[1] By an agreement entered into between the plaintiffs (hereinafter referred to as the appellants) and the defendants in 1997, the appellants had engaged the services of the 1st defendant (the company) through the 2nd defendant (respondent) to build and construct a factory on a piece of land bearing the postal address of Lot 6486 No 2 Jalan PJS 3/2, Taman Medan, Mukim Petaling, off Old Klang Road, 46000 Petaling Jaya, Selangor Darul Ehsan (the said land). For easy reference, collectively the company and the respondent will be referred to as the defendants.

[2] Due to the requirements demanded by Capital Control measures imposed by the Malaysian Central Bank, and in order to facilitate progressive payments in respect of the construction of the factory, the appellants and the defendants agreed that monies meant for the progressive payments be deposited in the company's account in RHB Bank Bhd. The sum deposited in September 1998 was RM1,310,000.00.

[3] By December 1999 the construction of the factory was completed and after progressive payments had been made, the company vide a letter dated 17 December 1999 duly signed by the respondent, confirmed that the outstanding amount due to be