Amanah International Finance Sdn Bhd v Tan Sri Halim Bin Saad (WA-22M-465-09/2018)

AMANAH INTERNATIONAL FINANCE SDN BHD

ABU TALIB BIN ABDUL RAHMAN ...DEFENDANTS (NRIC NO. : 531231-04-5015) (COUNTER CLAIM) AND CONSOLIDATED WITH S/N Y5duXgxkrkWbhWUqVULHrw IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA (COMMERCIAL DIVISION) CIVIL SUIT NO. WA-22M-523-10/2018 AMANAH INTERNATIONAL FINANCE SDN BHD ...PLAINTIFF (COMPANY NO. 15951-D) HEKTAR PREMIER SDN BHD (COMPANY NO. 586618-M) …DEFENDANT GROUNDS OF JUDGMENT INTRODUCTION [1] There are altogether three actions before me. The original action is between Amanah International Finance Sdn Bhd (“AIF”) and Tan Sri Halim bin Saad (“TSH”) vide Suit WA-22M-465-09/2018 (“Main Suit”). In that Main Suit, TSH had filed a counterclaim against AIF and another Abu Talib bin Abdul Rahman (“ATAR”) (“Counterclaim”). The Main Suit is consolidated with Suit WA-22M-523-10/2018 between AIF and Hektar Premier Sdn Bhd (“HP”) (“Consolidated Action”). S/N Y5duXgxkrkWbhWUqVULHrw [2] In the Main Suit, AIF claims for RM62,031,201.00 against TSH for TSH’s breach of a financing agreement for a facility described as the Master Equity Secured Financing-i Facility Agreement dated 9.6.2015 (“the Facility”). [3] In his Counterclaim, TSH seeks this Court to declare that-

the Share Purchase Agreement dated 30.12.2015 entered between AIF and ATAR - TSH’s nominee - to finance ATAR’s purchase of 20,000,000 shares (“Efogen Shares”) in Efogen Sdn Bhd (“Efogen”) is void;

(ii) The drawdown of part of the Facility amounting to RM20,250,000.00 to purchase the Efogen Shares is void as it is contrary to Shariah principles; and

(iii) The said monies paid for the acquisition of the Efogen Shares shall be refunded to TSH. [4] In the Consolidated Action, AIF seeks from HP the payment of RM62,190,325.63 being the sums owed by TSH to AIF under the Facility, pursuant to the Assignment of Surplus Sale Proceeds entered between HP and AIF on 26.1.2017 (“Assignment of Surplus Sale Proceeds”) where HP has agreed to pay and discharge the outstanding amounts due from TSH to AIF. S/N Y5duXgxkrkWbhWUqVULHrw [5] I had allowed AIF’s claims in the Main Suit and dismissed TSH’s Counterclaim. I had also allowed AIF’s claims in the Consolidated Action. [6] TSH appealed against my decision allowing the Main Suit. TSH further appealed against my decision in dismissing his Counterclaim. HP appealed against my decision in allowing AIF’s claims against it in the Consolidated Action. [7] This Grounds of Judgment applies to all three appeals. BACKGROUND Plaintiff's case [8] The brief facts of AIF’s case are as follows:

8.1 Vide its Letter of Offer dated 13.5.2015 and a Master Equity Secured Financing-i Facility Agreement dated 9.6.2015 ("Facility Agreement"), AIF granted TSH the Facility, which is a short-term financing arrangement for an amount of RM80,000,000.00 to finance the following:

TSH’s purchase of securities in Shariah-compliant Malaysian companies duly approved by the Plaintiff; and

the fees, deposit and costs in relation to the Facility.

8.2 The method of financing under the Facility is in accordance with the Tawarruq concept of Shariah banking system, and subject to the terms and conditions of the Facility Agreement which include the following:

8.2.1 The Facility shall mature on 31.12.2015;

8.2.2 The Facility shall be secured by, among others-

securities comprising:

the shares and warrants of a company, Sumatec

(ii) other securities listed on the Bursa acceptable to the Plaintiff; and

cash deposit comprising:

6 months' worth of Profits; and

(ii) a cash deposit of RM500,000.00. S/N Y5duXgxkrkWbhWUqVULHrw

8.2.3 When AIF determined that the ratio equity of the Secured Amounts under the Facility falls below the Required Equity Ratio of 156%, then AIF may make a margin call to require TSH to remedy the said ratio equity by either requiring TSH to provide further or additional security acceptable to AIF, or reduce the outstanding balance under the margin account to maintain the Required Equity Ratio.

8.3 The Facility Agreement went through the following 4 variations:

8.3.1 On TSH's request dated 15.1.2016, AIF agreed to vary the Facility Agreement, among others, to extend the Expiry Date of the Facility Agreement to 30.6.2016 and for the execution of a 2nd charge of 21 pieces of land in Johor Bharu as security in favour of AIF ("1st Variation"). The 1st Variation was concluded by way of a Supplementary Agreement to the Facility Agreement dated 2.3.2016.

8.3.2 Vide AIF's letter dated 18.7.2016 and TSH's letter dated 17.8.2016, the said Supplementary Agreement was further varied whereby the Expiry Date was further S/N Y5duXgxkrkWbhWUqVULHrw extended to 31.3.2017, subject to certain other terms and conditions (“2nd Variation").

8.3.3 Vide another letter from AIF dated 1.6.2017 which was accepted by the TSH on the same date, the Expiry Date of the Facility was further extended to 30.6.2017 (“3rd Variation").

