Mohd. Azmi SCJ:

This appeal concerned a claim by Bank Negara Malaysia for liquidated damages in the sum of RM70,000 (Ringgit seventy thousand only) for breach of a scholarship agreement entered into on 21 July 1980 between the bank and the scholar, the 1st respondent with the 2nd and 3rd respondent as guarantors. In an application for summary judgment under O. 14 Rules of the High Court 1980, the Senior Assistant Registrar was satisfied on affidavit evidence that there was no triable issue and accordingly entered judgment against the three respondents on 24 August 1988. On an appeal to a Judge in chambers, the learned Judge set aside the order of the SAR and issued a certificate of no further argument. On further appeal by the bank, we restored the order of the SAR by a majority decision (Gunn Chit Tuan SCJ dissenting).

At the conclusion of the appeal, we indicated that we would give our reasons and we do so now.

From the scholarship agreement, there was no dispute that it was the scholar, the 1st defendant in the Court below who approached the bank for a grant of scholarship to enable him to pursue a course of study in the University of Malaya leading to the award of an Honours Degree in Law. The bank agreed to grant the scholarship upon the terms and conditions contained in the agreement. One of these conditions which formed the consideration for the grant of the scholarship was contained in Clause l(c) of the agreement which provided:

1. The Scholar with the approval and consent of the Sureties, hereby agrees:

(a) ...

(b) ...

(c) that he will upon being required to do so by The Bank or any Ministry or body (whether corporate or unincorporate that may be so determined by the bank in a post consistent with the qualifications obtained by The Scholar to which he may be appointed for a period of ten (10) years from the date of his appointment upon the terms and conditions for the time being usually applicable to such post and at a salary in accordance with the scales of salaries for the time being in force relating thereto.

This was followed by Clause 3(e) in which the scholar agreed:

(e) in the event of The Scholar leaving the service of The Bank or the Ministry or body (whether corporate or unincorporate) that The Scholar may be required by The Bank to serve before fulfilling his obligation under this agreement to serve The Bank or the Ministry or body (whether corporate or unincorporate) for a period of ten (10) years The Scholar and The Sureties shall be jointly and severally liable for themselves, their heirs, executors, administrators and assigns to pay to The Bank on demand by way of liquidated damages the sum of ringgit Seventy Thousand Only (RM70,000).

In support of the application for summary judgment Encik Nordin Haji Nasir, the Personnel Manager of Bank Negara in his affidavit sworn on 18 January 1988 affirmed inter alia that:

4. By the said agreement and in consideration of the plaintif granting him a scholarship to pursue a course of study the 1st defendant inter alia undertook to serve the plaintif for a period of ten years upon completion of the said studies.

5. In breach of the said agreement the 1st defendant left the service of the plaintif without completing the 10 years as agreed.

6. In response to demands from the plaintif and/or its solicitors the 1st defendant, inter alia, admitted the plaintif's claims. There is now shown before me a letter of admission and marked as Exhibit BNM2.

There were three letters written by the scholar which were relevant on the issue of admission of liability. The first letter with the address of the scholar given as "Jabatan Pengawalan Bank, Bank Negara Malaysia" was the resignation letter dated 3 October 1984 as follows:

Tuan,

Perletakan Jawatan sebagai Pegawai Pentadbiran

Berhubung dengan perkara di atas, dengan ini saya memberi notis 1 (satu) bulan, seperti yang dikehendaki dalam surat lantikan saya bertarikh 13 Julai 1984 (Bilangan: Est 200), meletakkan jawatan s