Wan Adnan J:

In this action the plaintiffs claim for the following orders:

(a) a declaration that the plaintiff is relieved from performing any of its obligations under the consent order dated 21 January 1988;

(b) a declaration that the 1st defendant is not entitled to enforce the guarantees Nos. 87/0425 and 87/0462 both dated 23 July 1987 and issued by the 2nd defendant in the 1st defendant's favour;

(c) rescission of the agreement embodied in the said consent order;

(d) an order that the said consent order be set aside;

(e) an injunction perpetually restraining the 1st defendant from enforcing or attempting to enforce the said bank guarantees or from receiving payment from the 2nd defendant upon the said bank guarantees;

(f) a declaration that the 2nd defendant is not entitled to make payment of the sum of RM500,000 or any sum whatsoever to the 1st defendant upon the said bank guarantees;

(g) an injunction perpetually restraining the 2nd defendant from making payment to the 1st defendant under the said bank guarantees;

(h) general damages for fraud;

(i) interest on damages;

(j) costs;

(k) further or other relief.

By the notice of motion (encl. 2) the plaintiffs had applied for the following orders:

(a) the 2nd defendant, whether by itself or its agents or servants or however otherwise be restrained and an injunction be granted restraining it from making payment of the sum of RM500,000 or any sum whatsoever under the guarantees issued by it on 23 July 1987 and numbered 87/0425 and 87/0426 respectively;

(b) the 1st defendant, whether by itself or its agents or servants or howsoever otherwise be restrained and an injunction be granted restraining it from receiving payment of the sum of RM500,000 or any sum whatsoever under the 2nd defendant's guarantees dated 23 July 1987 and numbered 87/0425 and 87/0426 respectively;

until after the trial of this action;

The motion was heard ex parte and I granted the orders in terms of the motion till the date fixed for the hearing of the motion inter partes. After hearing both parties I dismissed the application and set aside the ex parte order.

The plaintiffs now appeal.

The background of the case is as follow:

1. On 30 August 1987 the plaintiffs entered into three agreements with National Rubber Smallholders Co-operative Berhad (NARSCO) for the purchase of crude palm oil. Under each agreement the plaintiff had agreed to provide a security deposit in the sum of RM250,000 in the form of bank guarantee in the name of Estet Pekebun Kecil Sdn. Bhd. (the first defendant) for the due performance of the plaintiffs obligations under the agreement.

2. Three bank guarantees were given by Malayan Banking Bhd. (the second defendant). They were guarantees No. 87/0583, 87/0425 and 87/0426. The beneficiary under each guarantee was the first defendant.

3. A dispute arose. The plaintiffs then commenced a civil suit in Penang High Court vide Suit No. 22-145-87. In that suit NARSCO was named as the first defendant and the first defendant in the present suit was named the second defendant.

4. Subsequently the parties compromised and a consent order was recorded on 21 January 1988.

The principles in American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396 were set out by Sir John Pennywick in Fellows v. Fisher [1976] QB 122 as follows:

(1) provided that the Court is satisfied that there is a serious question to be tried. there is no rule that the party seeking an interlocutory injunction must show a prima facie case.

(2) the Court must consider whether the balance of convenience lies in favour of granting or refusing interlocutory relief.

(3) `as to that' the Court should first consider whether, if the plaintiff succeeds, he would be adequately compensated by damages for the loss sustained between the application and the trial, in which case no interlocutory injunction should normally be granted.

(4) If damages would not provide an adequate remedy the Court should then consider whether if the plaintiff fa