Hashim Yusoff FCJ:

[1] On 18 May 2009 this court gave leave to appeal to the appellant on the following question of law:

Whether the 2nd Respondent as a Guarantor could again raise issues decided by the High Court against the 1st Respondent as the Borrower whereas Judgment against the 1st Respondent was maintained by the Court of Appeal and furthermore the 2nd Respondent did not and has never challenged the Guarantee Agreement signed.

We allowed the appeal and now give our reasons.

Background

[2] (i) The appellant (plaintiff) filed a suit in Kuala Lumpur High Court against the 1st respondent as the borrower (Principal Debtor) and the 2nd respondent as the guarantor for a claim of RM30,983,718.53 as at 20 October 1998 pursuant to an Islamic Banking Facility of Al-Tarkhis (Bai-Al-Inah Principle).

(ii) The 1st and 2nd respondent entered memorandum of appearance on 8 January 1999.

(iii) The appellant thereafter filed an application for summary judgment on 4 February 1999 pursuant to O. 14 Rules of the High Court 1980 ("RHC").

(iv) The hearing proceeded on affidavits filed therein and the application was dismissed before the senior assistant registrar but on appeal to judge in chambers, the said appeal was allowed and summary judgment was entered against both the 1st and 2nd respondent. The grounds of judgment by the learned High Court Judge appeared at pp. 45 to 58 of the record of appeal (I).

(v) Both respondents filed an appeal to the Court of Appeal on 12 May 2003 and on the grounds as appeared in the memorandum of appeal dated 12 May 2003 at pp. 32 to 35 of the rekod rayuan (I).

(vi) On 15 May 2008, the Court of Appeal struck out with costs the 1st respondent's appeal as it was in liquidation since 5 October 2005 and had not obtained leave of court in compliance with s. 226(3) of the Companies Act 1965, to proceed with the appeal. But the Court of Appeal allowed the 2nd respondent's appeal. Hence this appeal before us.

[3] Learned counsel for the appellant submitted that the Court of Appeal in allowing the 2nd respondent's appeal decided on only one issue ie,:

Whether at the date of the facility was granted to the 1st Respondent in August 1997, the Plaintiff (Appellant) could lawfully grant the Facility under Islamic Banking principles when the Plaintiff was a co-operative Society registered or deemed registered under the Co-Operatives Societies Act 1993. (See Rekod Rayuan Tambahan page 6, lines 15-25.)

[4] The Court of Appeal held that this is an issue of both facts and law. As such it was a serious issue which could only be decided after witnesses had given evidence on behalf of the plaintiff as to its capacity in law to carry on Islamic banking business.

[5] In arriving at its decision the Court of Appeal had relied on the Development Financial Institutions Act 2002 ("Act 618") whereby the appellant was, inter alia, one of the Financial institutions listed in the schedule of the order. As such the appellant is also governed by Act 618, which under s. 129(1) of the same Act, prohibits a prescribed institution from carrying any Islamic banking business or Islamic financial business before obtaining the prior written approval of the Central Bank of Malaysia. Therefore the Court of Appeal held that it was not a simple and obvious case because there were issues to be tried.

[6] Learned counsel for the appellant submitted that the Court of Appeal had erred in applying Act 618. As was held by the High Court, the appellant came under and was bound by the provisions of Akta Bank Kerjasama Rakyat Malaysia Berhad (Peruntukan Khas) 1978 ("Act 202") and the by-laws under Act 202. The learned High Court Judge found as a fact that the appellant's operation using the Syariah principles were in order and in accordance of the Appellant's Board of Directors' resolution as provided under Act 202.

[7] He further submitted that since the appeal of the 1st respondent as the principal borrower/debtor was struck out, it meant that the judg