2020] 6 MLJ 755; [2020] CLJU 660, CA (“Mahmood Ooyub”), Triple Zest Trading & Suppliers & Ors v. Applied Business Technologies Sdn Bhd [2024] 1 MLRA 144, [2023] 6 MLJ 818; [2023] 10 CLJ 187, FC (“Triple Zest”) and Detik Ria Sdn Bhd v. Prudential Corporation Holdings Limited & Anor [2025] 3 MLRA 544; [2025] 3 MLJ 22; [2025] 4 CLJ 159, FC (“Detik Ria”).

In Mahmood Ooyub, the Court of Appeal, rejected the appellant’s claim for an unjust enrichment due to illegal moneylending, and Lee Swee Seng JCA (now FCJ) had this to say: “[259] In the Singapore Court of Appeal’s case of Ochroid Trading Limited & Anor v. Chua Siok Liu (trading as Vie Import & Export) & Anor [2018] SGCA 5 where a specially convened panel of 5 Judges of Appeal sat to deliberate on this same issue in the light of Patel v. Mirza [2017] AC 467 watershed decision by the UK Supreme Court on illegality and restitution, the lender there had pleaded in the alternative a repayment of the balance principal sum not paid and the Court of Appeal had dismissed that, affirming the decision of the High Court that the joint venture investment agreement was null and void and unenforceable under the Singapore Moneylenders Act. [260] At any rate we have given careful consideration to this plea though not pleaded in the Statement of Claim of the lenders and we are of the view that to allow restitution would be to allow the lenders to mock the law prohibiting illegal moneylending under the Moneylenders Act 1951. [261] It would embolden the illegal moneylenders or “alongs” as they are pejoratively stigmatised, giving them a gush of wind beneath their wings that they may fly higher with their new-fangled and fraudulent schemes structured to look regular and respectable. [262] We can almost hear them rejoicing with glee with the refrain, “catch me if you can” and “even if you can I’ll still get back the balance principal loan!” It would be to give the alongs the best of both worlds and the public policy as reflected in the ever-increasing fines and penalties and the greater powers given to the police to investigate and collect evidence would be stymied and stultified in the Moneylenders (Amendment) Act 2003 and the Moneylenders (Amendment) Act 2011.” (emphasis added)

In Triple Zest, the Federal Court denied restitution under Section 66 of CA 1950 because the moneylending business was conducted by an unlicensed moneylender. The salient facts in Triple Zest are as follows:

Triple Zest Trading & Suppliers (“Triple Zest Trading & Suppliers”) applied for a loan of RM800,000.00 from

Applied Business agreed to provide a RM800,000.00 loan to Triple Zest Trading & Suppliers for 30 days, subject to repayment of RM1,600,000.00 (the RM800,000 loan plus an RM800,000.00 “agreed profit”);

without a licence to carry on business of moneylending, Applied Business still lent RM800,000.00 to Triple Zest

at the High Court, Triple Zest Trading & Suppliers was ordered to pay RM1.6 million to Applied Business;

at the Court of Appeal, Triple Zest Trading & Suppliers was ordered to pay only the principal sum lent of RM800,000.00;

however, on appeal, the Federal Court ruled that:

although there was only a single loan at interest transaction, Applied Business was carrying on the business of moneylending without a licence;

(ii) therefore, the loan transaction between Applied Business and Triple Zest Trading & Suppliers was illegal under MLA 1951 and void under Section 24 of CA 1950; and

(iii) since the single loan at interest transaction was illegal and void, Applied Business was not entitled to recover the principal sum of RM800,000.00 lent to Triple Zest Trading & Suppliers under Section 66 of CA 1950.

In Detik Ria, the Federal Court affirmed its earlier decision in Triple Zest. In delivering the decision of the Federal Court in Detik Ria, Nallini Pathmanathan FCJ held that: “[177] However, the application of the guidelines above may well result in a refusal of the remedy. This is borne out by Triple Zest (above) where relief was refused. In that case, the centrality of the illegality to the contract is clear, namely the prohibition against the lending of money without being licensed under the Moneylenders Act 1951 (s 5(2)). The prohibition in the statute is important because it forbids the levying of extortionate rates of interest levied on borrowers who are constrained to resort to borrowing from such unlicensed lenders. It carries with it great socio-economic ramifications. The object and purpose of the Moneylenders Act 1951 is to deter and disable illegal moneylending agreements. The parties to the illegal contract in Triple Zest knew, or ought to have known, that such moneylending is prohibited. Perhaps most importantly the transaction was executed in full. In Triple Zest, it was the lender who had deliberately transgressed the law and who sought to recover both the principal and the interest due on this illegal loan. Therefore, proportionality when applied to this matrix of facts justifies the refusal of the remedy. To that end, a denial of the s 66 relief was indeed a proportionate response to the illegality.” (emphasis added)

Based on Mahmood Ooyub, Triple Zest and Detik Ria, the Defendant is not entitled to recover the principal sum of €200,000.00 lent to the Plaintiff. Issue No.5 Can the Plaintiff utilise the €200,000.00 to offset the amount purportedly due and payable by the Defendant for the construction of the 1MW coal gasification system for Fitters NRG Sdn Bhd?

The Defendant contended that it could utilise the sum of €200,000.00 to offset the purported amount due and payable by the Defendant in relation to the construction of the 1MW coal gasification system for Fitters NRG Sdn Bhd.

I am of the view that the Plaintiff’s utilisation of the loan sum of €200,000.00 to offset the alleged amount due and payable for the construction of the 1MW coal gasification system for Fitters NRG Sdn Bhd is unfounded and devoid of merit for the following reasons:

as alluded to earlier, especially in Table 1, the Plaintiff did not make any application for an advance payment for the construction of the 1MW coal gasification system for

the Defendant gave the €200,000.00 to the Plaintiff as a loan and not as an advance payment;

there is nothing in the First Loan Application, the Second Loan Application, or any other documentary evidence indicating that the Defendant agreed to allow the Plaintiff to utilise the sum of €200,000.00 to offset the purported amount due and payable for the construction of the 1MW coal gasification system for Fitters NRG Sdn Bhd; and

not only did the Defendant disagree with the Plaintiff’s request to utilise the €200,000.00 to offset the alleged amount owed for constructing the 1MW coal gasification system for Fitters NRG Sdn Bhd, but the Defendant also objected to it, as demonstrated in the Second Notice of Demand.

Based on the foregoing reasons, I dismiss the Defendant’s counterclaim with costs of RM20,000.00, subject to an allocatur fee.

I also do not allow restitution of the RM866,927.20 (€200,000.00) loan under Section 66 of CA 1950. Dated 10th December 2025 SGD HELMI BIN HAMZAH JUDICIAL COMMISSIONER HIGH COURT OF MALAYA AT SHAH ALAM NEGERI SELANGOR Counsel for the Plaintiff : Mr. Rodney Khor Say Aun (Ms Badrina Ibtisam Binti Badrul Hisham) (Messrs. Rodney & Co) Counsel for the Defendant : Mr. Jarret Ong Kah Lok (Ms Lee Chia Yee) (Messrs. Ong, Ric & Partners)