8.3.4 Vide letters between AIF and TSH dated 2.10.2017, the Expiry Date was further extended to 2.10.2017 (“Final Variation”). What is the subject matter of AIF’s Main Suit and the Consolidated Action? [9] After the Facility Agreement between AIF and TSH had been executed, ATAR and TSH were approached by Dato’ Razali Rahim, the then CEO of AIF, offering ATAR to purchase the Efogen Shares held by AIF. The Efogen Shares were pledged by one Johany Jaafar arising from a separate facility between Johany and AIF, which Johany had defaulted. S/N Y5duXgxkrkWbhWUqVULHrw [10] Relying on Dato’ Razali’s representation, ATAR agreed to purchase 20 million units of the Efogen Shares from AIF for RM20,250,000.00, and the financing was through TSH’s unutilised funds available from the Facility. [11] It is not disputed that TSH had utilised RM60,297,365.00 of the Facility to purchase:

Shares in a public-listed Malaysian company Sumatec Resources Berhad on 19.6.2015 for RM40,047,365.00 (“1st

(ii) 20,000,000 shares in Efogen on 30.12.2015 for RM20,250,000.00 (2nd Tranche”). [12] AIF’s Main Suit and its Consolidated Action are only concerned with the 2nd Tranche. The Efogen Shares [13] As indicated earlier, the Efogen Shares were registered in the name of Johany and charged to AIF for a separate financing provided by AIF to S/N Y5duXgxkrkWbhWUqVULHrw Johany. Johany defaulted that facility and AIF then exercised its rights as chargee to sell Johany’s shares in Efogen. AIF entered into a Share Purchase Agreement with ATAR on 30.12.2015 for the purchase of 20,000,000 shares of Efogen (“Efogen SPA”). ATAR is TSH’s nominee. To facilitate ATAR’s purchase of the Efogen Shares, the purchase price of RM20,250,000.00 was provided through the 2nd Tranche of the Facility. [14] Those 20,000,000 Efogen Shares was subsequently charged back to AIF to fulfill TSH’s obligations to secure the Facility with shares of companies listed in the Bursa acceptable to AIF, as required by the Facility Agreement. [15] AIF alleged that TSH had defaulted the Facility Agreement, among others, in the following manner:

failure to fulfil the terms and conditions of the Final Variation by, among others, failure to pay the Deferred Selling Price of RM60,075,494.06 before the Expiry Date;

(ii) failure to pay the Secured Amounts; S/N Y5duXgxkrkWbhWUqVULHrw

(iii) failure to take steps to remedy the Current Equity Ratio by providing further security and/or reducing the principal amount owing;

(iii) failure to maintain the Current Equity Ratio to not lower than 156%;

consequent to a separate proceeding commenced by Exim Bank against TSH for a sum of USD87,297,656.07 and where the TSH had subsequently entered into a Consent Judgement with Exim Bank on 15.12.2017 which had adjudged TSH to be severally and jointly liable with a 3rd party to pay Exim Bank a sum of USD90,972,366.07 on or before 30.6.2018, thus prejudicing TSH's ability to discharge his payment obligations towards AIF in accordance with the Facility Agreement. [16] Based on the above, AIF filed the current Suit against TSH claiming, among others, for the sum of RM62,031,201.48 for the outstanding sum due and owing to AIF as at 31.8.2018, and Ta’widh (compensation charges for TSH’s late payment). S/N Y5duXgxkrkWbhWUqVULHrw TSH's and ATAR’s case [17] The brief facts of the TSH's case are as follows:

17.1 The existence of the Efogen SPA between AIF and ATAR for the 20,000,000 Efogen Shares at the purchase price of RM20,250,000 and that the said purchase price was paid vide the drawdown of the 2nd Tranche is not disputed by TSH. TSH also admitted that AIF acquired the said Efogen Shares pursuant to rights granted to AIF as chargee in respect of a facility it granted to Johany, a shareholder of Efogen Sdn Bhd.

17.2 TSH argued that he and ATAR had agreed for the arrangements to utilise the 2nd Tranche of the Facility based on a representation made by AIF’s then CEO, Dato’ Razali, that the Efogen Shares has a value of between RM80-100 million and are ready for listing.

17.3 TSH alleged that prior to the execution of the Efogen SPA, another 3rd Party, Roziah Ismail, gave notice to the AIF stating her interest in 6,000,000 of the Efogen Shares which was still held by Johany as she had paid Johany for those shares in full. This resulted in Roziah Ismail filing an action vide Kuala Lumpur Civil Suit WA-S/N Y5duXgxkrkWbhWUqVULHrw 22NCC-451-08/251 ("Suit 451") against Johany where she claimed for specific performance against Johany and for the said 6,000,000 shares to be transferred to her.

17.4 During the 1st day of the trial of Suit 451, Roziah Ismail withdrew that Suit 451 when she found out about the Efogen SPA and she filed a new Civil Suit WA-22NCC-333-09/2016 ("Suit 333") against Johany, AIF and ATAR claiming for the same 6,000,000 of the Efogen Shares. On 13.12.2017 the High Court granted judgment in favour of Roziah Ismail in Suit 333 and ordered Johany to pay Roziah a sum of RM10.5 million. Roziah's claim against AIF and ATAR was dismissed. Johany's appeal was dismissed by the Court of Appeal on 13.10.2018.

17.5 In the meanwhile a search conducted by TSH at the SSM showed that as at November 2020, one Tan Sri Abdul Rashid Abdul Manaf is the majority shareholder of Efogen and MIDF Amanah Investment Nominees (Tempatan) Sdn Bhd is the minority shareholder.

17.6

17.7 It is TSH’s contention that if the Efogen Shares were able to be listed with the expected value as represented by AIF’s former CEO, he would in turn be able to raise funds and consequently would have a stable cash flow to service the Facility. However, this was not the case as the Efogen Shares were unable to be transferred and registered to ATAR and ultimately had no value, which resulted in TSH being unable to service the Facility.

17.8 TSH and ATAR further argued that AIF failed to ensure the Efogen Shares were unencumbered, in breach of the Efogen SPA.

17.9 ATAR and TSH further argued that AIF failed to deliver the relevant documents which include :

the 2015 Management Accounts of Efogen;

Efogen’s company resolution authorising the transfer of its shares.

