ALASAN PENGHAKIMAN

10 September 1997. The following judgment was delivered by Justice Dato' Dr Visu Sinnadurai.

The present action pertains to one of the multitude of actions and applications filed by various parties arising from a joint-venture project undertaken by Teguh Consolidated Sdn Bhd (Teguh) with several other parties. Of particular concern for the present purpose is the suit filed by Teguh against Malayan Banking Bhd (Civil Suit No S2-22-56-91), and an application filed by Malayan Banking against Teguh and Yata Development Sdn Bhd (Yata) in originating summons No S4-24-157-91. Both the civil suit and the originating summons were subsequently consolidated. Thereafter, Teguh filed a statement of claim against Yata. Yata, in response to the statement of claim of Teguh, filed not only a defence but also a counterclaim.

On 24th December 1993, a consent order was entered into whereby all issues relating to Malayan Banking, Teguh and Yata in these actions were resolved, except for the counterclaim of Yata. One of the terms of the consent order was that Teguh agreed to deposit a sum of RM480,000 (in relation to the sum claimed by Yata in the counterclaim), pending the disposal of the counterclaim. (The full text of this consent order is now reported in another related case, Teguh Consolidated Sdn Bhd v Talam Corp Bhd, with Malayan Banking Bhd (third party)

Yata's counterclaim

Yata's counterclaim against Teguh arose under the following circumstances: Yata allege that Teguh had requested from Yata a loan of RM401,576.48 to enable Teguh to pay premiums due to the State authorities for certain lands held under 2215 different title deeds in Negeri Sembilan. For this purpose, the parties entered into a written agreement. In consideration of the loan granted by Yata, and as a security for the loan, Teguh executed a memorandum of deposit of the document of titles to create a lien. Furthermore, two directors of Teguh also executed a guarantee for the repayment of the loan.

It should be noted that Teguh do not deny that a certain sum of money was in fact advanced to Teguh by Yata. Teguh, however, dispute the exact amount of the loan, and also, and more importantly, for reasons stated below, take the view that Teguh need not repay this loan, as the loan transaction was illegal.

Teguh's present application (enclosure 30)

In the present application, in enclosure 30, Teguh, by way of summons in chambers has applied to strike out Yata's counterclaim under Order 18 rule 19 of the Rules of the High Court.

Teguh's contention

Teguh seeks to strike out Yata's counterclaim on the sole ground that the loan granted to Teguh by Yata was illegal as it contravened the Moneylenders Ordinance 1951.

Teguh in support of its contention argued that Teguh had borrowed only a sum of RM377,481.90 from Yata, and that the difference between this sum and the sum claimed by Yata (that is, the sum of RM23,980.34) was illegal interest which Yata was not entitled to impose nor claim. It was therefore argued, that as Yata was not a licensed moneylender under the Moneylenders Ordinance, the imposition of the interest rendered the entire loan agreement illegal and void.

Yata's reply

Yata denied that any unauthorised or illegal interest had been charged and took the stand that the amount claimed, that is the sum of RM401,576.48 was the actual amount of the loan given to Teguh by Yata. This, it was argued by Yata was fully supported by documentary evidence in the nature of,inter alia, the loan agreement and the payment vouchers. Counsel for Yata in his written submission then concluded as follows:

".... upon closer examination of all the above documents exhibited by the plaintiff [Teguh] and the defendant [Yata], I humbly submit that the loan given by the defendant to the plaintiff is only RM401,576.48 without interests. The plaintiff's allegation that the loan sum is only RM377,576.14 and the defendant charged an interest of RM23,980.34 is baseless and made without concrete reasons