Hashim Yeop Sani CJ (Malaya):

By a letter dated 29 October 1980 (A.R. Vol. 2, p. 232) the appellants ("the bank") acceded to the request of a company, Syarikat Johor Tenggara Sdn. Bhd., for a fixed loan of RM1,250,000 to facilitate the purchase (by Ow Chor Seng and Chee Eng Hoon, the directors) of the shares of Hotel Rasa Sayang Sdn. Bhd. ("the hotel"). This fixed loan was to be secured by:

(a) a first legal charge on Malay Grant 1969 on Lot 1327 situated in the township of Johor Bahru of which the hotel was the registered proprietor;

(b) a debenture stamped up to RM1,250,000 on all the hotel's assets;

(c) joint and several guarantees for RM1,250,000 from the directors of Syarikat Johor Tenggara Sdn. Bhd.; and

(d) a personal guarantee from Chee Eng Hock for the same amount of RM1,250,000.

An agreement for this purpose was entered into on 19 November 1980 by the parties concerned. The hotel executed the securities and the bank disbursed the loan.

On 28 September 1982 the bank granted an overdraft facility and a further loan of RM2,500,000 to the hotel secured by a first legal charge for an amount up to RM4,000,000 over the hotel's land and a further first legal supplementar