Bank Kerjasama Rakyat Malaysia Berhad (12AM-7-07/2018)

M. KAMALA A/P PERUMAL @ MUTHUSAMY (NRIC No: 660109-04-5370)

Raventeran a/l Vadivelu (NRIC No: 630813-10-7291) … RESPONDENTS [IN THE SESSIONS COURT AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA SUMMONS NO: WA-B52M-274-04/2018 BETWEEN BANK KERJASAMA RAKYAT MALAYSIA BERHAD [2192] … PLAINTIFF

M. KAMALA A/P PERUMAL @ MUTHUSAMY (NRIC No: 660109-04-5370)

Raventeran a/l Vadivelu (NRIC No: 630813-10-7291) … DEFENDANTS] BEFORE YA KHADIJAH BINTI IDRIS JUDICIAL COMMISSIONER 2 GROUNDS OF JUDGMENT Introduction [1] The Plaintiff’s writ action against the Defendants is for the sum of RM 338,835.46 being monies due and payable under an Islamic financing facility granted by the Plaintiff. The Plaintiff’s Writ and Statement of Claim (the Writ and Statement of Claim is collectively hereinafter referred to as “the Plaintiff’s Claim”) was subsequently struck out by the Sessions Court pursuant to the Defendants’ application under Order 18 rule 19 (1) (b), (c) and (d) of the Rules of Court 2012 (RoC 2012). [2] Aggrieved by the decision of the Sessions Court, the Plaintiff appealed to Judge in Chambers. Having heard both parties, this court allowed the appeal. Below are the grounds for the said decision. [3] The parties will hereinafter be referred as they were in the Sessions Court. 3 Salient Facts [4] Via Letter of Offer dated 20 October 2005, the Plaintiff offered and the Defendants accepted an Islamic banking facility amounting to RM 234,000.00 (Facility). The purpose of the Facility was to redeem a facility taken by the 2nd Defendant from Standard Chartered Bank Malaysia Berhad (Standard Chartered Bank). [5] As security for the Facility, both parties agreed to execute the following documents –

Asset Puchase Agreement;

Asset Sale Agreement;

a charge over a double-storey house (the Property), which at the material time was registered in the name of the 2nd Defendant, in favour of the Plaintiff. The said charge is to be created upon the happening of the following events –

The discharge of a charge created by the 2nd Respondent in favour of the Standard Chartered Bank Malaysia Berhad; 4

(ii) The transfer of half (1/2) share in the Property in favour of the 1st Respondent from the 1st Respondent; making each of Respondents having ½ share each in the Property. [6] Via the Asset Purchase Agreement and the Asset Sale Agreement it is agreed that the Defendants are to repay the Facility granted by 263 monthly instalments of RM 1,879.00 each and one final instalment of RM 1,875.37. [7] Via letter dated 15 November 2005, Messrs Sasikumar & Associates (Solicitor), the legal firm having conduct of the documentations in relation to the Facility, advised the Plaintiff that all documentations are in order and binding and that the Plaintiff could release the redemption sum to Standard Chartered Bank. It is undisputed that the Plaintiff had redeemed the Property from Standard Chartered Bank by making payment in the sum of RM 197,527.68 to the said bank. It is also undisputed that the Plaintiff had disbursed to the Solicitor the difference (being RM 36,472.32) between the Facility and the redemption amount paid to Standard Chartered Bank upon being advised by the said Solicitor via letter dated 6 December 2005 that all 5 security documents were presented for registration and that it is in order for the Plaintiff to make disbursement. [8] The Asset Purchase Agreement and the Asset Sale Agreement were executed on 14 November 2005 respectively. However with regards to the charge, the Plaintiff was subsequently notified by the Land Office around July 2007 that the presentation of the charge was rejected because the name of the chargor and the registered owner of the Property are not the same. Thus the intended charge over the Property was not effected as the transfer of the half share of the Property from the 2nd Defendant to the 1st Defendant did not take place. Since the 1st Defendant is not the registered owner of the Property he has no legal title to create a charge over the same. [9] It is the Plaintiff’s pleaded case that –

The Defendants failed, refused and / or negligent in taking the necessary steps to ensure the following is being perfected –

the transfer of half share of the Property from the 2nd Defendant to the 1st Defendant; and 6

(ii) followed by the creation of the charge over the Property.

