Gopal Sri Ram JCA:

[1] This is the judgment of the court.

[2] This appeal is directed against the judgment of the High Court at Kota Kinabalu dismissing the appellant's claim for the recovery of RM1,000,000 paid by it as deposit for purchase of shares from the respondent and against the judgment entered in the defendant's favour on his counterclaim. The brief facts relevant to this appeal are as follows.

[3] By a letter of undertaking dated 24 June 1997 the appellant agreed with the respondent to pay a sum of RM5,000,000 for the respondent's shares in a company known as Jernih Kaya Sdn Bhd. The letter of undertaking contained a term that the balance sum of RM4,000,000 would be paid upon approval of the transaction by the Foreign Investment Committee (FIC) and other relevant authorities. There is no dispute that the appellant paid the sum of RM1,000,000. Nor is there any dispute that the respondent handed over the shares in question with the transfer forms to the appellant. By a sale and purchase agreement dated 26 June 1997, the appellant entered into an agreement with Madrigal B. Gumba to purchase 900 shares (which included the respondent's shareholding) in Jernih Kaya Sdn Bhd. Shortly after these events, the appellant made a public statement announcing its acquisition of a controlling stake in Jernih Kaya Sdn Bhd. In consequence of this announcement the appellant's shares rose in value. Later, by a letter dated 12 January 1998 the FIC refused to give its approval for the proposed acquisition by the appellant.

[4] The appellant's case in the court below and before us is that it is entitled to have the deposit returned to it because the condition precedent in the agreement, namely, the FIC approval had not been obtained. The respondent, on the other hand, contended that the appellant had by its conduct waived the requirement of the FIC approval and is in any event estopped by its conduct from relying on the said approval as a condition precedent. The learned judge found for the respondent. He was no doubt impressed by the appellant's conduct both before and after the letter of undertaking was executed.

[5] It is a principle of general application that if an obligation in a contract is conditional on an occurrence of an event then the occurrence or non-occurrence of the event will have the effect of either necessitating or excusing the performance of the promise. So if A agrees with B that he will pay B if X approves the transaction and if X does approve the transaction A must pay B. If X does not approve the transaction then he need not.

[6] The leading authority on the subject is Aberfoyle Plantations Ltd v. Khaw Bian Cheng ; [1960] 26 MLJ 47. In that case, the appellant agreed to sell an estate to the respondent. However, the sale was conditional upon the appellant obtaining a renewal of certain leases. The respondent paid the deposit required to be paid under the agreement. As it happened the appellant did not obtain the renewal of the leases in question. The respondent sued to recover the deposit. It was held by the Privy Council that the respondent was entitled to its deposit. On a proper construction of the contract in that case, the respondent's obligation to pay the balance of the purchase price did not arise if the appellant did not obtain the renewal of the leases.

[7] Similarly, in National Land Finance Co-operative Society Ltd v Sharidal Sdn Bhd [1983] CLJ 282 (Rep); [1983] 2 CLJ 76; [1983] 2 MLJ 211 the respondent in that case had agreed to sell to the appellant certain lands. It was a condition of the sale and purchase agreement that the approval of the Foreign Investment Committee should be obtained. As it happened, such approval was refused. It was held that the sale and purchase had become void because the approval by the Foreign Investment Committee was a contingent condition.

[8] As in the case of all general principles, the one under discussion is also subject to qualifications. If parties to a con