JUDGMENT

KL Rekhraj J:

Pursuant to the sale and purchase agreement dated 7 August 1995; and entered into between the plaintiffs; as the purchasers on the one part; and the defendant as the vendor on the other part (hereinafter called the sale and purchase agreement) wherein the vendor as the owner and as beneficial owner agreed to sell 1,530,000 shares held by him in Hamsay Glass Sdn. Bhd. (company) at a purchase consideration of RM6,340,000 (purchase price) upon terms and conditions as provided therein - inter alia, under cl. 8.2.3 upon a warranty representation of the defendant (vendor), that the company shall have a minimum profits for a period of three years effective 30 June 1997 as follows:

(a) for the year ending 1997 RM2 million;

(b) for the year ending 1998 RM2 million; and

(c) for the year ending 1999 RM2 million.

Further by cl. 8.3 of the agreement, the defendant undertook to indemnify and keep indemnified the purchasers against all losses arising out of all or any breach of warranties, undertakings or covenants and or misrepresentations. In addition to the above, the defendant also by cl. 8.9 of the said agreement warranted "the vendor further warrants and undertakes that in the event the minimum profits of the company for the period of three years from the date of this agreement (dated 7 August 1995) is less than as provided for in cl. 8.2.3 (hereinabove) - then the vendor shall pay to the purchaser the difference between the profits made by the company for the three year period; the amount specified in cl. 8.2.3.; and which amount by way of payment shall be made by the vendor to the purchaser at such time as the purchaser may at its absolute discretion determine (or make)."

The company suffered losses for the period of three years from the date of the agreement as provided for under cl. 8.9; and the plaintiffs therefore claimed against the defendant in the sum of RM5,225,147 being the losses suffered worked up as at 30 June 1998, together with interest thereon and costs.

The plaintiffs (before the issuance of the writ dated 24 March 1999) had on 4 November 1998, through their previous solicitors had written to the defendant of the breach on the part of the defendant and demanding of the defendant the said sum of RM5,225,147 to be paid within 14 days of the date thereof failing which legal proceedings shall be instituted against him.

To this demand, the defendants solicitors M/s Amir, Faezal, Norzela & Chong by their letter dated 10 November 1998, replied -

(a) our client disputes the claim as specified in your letter; and

(b) we wish to inform that should your client intend to commence any proceedings in this matter, we have instructions to accept service of process.

The plaintiffs proceeded to issue the writ; and instead of having it served on the solicitors as requested for in the letter of M/s Amir, Faezal, Norzela & Chong, served it personally on the defendant on 6 April 1999, in accordance with O. 10 r. 1 of the Rules of the High Court, 1980; and upon the default of appearance by the defendant, and upon perusal of the affidavit of service of the writ of summons of claim and the certificate of non-appearance having been filed; and the court being satisfied that the plaintiffs' claim was a liquidated sum, entitling judgment in default, the court entered judgment on 20 April 1999, against the defendant; thereby making it a regularly obtained judgment; and a regularly obtained judgment can only be set aside upon an application, provided the affidavit in support of the summons to set aside shows that the defendant has a valid defence on merits.

After the entering of the judgment, the defendant then attempted to enter an unconditional appearance, and by this act of unconditional appearance had elected to waive the argument of any on irregularity in the service. The defendant then filed a summons in chambers on 25 June 1999, praying for:

(i) That the service of the plaintiffs writ of summons on the defe