THE APPLICATION

[1] Enclosure 208 and encl 205 are the applications by the second defendant (Mayban Trustees) and the third defendant (‘KAF Discounts’) respectively by way of preliminary issues under O 14A of the Rules of the High Court 1980 (‘the RHC’). In essence, the said defendants contend that the plaintiffs by entering into consent judgment with the ten other defendants in this civil suit in encl 200 on 7 July 2008 cannot maintain their claim against the second and third defendants, and therefore the trial against them cannot proceed.

[2] The applications are made pursuant to O 14A and O 33 r 2 of the RHC.

THE PLAINTIFFS’ CLAIM

[3] This civil suit involves the issuance by the first defendant (‘Pesaka’) of RM140m worth of ‘Al-Bai’ Bithaman Ajil’ bonds (‘ABBA bonds’) which were purchased by the ten plaintiffs, all of whom are financial institutions, and which Pesaka failed to redeem on the maturity date.

[*845]

[4] In essence, Pesaka borrowed a sum of RM140m from the bondholders, upon its promise to repay the latter a sum of RM157,815,000. Because the ABBA bonds are Shariah compliant, interest does not accrue. Instead, a profit element of RM17,815,000 (RM157,815,000 less RM140,000,000) is due and payable by Pesaka upon full maturity of the ABBA Bond, that is, 30 September 2005.

[5] The primary relief sought by the plaintiffs is an order to recover monies owing to the plaintiffs by reason of the failure by Pesaka to redeem the first tranche of the ABBA bonds upon their maturity on 30 September 2005, and the resulting declaration by Mayban Trustees (the second defendant) of an event of default on the part of Pesaka.

[6] Insofar as relief is concerned, the plaintiffs’ claims are as follows:

(a) as against Pesaka (the first defendant), judgment in the sum of RM157,

815,000 (now RM149,315,000).

(b) as against Mayban Trustees (the second defendant) and KAF (the third

defendant), damages in the sum of RM149,315,000 or any other sum that

the court deems fit and proper.

(c) as against the fourth to 12th defendants, general damages;

(d) a declaration that in consequence of the lifting of the corporate veil

of each of the sixth to 12th defendants, the assets and properties of

each of the said defendant belong in equity to Pesaka and/or Rafie

(fourth defendant) and/or Murnina (fifth defendant);

(e) a declaration that all the assets and properties of Pesaka, Rafie and

Murnina belong in equity to the plaintiffs;

(f) an order that all the assets and proceeds of the sixth to 12th

defendants, Rafie and Murnina be traced and thereafter applied to

discharge the indebtedness of Pesaka to the plaintiffs; and

(g) as against all the defendants:

(i) interest on all amounts ordered to be paid to the plaintiffs at

8% per annum from 1 October 2005 to the date of payment, or at

such rate and for such period as the court deems fit;

(ii) costs; and

(iii) further or other relief.

[*846]

THE PARTIES INVOLVED

[7] The first defendant issued bonds to the value of RM140m. The bonds were redeemable at various dates in the total value of RM157m. Redemption will take place by payment of the value to these bondholders at the material times. The obligation to make payment of the redemption sum is that of the first defendant.

[8] The plaintiffs were the holders of the bonds at the material times and had purchased the bonds from the primary subscriber, namely K&N Kenanga Bhd. Payment was duly made to the third defendant who then applied the payment to the account of the first defendant.

[9] The second defendant was the trustee to the bondholders. But more importantly in the context of this suit, they were to be authorised signatories to certain bank accounts.

[10] The third defendant was the lead arranger, facility agent and issue agent. the second and third defendants had different roles to play in this transaction