Black Tulip Trades Sdn Bhd v Garden Flora Exports Sdn Bhd (WA-22NCC-804-11/2023)

MZ POLYMERS SDN BHD

MOHAIDEEN HAROON SYED IBRAHIM (PASPOT INDIA NO. Z4906136) S/N okvOeNdcjUqhWwh6TgoU9g

WAHITHA BANU (NO. K/P: 820110-75-5046) …DEFENDAN-DEFENDAN (Melalui Tuntutan Balas) [Didengar bersama dengan] GUAMAN NO: WA-22NCC-804-11/2023 BLACK TULIP TRADES SDN BHD (NO. SYARIKAT: 1386785-H) [Didengar bersama dengan] GUAMAN NO: WA-22NCC-440-07/2024 S/N okvOeNdcjUqhWwh6TgoU9g MZ MULTITRADE SDN BHD (NO. SYARIKAT: 1377275-H) (Melalui tindakan asal)

MZ MULTITRADE SDN BHD

MOHAIDEEN HAROON SYED IBRAHIM

WAHITHA BANU (NO. K/P: 820110-75-5046) …DEFENDAN-DEFENDAN (Melalui Tuntutan Balas) S/N okvOeNdcjUqhWwh6TgoU9g

The principal shareholder and director of all 3 Plaintiff companies in Suits 803, 804 and 440 is Wahitha Banu (“Banu”), while the Defendant company is apparently controlled by one Mohamed Gani Mohamed Ehiya (“Ehiya”). The Plaintiffs sued the Defendant company in 3 separate suits. The 3 suits were heard together because the factual matrix and substantive issues are almost identical.

The Plaintiff in each suit sought declarations that each of the 3 agreements signed by Banu and Ehiya on behalf of the Plaintiffs and Defendant on 23-5-2022 are void, being sham “settlement agreements” for debts owed (“MZ Polymers Agreement,” “Black Tulip Agreement,” and “MZ Multitrade Agreement” or collectively, the “Agreements”); or agreements that were signed under coercion.

The Plaintiff sought the refund of RM1,000,000.00 already paid under the Black Tulip Agreement while the Defendant counterclaimed against the Plaintiffs, Banu and her husband, Mohaideen Haroon Syed Ibrahim (“Haroon”) for the recovery of unpaid sums due under the MZ Polymers Agreement and MZ Multitrade Agreement in the sums RM1,686,182.00 and RM5,200,000.00 respectively. S/N okvOeNdcjUqhWwh6TgoU9g Issues for determination

On its face, each of the Agreements are duly stamped contracts containing: a) the Plaintiff’s admission of a debt due and an undertaking to repay it to the Defendant; b) Banu’s undertaking to be personally liable in the event of the Plaintiff’s default and/or winding up; and c) the transfer to Banu of certain shares in the Plaintiff (“Shares”).

The Shares comprised the following: Plaintiff No. of shares Shareholders MZ Polymers Sdn Bhd 262,502 • Ehiya • Syed Shafiudeen bin Abdul Hameed • Abdul Razak Ayoulia Mydeen Black Tulip Trades Sdn Bhd 1,000,001 • Syed Shafiudeen bin Abdul Hameed MZ Multitrade Sdn Bhd 1,920,001 • Ehiya

The issues for this Court’s determination were whether the Agreements were a sham and/or whether Banu had been coerced into signing them. S/N okvOeNdcjUqhWwh6TgoU9g Analysis and findings

By way of background, it was not challenged that Ehiya first knew Haroon in Dubai before he married Banu and moved to Malaysia. Haroon approached Ehiya in 2019 after he started MZ Polymers Sdn Bhd. There was evidence of remittances of funds from Ehiya personally and Black Tulip Flowers FZC, Dubai, part of his family-owned Black Tulip group headquartered in Dubai. The Defendant is a related company in the Black Tulip group.

As set out in the Agreements, the Plaintiffs admitted receiving an aggregate sum of RM7,866,182.00 which was attributed as debts due to the Defendant. The sum comprised: Recipient Company Amount (RM) MZ Polymers Sdn Bhd 1,686,182.00 Black Tulip Trades Sdn Bhd 1,000,000.00 MZ Multitrade Sdn Bhd 5,200,000.00 The burden was on the Plaintiffs to prove the case they advanced for why the Agreements were sham agreements.

Based on the pleadings, the Plaintiffs say that the Agreements are a sham because the sums claimed in the Agreements were not loans but sums paid by the Shareholders named in the Agreements to acquire the Shares, and that they were not entitled to a refund. The Plaintiffs did not seriously contest the fact that they received the S/N okvOeNdcjUqhWwh6TgoU9g funds, substantially evidenced by documentary proof of remittances as noted.