17.10 AIF’s failure to furnish those documents had led to the non-registration of the Efogen Shares. Most importantly, ATAR claimed that had he been provided opportunity to sight the 2015 Management Accounts of Efogen he would not had proceeded to purchase the Efogen Shares having known the actual value of those shares. Instead, his decision was mainly based on the value of the shares as represented by AIF’s then CEO, Dato Razali Rahim.

17.11 TSH contended that -

the said Efogen SPA was not Shariah-compliant on the following reasons:

the true owner of the 20,000,000 Efogen Shares is unclear, as there are multiple claimants namely Johany, AIF, Roziah, Tan Sri Abdul Rashid Manaf, MIDF, and now ATAR through the Efogen SPA. Such vagueness (Gharar) is not permissible under Shariah banking principle;

AIF as the Financier had violated their own ‘aqad in the Facility Agreement by allowing the 2nd Tranche to be disbursed to themselves as the Seller pursuant to the Efogen SPA. Such utilization of part of the Facility is a deviation from the purpose of the Facility;

there was no prior approval of the Plaintiff's Shariah Committee before the conclusion of the Efogen SPA;

(ii) consequent to the status of Efogen SPA as set out above, the Efogen Shares are not "security" as defined in the Facility Agreement. It follows therefore the condition of the Facility Agreement had not been fulfilled and therefore the Facility Agreement must be terminated and declared null and void.

17.12 Based on the facts and arguments as enumerated above, TSH contended that this Court must make a finding that-

the disbursement of the 2nd Tranche is invalid and forbidden by Shariah;

(ii) the Efogen SPA shall be declared as void ab initio; and S/N Y5duXgxkrkWbhWUqVULHrw

(iii) consequent to the declaration that the Efogen SPA is void ab initio –

ATAR is entitled to terminate the Efogen SPA; and

TSH is entitled to a refund of all monies paid by him to AIF in respect of all monies disbursed from the Facility to pay for the acquisition of the Efogen Shares. HP’s Case [18] HP’s main defence against AIF’s claims against it was that the said claims are premature, on the following reasons:

When AIF agreed to extend the Facility to TSH pursuant to the Final Variation, HP had agreed to allow TSH to utilise the expected surplus over the sale of a piece of HP’s land in Subang Jaya to AIF. This was carried out pursuant to the Assignment of Surplus Sale Proceeds dated 26.1.2022 (“HP’s Assignment”). AIF argued the HP’s Assignment formed part of a security for TSH’s extended Facility. When TSH was alleged to have defaulted in the repayment of that S/N Y5duXgxkrkWbhWUqVULHrw extended facility through the Main Suit, AIF brought the action against HP through the Consolidated Action;

At all material times, HP’s Assignment was not to guarantee TSH’s debts pursuant to the extended facility. It is only a promise to indemnify AIF for TSH’s default in his repayment of the said facility through the surplus of sale proceeds of HP’s land;

The HP land sale transaction has not completed and as such the surplus has not arise as yet.

AIF could only initiate any action against HP after this Court concluded its findings on AIF’s claims against TSH;

Even if this Court finds TSH liable, and the HP land transaction has completed, HP’s extent of liability is only confined to the surplus sale proceeds of the HP lands, subject to deductions against the amounts to be paid by HP to its chargor, Maybank Berhad. S/N Y5duXgxkrkWbhWUqVULHrw FINDING OF THIS COURT Preliminary Issue : What was the scope of TSH’s Counterclaim? [19] Whilst AIF’s claims against TSH, and AIF’s claims against HP in the Consolidated Action are rather straight forward as set out in the earlier paragraphs, I must at the outset resolve what exactly was TSH’s counterclaims against AIF and ATAR. This is because AIF’s counsels argued that TSH’s counterclaim revolves around his challenge on the validity of the Facility limiting it only to the 2nd Tranche involving the disbursements of RM20,250,000.00 for the purchase of the Efogen Shares. On the other hand, TSH’s counsels argued in their submissions that TSH’s claims were not limited to only the validity of the 2nd Tranche but also AIF’s right to claim the 1st Tranche, as the entire actions of AIF with regards to the 2nd Tranche transaction has caused tremendous losses to TSH that had the consequential effect in TSH not being able to service the Facility. [20] To resolve this issue, all that needed to be done by this Court is to examine TSH’s pleadings, as it is trite law that parties are bound by pleadings and parties are not allowed to adduce facts and issues which S/N Y5duXgxkrkWbhWUqVULHrw they have not pleaded. Ramly Ali FCJ in Samuel Naik Siang Ting v. Public Bank Bhd [2015] 8 CLJ 944; [2015] 6 MLJ 1 held: “It is a cardinal rule in civil litigation that parties are bound by their pleadings and are not allowed to adduce facts and issues which they have not pleaded (see State Government of Perak v. Muniandy [1985] CLJU 117; [1986] 1 MLJ 490; and Anuar bin Mat Amin v. Abdullah bin Mohd Zain [1989] CLJU 74; [1989] 3 MLJ 313).” [21] Justice Ramly Ali cited with affirmation the decision of the English Court in Blay v. Pollard & Morris [1930] 1 KB 628, in holding further that a court’s determination on matters before it must be confined only on the issues on the record as pleaded, and if parties desired to raise other issues, these must be pleaded on the record by amendment. [22] This Court would therefore confine its findings on TSH’s counterclaim based on his pleadings, which could be summarized as follows:

Paragraphs 3 - 5 of TSH’s Amended SOD sets out TSH’s objection to the Plaintiff’s assertion on the conclusiveness of the AIF’s Certificate of Indebtedness. TSH alleged that there are manifest error in the statement. TSH’s counsels argued that as the Certificate of Indebtedness is in question, it follows that the entirety of the Facility is in question and not just the 2nd Tranche.