The Defendants are nevertheless bound by the terms of the Facility to repay the Facility via the monthly payment as agreed and the Defendants had defaulted when they failed to make the monthly repayments. Although written demand was made on the Defendants, the Defendants failed to comply. In respond to the Plaintiff’s Statement of Claim, the Defendants also counterclaim seeking for an injunction that the Plaintiff return to the Defendants the original title of the Property.

In the event the court finds the Facility to be void for non-compliance with Syariah principles (on the ground that the Property was not jointly-owned by both the Defendants at the time the Asset Purchase Agreement and the Asset Purchase Agreement were executed as there is element of uncertainty as to the identity of the seller and / or the buyer) the Plaintiff is entitled to recover from the Defendants and to be 7 compensated for the monies spent by the Plaintiff for the benefit of the Defendants under the Facility. Defendant’s contentions [10] The Defendant’s application to strike out (the Striking Out Application) is premised on the following grounds:

the cause of action had accrued upon the occurrence of the following events –

around end of 2006 when the Defendants stop making the repayments in respect of the Facility. Thus the Plaintiff has until around end of 2012 to sue the

(ii) on 30 November 2007 when the Defendants failed to pay the arrears within 14 days as demanded by the Plaintiff via letter dated 15 November 2007. Thus the time for Plaintiff to sue the Defendants ends on 30 November 2013. 8

(b)

Section 21 of the Limitation Act is not applicable as the Plaintiff’s cause of action against the Defendants is based on breach of contract. It is not a foreclosure proceedings under section 12 of the said Act as there was no charge lodged and registered over the Property. Plaintiff’s contentions [11] The Striking Out Application is resisted on the following grounds –

The Plaintiff had discharged its obligations under the Facility by –

redeeming the Property from the existing financier, Standard Chartered Bank; and 9

(ii) paying the differential sum between the Facility amount and the redemption sum to the Solicitors for the benefit of the Defendants.

Appellant’s action against the Respondents is to recover money secured by any mortgage of or charge on the said property. Section 21 of the Limitation Act 1953 is applicable herewith as the Appellant’s action against the Respondents involves a security i.e. a mortgage.

The Defendants had deposited the title of the Property to the Plaintiff as security for the Facility.

The issue of limitation must turn on its facts and for that purpose a trial by affidavit is insufficient. A full hearing will be the proper forum where facts could be adduced by way of oral as well as documentary evidence.

Striking out the Plaintiff’s Claim would practically allow the Defendants to be unjustly enriched as the Plaintiff had redeemed the Property and the Defendants are enjoying the 10 Property without making repayment for the Facility obtained from the Plaintiff for purpose of redemption of the Property. The law [12] Order 18 rule 19 of the RoC 2012 reads as follows –

Striking out pleadings and endorsements (O. 18 r. 19)

The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that-

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious;

it may prejudice, embarrass or delay the fair trial of the action; or

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

No evidence shall be admissible on an application under subparagraph (1)(a).

This rule shall, as far as applicable, apply to an originating summons as if it were a pleading. 11 [13] The principles governing striking out application under Order 18 rule 19 of the RoC 2012 was succinctly stated in the Supreme Court case of Bandar Builders Sdn Bhd v. United Malayan Banking Corporation Berhad [1993] 3 MLJ 36 where it was held as follows – The principles upon which the Court acts in exercising its power under any of the four limbs of O. 18 r. 19(1) Rules of the High Court are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule (per Lindley M.R. in Hubbuck v. Wilkinson [1899] 1 QB 86, p. 91), and this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it "obviously unsustainable" (Attorney-General of Duchy of Lancaster v. L. & N.W. Ry. Co. [1892] 3 Ch. 274, CA). It cannot be exercised by a minute examination of the documents and facts of the case, in order to see whether the party has a cause of action or a defence (Wenlock v. Moloney [1965] 1 WLR 1238; [1965] 2 All ER 871, CA.). The authorities further show that if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O. 33 r. 3(which is in para materia with our O. 33 r. 2 Rules of the High Court) (Hubbuck v. Wilkinson) (supra). The Court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that the defences raised are not arguable. (emphasis added) 12 Findings of the court [14] The determination of the above issue in turn depend on the issue whether section 6 or section 21 of the Limitation Act applies. For ease of reference both statutory provisions are reproduced below – Section 6 6 Limitation of actions of contract and tort and certain other actions

Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say –

actions founded on a contract or on tort;

actions to enforce a recognisance;

actions to enforce an award;

actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or of a sum by way of penalty or forfeiture.

