Mokhtar Sidin JCA:

[1] In this appeal, the appellant (the plaintiff in the court below) sought the following reliefs:

1. A declaration that the Memorandum of Understanding (MOU/P28) dated 12 December 1992 entered into between the parties, is a valid and binding contract.

2. Specific performance by the defendant of the MOU.

3. An injunction restraining the defendant or its agents from taking any steps to call in new tenders for the development of the defendant's subject land described as Lot 166, Section 1, Georgetown (hereinafter referred to as "the subject land").

4. An injunction restraining the defendant to develop or award any contract for the development of the subject land.

5. Where an award to develop the subject land had been given to another party an injunction to stop the defendant from taking any steps in the development of the subject land.

The High Court dismissed the appellant's claim and being dissatisfied with that decision, the appellant appealed to this court. The facts:

[2] The respondent, the Indian Association, Penang (hereinafter referred to as "the Association") is a non profit organisation and was incorporated on 23 April 1924 under the Companies Ordinance 1924 as a company limited by guarantee. The Association's Memorandum and Articles provide very wide and various objects. Its main object is as a social club for members who are all of Indian descent. Another object of the Association is to provide for its members a clubhouse with the usual club facilities in games and sports, entertainment and dining. Towards this end the Association had acquired a piece of land (the subject matter of this appeal). The Association's Memorandum and Articles also allow it to create debenture, charges or leases in pursuit of its objects. The Association had been planning to build the clubhouse on that piece of land (hereinafter referred to as "the subject land").

[3] At all times, the Association is managed by a management committee elected by the members at its annual general meeting (AGM). The elected management committee members will choose amongst themselves a chairman, which is known as the President of the Association. From 1983 to 7 July 1994 (except for the year 1988), the President of the Association was one Samuel J Devagnaman also known Sam Mathuram (SP4). At the Association's AGM held on 26 June 1994, a new management committee members were elected and SP4 was one of them. When the new management committee met to elect the President, the committee members chose SD1 (Mr. V. Mohan) to be the President of the Association instead of SP4 who was the incumbent.

[4] Under its Memorandum and Articles of Association, the management committee is permitted to establish several sub-committees to run the affairs of the Association. The sub-committees are answerable to the management committee. The sub-committees could not make any decision which would bind the management committee or the Association. The sub-committees could only make recommendations or offer advice to the management committee. One of the sub-committees is known as the building sub-committee whose function is to look into the feasibility of building a clubhouse on the subject land. Traditionally, the President of the Association would be the chairman of the building sub-committee.

[5] As I have stated earlier, the Association had been toying with the idea of building its own clubhouse even before SP4 became the President of the Association. Though SP4 had been the President much earlier, it was only in 1991 that the sub-committee attempted to solicit offers to develop the subject land. Several offers were received and finally the management committee shortlisted the offer by a company called Sobena. This was then brought to the members at a general meeting held on 12 April 1992, but the members rejected it when it was discovered that Sobena was financially unsound. The management committee then made another attempt by advertising the proposal to