Social Finance Sdn Bhd v Jamaliyah Binti Salleh (WA-24NCC-370-07/2025)

JAMALIYAH BINTI SALLEH (NRIC No.: 710911-11-5156)

FK TECHNOLOGY SDN BHD [Company No.:201101001076 (929210-W)]

KHAIRY FAHMY BIN MOHD KARIM (NRIC No.: 800727-01-6165) …DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 1)

The claim before this Court is not an unfamiliar story. A party seeks financial assistance from the second party. The requested sum of money is given, on terms, for a consideration. A default occurs. The second party seeks to enforce the terms. The first party claims the whole transaction is a moneylending transaction. It is therefore void.

The main issue before this Court is whether the transaction concerned is a moneylending transaction and ought to be struck down.

This is how the story unfolds.

The Third Defendant (“D3”) is a director and shareholder of the Second Defendant (“D2”). The First Defendant (“D1”) is the Company Secretary of D2.

Sometime in or about September 2024, D3 approached the Plaintiff for a loan of RM4 million. The loan was sought to ease the then financial distress of D2 and a related company of D2.

In consideration of receipt of the loan, D3 prepared and executed a Letter of Undertaking and Guarantee (“LoUG”) dated 9 October

The LoUG’s salient terms are: “1. In my personal capacity as principal debtor and not merely as surety, the repayment and payment of:

Loan Sum [RM 4,000,000];

16% return on the Loan Sum; and

all losses and damages suffered by the Lenders arising out of any breach, non-performance and non-observance by the Company duties and obligation arising out of the mutual agreement between the Company and the Lenders; (collectively, "Guaranteed Sum") on or before 31.10.2024.

I shall pay to the Lenders on demand the Guaranteed Sum.

Failure to fulfil paragraph 1 or/and 2, I undertake and guarantee to transfer minimum shareholding of 51% of

The LoUG is expressed to be irrevocable, continuing, and that time is of the essence.

The promised repayment did not materialise. The Plaintiff’s case is that default crystallised, thereby triggering the agreed consequence. That means D3 is liable to transfer his 51% shareholding in D2 to the Plaintiff.

D3 then instructed D1 to prepare the requisite Form of Transfer of Securities for the transfer of 2,550,000 units of shares from D3 to the Plaintiff. The Form was duly executed and dated on 13 January

D3 duly caused D2 to pass a Directors’ Resolution on the same date approving the transfer. The transfer was then submitted to the Inland Revenue Board of Malaysia for adjudication. Upon adjudication, the Plaintiff duly paid the stamp duty.

The Plaintiff then requested D1 to register the Plaintiff in D2’s Register of Members. The Plaintiff also requested D1 to call for an Annual General Meeting of D2 for the appointment of new directors.

Notwithstanding repeated reminders, D1 failed to comply with the Plaintiff’s requests.

The Plaintiff seeks declaratory relief against D1 on account of her breach of duty and negligence in registering the transfer of the shares. The Plaintiff also seeks an order that D1 and/or D2 register the transfer of 2,550,000 units of shares in D2 from D3 to the Plaintiff pursuant to Section 107 of the Companies Act 2016.

The Defendants contend that the Share Transfer Form recites consideration of RM1.785 million, which they say was never paid.

They also contend that there were instalment repayments of approximately RM2.36 million from end of March 2025, said to undermine the Plaintiff’s entitlement to insist on registration of the shares. The acceptance of those repayments is also said to constitute waiver on the part of the Plaintiff.

D2 and D3 contend the LoUG is illegal and unenforceable as it imposes a 16% “return”, said to be “interest” within the Moneylenders Act 1951 (“MLA”). They rely materially on the Federal Court decision in Triple Zest Trading & Suppliers v Applied Business Technologies Sdn Bhd [2023] 6 MLJ 818, and submit that proof of even a single loan transaction at interest is sufficient to trigger the statutory presumption under Section 10OA of the MLA, and that the transaction should be treated as an illegal moneylending transaction.

They further submit that the share transfer cannot be insisted upon because the stated consideration in the Share Transfer Form was never paid, and that beneficial interest cannot pass without payment.

They also invoke relief against forfeiture and contend the transfer of controlling shares of D3 is disproportionate, having regard to the alleged outstanding sum.

D1’s principal defence is that she acted in her official capacity and denies negligence or breach. She also relies on the post-transfer repayments and submits that the Plaintiff, having accepted such payments, has waived the right to insist on registration of the shares transfer. In short, the Plaintiff cannot approbate and reprobate.

