Mohamed Dzaiddin Abdullah FCJ:

[1] This is an action for specific performance of an agreement dated 27 July 1977 (the said agreement) made between the defendant, formerly known as Sovereign General Insurance Sdn Bhd, and Ng Siau Choon (the deceased), who was at the material time the chairman and the principal officer of the defendant. Under the said agreement and for the consideration of RM1,669,220, the defendant agreed to sell and the deceased to purchase the following assets and properties of the defendant:

(a) 20,000 shares of RM1 each in Auto Electronic Sdn Bhd;

(b) Lot 510, s 67, Town of Kuala Lumpur, together with the premises thereon known as No: 247, Jalan Bukit Bintang, Kuala Lumpur;

(c) Lot 1283 and Lot 1285, s 46, Town of Kuala Lumpur, together with two uncompleted buildings erected thereon;

(d) Lots 107, 115 and 116, Town Area xx, Malacca, together with the premises erected thereon and known as No:55-A, 55-D, Jalan Bendahara Melaka;

(e) Lots 26 and 27 Pulau Sebang, District of Alor Gajah, Melaka, together with the premises erected thereon and known as No 203 and 2004, Main Road, Pulau Sebang, Melaka;

(f) Lots 278 and 279, Town Areas, VIII Melaka.

[2] This action was commenced by the deceased, but on his death on 8 January 1984, his son, Ng Pak Cheong, was substituted as the plaintiff by order of Court of 30 March 1987.

[3] By the statement of claim dated 30 March 1980, the plaintiff alleged as follows:

(a) That he had paid to the defendant the sum of RM586,922 toward the purchase price, leaving a balance of RM1,082,298 and upon signing of the said agreement, he had taken over possession of the said properties.

(b) That under cl 5 of the said agreement, the defendant was to take necessary action to obtain the approval and/or consent of the Director General of Insurance (DGI) for the sale of its assets and properties to the plaintiff in view of the fact that the said sale and transfer was subject to the consent of the DGI being granted on or before 31 January 1978.

(c) The defendant also agreed to give its full co-operation and assistance to the DGI for the latter to carry out investigation into its affairs, following the issuing of a notice by the DGI to the defendant that it should not dispose of its assets without the DGI's prior approval since the DGI's investigation was still pending.

(d) That the defendant had agreed to execute the transfer of the first three above-mentioned properties to the plaintiff on or before 31 January 1978 for a total consideration of RM395,000.

(e) On 10 August 1979, the plaintiff's solicitors wrote to the defendant demanding the latter to comply with the terms of the said agreement.

[4] Despite receipt of the said demand letter, the defendant had failed or neglected to carry out its obligations under the said agreement.

[5] Wherefore, the plaintiff claimed for an order for specific performance of the said agreement. Alternatively, damages in lieu thereof.

[6] By an amended defence and counterclaim dated 12 March 1981, the defendant contended that the said agreement was void and unenforceable in law because the purported sale of the defendant's properties was in contravention of the directives of the DGI and s 27(2) of the Insurance Act 1963. Secondly, the defendant alleged that the said agreement was a fraud on the defendant since it was a product of an asset-stripping operation designed to defraud the creditors and its insured. Further and/or in the alternative, the defendant alleged that the deceased had been in breach of fiduciary duty by purporting to purchase the defendant's properties for himself to the detriment of the defendant's shareholders and insured. By the counter-claim, the defendant prayed for a declaration that the said agreement was illegal, null and void for reasons pleaded in the amended defence, and for an order of vacant possession of the defendant's properties, damages for trespass and unlawful occupation of the said properties and costs.

[7] At the outset, it should be