(ii) It is trite law that Certificate of Indebtedness - if no evidence shown any manifest error in the amount and calculation stated therein - would form conclusive evidence of the amount due by a borrower: Citibank NA v. Ooi Boon Leong & Ors [1980] 1 LNS 168; [1981] 1 MLJ 282 and Cempaka Finance Bhd. v. Ho Lai Ying & Anor [2006] 3 CLJ 544. In CIMB Bank Bhd v Zima Properties Sdn Bhd & Ors [2014] 6 CLJ 677, Mohd Zawawi Salleh JCA (as His Lordship then was) delivering the decision of the Court of Appeal held: “It is axiomatic that a certificate or statement issued pursuant to a conclusive evidence clause is, in the absence of fraud or manifest error on the face of the certificate, determinative of the amount due.”

(iii) The fact that TSH questioned the AIF’s Statement of Account per se does not equate questioning the legality and validity of the Facility as a whole. This must be seen within the context of TSH’s pleadings in its entirety.

(iv) Paragraphs 6 - 14 of TSH’s Amended SOD formed the main and substantive part of his Defence. And it was based on these main parts of the Defence that TSH formulated his Counterclaims against AIF. These main part of the Amended Defence and S/N Y5duXgxkrkWbhWUqVULHrw Counterclaims were squarely premised on the 2nd Tranche – the part of the Facility amounting to RM20,250,000.00 which was disbursed to pay for the purchase of the Efogen Shares. In these paragraphs of his Amended Defence, TSH claimed that the Efogen SPA was not Shariah-compliant, and it follows that the disbursement of the relevant amount from the Facility to facilitate the purchase of the Efogen Shares was not Shariah-compliant. This would result in the Efogen SPA having to be declared as void ab initio and the consequential reliefs as I had indicated in the earlier paragraph – that ATAR, being TSH’s nominee, is entitled to terminate the Efogen SPA and all monies, profits and payments shall be refunded to TSH.

The above paragraphs clearly showed the intent on the part of TSH to deal only with the 2nd Tranche in his Counterclaim. He never intended to make any claims covering the 1st Tranche. His claims for “the refund of all monies, profits and payments” were intended to only cover the monies, profits and payments related to the 2nd Tranche. His arguments that he meant to claim for the entire Facility was clearly an afterthought.

(vi) Apart from the above, paragraphs 4 - 10 of TSH’s Reply to AIF’s Defence to his Counterclaim reinforced the fact that TSH’s Counterclaim revolves around the 2nd Tranche only.

(vii) In paragraphs 4-6, TSH pleaded that the Tawarruq transactions documents through the variation letters are not bona fide and inconsistent with Shariah principles of Tawarruq. This is despite TSH’s unequivocal agreements to the variations. TSH alleged that the profits charged by AIF under the Facility is riba’ and contrary to Shariah principles.

(viii) In paragraphs 8 – 10, TSH reinforced his case regarding the Efogen SPA. [23] Having examined TSH’s pleadings as briefly set out above, this Court agrees with the submission of AIF’s counsels that TSH’s challenge on the validity of the Facility is only limited to the 2nd Tranche. TSH does not plead to challenge the 1st Tranche or the entirety of the Facility. [24] The main issue to be determined by this Court in the Original Action, the Counterclaim and teh Consolidated Action, therefore, is only in respect of the 2nd Tranche of the Facility. But at the same time, this Court will S/N Y5duXgxkrkWbhWUqVULHrw address TSH’s claims that the Tawarruq transactions documents through the variation letters are inconsistent with Shariah principles. Shariah Issues At Interlocutory Stage [25] TSH had filed an interlocutory application asking this Court to invoke s. 56(1)(b) of the Central Bank of Malaysia Act 2009 to refer the following Shariah issues, deemed by TSH as novel, to the SAC of BNM:

Whether AIF, an Islamic Financing Institution, is permitted to disburse a facility under Tawarruq to finance the purchase of the Efogen Shares which due to the reasons as set out in the earlier paragraphs had fallen into non-Shariah compliant shares status;

(ii) Whether AIF is required to obtain prior approval from its respective shariah committee before the disbursement of facility under Tawarruq;

(iii) Whether AIF is permitted to disburse a facility to finance a third party, ATAR’s purchase of the Efogen Shares, of whom ATAR is not privy to the facility agreement between TSH and AIF; S/N Y5duXgxkrkWbhWUqVULHrw

(iv) Whether AIF is permitted to disburse the said 2nd Tranche of the Facility granted to TSH to finance ATAR’s acquisition of the Efogen Shares which is tainted with Gharar (ambiguity), hence is non-Shariah compliant. [26] I had dismissed the application having ruled that the issues raised although are Shariah issues, but are not novel. I referred to the Federal Court decision in JRI Resources Sdn Bhd v. Kuwait Finance House (Malaysia) Bhd; President of Association of Islamic Banking Institutions Malaysia & Anor (Interveners) [2019] 5 CLJ 569, where it was held that the determination of Shariah principles in business and Islamic banking transactions is not to be determined by this Court but is within the jurisdiction of the SAC. The Federal Court in JRI Resources also held that subsection 56(1) of the CBMA gives option to the Court or arbitrator whether to take into consideration the published ruling of the SAC or refer the Shariah issue to the SAC for ruling. The word 'or' in that section signifies that such option is provided to the Court or arbitrator. [27] Having scrutinised the pleadings of parties and the Shariah issues raised by the Defendants, I concluded that the Shariah issues or questions raised by the Defendants are not in any manner pertaining to issues that require determination and ruling of the SAC. Instead the issues and S/N Y5duXgxkrkWbhWUqVULHrw questions are pertaining to implementation, operation and execution of various agreements and contractual terms involving the parties. These are issues that are clearly within the jurisdiction and competence of this Court to determine. In making such determination, I could refer and take into consideration any published rulings of the SAC, with the assistance of the expert witness to explain them. There is therefore no necessity for this Court to invoke subsection 56(1)(b) to refer such issues to the SAC for ruling. See Amanah International Finance Sdn Bhd v Tan Sri Halim Saad [2021] CLJU 2287, [2021] 1 LNS 2287. [28] The Court of Appeal had affirmed this Court’s decision and held: “(1) We are of the view that the High Court Judge is not plainly wrong in his decision not to refer the questions posed by the Appellant to the Syariah Advisory Council (SAC) for its ruling. The Judge under s. 56(1) of the Central Bank of Malaysia Act 2009 (CBMA) have the option either to take into consideration any published rulings of the SAC or refer such questions to the SAC for its ruling.