The core issues may be framed as follows: i. Whether the transaction is tainted by moneylending illegality under the MLA; and ii. Whether post-transfer repayments, unpaid consideration, waiver, and/or relief against forfeiture bar the Plaintiff’s application. ANALYSIS Whether the Transaction is Tainted by Moneylending Illegality Under the MLA

The execution of the LoUG and the fact of non-payment by the stipulated date are not in dispute. What is disputed is whether the LoUG is enforceable in law, having regard principally to the allegation of moneylending illegality.

D2 and D3’s main complaint is that the transaction is tainted by moneylending illegality. They place heavy reliance on the Federal Court case of Triple Zest.

In Triple Zest, the facts are these. There, the first appellant company required funds for its business and approached the respondent company for what the courts below described as a "friendly loan" of RM800,000. The respondent agreed to lend RM800,000 on the condition that the appellants would repay the principal sum of RM800,000 and an additional RM800,000 described as "agreed profit". The loan period was for 30 days. The borrower was therefore required to repay a total of RM1.6 million at the end of that period. The borrower defaulted. The respondent sued to recover a total sum of RM1.6 million as well as enforcement of certain other collateral.

The Federal Court held that the RM800,000 "agreed profit" was in substance interest. The interest amounted to 100% of the principal within 30 days and proof of a single loan at interest triggered the presumption under Section 10OA of the MLA. The Court also held that the burden was on the respondent to prove it was not carrying on the business of moneylending and that the respondent failed to rebut that burden. The entire arrangement was therefore treated as an illegal moneylending transaction, and the respondent was not entitled to recover either the interest or even the principal sum.

I have also looked at Section 10OA of the MLA which reads: Where in any proceedings against any person, it is alleged that such person is a moneylender, the proof of a single loan at interest made by such person shall raise a presumption that such person is carrying on the business of moneylending, until the contrary is proved.

In Triple Zest, the Federal Court authoritatively clarified three interlocking principles: i. that the statutory definitions of “moneylender”, “moneylending”, and “interest” must be read harmoniously; ii. that any sum payable in excess of the principal, by whatever label described, constitutes “interest”; iii. that upon proof of a single loan at interest, the presumption under Section 10OA arises and imposes a legal burden, not merely an evidential burden, on the alleged lender. This burden is rebuttable on a balance of probabilities.

I respectfully accept the binding ratio of the Federal Court in Triple Zest in its entirety.

What then is the analytical approach of Section 10OA of the MLA pursuant to the case of Triple Zest? I distill them as follows: i. First, the Court is to determine whether there is proof of a loan at interest; ii. If so, recognise that the statutory presumption under Section 10OA arises; iii. Evaluate whether the alleged lender has discharged the legal burden of rebutting the presumption by showing that it was not carrying on the business of moneylending. iv. Importantly, the presumption is rebuttable. The statute does not deem every loan at interest to be conclusively illegal. Rather, it shifts the burden of persuasion.

The Defendants here contend that once it is shown that the LoUG imposed a 16% return, the Court must, by operation of Triple Zest, find illegality. I do not read the Federal Court’s decision so broadly. In my view, to treat Triple Zest as laying down a rule that every isolated loan with any return is automatically illegal would be to convert a rebuttable statutory presumption into a conclusive one. That would contradict both the text of Section 10OA of the MLA and the structure of the Federal Court’s reasoning.

In Triple Zest, the Federal Court’s finding of illegality was not based merely on the existence of interest. It was grounded on two critical factual findings: i. the so-called “agreed profit” amounted to 100% of the principal within 30 days, which the Court described as interest disguised under another label; ii. the alleged lender failed to discharge the statutory legal burden. The Court noted the absence of rebuttal evidence and held that the presumption stood unrebutted.

I find the case before me is materially distinguishable on the facts.

First, the return in the present case is 16%, not 100% of the principal within 30 days as in Triple Zest. The Federal Court was dealing with an arrangement under which RM800,000 was to be repaid with a further RM800,000 within 30 days. The exorbitant nature of the return formed an important part of the factual matrix before the Court.

On the materials before me, the self-imposed 16% return by D3 was made in the course of commercial negotiations by D3 himself. It was accepted as part of a negotiated arrangement to secure urgent financing. In those circumstances, I am not prepared to characterise that return as predatory, oppressive or commercially irrational.

Secondly, the relevant inquiry remains whether, on the facts, the Plaintiff was carrying on the business of moneylending. The concern of the MLA is the business of moneylending. The evidence before me points instead to a single commercial accommodation arising from an existing business relationship. There is no evidence of system, continuity, repetition, advertisement, or holding out as a moneylender (see: Shim Vui Geh v Dayang Masturah Sahari & Another Appeal [2023] 10 CLJ 733).