An action for an account shall not be brought in respect of any matter which arose more than six years before the commencement of the action.

An action upon any judgment shall not be brought after the expiration of twelve years from the date on which the judgment became enforceable and no arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due.

An action to recover any penalty or forfeiture or sum by way of penalty or forfeiture recoverable by virtue of any written law shall not be 13 brought after the expiration of one year from the date on which the cause of action accrued: Provided that for the purpose of this subsection the expression "penalty" shall not include a fine to which a person is liable on conviction for a criminal offence.

Nothing in this section shall apply to –

any cause of action within the Admiralty jurisdiction of the High Court which is enforceable in rem other than an action to recover the wages of seamen, or

any action to recover money secured by any mortgage of or charge on land or personal property.

Subject to sections 22 and 32 of this Act the provisions of this section shall apply (if necessary by analogy) to all claims for specific performance of a contract or for an injunction or for other equitable relief whether the same be founded upon any contract or tort or upon any trust or other ground in equity. Section 21 21 Limitation of actions to recover money secured by a mortgage or charge or to recover proceeds of the sale of land

No action shall be brought to recover any principal sum of money secured by a mortgage or other charge on land or personal property or to enforce such mortgage or charge, or to recover proceeds of the sale of land or personal property after the expiration of twelve years from the date when the right to receive the money accrued. 14

No foreclosure action in respect of mortgaged personal property shall be brought after the expiration of twelve years from the date on which the right to foreclose accrued: Provided that if, after that date the mortgagee was in possession of the mortgaged property, the right to foreclose on the property which was in his possession shall not, for the purposes of this subsection, be deemed to have accrued until the date on which his possession discontinued.

The right to receive any principal sum of money secured by a mortgage or other charge and the right to foreclose on the property subject to the mortgage or charge shall not be deemed to accrue so long as that property comprises any future interests or any life insurance policy which has not matured or been determined.

Nothing in the preceding subsections of this section shall apply to a foreclosure action in respect of mortgaged land but the provisions of this Act relating to actions to recover land shall apply to such an action.

No action to recover arrears of interest payable in respect of any sum of money secured by a mortgage or other charge or payable in respect of proceeds of the sale of land, or to recover damages in respect of such arrears shall be brought after the expiration of six years from the date on which the interest became due: Provided that-

where a prior mortgagee or other incumbrancer has been in possession of the property mortgaged or charged, and an action is brought within one year of the discontinuance of such possession by the subsequent incumbrancer he may recover by that action all the arrears of interest which fell due during the period of possession by the prior 15 incumbrancer or damages in respect thereof, notwithstanding that the period exceeded six years;

where the property subject to the mortgage or charge comprises any future interest or life insurance policy and it is a term of the mortgage or charge that arrears of interest shall be treated as part of the principal sum of money secured by the mortgage or charge, interest shall not be deemed to become due before the right to receive the principal sum of money has accrued or is deemed to have accrued.

This section shall not apply to any mortgage or charge of a ship. [15] Having given due consideration to the parties’ argument and facts of the case, it is the considered opinion of this court that this is not a plain and obvious case to be dealt summarily. The reasons for saying so are stated below. [16] While the Defendants’ contentions that section 6 of the Limitation Act prohibits action founded on contract to be brought after the expiration of 6 years from the date on which the cause of action had accrued reflect the position of the law, the instant action filed by the Plaintiff is not under the said section 6. [17] As can be seen from the Plaintiff’s Claim, the Plaintiff’s action is for the recovery of the Facility which is secured by the charge created over 16 the Property. The Plaintiff’s action falls squarely within the ambit of section 21 (1) of the Limitation Act which provides, inter alia, that action to recover money secured by a mortgage or other charge on Land shall not be brought after the expiration of twelve years from the date when the right to receive the money accrued. Using the Defendants’ formula as to the date when cause of action accrued (see paragraph 10 above), the Plaintiff’s Claim filed in April 2018 is well within the statutory period stated in the said section 21 (1). [18] It is argued by the Defendants that section 21 of the Limitation Act is not applicable because there was no charge created over the Property. On this issue, this court can do no better than to refer to a Federal Court case Mahadevan & Anor v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266 which relate to a claim for repayment of money advanced. The issue discussed was whether the claim (brought against the administrator of the deceased’s estate) was based on contract or on a charge. In the said case the respondent had advanced two sums of money to the deceased who used it to purchase six pieces of land. The issue discussed at the Federal Court which is relevant to the instant case was whether the respondent's suit is statute-barred in view of the fact that the action filed by the respondent was more than seven years after the advance was received by the deceased. There was no charge 17 created over the lands purchased by the deceased (using the advance given by Plaintiff). [19] In determining the issue of statutory limitation the Federal Court in Mahadevan case took into account the purpose the advance were made. The court deliberation on section 21 (1) of the Limitation Act and in particular the creation of equitable charge is reproduced below – The next issue is whether this suit which was commenced on July 30, 1974, i.e. more than seven years after the money was received, is not barred by limitation period. This question, however, in turn depends upon the purpose for which these two sums were paid and upon the nature of rights acquired by the respondent regarding these payments. There are two provisions of the Limitation Act 1953 (Malaysia Act 254) which are relevant for this appeal. These are sections 6 and 21 (1), which are set out as follows: "6 (1) Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say –

