A lender is not obliged to honor drawdown requests if preconditions in the loan agreement are not met, and the borrower's failure to satisfy these conditions disallows claims of breach of contract against the lender.

Table of Content
1. consolidation and consolidation of suits in court. (Para 1 , 2 , 3 , 4)
2. background facts involving the project and banking facilities. (Para 5)

i) Johor Bahru Suit S-23-15-2010 (JB Suit);

ii) Kuala Lumpur Suit S-22NCVC-227-2011 (KL Suit)

The JB Suit consists of:

i) A main claim by the Plaintiff (hereinafter referred to as "Bistari land") against Malayan Banking Berhad (Hereinafter referred to as "MBB"); and

ii) A counterclaim by MBB against Bistari Land and LP World Sdn Bhd.

The KL Suit is a claim by Bistari land agst MBB and former receivers and managers of Bistari Land, Dato' Gan Ah Tee and Mok Chew Yin.

BACKGROUND:

Bistari Land is a developer of a mixed development project which is known as Bandar Bistari Perdana at Mukim Plentong, Daerah Johor Baharu (hereinafter referred to "the said project").

The said project was taken over from Cahaya Baru Development Berhad (CBDB).

MBB was the financiers for CDBD with regards to the project. Bistari Land had taken over the liabilities of CDBD with MBB amounting to RM150,000,000.00.

The JB Suit:

In the Johor Bahru Suit, Bistari Land's cause of action against MBB is on an alleged breach of contract on the part of MBB. MBB is the Bank which had granted various banking facilities to Bistari Land. Bistari Land alleged that MBB had wrongfully refused to allow drawdowns on certain facilities which was granted by MBB to Bistari Land.

The banking facilities that were granted by MBB to Bistari Land are:

i) Term Loan of RM150 million. This is the first term Loan which was released by the bank to Bistari Land ("TL-1");

ii) Bridging Loan of RM25 million ("BL-1");

iii) Term Loan of RM17.5 million ("TL-2");

iv) Bridging Loan of RM24 million ("BL-2");

v) Overdraft of RM6.5 million ("OD");

vi) Term Loan of RM5 million ("TL-3")

In consideration of MBB granting various facilities to Bistari Land, Bistari Land had given several securities to MBB. Amongst the several securities granted were several debentures which gave MBB the rights to appoint a Receiver and Manager (R & M) over Bistari Land in the event of default of the banking facilities.

D2, D3, D4 and D5 (in the counter claim in the JB Suit) were the guarantors who executed the respective guarantees in favour of Bistari Land to repay all indebtedness and/or satisfy all obligations of Bistari Land when demanded by MBB.

Bistari Land subsequently launched and managed to sell 439 units of houses worth 44.97 million known as Ixora 1, Ixora 2A and Ixora 2B.

Bistari Land alleged that despite Bistari Land complying with the terms of the Loan Facilities and had proceeded to launch Ixora 4 phase, MBB refused to allow the further drawdown of BL 1 and did not allow the draw down of BL 2 and TL 3 in 2006.

Bistari Land alleged that it had continued to service the loans until 2008, however with MBB refusing to allow the further drawdown of the said facilities, Bistari Land could not continue with the said project.

On or about 18.3.2010 Bistari Land received a demand letter from MBB's solicitors demanding for the repayment of the sum RM255,619,727.30.

Thereafter on 8.4.2010 Bistari Land initiated this suit against MBB due to the alleged breach for not allowing the release of the said Loans to continue with the said project and Bistari Land is seeking injunctive relief, damages and costs.

Simultaneously Bistari Land had filed an application for an interim injunction to restrain MBB from appointing the R & M and/or to remove them if appointed, pending disposal of the main suit.

However, before the hearing of the application for the interim injunction in the JB High Court, MBB had proceeded to appoint the R & M on 10.6.2010.

Subsequently, the High Court in Johor Bharu had allowed the application of Bistari Land to remove the R & M on 23.11.2010 and to return the management of Bistari Land back to the directors of Bistari Land.

The contention of Bistari Land:

MBB had breached the terms of BL 1, BL 2 and TL 3 of the Agreement for failing to allow Bistari Land to draw down the fu

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