Thirdly, unlike Triple Zest, this is not a case where the alleged lender failed to place material before the Court to rebut the presumption. The Plaintiff’s case is that it does not advertise, hold itself out, or operate as a lender. This was a singular transaction arising from a business relationship. There is no evidence of system, repetition, or continuity of lending activity. On the facts before me, it cannot be said, as in Triple Zest, that there is “not a morsel of evidence” rebutting the presumption.

I also bear in mind that the 16% return was not unilaterally imposed by the Plaintiff. On the evidence before me, it was a term proposed by D3 himself as part of the commercial arrangement. Whilst that fact does not by itself answer the statutory presumption under Section 10OA, it is relevant when assessing the true character of the transaction and whether it bears the hallmarks of a moneylending business. In my judgment, it does not.

On the balance of probabilities, I am satisfied and find that the Plaintiff has discharged the legal burden of showing that it was not carrying on the business of moneylending within the meaning of the

It follows that the LoUG is not rendered illegal under the MLA. In holding so, I have endeavoured to apply the ratio in Triple Zest, bound as I am by it, properly confined to its factual context. Peripheral Issues of Unpaid Consideration, Post-Transfer Repayments, Waiver and Forfeiture

The Defendants contend the stated consideration was never paid. On the facts of this case, however, the transfer was the agreed consequence upon default under the LoUG, which is a security enforcement mechanism rather than a conventional purchase transaction in the ordinary course. The stated consideration point does not defeat the agreed security structure in the LoUG nor the corporate approval of the transfer.

As for post-transfer repayments and alleged waiver, D1 contends that acceptance of repayments amounts to waiver or approbation and reprobation.

I do not accept this. Waiver must be clear and unequivocal. Here, the repayments were partial and do not demonstrate an agreement to rescind or abandon accrued contractual rights. The Plaintiff’s acceptance of partial repayments is equally consistent with reducing the outstanding exposure while maintaining the agreed security position.

The contractual consequence of default under the LoUG crystallised upon non-payment by the stipulated date. The transfer of 51% shareholding was the agreed security mechanism triggered by that default. Subsequent partial repayments, made months after the breach, cannot retrospectively undo accrued contractual rights absent a clear and unequivocal agreement to rescind or vary the original bargain. No such agreement is pleaded or proven. Acceptance of part-payments, without more, does not amount to waiver, election, or abandonment of the Plaintiff’s entitlement to enforce the agreed security. The argument that the Plaintiff is seeking to “have the cake and eat it too” is rhetorically attractive but legally unsustainable.

On the issue of relief against forfeiture, D2 and D3 rely on the case of Chen Chow Lek v Tan Yew Lai [1983] 1 CLJ 123. In Chen Chow Lek, the appellant failed to pay the overdue interest and what remained was RM100. Payments were received even while litigation was ongoing. It was in light of those facts that the Federal Court quoted the speech of Lord Wilberforce in Shiloh Spinners Ltd v Harding [1973] 2 WLR 28: “...it remains true today that equity expects men to carry out their bargains and will not let them buy their way out by uncovenanted payment. But it is consistent with these principles that we should reaffirm the right of Courts of equity in appropriate and limited cases to relieve against forfeiture for breach of covenant or condition where the primary object of the bargain is to secure a stated result which can effectively be attained when the matter comes before the Court, and where the forfeiture provision is added by way of security for the production of that result.”

Relief against forfeiture is an equitable relief given in limited circumstances. It is trite that he who wants equity must do equity. A contract breaker cannot seek this relief merely to avoid the consequences of a bargain he has willingly entered into.

I also do not find the breach here to be as trivial in the case of Chen Chow Lek or even that of Yap Hong Too & Anor v Wong Ah Mei & Anor [1997] 1 CLJ 568, another Federal Court decision where relief was granted due to delay of two days in making the payment of balance purchase price.

The invocation of relief against forfeiture does not assist the Defendants on the facts before this Court. The Court is not being asked to enforce a penalty; it is being asked to enforce a bargained-for security consequence agreed between commercial parties. On the facts, I hold that parties must be held to their bargain which they willingly entered into. The transfer was not imposed by the Court. It was agreed by the parties themselves as the consequence of default.

I must, for completeness, address the refusal of D1 to register the shares transfer.