The Judge in his Grounds of Judgment at para 28 had stated that he could refer and take into consideration any published rulings of teh SAC (as per s. 56(1)(A) and that there is no necessity for him to invoke subsection 56(1)(B) by referring the matter to SAC for its ruling.

As such, the Judge has not erred in his decision.

Therefore, we find no merits in the appeal to warrant our intervention. S/N Y5duXgxkrkWbhWUqVULHrw

Appeal is dismissed with costs and decision/Order of the High Court dated 22/7/2022 is thereby affirmed.” Shariah Issues Raised During Trial [29] Despite the decision of the Court of Appeal affirming this Court’s decision as set out above, during the course of the trial, counsels for TSH, ATAR and HP reiterated their arguments at the interlocutory stage that before this Court could proceed to make any determination on the disputes of the parties, this Court must submit the Shariah issues raised by TSH to the SAC as this Court does not have the competence and jurisdiction to deal and decide on those issues. Once the SAC had made its rulings, any which way, only then can this Court proceed with the trial and make the appropriate determination. [30] This Court disagreed with TSH, HP and ATAR’s counsels. [31] The Shariah issues raised by TSH are in essence similar with those raised in his interlocutory application as I had elaborated in the earlier paragraphs. They are as follows: S/N Y5duXgxkrkWbhWUqVULHrw

That the Variation Letters are inconsistent with the Tawarruq Principle under which the Facility was granted as the commodity transactions referred to in the Facility Agreement had been completed prior to the execution of those letters.

(ii) The usage of the 2nd Tranche of the Facility in the amount of RM20,250,000.00 for the purchase of the Efogen Shares where AIF appeared to be the buyer and the seller of the shares contradicted Shariah principle, raising uncertainty and ambiguity or “Gharar” as termed under Shariah law.

(iii) As set out in the earlier paragraphs, some portion of the 20,000,00 Efogen Shares involved in the Efogen SPA were claimed by one Roziah Ismail. On top of that, a search conducted by TSH at the SSM showed that as at November 2020, one Tan Sri Abdul Rashid Abdul Manaf is the majority shareholder of Efogen Sdn Bhd and MIDF Amanah Investment Nominees (Tempatan) Sdn Bhd is the minority shareholder. TSH concluded that these facts drew ambiguity and vagueness (Gharar) as to the true owner of the Efogen Shares. This issue formed the crux of TSH’s counterclaim against AIF. S/N Y5duXgxkrkWbhWUqVULHrw [32] TSH argued that based on the above circumstances, the said Efogen SPA was not Shariah-compliant as it involved element of Gharar (vagueness). This Gharar occurred when during the conclusion of the Efogen SPA the true owner of the 20,000,000 Efogen Shares cannot be determined. Such uncertainty and ambiguity is strictly prohibited in Shariah transactions. It follows therefore the disbursement of the 2nd Tranche is invalid and forbidden by Shariah. Consequentially, the 2nd Tranche disbursement for the acquisition of the Efogen Shares shall be declared as invalid as it was not in compliance with Islamic principles. [33] In consonant with this argument, TSH maintained that the Shariah issues that he raised above are issues that must be resolved by the Shariah Advisory Council of the Bank Negara Malaysia (“SAC”) pursuant to s. 56(1)(b) of the Central Bank of Malaysia Act 2009. This Court does not have the jurisdiction to decide on those Shariah issues as they are novel issues and this Court has no alternative but to refer those issues to the SAC for its ruling. TSH claimed that consequent to that, this Court does not possess the jurisdiction to hear the case in their entirety until the ruling on the Shariah issues he raised are resolved by the SAC. [34] As the Shariah issues are essentially similar with the issues TSH raised earlier to which this Court’s decision had been affirmed by the Court S/N Y5duXgxkrkWbhWUqVULHrw of Appeal, I decided to apply the same line of reasons as set out in my grounds of judgment in making a finding that this Court possessed the jurisdiction to hear the case in their entirety without having to make any reference to the SAC on the Shariah issues raised by TSH. [35] Firstly, it is my ruling that the issues raised by TSH are not in any manner pertaining to Shariah principles and law involving Islamic banking. Those are issues and questions pertaining to implementation, operation and execution of various agreements and contractual terms involving TSH, AIF, ATAR and HP. [36] Secondly, this Court does not accept TSH’s arguments that as the commodity transactions completion date was earlier than the date of the execution of the variation letters, it rendered the variation letters inconsistent with Tawarruq principle. [37] This Court was guided by the evidence of the Plaintiff’s Shariah expert, Associate Professor Dr Azman Mohd Noor (PW2) on this issue. PW2 explained the concept of Tawarruq in detail and testified that the commodity transactions which formed the key element of the Tawarruq agreement which was concluded by TSH and AIF had been discussed at great length by the SAC. The SAC had long concluded that Tawarruq in S/N Y5duXgxkrkWbhWUqVULHrw the manner as entered into by TSH fully complies with Shariah principles. As for the Variation Letters, PW2 particularly referred to his expert report (P2) where he made reference to paragraph G 14.6 of the SAC’s Tawarruq Policy Document dated 28.12.2018 which provides: “The contracting parties may mutually agree to enter into a new contract that may result in a new debt obligation, whereby the proceeds of the new contract is to be used to settle the outstanding debt obligation arising from the sale and purchase contract under the earlier Tawarruq.” [38] This Court agrees with the Plaintiff that based on the above ruling, the Final Variation letters are consistent with the Tawarruq principle. [39] Thirdly, on the argument that the multiple ownership claims of the Efogen Shares rendered the transaction void and non-Shariah compliant as it involved Gharar, TSH relied on the writing of one Sheikh Muhammad Taqi Usmani published in the online website Islamicmarket.com, accessible online at https://Islamicmarkets.com/education/basic-rules-of-sale: S/N Y5duXgxkrkWbhWUqVULHrw

