BBA contracts in Islamic banking enforce equitable adjustments through unearned profit rebates, ensuring fair treatment upon contract defaults while balancing legal precedents and Shariah compliance.

Introduction

[1] There are two sets of appeal that went before the Court of Appeal relating to Bai Bithaman Ajil ("BBA") contracts in Islamic banking. The first set of appeal involves 11 Writs of Summons and one originating summons. They were heard together and decided by the Court of Appeal on 26 August 2009 and reported in Bank Islam Malaysia Bhd v. Lim Kok Hoe & Anor and Other Appeals, [2009] 6 CLJ 22 . The Court of Appeal held that a BBA contract is valid and enforceable and reversed an earlier decision of the High Court in Arab-Malaysian Finance Bhd v. Taman Ihsan Jaya Sdn Bhd & Ors; Koperasi Seri Kota Bukit Cheraka Bhd (Third Party) And Other Cases; [2008] 5 MLJ 631; [2009] 1 CLJ 419. Subsequent thereto all cases involving BBA contracts that were heard together thereat were sent to this Court for determination of the quantum of plaintiff's claim. The quantum of the plaintiff's claim in these writs of summons and the amount due under the originating summonses had in fact been determined by me on 28 January 2010.

[2] Another set of appeal came before another panel of the Court of Appeal on 20 October 2009. That panel followed its earlier decision and again the cases were sent to this Court for determination of the quantum of plaintiff's claim in the writs of summons, as well as the amount due under the originating summonses. The proceedings before me, which were actions in the second set of appeal, involve two Writs of Summons registered as D4-22A-263-2006 and D4-22A-195-2006, and two Originating Summonses registered as D4-22A-395-2005 and D4-22A-399-2005 respectively. Pursuant to the order of the Court of Appeal, parties were notified to appear before the learned deputy registrar for case management and all the cases were set to be heard together on a specified date. However, only the solicitors for the plaintiff were present on that date.

[3] The plaintiff in each of these four cases is Bank Islam Malaysia Berhad ("BIMB"). For the purpose of hearing before me on the issue of quantum, BIMB filed an affidavit for each of the cases stating the latest statement of account in support of its claim. On the day set for hearing, none of the defendants appeared, except Encik Azhar bin Osman, who is the defendant in the Originating Summons D4-22A-395-2005. He appeared in person. All the four cases are based on BBA contracts.

[4] Learned counsel for BIMB, Encik Oommen Koshy (Encik Aedyla Bokari with him) contended that in a BBA contract the bank has a legal right to claim for the full sale price as stipulated in the Property Sale Agreement ("PSA"). Accordingly he argued that in an application pursuant to an originating summons, the Court ought to grant an order for sale based likewise, on the full sale price, irrespective of a premature termination. The bases of Encik Oommen Koshy's arguments are two. First, he contended that this Court should honour and enforce the clear written terms of the contract and should not interfere with the intention of parties by imputing any other term. Since parties had agreed as to the amount of sale price as stipulated in the PSA, the defendant is under a legal obligation to pay the full sale price, irrespective of when a breach occurs. Secondly, by virtue of the doctrine of stare decisis, this Court is bound by the decision of the Court of Appeal in Lim Kok Hoe which, according to Encik Oommen Koshy, upheld and acknowledged the obligation to pay the full sale price under the PSA.

[5] Before I proceed to analyse the arguments of learned counsel, it would be appropriate for me to state here the practice