It is my finding that D1, as company secretary, does not have a discretion to adjudicate commercial disputes once the statutory requirements for registration are met. D1’s argument is that there has been repayments by D2. She also contends that there are no loan agreements in existence. She says the transfer form was sent for adjudication without her knowledge. She refused to register the shares based on her reading of Inland Revenue Board of Malaysia’s Guidelines (“Guidelines”) concerning stamping of share transfer instruments for shares not quoted on the Kuala Lumpur Stock Exchange ("KLSE") which required D1 to provide some form of certification as part of the stamping application. Finally, she contends that the stated consideration for the transfer as stated in the transfer forms have not been paid.

D1's position overlooks the limited role of a company secretary in the registration process. The question before D1 was not whether the underlying transaction was ultimately right or wrong, but whether the statutory requirements for registration had been satisfied.

The registration of transfer of shares and the instruments required for the same are governed by Sections 105 and 106 of the Companies Act 2016. The Guidelines relied on by D1 do not govern share transfers but the basis of valuation. A guideline, and one of that nature, cannot override the clear provisions of Sections 105 and 106 of the Companies Act 2016.

Next, there is nothing in the Companies Act 2016 that requires a company secretary to be an adjudicator of disputes in the manner D1 has acted in the present case. She has allowed the dust of conflict between the parties to cloud her eyes. I am unable to accept her explanations for refusing to register the shares transfer. They bear the hallmarks of an afterthought. I say so because despite attempts by the Plaintiff to have the shares registered, D1, despite receiving the requests, kept silent. No issues were raised on illegality and lack of consideration. This was followed by a belated email from D1, dated 4 July 2025, almost six months after the Share Transfer Form was executed on 13 January 2025, saying there was a “mistake on the stamp duty done by third party” and that D1 is “not responsible for that”. I find the cavalier manner in which D1 has treated the transfer request to be troubling. I do not find her reasons for refusing to register the shares transfer, one that has been approved by the board of directors of D2, duly adjudicated and with stamp duty paid, to be valid.

Section 107 of the Companies Act 2016 reads: 1) If a company refuses to register a transfer, the transferee or the transferor may apply to the Court for an order under this section. 2) On an application under subsection (1), the Court may order the company to register the transfer, if the Court is satisfied that the application is well-founded.

In Sng Chong Keong v PC Manufacturing Solutions Sdn Bhd [2021] CLJU 1617, the Court held that: “In deciding whether or not an application is well-founded should consider the procedural compliance as well as the substantive merits of the application according to the facts and legal principles relevant to the subject-matter of the application. In the natural and ordinary meaning, mere compliance with statutory procedure does not ipso facto render the application well-founded.”

I find that the application here is well-founded. I must uphold the bargain of the parties and not seek to re-write the contract they have entered. The mere fact that enforcing the contract would be onerous to one party is not, without more, a reason to strike it down.

I therefore granted the declaratory relief sought and ordered the registration of the transfer of the shares. As D2 has paid RM2 million to the Plaintiff and given that Learned Counsel for the Plaintiff has agreed to refund the payment, I further ordered that the sum of RM2 million be refunded to D2 within 30 days from the date of this order. The registration of the share transfers shall be carried out within seven days from the date the refund is paid by the Plaintiff to D2. Dated the 1st day of June 2026 -sgd- ……………………………………………………………………… MUHAMMAD ADAM BIN ABDULLAH Judicial Commissioner (Commercial Division NCC 4) High Court of Malaya In the Federal Territory of Kuala Lumpur, Malaysia Counsel for the Plaintiff : Hadi Mukhlis Khairulmaini Messrs. Azmi & Associates Counsel for the Defendant : Rusdy bin Ishak for the 1st Defendant Messrs. Shahdan Anuar & Jamaludin Abdullah Abdul Rahman together with Deanna Ternisha for the 2nd and 3rd Defendant Messrs. Cheang & Ariff

Chen Chow Lek v Tan Yew Lai [1983] 1 CLJ 123 2. Shiloh Spinners Ltd v Harding [1973] 2 WLR 28 3. Shim Vui Geh v Dayang Masturah Sahari & Another Appeal [2023] 10 CLJ 733 4. Sng Chong Keong v PC Manufacturing Solutions Sdn Bhd [2021] CLJU 1617 5. Triple Zest Trading & Suppliers v Applied Business Technologies Sdn Bhd [2023] 6 MLJ 818 6. Yap Hong Too & Anor v Wong Ah Mei & Anor [1997] 1 CLJ 568

Sections 105; Section 106 and Section 107 of the Companies Act 2016 2.