actions founded on a contract or on tort; ...

An action for an account shall not be brought in respect of any matter which arose more than six years before the commencement of the action." "21 (1) No action shall be brought to recover any principal sum of money secured by a mortgage or other charge on land or 18 personal property or to enforce such mortgage or charge, or to recover proceeds of the sale of land or personal property after the expiration of twelve years from the date when the right to receive the money occurred." As the suit was commenced more than seven years after the event, it is statute-barred under section 6 unless it falls within the provisions of section 21(1) of the Act. This section practically is word for word identical with section 18 of the U.K. Limitation Act 1939 (Halsbury's Statute, 3rd Ed. P.77). Mr. Sri Ram cautioned us to interpret this section in the light of our law and not with reference to the English law. We, of course, accept this submission. But, he further submitted that the words "other charge on land" in section 21

of the Act must be interpreted to mean only legal charge as provided for in Part Sixteen of the National Land Code and that since these two lots, i.e. Lot 290 and Lot 461 were not so charged to the respondent, section 21(1) of the Act does not protect this suit from being statute-barred. In our view the relevant words in section 21(1) of the Act for the purpose of this appeal are not merely the words "other charge on land", but the whole expression "a mortgage or other charge on land". It is this expression we must now construe. Our land law does not recognise a mortgage if it means a mortgage in the sense of English land law whereby the legal estate, i.e. ownership of the land is transferred to the mortgagee and what is left with the mortgagor is only an equitable right to redeem, known as equity of redemption. But our land law certainly recognises a mortgage in the sense of Torrens system, referred to by text written as Torrens Mortgage in which the mortgagor retains the legal ownership whilst the mortgagee acquires a statutory right to enforce his security. For the purpose of avoiding confusion, our National Land Code drops the word "mortgage" 19 and uses the word "charge" in place of Torrens mortgage. Thus, when section 21(1) of our Limitation Act speaks of a "mortgage", it must mean a "charge" as understood and provided for in Part Sixteen of our National Land Code (see Haji Abdul Rahman & Anor v Mahomed Hassan [1917] AC 209 217 1 FMSLR 290 PC.) That being the case, the words "other charge on land" in the section, in our view, must mean other types of encumbrances to which the land is subjected. These could be an equitable charge or a lien, statutory or equitable which arises as a result of depositing a title deed with the lender. The decision of the Privy Council in Haji Abdul Rahman v. Mahomed Hassan (supra) certainly does not prevent the creation of an equitable charge. In that case an agreement to secure a debt by which the debtor transferred his land to the creditor and upon repayment the land would be transferred back to the debtor was held to be valueless as a transfer or burdening instrument, but was good as a contract. The right so created was not a legal right in the land but only a contractual right. The nature of this contractual right was amplified by Terrell, Ag. C.J. in Arunasalam Chetty v Teah Ah Poh Trading & Anor [1937] MLJ 17 21 to be a security for debt outside the provisions of the Land Code. On the other hand if Haji Abdul Rahman's case (supra) is considered to have the effect of preventing the creation of an equitable charge, the effect of the decision cannot be extended to other cases. In that case the agreement was held void as a transfer or as a burdening instrument because it contravened section 4 of the (Selangor) Registration of Titles Regulation 1891. This section prohibited the transfer, transmission or the creation of any mortgage or charge, or otherwise dealt with except in accordance with the provisions of this Regulation, and "every attempt to transfer, transmit, mortgage, charge, or otherwise deal with the same, except as aforesaid, shall be null and void and of none effect, ..." And section 41 enacted that "whenever any land is intended to be charged or made security in favour of any person, the proprietor shall execute a 20 charge in the form contained in Schedule E, which must be registered as hereinbefore provided". But the subsequent Land Code and the present National Land Code do not contain provisions similar to section 4 of the above quoted Regulation, although the Codes make provisions as to how a charge or a lien could be created. Examination of courts' decisions clearly show that the courts have resorted to equitable principles and consistently held that an agreement or an arrangement to secure a debt in favour of the creditor in respect of the debtor's land creates an equitable charge