Abdul Malek Ahmad JCA:

According to the statement of claim dated 13 January 1982, by an agreement dated 15 June 1979 between the plaintiff, the appellant before us, a private limited company having its place of business in Alor Setar, Kedah, and the first defendant, the first respondent in this appeal, a company running its business in Kuala Lumpur, it had been agreed by the third respondent that the first respondent would sell, and the appellant would purchase, the lands held under Pegangan 536, 537 and 538 respectively in Bandar Jelutong, Section 1, Daerah Timor Laut, Penang together with the three shophouses erected respectively thereon known as Nos. 411A, 411B and 411C Jalan Jelutong Penang for RM510,000. The second and third defendants, now the second and third respondents, are receivers and managers of the first respondent.

Under the agreement, the appellant was to pay a deposit of RM51,000 to the first respondent, which they did, and that the balance of RM459,000 was to be paid to the first respondent's solicitors on or before the date of completion which was 14 August 1979 upon which the first respondent was to deliver to the appellant a valid and registrable memorandum of transfer of the said properties free from all encumbrances together with the documents of title thereto. Time was to be of the essence of the agreement.

On 10 August 1979, the appellant forwarded to the first respondent's solicitors a cheque for RM459,000 being the balance of the purchase price. However, on 28 September 1979, the third respondent verbally informed the appellant that the directors of the first respondent had refused to execute the transfer and as a result they were returning the balance of the purchase-price to the appellant's solicitors to hold the same until the transfer had been duly executed.

Consequently, the appellant had asked for specific performance of the agreement, alternatively damages for breach of contract or, in the alternative, damages in lieu of specific performance and a declaration that the appellant is entitled to a lien on the properties for the deposit with interest thereon.

In their statement of defence amended pursuant to a court order dated 5 December 1979, the respondents pleaded that the first respondent is a company in receivership. Further, the second and third respondents had been conferred the power and authority to sell the assets and the property of the first respondent under the debenture issued by the first respondent on 25 January 1977 but state that actually in law the third respondent had no power to sell the assets.

The first respondent also admitted having received a deposit of RM51,000 and although they had told the appellant that it would be refunded, the appellant had informed the respondents that they will not accept a refund. The balance of the purchase price amounting to RM459,000 however, had been refunded.

The respondents now contend that no valid and registrable memorandum of transfer had been forwarded as the respondents have no power to sell or transfer the properties. They had taken all reasonable measures to secure the execution by the directors of the first respondent of the transfer of the properties but they had failed or neglected to do so.

Subsequently, by a letter dated 23 February 1987, the respondents had through their solicitors informed the solicitors for the appellant that the respondents were in a position to obtain and deliver to the appellant an executed memorandum of transfer and required the appellant to forward the balance of the purchase price amounting to RM459,000.

There was no response from the appellant. By a letter dated 3 April 1987, the solicitors for the respondents had written to the solicitors for the appellant requesting a reply within seven days failing which the respondents would forfeit the deposit and terminate the agreement.

Again, there was no response from the appellant. It is therefore the respondents' contention that because of