The court established that disguised money lending transactions camouflaged as sales violate the Moneylenders Act, rendering them void ab initio.

Azizah Nawawi JCA:

Introduction

[1] There are 3 (three) appeals before us arising from two (2) separate Suits.

[2] In Civil Suit No: 22NCVC-479-09/2015 ("Suit 2015"), David Choong ("DC") had sued Tan Sri Dato' Seri Dr M Mahadevan a/I Mahalingam ("TSM") and 9 Others seeking, inter alia, a declaration that TSM had illegally loaned monies to DC in ten (10) transactions which are unlawful and unenforceable under the Moneylenders Act 1951 ("MLA").

[3] In Civil Suit No: 22NCVC-95-02/2017 ("Suit 2017"), TSM had sued DC and Lee Kuang Gen ("LKG") for collusion by way of inducement, misrepresentation and false promises of handsome returns of gold investments, and causing TSM to enter into the Sale of Gold Agreements ("SOGAs") with DC amounting to RM10,493,500.00. TSM's claim is for the return of the said sum of RM10,493,500.00.

[4] DC filed a Counterclaim in Suit 2017 seeking a declaration that all of TSM's 10 loans to DC are in contravention of the MLA and are therefore illegal and/ or void ab initio, an injunction to restrain TSM and his servants and agents from harassing, assaulting, threatening or committing any act to injure DC and his businesses and for general damages.

[5] After a full trial, the learned Judge has allowed Suit 2017. LKG had filed an appeal in Appeal No: W-02(NCvC)(W)-2021-10/2021 ("Appeal 2021") and Appeal No: W-02(NCvC)(W)-2155-11/2021 ("Appeal 2155") was filed by DC.

[6] The learned Judge had also dismissed Suit 2015, and this is the subject matter of Appeal No: W-02(NCvC)(W)-2156- 11/2021 ("Appeal 2156") by DC.

The Salient Facts

[7] In or about July 2013, LKG had introduced DC to TSM for the sale of gold bars by TSM. In respect of these transactions, the gold bars were sold and the proceeds of the sale were deposited into the bank account of TSM.

[8] Between November 2013 and January 2015, TSM had entered into the following SOGAs with DC to sell/invest in gold ingots to the value of RM10,993,500.00. TSM's position is that he had transferred the gold to the said value to DC based on the following agreements:

(i) SOGA 1 dated 17 November 2013;

(ii) SOGA 2 dated 25 June 2014;

(iii) SOGA 3 dated 25 June 2014; and

(iv) SOGA 4 dated 9 January 2015.

[9] The said SOGAs are the subject matter of both suits.

[10] Parties have also signed four (4) documents, titled "Letter Verifying and Confirming Transfer of Gold Bullions" (Exhibits D5, D44 and D45). These documents are to show that the gold bullion was transferred to DC, who is described as the purchaser, from TSM, who is described as the vendor.

[11] In early 2015, TSM had requested that DC return the sum of RM2,000,000.00 and USD2,000,000.00.

[12] By a letter dated 20 April 2015, TSM requested DC to pay the sum of RM10,043,500.00. DC did not make the payment.

[13] On 2 September 2015, DC filed Suit 2015.

[14] On 21 February 2017, TSM filed Suit 2017.

Decision Of The High Court

[15] The core issue before the learned High Court Judge was whether the SOGAs entered between DC and TSM are for t