The Plaintiff pleaded that by a letter of offer dated 30.1.1997 and a supplementary letter of offer dated 19.2.1997, the Plaintiff had agreed upon the 1st Defendant's request, to grant to the 1st Defendant among others, an Overdraft Facility of RM10 million (the OD facility) . The rest of the Defendants stood as guarantors to the extent of the RM10 million. By a letter of offer dated 7.6.1999 between the Plaintiff and the 1st Defendant, the Plaintiff agreed with the 1st Defendant to restructure the OD facility to a Term Loan of RM9, 647 ,000 .00 (the said term loan facility) . It was a term of the agreement that the said second letter of offer superceded all previous letters of offer.

Upon breach by way of non payment by the Defendants, the Plaintiff sought the following orders:-

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(a) a sum of RM12,312,102.29 as at 30-6-2002;

(b) further interest on the sum of

RM12,312,102.29 at the rate of 3.5% per

annum + 6.4% (the Plaintiff's Base Lending

Rate per annum) including 1% default rate on

monthly rests from 1-7-2002 until date of

full realisation.

(c) a declaration that the Plaintiff is entitled

to sell the 2,363,000 Farlim Group (M)

Berhad shares to any purchasers in any

manner on any terms for such consideration

at any time thought fit by the Plaintiff in

its absolute discretion.

(d) costs (including the Plaintiff's Solicitor's

fees on solicitor-client basis);

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The Plaintiff then took out a summons for summary judgment and obtained the said order. Before me Mr Rajah for the Defendants raised two issues.

The first letter of Guarantee & Indemnity dated 15.5.1997 showed that the guarantors' limit of guarantee was RM10 million (Exhibit KKH 13) . I was then referred to Exhibit KKH 15 which was the demand notice. This demand notice addressed to all. the borrowers sought the following:-

PrincipalRM 10,152,082.86

InterestRM 1,552,569.39

Late Charges RM 35,405.36

Clearly the demand notice which referred to a sum of RM10,152,082.86 as the principal, when

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the Defendants' guarantee was only for a sum of RM10 million, was bad in law. In Co-operative Central Bank Ltd v. Meng Kuang Properties Bhd [1991] 2 MLJ 283., Lim Beng Choon J had this to say at Page 288,

"I am impelled to hold that the wrongful demand for payment of the default interest to which the plaintiff bank is not entitled must necessarily render the notice of demand and the Form 16D ineffectual and invalid. It is not a simple case of the said notices of demand containing an erroneous sum but it is a case where the said notices were demanding payment of something to which the plaintiff bank had no right.

In the circumstances of this case I am satisfied that the plaintiff bank are not prima facie entitled to the remedies sought by them in their originating summons. The matter must go for trial. Costs of this proceeding are to

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be paid by the plaintiff bank to the defendant company."

In reply Mr Ben Chan for the Bank surprised not only the Counsel for the Appellants but this Court too by maintaining that there were two guarantees for RM10 million each and that therefore the principal sum claimed being RM10,152,082.86 was well within the RM20 million guarantee.

To my mind this is a preposterous submission. The exhibit KKH 15 itself referred to only RM10 million. Mr Chan refused to answer this Court's pointed question whether his contention that there were two guarantees of RM10 million each was reflected in his firm's notice of demand to the guarantors. Instead of answering a simple question, Mr Chan referred me to the case of Public Bank Bhd v. Chan Siok Lie &

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Ors [1989] 2 MLJ 305 and to a passage from Shankar J (as he then was) in respect of the requirement or otherwise to state the precise amount owing correctly in the notice. Mr Chan quoted His Lordship at Page 308 which reads as follows:-

"I agree that great care should be taken when applying Mok Hin Wah's case to remember that it will only apply if the words of the guarantee specifically make a pr