Mah Weng Kwai JCA (delivering judgment of the court):

BRIEF FACTS

[1]In 1999, the appellant approved and disbursed term loan and overdraft facilities in the sum of RM400,000 to Malaysian Aerosols Manufacturer Sdn Bhd (‘Malaysian Aerosols’). In consideration thereof, a third party charge over a piece of property owned by Quickpack (M) Sdn Bhd (‘the fourth defendant’) was executed by the fourth defendant in favour of the appellant. The fourth defendant was wound up on 24 August 2001 and the official receiver was appointed the liquidator.

[2]The respondents and Singaravelu s/o Ratnnavelu (‘the first defendant’) were at all material times directors and shareholders of the fourth defendant while Amudah Devi d/o Maruthamuthu (‘the second defendant’) was a director of the fourth defendant. The first and second defendants were also the directors of Malaysian Aerosols.

[3]A directors’ resolution of the fourth defendant was purportedly passed on 3 April 1999 giving approval and authority to the directors of the fourth defendant to execute the relevant documents for the creation of the third party charge over its property as security for the banking facilities granted to Malaysian Aerosols.

[4]The