Abdul Wahab Said J:

[1] The plaintiff's claim against the defendants is for the amount of RM9.2 million arising out of a loan agreement dated 26 June 1997 entered into between the plaintiff and the 1st defendant, where the plaintiff granted a loan of RM9.2 million, free of interest.

[2] The loan was payable in 24 months. The 1st defendant is deemed to have breached the agreement if among others, it fails or defaults in payment of any amount payable on the maturity date as provided for under the agreement, regardless of whether the plaintiff had made a formal claim on it or not. The 2nd defendant had agreed to carry out the 1st defendant's obligations as if he were the principal borrower if the 1st defendant failed to fulfill its obligations under the agreement.

[3] The 1st defendant failed to settle the debt within the time stipulated in the agreement. On 17 March 2003, the plaintiff through its solicitors sent a notice of demand for the said amount. The defendants failed to pay and the plaintiff filed this claim against the defendants.

[4] A judgment in default had been obtained against the 1st defendant. The plaintiff filed an O. 14 application against the 2nd defendant in encl. 15 and subsequently an application to strike out the 2nd defendant's counterclaim under O. 18 in encl. 16. The senior assistant registrar allowed the O. 14 application while the deputy registrar subsequently granted the plaintiff's application to strike out the 2nd defendant's counterclaim. Both the appeal against the aforesaid orders by the 2nd defendant was argued together before me.

[5] The 2nd defendant in his defence said that the 1st defendant was induced and coerced into entering the loan agreement dated 26 June 1997 by illegitimate pressure brought to bear upon it by the plaintiff. The 2nd defendant was likewise coerced into providing the security required by the plaintiff.

[6] The parties' relationship dated back to 1994, where the 1st defendant invited the Melaka State Government and Zeron Sdn Bhd to sign an MOU. By this MOU, the parties agreed to establish a joint venture company which would manufacture high performance optical and electrically conducive film coated products. The plaintiff entered into the MOU on behalf of the State Government. The parties in the MOU entered into a shareholder's agreement where one Bryn Lloyd Williams, who is one of the 1st defendant's directors, agreed to allot 8 million ordinary shares, where 1,600,000 (20%) are held by the plaintiff, 4,000,000 (50%) by Zeron and 2,400,000 (30%) by Bryn Williams and the defendant. In consideration of the allotment of shares, the plaintiff undertook to obtain financing for the company, including an irrevocable letter of credit to enable it to purchase machinery for Photran USA to set up a plant to manufacture the products in Malaysia.

[7] Besides the shareholding, the 2nd defendant said, the majority in number of the directors were nominated by and represented by the plaintiff. The 2nd defendant said that he was coerced to enter into signing the letter of indemnity because he needed the plaintiff to release RM4.6 million to be utilized for the purchase of the said machinery. Besides insisting that its part of the obligation under the shareholders' agreement is to be treated as a loan, totaling RM9.2 million, the plaintiff had also refused to fulfill its obligation under a land transfer agreement, which was in consideration of the transfer of Zecon's 10 million shares to it. The refusal had made it difficult for the 2nd defendant to secure the needed banking facilities.

[8] Having heard submissions from both sides, I find that the defendant's allegation that there was undue influence and coercion is equivocal and inconsistent with undisputed contemporaneous documents, namely the loan agreement and the indemnity agreement. The 2nd defendant had attempted to show certain alleged commitments or agreements before the execution of the loan agreement and indemnity agree