There must be certainty as to the ownership of the item/asset to be sold and that the seller shall not sell an item/asset which he does not own; and

(ii) The item/asset to be sold must be of some value. [40] This Court found that Roziah Ismail’s claims against Johany is considered settled when the Court of Appeal confirmed that Johany shall pay RM10.5 million for the transfer of her relevant portion of the Efogen shares to Johany. As such the pledging of those shares by Johany to AIF for a separate facility arrangement between Johany and AIF that led to AIF forfeiting those shares when Johany breached the facility agreement was unequivocally valid. It follows therefore the sale of those shares by AIF to ATAR was valid as AIF was the rightful owner of those shares at that time. It is also this Court’s finding that the fact that the record of SSM showed Johany’s name still appeared as the “owner” of the relevant portion of the Efogen Shares per se does not make Johany as the legal owner as this is merely procedural. [41] I had further considered the decision of the COA in Pan Northern Air Services Sdn Bhd v. Maybank Islamic Bhd & Another Appeal [2021] 3 CLJ 34 cited by TSH’s counsel in their written submissions. I S/N Y5duXgxkrkWbhWUqVULHrw found the decision of the COA does not in any manner alter the detailed elaborations of the Federal Court in JRI Resources which I had referred to in my GOJ earlier. [42] It is my finding that the Shariah issues raised by TSH, ATAR and HP are not novel Shariah issues that would require ruling by the SAC. There is no reason for this Court to refer the issues to the SAC. Thus, this Court clearly has jurisdiction to hear and determine all the issues raised in this Suit, including the Shariah issues raised by TSH. Efogen Shares were free from encrumbrances? [43] TSH and ATAR argued that AIF had failed to fulfill its contractual obligations to ensure the Efogen Shares are free from encrumbrances, as represented by AIF’s former CEO, Dato’ Razali Rahim. [44] This Court took cognizance of the fact that TSH and ATAR in another action, WA-22NCC-333-09/2016 (Suit 333) had taken the position that the shares were free from encumbrances, and that ATAR was a bona fide purchaser for value of the shares under the Efogen SPA. Based on that position taken by ATAR, the Court had dismissed the action against S/N Y5duXgxkrkWbhWUqVULHrw ATAR in that Suit 333 and made a finding that ATAR was a bona fide purchaser for value and his shares are free from encumbrances. [45] Based on that finding, this Court agrees with AIF’s counsel that the principle of judicial estoppel applies to ATAR and TSH in that as they had successfully and unequivocally asserted their position with regards to the shares in that prior proceeding, they are estopped from asserting an inconsistent position in this subsequent proceeding : Edwards v Aetna Life and Casualty 690 F2S 595 [1982], OJSC Oil Co Yugraneft (In Liquidation) v Abramovich and others [2008] EWHC 2613 (Comm), Bank Pertanian Malaysia Bhd v Rampai Maluri Sdn Bhd [2021] MLJU 266, Zulpadil bin Mohammad & Ors v Bank Pertanian malaysia Bhd [2013] 2 MLJ 915. [46] This Court further concluded that TSH and ATAR’s arguments that Efogen shares were encumbered and therefore the Efogen SPA shall be declared void cannot be sustained on the grounds as intimated by AIF’s counsel, to which this Court is in total agreement:

ATAR’s letter dated 29.12.2015 to AIF which was issued prior to the date of the Efogen SPA which indicated that ATAR agreed to purchase the Efogen Shares with full knowledge of the S/N Y5duXgxkrkWbhWUqVULHrw existence of several 3rd party claims including Roziah Ismail,

Clause 5 of the Efogen SPA provides clearly ATAR’s obligation to resolve and settle all claims made by the 3rd parties in respect of the Efogen Shares;

ATAR himself was named as a party to Suit 333 where he successfully absolved the claims against him when he argued and admitted that the Efogen Shares were unencumbered and that he was a bona fide purchaser;

Recital 3 of the Efogen SPA stated that MIDF Amanah Merchant and Tan Sri Abdul Rashid Abdul Manaf are the registered names of the Efogen Shares;