giving rise to an equitable right in favour of the creditor, although no charge or lien within the provisions of the National Land Code or the previous Code is executed or created. (see Ngan Khong v Bamah bt Pakeh Jamin & Anor [1935] FMSLR 81; [1935] MLJ 167 Arunasalam Chetty v.Teah Ah Poh Trading & Anor (supra) Vallipuran Sivaguru v Palaniappa Chetty [1937] MLJ 59 and Mercantile Bank v Official Assignee [1969] 2 MLJ 196). The basis of this ruling is the very raison d'etre of the court's own existence and the imputed intention of the legislature. Terrell, Ag. C.J. in Arunasalam Chetty's case (supra) said: "... It is the duty of the Courts to do justice between parties, and unless expressly prohibited by Statute law, to give effect to ordinary commercial transactions, such as the advance of money on the security of title deeds ..." (p.22) "... but it is difficult to believe that it was the deliberate intention of the Kedah legislature by the mere omission to exclude the recognition of the principle of an equitable deposit." (p.21) These statements were supported by Whitley, Ag. C.J. (S.S.) who sat in the same case and said: "... the Courts will recognise equitable estates and rights except so far as they are precluded from doing so by the statutes." (p.18) 21 Raja Azlan Shah J (as he then was) reaffirmed this judicial attitude in Mercantile Bank Ltd case (supra) when he said: "... unless there are express words in the Act, this court is not precluded from giving effect to equitable rights existing between the parties ... (p.197). There is, however, no provision in the National Land Code prohibiting the creation of equitable charges and liens. The Code is silent as to the effect of securities which do not conform to the Code's charge or lien. Therefore equitable charge and liens are permissible under our land law. We, therefore, think that the words "or other charge on land" in section 21(1) of the Limitation Act must be construed to include equitable charges and liens as well. (emphasis added) [20] In the instant case, at all material time it was the intention of the Plaintiff as the financier and the Defendants who are the debtors to secure the Facility by way of a charge over the redeemed Property in favour of the Plaintiff. In fact, the Defendants had deposited the title of the Property to the Plaintiff as security for the Facility. Applying the principle set out in the Mahadevan’s case, even though the charge was not registered, there is an equitable charge created over the Property. Thus section 21 (1) of the Limitation Act applies and the Plaintiff is not barred from initiating this action against the Defendants. 22 [21] In the book Land Law in Malaysia Cases and Commentary (Third Edition) by Teo Keang Sood and Khaw Lake Tee, the learned authors summarised instances where the court held equitable charge was created – [7.63] The term ‘equitable charge’ has also been used in the following circumstances: (i) where a charge instrument has been executed but not presented for registration: see Standard Chartered Bank v Yap Sing Yoke & Ors and Oriental Bank v Chup Seng (Butterworth) Sdn Bhd; (ii) where no separate title has been issued and, instead of a charge, a loan agreement and a deed of assignment are entered into to secure a loan: Malayan Banking Bhd v Zahari bin Ahmad; and (iii) where a charge instruments had been erroneously attested: see Bank Pembangunan dan Infrastruktur Malaysia Bhd (formerly known as Bank Pembangunan Malaysia Bhd) v Omar bin Hj Ahmad. [22] In Tan Kong Min v. Malaysian Nasional Insurance Sdn Bhd [2005] 3 CLJ 825 the same issue arose before the Federal Court. The case relate to an action for the recovery of shortfall after auction was conducted in respect of a property charged to secure the repayment of a loan granted by the respondent to the appellant. The respondent's suit was dismissed at first instance in the High Court, but allowed on appeal to the Court of Appeal. The appellant then was allowed leave to appeal to the Federal Court and one of the questions raised for the Federal Court's determination was whether a claim for balance after sale was a claim founded on contract and therefore subject to the limitation period 23 of six years under s. 6 (1) (a) of the Limitation Act or a claim for money secured by charge on land and therefore subject to the twelve year limitation period under s. 21 (1) of the same. [23] Based on the facts in Tan Kong Min, the Federal Court held section 6 of the Limitation Act could not apply in view of the express exclusion of 'any action to recover money secured by any mortgage of or charge on land' which is stipulated in section 6 (5) (b) of the same. The action was thus not founded on a claim on contract under section 6 the said Act. The Federal Court held the applicable provision is section 21 and explained the difference between sections 21 (1) and 21 (2) of the Limitation Act. It held – In our judgment, the applicable provision is s.

