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2021 MarsdenLR 1836
HIGH COURT MALAYA PULAU PINANG
SEVANASPARAN MANIKAM – Appellant
Versus
DHARMENDRA KUMAR RAGHAVAN & ORS (ENCL 4) – Respondent
[Civil Suit No: PA-22NCvC-25-02/2021]
An interim injunction is appropriately granted to prevent potential unjust enrichment through fraudulent acts, particularly in cases involving illegal moneylending.
Headnote:(A) Moneylenders Act 1951 – Allegations of fraud and conspiracy to defraud in relation to land transactions disguised as moneylending agreements – The plaintiff asserted that the sale and purchase agreements were sham documents created solely to cloak illegal moneylending transactions. (Para 22)
(B) Judicial Discretion – The court emphasized that interim injunctions should maintain the status quo until trial, particularly where substantial financial interests and potential losses are at stake. (Paras 26, 30)
Facts of the case: The plaintiff, facing financial strain, entered into suspicious land transactions meant to disguise a high-interest moneylending scheme, fearing transfer of his lands at unjustly low values.
Findings of Court: The court found that the interim injunction was warranted to prevent irreparable harm until the merits of the case could be determined.
Issues: The court addressed whether the agreements constituted genuine sales or were sham agreements disguising illegal loans, and the appropriate equitable relief.
Ratio Decidendi: The court ruled that it must assess the existence of serious issues to be tried, the balance of convenience, and public interest in the context of protecting vulnerable borrowers under the Moneylenders Act.
Result: Application for interim injunction granted.
JUDGMENT
Introduction
[1] This is an application dated 22 February 2021 for an interim injunction pending the disposal of the instant action (enclosure 4). The injunction sought was to restrain the defendants and/or their agents or from:
(i) using and/or proceeding with the sale and purchase agreement and the power of attorney both dated 31 October 2019 and/or dealing with the plaintiff's seven pieces of land ("the lands"), the subject matter of the sale and purchase, until the disposal of this action; and
(ii) disposing of, charging, assigning or in any other way dealing with the lands until the disposal of this action.
[2] On 21 April 2021 I allowed the application against the 3rd and 4th defendants after the 1st and 2nd defendants had given an undertaking to the court not to deal with the lands in any manner whatsoever.
[3] This judgment contain the reasons for my decision allowing the interim injunction:
The facts
[4] The plaintiff is the registered owner of the lands which are situated in Mukim 05, Daerah Barat Daya, Penang the description of which are as follows:
(a) Geran Mukim No 73, Lot 166
(b) Geran Mukim No 162, Lot 277
(c) Geran Mukim No 163, Lot 276
(d) Geran Mukim No 176, Lot 371
(e) Geran Mukim No 177, Lot 370
(f) Geran Mukim No 180, Lot 368
(g) Geran Mukim No 182, Lot 369
[5] The plaintiff said that at the end of 2017 he was in need of funds for his business and obtained a loan of RM1 million from Aspen Centennial Sdn Bhd ("Aspen Centennial"), a moneylender at certain interest rates. The plaintiff said that at the insistence of Aspen, the loan was disguised in the form of a sale and purchase agreement of the lands meant only as collateral for the moneylending transaction (1st SPA").
[6] The plaintiff stated that the 1st SPA was a sham agreement based on the representation made to him and evidenced by terms not found in normal sale and purchase agreements. The 1st SPA contained conditions such as that the purchase price of RM1 million and deposit sum was also RM1 million and with no provision for retention and payment of Real Property Gains Tax. At the same time there was also executed a settlement agreement dated 28 December 2017 for the debt of RM1 million being the total amount of friendly loan advanced to the plaintiff by Aspen. The plaintiff said that the settlement agreement was also a sham agreement ie to settle a RM1 million loan taken by the plaintiff whereby the plaintiff had agreed to execute the 1st SPA as the RM1 million debt was the consideration for the said sale and purchase agreement.
[7] At the time of the execution of the 1st SPA the value of the lands were estimated between RM10 million and RM12 million. As security for the loan, a caveat was lodged on the lands by Aspen Centennial. Upon execution of the 1st SPA it was alleged that the loan amount was released as per the actual moneylending transaction. Subsequently, when the plaintiff was unable to service the loan he sought out a second moneylender, Corporate Bridge Sdn Bhd to borrow RM1.5 million ("second loan" and "Corporate Bridge") to repay the first loan and interest taken from Aspen Centennial.
[8] According to the plaintiff the same modus operandi for the moneylending transaction carried out by Aspen Centennial was carried out by Corporate Bridge. A sham sale and purchase agreement ("2nd SPA") and a supplemental agreement were executed simultaneously on 28 June 2018 to disguise the moneylending transaction as a sale and purchase of land. The sham transaction could be gathered from similar terms as in the Aspen Centennial agreement which are not found in normal sale and purchase agreements. The supplemental agreement gave the plaintiff an option to return the loan sum of RM1.5 million without demand to the purchaser within six months from the date of the agreement with interest at 1% per month and which interest is agreed to be paid only upon payment of the whole sum of RM1.5 million.
[9] The purpose of taking the second lo