Evidentially, this Court could find no clear evidence of the correlation between the Shares and the sums transferred to the Plaintiffs in terms of share price, quantity or time of allotment, as no available corporate records of the share issuance and allotment was adduced. Save for the RM1,000,000.00 for 1,000,001 shares in Black Tulip for which a correlation may be inferred, there was no attempt to explain why: a) RM1,686,182.00 is consideration for 262,502 shares in MZ Polymers; or b) RM5,200,000.00 is consideration for 1,920,001 shares in MZ Multitrade. Ehiya testified that there is no correlation because the Shares had nothing to do with the loans.

As the Defendant’s pleaded defence is that the Shares were held by Ehiya and his nominees as security for the loans, the Plaintiffs relied heavily on Ehiya’s testimony under cross-examination when he said that he did not ask for security for the friendly loans he gave to Haroon at his request. According to Ehiya, Haroon offered the Shares when Ehiya became concerned that Haroon kept asking for more money.

Abdul Razak Ayoulia Mydeen who testified as DW1 did not seem to be aware that he held some shares in MZ Polymers Sdn Bhd, while the other shareholder, Syed Shafiudeen bin Abdul Hameed, was not called by either party to testify. There was no evidence of any S/N okvOeNdcjUqhWwh6TgoU9g participation by Ehiya or his so-called nominees in the affairs of the Plaintiffs.

This Court also considered the objective contemporaneous documentary evidence and found: a) an audit balance confirmation issued by the Defendant to MZ Multitrade showing that RM3.2 million was a repayable advance due and owing to the Defendant, which MZ Multitrade signed for the Defendant’s auditors without indicating any disagreement; b) various bank remittance advice with the reference for beneficiary indicated as “Advance” for payments made to all 3 Plaintiffs, including MZ Polymers Sdn Bhd; and c) cheque image and payment voucher from Ehiya to MZ Polymers that described a payment of RM600,000.00 made to MZ Polymers as “part payments for investment into MZ Polymers Sdn Bhd; Shares Total USD200,000.” The RM600,000.00 was the first sum of money paid personally by Ehiya to MZ Polymers in 2019.

As can be seen above, both the oral and documentary evidence as to the purpose of the payments received by the Plaintiffs from Ehiya and Black Tulip Flowers FZC, Dubai were equivocal. On a balance of probabilities, this Court was unable to arrive at the conclusion that the RM7,866,182.00 or any substantial part thereof, were consideration for the acquisition of shares in the Plaintiffs as contended. S/N okvOeNdcjUqhWwh6TgoU9g

In any case, according to the formulation approved by the Federal Court in Yogananthy a/p AS Thambaiya v Harta Pusaka Idris bin Osman [2020] 5 MLJ 455 (“Yogananthy”) as to what a “sham agreement” means, Lord Diplock held as follows in Snook v London and West Riding Investments Ltd [1967] 2 QB 786: “As regards the contention of the plaintiff that the transactions between himself, Auto Finance and the defendants were a ‘sham’, it is, I think necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the ‘sham’ which are intended to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities ...that for acts or documents to be a ‘sham’, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intention of a ‘shammer’ affect the rights of a party against whom he deceived.” [Emphasis added]

The Federal Court in Yogananthy provided the following useful guidance for the detection of sham documents: “(33) The applicable test to ascertain a sham document, inter alia, were: (i) in the case of a document, the court is not S/N okvOeNdcjUqhWwh6TgoU9g restricted to examining the four corners of the document and it may examine external evidence; (ii) the test of intention is subjective, i.e., the parties must have intended to create different rights and obligations from those appearing from the relevant document, and in addition, they must have intended to give a false impression of those rights and obligations to third parties; (iii) the fact that the act or document is uncommercial, or even artificial, does not mean that it is a sham; (iv) the fact that parties subsequently depart from an agreement does not necessarily mean that they had never intended the agreement to be effective and binding; and

the intention must be a common intention.” [Emphasis added]

Ultimately, there was no real dispute that monies aggregating the sum of RM7,866,182.00 were received by the Plaintiffs, as recorded in the Agreements. The only dispute was as to its purpose and the terms on which it was received. However, the Agreements did not identify either in the recital or in its terms, the underlying basis for the undertaking by Banu to repay the sum to the Defendant.

In other words, the Agreements do give to this Court, the appearance of creating real legal rights and obligations between the parties expressed in the document, with no obvious common intention to create false impressions. Regardless whether they were loans or investments, the Plaintiffs undertook to repay the monies received, and this is something they could quite legitimately do on the facts. To that end, the Black Tulip Agreement was also fully executed. S/N okvOeNdcjUqhWwh6TgoU9g

Considering the evidence, there was no reason for this Court to conclude that the Agreements were sham agreements and void as being against public policy.