Section 21(1) specifically refers to an action to recover moneys secured by a charge which is an action in personam, whilst s. 21 (2) specifically refers to a foreclosure action in respect of mortgaged personal property which is an action in rem. The limitation period is therefore twelve (12) years from the date when the right to receive the money accrued or twelve (12) years from the date on which the right to foreclose accrued respectively. [24] Thus, contrary to the Defendants’ contentions, section 6 (1) of the Limitation Act is not applicable in the instant case as section 6 (5) of the same has expressly excluded the application of section 6 to any action 24 to recover money secured by any charge on land. The limitation provision in so far as action to recover money secured by any charge on land is section 21 of the Limitation Act and not section 6 of the same. The Plaintiff’s present case is an action in personam and accordingly the relevant provision applicable is section 21 (1) of the Limitation Act. The Plaintiff’s Claim is therefore obviously sustainable. Other issues [25] The Defendants’ sole ground for striking out the Plaintiff’s Claim is premised on the violation of the limitation period stipulated under section 6 of the Limitation Act. However it must also be noted that the Plaintiff’s Claim includes (as an alternative) that the Defendants compensates the Plaintiff for the benefit and advantages that the Defendants have received from the Facility granted to the Defendants should the Facility granted is held to be void for non-compliance with the Syariah principles (paragraph 8 of the Plaintiff’s Reply and Defence to Counter Claim). The benefits and advantages here would necessarily mean the Property, which is currently registered under the 2nd Defendant’s name, had been redeemed through the Facility granted by the Plaintiff to the Defendants. 25 [26] Based on the Defendant’s Statement of Defence (paragraph 11) and the affidavit in support (paragraph 8) of the Striking Out Application, the Defendants admit they have stopped making repayment for the Facility around end of 2006 when they came to know that the transfer of the half share of the Property from the 2nd Defendant to the 1st Defendant and the registration of the charge over the said Property was not effected by the Plaintiff. This deliberate and intentional act was despite the fact that the Defendants knew at all material time that the Facility had already been fully disbursed for the benefit of the Defendants for the purpose of redeeming the Property. [27] In this respect reference is made to section 66 of the Contracts Act which provides as follows –

Obligation of person who has received advantage under void agreement, or contract that becomes void 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. [28] In order for section 66 of the Contracts Act to be applicable, one crucial point to be established is whether the parties were aware of the illegality at the time the contract was made. Remedy of restitution is 26 only awarded if parties were not aware of the illegality (Ng Siew San v Menaka [1973] 2 MLJ 154) when the contract was executed. In the instant case, as can be seen from the respective pleadings, the parties are blaming each other over the unregistered charge over the Property. Thus whether the Asset Purchase Agreement and Asset Sale Agreement were illegal at the time of execution and whether the restitutionary provision in the said section 66 is applicable is a question of fact which ought to be determined via vivo voce evidence. Conclusion [29] Based on the facts as gathered from the Plaintiff’s pleadings and the affidavit evidence, it is the considered opinion of this court that this is not a plain and obvious case which falls within Order 18 rule 19 (1) (b),

and (d) of the RoC 2012. There is nothing scandalous, vexatious or frivolous about the Plaintiff’s Claim against the Defendants. Nor can the Plaintiff’s Claim to recover the money due and payable under the Facility which is secured by an equitable charge be construed as delaying or prejudicial to the fair trial of this action or that it is an abuse of the process of the court. The Plaintiff’s Claim is bona fide. To strike out the Plaintiff’s action at this juncture would highly prejudice the Plaintiff. 27 [30] Premised on the aforesaid reasons, the Plaintiff’s appeal was allowed with cost and the decision of the Sessions Court was accordingly reversed. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 19 FEBRUARY 2019 Counsel: Plaintiff : Mahendran Naidu of Messrs Shukor Baljit & Partners Defendants : Suresh Sachithanantham and together with Revathy Balachandran of Messrs Rastam Singa & Co