The court established that the loan agreement was illegal due to unlicensed interest collection, rendering both the loan and the related Sale and Purchase Agreement void under applicable statutes.

A. INTRODUCTION

[1] This case involves a dispute over a loan of RM200,000.00 advanced by the Plaintiff, Yeong King Hui, to the Defendant, Parameswaran A/L Subramaniam. The Plaintiff claimed it was a friendly, interest-free loan, while the Defendant argued it was subject to illegal interest charges, making the transaction void under the Moneylenders Act 1951 . The Defendant also alleged that a related Sale and Purchase Agreement (SPA) was a sham document used to facilitate the loan.

[2] The Plaintiff sought repayment, while the Defendant counterclaimed, seeking, among other reliefs, a declaration that the SPA and the loan were void due to illegality.

[3] At the conclusion of the trial, the court dismissed the Plaintiff's claim and allowed the Defendant's counterclaim.

[4] Dissatisfied with the decision, the Plaintiff filed an appeal.

B. SALIENT FACTS

[5] The Plaintiff provided RM200,000.00 to the Defendant on 12 April 2017 as a loan. This sum was issued via a CIMB Bank cheque and debited from the Plaintiff's account.

[6] As requested by Plaintiff, the Defendant offered his property (Individual Title No H.S (M) 25156, Lot No PT40415, Tempat Telok Gadong, Klang) as collateral, executing a SPA and permitting the Plaintiff to lodge a private caveat on the property.

[7] The Defendant repaid RM48,000.00 in six instalments of RM8,000.00 each between April and November 2017. Defendant said that the payment made was merely considered interest payment of the loan. The Plaintiff in court denied collection of interest and said that the 6 instalments sum were considered repayment leaving a balance of RM152,000.00 remain unpaid.

[8] On 9 October 2017, the Defendant sent letters to the Plaintiff to settle the loan and requested a total settlement amount. Plaintiff did not reply the letter.

[9] Defendant stop making payment afterwards and Plaintiff initiated this suit.

[10] The Plaintiff claimed the loan was a friendly loan without interest while the Defendant alleged the loan was an illegal moneylending transaction.

C. AGREED ISSUES TO BE TRIED

[11] Agreed issues to be tried (filed vide encl 48) are as follows:

i. Whether the sum of RM200,000.00 received by the Defendant was pursuant to a friendly loan without interest?

ii. Whether the SPA was signed to facilitate an illegal moneylending transaction?

iii. Whether the sum of RM48,000.00 made by the Defendant was to account for interest or repayment towards the friendly loan?

iv. Whether the Plaintiff's loan to the Defendant is illegal?

D. PLAINTIFF'S SUBMISSION

[12] The Plaintiff contended that the RM200,000.00 was a friendly loan provided without interest, supported by a CIMB cheque dated 12 April 2017, which the Defendant acknowledged receiving and depositing.

[13] According to the Plaintiff, despite receiving RM48,000.00 as partial repayment, the Defendant failed to repay the remaining RM152,000.00 The Plaintiff referred to Tan Aik Teck v. Tang Soon Chye 2007 MarsdenLR 913 ; ; , which clarified that a friendly loan is based on mutual trust and need not be between friends. The Plaintiff had discharged the burden of proving the loan, shifting the onus to the Defendant.

[14] Plaintiff averred that the SPA was executed as security for the loan, not to facilitate an illegal moneylending transaction. The Defendant voluntarily signed the SPA and acknowledged it was assurance for the loan repayment. The SPA did not materialize into a ge