It seems to this Court that the more decisive issue is whether the Agreements were executed under coercion as alleged. Coercion, as a vitiating factor to void contracts, is strictly defined under Section 15 of the Contracts Act 1950 as follows: “Coercion” is the committing, or threatening to commit any act forbidden by the Penal Code, or the unlawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.” When consent to an agreement is caused by coercion, the agreement is a contract voidable at the option of the party whose consent was so caused.

The burden of proving coercion lies with the party alleging it. In this case, the pleaded particulars were as follows: S/N okvOeNdcjUqhWwh6TgoU9g

It was observed in Teck Guan Trading Sdn Bhd v Hydrotek Engineering (S) Sdn Bhd & Ors [1996] 4 MLJ 331 (“Teck Guan”) that: “There are two ways of committing "coercion" as defined by s. 15, one of which is the threatening of an act forbidden by the Penal Code, while the other is the unlawful detention or the threatening of such to the prejudice of any person, with the intention of causing any person to enter into an agreement. Mr. Lim did not submit whether any or which of the acts of the plaintiff can be considered as a threat to commit an act forbidden by the Penal Code and which section of the Penal Act as forbidding the threatened act. Mr. Lim must say what offence the plaintiff had committed under the Penal Code before the Court can decide whether such an offence had been committed (Pollock & Mulla on Indian Contract and Specific Relief Acts, 9th Edn., p. 133). Learned Counsel had not done so. This was no surprise because the facts of this case do not reveal any offence under the Penal Code. The contention of coercion is rarely heard nowadays as pointed out by Visu Sinnadurai on Law of Contract, 2nd Edn., p. 256, where he said: The various definitions of 'coercion' under s. 15 of the Contracts Act limit the wrong or threatened wrong to crimes under the Penal Code alone and not to include tortious wrongs. Acts which are offences other than under the Penal Code or which are merely a civil wrong will not amount to 'coercion' within the ambit of s. 15. To a very large extent, this limited definition in the Contracts Act renders the scope of coercion obsolete.” [Emphasis added] S/N okvOeNdcjUqhWwh6TgoU9g

Like in Teck Guan, there were no submissions on what Penal Code offence was committed or threatened and whether, on the facts, the elements of those offences could be made out. Based on the circumstantial evidence introduced at the trial: a) Haroon lodged a police report on 18-5-2022, alleging that he had met Ehiya and Abdul Razak at the lobby of the Grand Hyatt on 16-5-2022 and that he was threatened; and that he received calls with threats because of his failed investment; b) Banu lodged a police report on 20-5-2022, alleging that she met with Ehiya and 6 of his friends proposing repayment of investment in 2.5 years and received via WhatsApp attaching a settlement agreement and threatened to harass her if she did not sign it; and c) Banu lodged a police report on 22-8-2022, alleging that she received a WhatsApp from Ehiya stating that he can do anything illegal, because Banu had asked for more time to repay the investment monies.

Apart from 3 police reports made by Banu and Haroon on 18-5-2022 and 22-8-2022, and the oral evidence of Haroon on the stand, no objective or independent corroborating evidence was adduced at the trial to prove that they were in fact, threatened by persons whose actions may be attributable to the Defendant, whether on 23-5-2022 or at any prior date. S/N okvOeNdcjUqhWwh6TgoU9g

In particular, this Court noted from the police reports that: a) there were witnesses who might be in a position to provide corroboration for the alleged threat of harm to Banu or her relatives i.e.

a cousin, Mohamed Rithaudeen who accompanied Banu to a meeting on 16-5-2022; and

(ii) an employee Sharmila who claimed that Ehiya had called to make threats; and b) there were alleged threatening WhatsApp message sent by Ehiya on 20-5-2022 and 22-8-2022. However, none of the above evidence were produced at the trial.

Some WhatsApp messages from Haroon were transcribed and tendered, but not the entire exchange. The messages were assurances that repayment would be made, but it did not reveal any element of coercion and if there were other messages containing threats, they were not adduced.