ATAR admitted in his evidence that Tan Sri Abdul Rashid Abdul Manaf had not make any claims against any person over the Efogen Shares ownership. S/N Y5duXgxkrkWbhWUqVULHrw [47] Based on the above findings, this Court rule that the Efogen Shares were free from encumbrances, and that ATAR was a bona fide purchaser for value of the shares under the Efogen SPA. Adverse Inference against AIF for failure to call Dato’ Razali Rahim as a witness? [48] ATAR and HP argued that as PW1 had testified that the best person to explain about the Efogen SPA is Dato’ Razali, this Court shall invoke section 114(g) of the Evidence Act and presume adverse inference against AIF’s failure to call Dato’ Razali as a witness. [49] The law on adverse inference is trite. The scope of s. 114(g) had been explained in the celebrated case of Munusamy v PP [1987] 1 MLJ 492 where the Supreme Court held that adverse inference can only be drawn if there is withholding or suppression of evidence and not merely on account of failure to obtain evidence. If it relates to a document, then it cannot be invoked merely because of failure to produce the particular document but failure to produce material document. If it relates to a witness it cannot be invoked by the mere failure to call any witness, but that witness must be an important witness to the case. S/N Y5duXgxkrkWbhWUqVULHrw Is the Share Sale Agreement invalid when the Shariah Screening Checklist was incomplete? [50] The non-completion of the AIF’s Shariah Screening Checklist (P4) was one of the issues raised during the course of the trial. TSH argued that it is mandatory for AIF to complete the Shariah Screening Checklist and subsequently to submit the completed checklist to AIF’s internal Shariah Committee to ensure that all matters related to the application of the Facility by TSH are Shariah-compliant. Failure on the part of AIF to complete the said checklist had rendered TSH’s application for the Facility and the subsequent Efogen Shares transaction not being examined by AIF internal Shariah Committee, which is the body that determines Shariah-compliance of those transactions. [51] When cross-examined by TSH’s counsel, Associate Professor Dr Azman Mohd Noor (PW2) agreed that the screening by the AIF’s internal Shariah team should be done prior to disbursements of a facility to detect any Shariah non-compliant. According to PW2 the market practice is that the internal Shariah team would conduct the screening to detect any irregularities. If the team found any, it will be brought to the internal Shariah Committee who would then decide whether the irregularities would cause the transaction to be regarded as null and void, or S/N Y5duXgxkrkWbhWUqVULHrw permissible. PW2 gave evidence further that the fact that the screening form was done properly and not affirmed by the AIF internal Shariah Secretariat per se would not imply that the financing transaction is null and void, as it is only a procedure. During cross-examination, PW2 agreed with the Defendant’s counsel that his conclusion that the Efogen Shares are Shariah-compliant was based on his assumption that AIF had done all the necessary Shariah screening process on Efogen Sdn Bhd. [52] It is my ruling that the Shariah Screening Checklist is, as the name suggests, a mere Checklist. The existence or otherwise of that Checklist Form, including the non-filling up of the details in that Checklist by AIF’s Shariah Secretariat, does not determine the Shariah compliance or otherwise and the validity of the Facility and the share sale transactions. For the Facility and the Share Sale Agreement to be Shariah-compliant, the applicable fundamentals and principles shall be complied with. These fundamentals had been set out in the Shariah Screening Methodologies set out by the SAC of the SC and SAC of the BNM. [53] The SAC of the SC, for instance, adopts Quantitative and Qualitative approach in determining Shariah status of securities and shares. The Quantitative approach involves business activity benchmarks and S/N Y5duXgxkrkWbhWUqVULHrw financial ratio benchmarks with specific percentages of companies involving in various non-Shariah related businesses. [54] The non-filling up of the details in that Checklist by the Shariah Secretariat of the AIF simply shows incompetence and lackadaisical attitude of those officials. That alone would not make the shares and the share sale agreement invalid. Revisiting the issue of Gharar [55] This Court will reiterate the main issue before this Court. By virtue of the Efogen SPA between AIF and ATAR, AIF sold to ATAR 20,000,000 shares in Efogen at the purchase price of RM20,250,000.00. AIF acquired the said shares pursuant to rights granted to them as a charge in respect of a facility it granted to Johany, a shareholder of Efogen. It is not disputed that ATAR entered into the Efogen SPA with the Plaintiff as TSH’s nominee, and the entire purchase price was paid to AIF through the 2nd Tranche draw-down from the Facility granted by AIF to TSH. [56] In the meanwhile a search conducted by TSH at the SSM showed that as at November 2020, one Tan Sri Abdul Rashid Abdul Manaf is the majority shareholder of Efogen and MIDF Amanah Investment Nominees S/N Y5duXgxkrkWbhWUqVULHrw (Tempatan) Sdn Bhd is the minority shareholder. TSH concluded that such disparity drew ambiguity as to the true owner of the Efogen Shares that were the subject of the share sale transaction, thereupon raising the issue of Gharar making the transaction non-Shariah compliant. [57] Pursuant to the Efogen SPA, the share transfer forms and Efogen share certificates were delivered to ATAR. In light of the claims by Roziah, ATAR did not submit the transfer forms and share certificates for registration, and this resulted in Johany still, on record, in control of Efogen Sdn Bhd. [58] The status of Efogen involving in halal business is never an issue raised by TSH. As such AIF’s arguments that Efogen Sdn Bhd is a Shariah-compliant entity is not disputed by TSH’s team. What is being questioned by TSH is the existence of Gharar due to uncertainity on the ownership of the Efogen shares and the manner in which the transaction took effect that resulted in the whole share sale being non-Shariah compliant. [59] This Court agrees with the submission of the AIF’s counsel that this allegation shall be fully proven by TSH and all that needed to be shown to this Court by AIF, on the balance of probabilities, is the existence of a valid S/N Y5duXgxkrkWbhWUqVULHrw contract between AIF and TSH, in this instance undisputedly TSH’s nominee who had acted fully on TSH’s behalf and with TSH’s consent, on the Efogen shares sale transaction. [60] TSH, ATAR and HP’s arguments that the Efogen SPA contradicted Shariah principle as it involved vagueness due to uncertainty of the ownership of the Efogen Shares purchased by ATAR utilising TSH’s facility cannot be sustained. AIF is clearly the owner of the part of the Efogen Shares that had been charged by Johany to AIF. [61] DW3, HP’s director and sole witness, could not assist this Court to understand the sale of HP land as he could not explain the documents pertaining to the sale transaction, which documents were obtained by AIF from HP through discovery proceeding. DW3 admitted that HP was controlled by TSH. [62] Clause 5.03 of the Facility Agreement provides that the obligation to utilise the Facility for Shariah-compliant activities falls squarely on TSH and not AIF. This Clause further provides that if TSH failed to comply with this obligation, AIF “shall have the right to review, suspend, recall or terminate the Facility.” S/N Y5duXgxkrkWbhWUqVULHrw [63] Having considered the evidence before this Court brought by both parties as set out in the earlier paragraphs, and based on my findings on all the issues raised, I conclude that AIF had successfully proven the legality of the Facility Agreement, the legality of the subsequent variations of the terms of that Facility Agreement culminated in the Final Variation Letter, the legality of the Efogen SPA and all transactions related to that Efogen SPA pertaining to the Efogen Shares. TSH had breached the Facilities Agreement. It is my further conclusion that the Efogen SPA is valid and the drawdown of the 2nd Tranche for the purchase of the Efogen Shares by ATAR is valid. ATAR had breached the Efogen SPA. [64] This Court also took cognizance of what had transpired in Suit 333 involving both AIF and TSH and Roziah and the fate of the Efogen Shares in that proceeding which was made known to this Court by both parties. CONCLUSION [65] In conclusion, I rule that all transactions and documents pertaining to the Efogen share sales were legally valid. TSH and ATAR had failed to canvass any doubt on AIF’s case and AIF had proven its case on the balance of probabilities. S/N Y5duXgxkrkWbhWUqVULHrw [66] I therefore allow AIF’s claims for TSH to pay a sum of RM62,031,201.48 being outstanding amount due and owing to Plaintiff as at 31.08.2018 for breach of the Facility Agreement. [67] I dismissed all counter-claims by TS Halim. [68] As for the AIF’s claims for Ta’widh, I allow it subject to the calculation of the quantum in the manner as prescribed by the SAC in its 50th meeting dated 26.05.2005, 61st meeting dated 24.08.2006 and 100th meeting dated 30 April – 1 May 2010 which stated:

Court may impose Ta’widh at the rate stipulated by the procedures of the Court. However, from this rate, the judgement creditor is only allowed to receive compensation date of actual loss.

(iii) To determine actual loss, the SAC agreed to adopt the “weighted average overnight rate” of Islamic money market as a reference. [69] I ordered Ta’widh against TSH in that manner. S/N Y5duXgxkrkWbhWUqVULHrw [70] I also allow costs in favour of AIF. [71] On the Consolidated Claims by AIF against HP, having considered the evidence before me, particularly Clauses 2.1 and 15.4 of HP’s Assignment, I conclude that HP as the surety had agreed to assume the role of the principle debtor in place of TSH as the original principal debtor, and is therefore liable to satisfy the full extent of TSH’s indebtedness to AIF, which I had found to be in favour of the AIF. [72] Based on the findings as set out in the earlier paragraphs, I rule that pursuant to the Assignment of Surplus Sale Proceeds entered between HP and AIF on 26.1.2017, HP has agreed to pay and discharge the outstanding amounts due from TSH to AIF. Consequential to my findings on TSH’s breach of the Facility Agreement and that the Efogen SPA is valid and enforceable, I allow AIF’s claims against HP for the payment of RM62,190,325.63 being the sums owed by TSH to AIF under the Facility and the Ta’widh. [73] However, I must make it clear that the total sum that AIF shall receive following the findings of this Court in both Suits from both TSH and HP shall not exceed the actual amount due to AIF by the principal debtor TSH. S/N Y5duXgxkrkWbhWUqVULHrw OBITER [74] Having appraised myself with the full facts of the case as set out in the earlier paragraphs, I must not fail to take this opportunity to state my observation on the following matters:

AIF has agreed to lend an amount of RM80mil to TSH;

(ii) The main purpose of the lending was to allow TSH to purchase shares/securities in Shariah-compliant Malaysian companies duly approved by the Plaintiff;

(iii) It was meant to be a short-term facility – maturing in six (6) months after the date of signing of the facility agreement. Maturing date was on 31.12.2015;

(iv) The Facility Agreement stated that the borrowing shall be secured by numerous means, including shares and warrants of Sumatec Resources Berhad, and securities from companies listed on the Bursa acceptable to the Plaintiff; S/N Y5duXgxkrkWbhWUqVULHrw

(iv) The requirement of Sumatec shares security had been complied with by TSH. But as for the 2nd security, when the agreement stated that this security shall be raised through other shares from companies listed in the Bursa, one could only interpreted that to mean that TSH will provide shares which are already in his pockets and charge them for this purpose. This is a reasonable deduction when this court took judicial notice of the stature of TSH as a highly successful businessman with substantial amount of shareholding in numerous companies locally and abroad;

However, the facts of this case as I had set out earlier showed that was not the case. AIF went “out of its way” to offer TSH shares charged to it which it had forfeited from a third party, and allowing TSH, through his nominee ATAR, to purchase those shares utilising the loan it had granted to TSH, and then place these shares back to IAF as security for the Facilities;

(vi) In the meantime, AIF had allowed the short-term 6 month loan metamorphosised into a long term 2-year loan through four extensions, enabling all this arrangements and requirements to materialise; S/N Y5duXgxkrkWbhWUqVULHrw

(vii) AIF allowed extensions after extensions, despite having issued letters of demand to TSH for TSH’s breaches and failures to service the Facility;

(viii) In the meanwhile, AIF failed to complete its internal Shariah Screening Checklist, which as I had remarked earlier although does not affect the legality of the transaction but showed utter incompetence and lackadaisical attitude of the relevant officials of AIF. [75] The above facts demonstrated a transaction which, albeit legal and valid, but arguably tainted with questionable ethics on the part of the relevant AIF officials. I am hopeful that the top management of AIF will take positive measures to improve this. Dated : 6 May 2024 -signed- (MOHD RADZI BIN HARUN) Judge High Court of Malaya S/N Y5duXgxkrkWbhWUqVULHrw PARTIES: Solicitors for the Plaintiff: David Morais together with Shaikh Abdul Saleem, Pavitra Pillai, Sara Jailanny and Ellia Fatanah Messrs. Shaikh David & Co A1-9-9, Arcoris Mont Kiara No. 10 Jalan Kiara, 50480 Kuala Lumpur Ref. : SDC/SAS/EK/19001950 Email : samantha@sdco.com.my Solicitors for the Defendant: Ashok K. Raman together with Mohd Faiz Iskandar Hamzah Messrs Arief & Iskandar A1-2-5, Arcoris Mont Kiara, No. 10 Jalan Kiara, 50480 Kuala Lumpur, Ref. : AI.1.202000.18.FH Email : ariefiskandar.legal@gmail.com Solicitor for the 2nd Defendant in Counter Claim & Defendant in the Consolidated Matter: Khalid Yusof Messrs Abu Talib Shahrom 39-43, Jalan Desa, Taman Desa 58100 Kuala Lumpur Ref. : ATS/LIT/CIV/20180230/KY Email : general@atsz.com.my S/N Y5duXgxkrkWbhWUqVULHrw