Considering the pleaded case for coercion, this Court could also find no evidence of it at the law office of Shafee & Co on 23-5-2022. One of the 2 solicitors attending to the matter and to the parties on 23-5- 2022 was Nur Shafiqa binti Mohamad Roslan. Shealso represented the Plaintiffs and interacted with them on the day. She testified at the trial as to what transpired on 23-5-2022 at the office, and disagreed with the suggestion that Banu was forced to sign the settlement agreements. S/N okvOeNdcjUqhWwh6TgoU9g

Without more evidence, this Court could not draw the irresistible inference suggested by counsel for the Plaintiffs, that the number of representatives of the Defendant present throughout the many hours when the negotiations, discussions, drafting and explaining at Shafee & Co’s office on 23-5-2022, indicated that the Plaintiffs were under threat by the Defendant’s representatives as pleaded.

Incidentally, the Plaintiffs had earlier consulted another lawyer, Ahmeena Banu binti Abdul Aziz, who also testified at the trial about an agreement she was engaged to prepare based on a term sheet dated 17-5-2022 for a settlement. This was the document that Haroon signed, apparently with notations he made that it was “without prejudice” and “for negotiation purpose only.”

Haroon’s account of the genesis of the 17-5-2022 terms of settlement and the case of possible coercion was not put to lawyer Ahmeena at all, even though Ehiya had testified that he was asked by the Plaintiffs to go to Ahmeena Banu’s office to sign a settlement agreement, only to find that they had not shown up.

As the Plaintiffs’ counsel, both Nur Shafiqa and Ahmeena Banu were the natural confidants to whom the Plaintiffs could have turned if the Plaintiffs genuinely feared the Defendant’s representatives.

Crucially, it was Banu who signed the impugned Agreements on 23- 5-2025, but this Court heard no evidence from her at all. The circumstances of Banu’s non-attendance at the trial were as follows: S/N okvOeNdcjUqhWwh6TgoU9g a) Counsel for the Plaintiffs had initially sought to postpone the trial scheduled to run for 4 days from 15-18 December 2025 because Banu’s mother had just passed away; b) The Court did not allow the request, but vacated the first day of trial on 15-12-2025 and also the rest of the day on 16-12-2025 after Haroon had testified; c) In deciding to close the Plaintiff’s case on 17-12-2025, counsel for the Plaintiff informed the Court that Banu was in town, but would not be attending to give evidence.

As the person who lodged 2 of the police reports adduced, executed the settlement agreements and undertook personal obligations as a guarantor, it was incumbent on Banu to take the stand and be subjected to cross-examination. Her witness statement was not admitted into evidence and could not be considered.

According to the Federal Court case of Takako Sakao (f) v Ng Pek Yuen (f) & Anor [2010] 1 CLJ 381: “[4] In our judgment, two consequences inevitably followed when the first respondent who was fully conversant with the facts studiously refrained from giving evidence. In the first place, the evidence given by the appellant ought to have been presumed to be true. … [5] The second consequence is that the court ought to have drawn an adverse inference against the first respondent…” S/N okvOeNdcjUqhWwh6TgoU9g

This Court drew no adverse inference against Banu for her absence at the trial. However, it did consider the following reference to Sarkar on Evidence 16th edn at p. 1837 in Takako Sakao to be relevant: “It is the bounden duty of a party personally knowing the whole circumstances to give evidence and to submit to cross-examination. Non-appearance as a witness would be the strongest possible circumstance to discredit the truth of his case - Gurbakhsh v. Gurdial, A [1927] PC 230.”

Lastly, it was argued by the Plaintiffs that there was no consideration for Banu’s personal guarantee in the Agreements. This Court finds that the primary obligations in the Agreements are supported by consideration in the form of the mutual promises therein, and the lack of consideration for the secondary obligation therein was not pleaded.

For the reasons set out above, this Court found that the Agreements are valid and enforceable. The Plaintiff’s claims in Suits 803, 804 and 440 were accordingly dismissed with costs; and the Defendant’s counterclaims against MZ Polymers Sdn Bhd and MZ Multitrade Sdn Bhd and Banu (as guarantor) in Suits 803 and 440 were allowed with costs.

However, in respect of the counterclaim in Suit 440 for the principal sum of RM5,200,000.00, this Court allowed Judgment for only RM3,200,000.00 according to the terms of the MZ Multitrade Agreement as the waiver of the RM2 million was not stated anywhere in the agreement to be conditional. S/N okvOeNdcjUqhWwh6TgoU9g

Global costs of RM20,000.00 were ordered in favour of the Defendant in each suit. Bertarikh: 06 April 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam Untuk Plaintif: Gunaseelan a/l S.Thambinathan (Kumaradevan Rajadevan bersamanya) Tetuan Gunaseelan & Associates Untuk Defendan: Palanivel a/l K V Sathasivam (Siow Chang Yao dan Ong Kim Hong bersamanya) Tetuan Palani Aishah & Co S/N okvOeNdcjUqhWwh6TgoU9g