JUDGMENT

Anantham Kasinather JCA:

Background Facts

[1] The parties hereto executed a tenancy agreement on 3 January 2011 for the lease by the appellant of premises described as Administration Building 1, 2 and 3 and factory 2 (hereinafter described as 'the said demised premises').

[2] The said tenancy agreement was for a period of three years commencing 3 January 2011 at a monthly rental in the aggregate of RM1,486,070.40. In addition to the rental, the appellant tenant was required to pay the sum of RM278,638.20 per month by way of service charges. Another term of the tenancy agreement provided for the respondent landlord to be entitled to vacant possession of the said demised premises and to forfeit the deposit of RM4,480,211.20 by way of liquidated and ascertained damages upon the tenancy agreement being terminated by the respondent landlord arising from any breach of the agreement by the appellant tenant.

[3] The tenancy agreement also incorporated a provision for the appellant tenant to indemnify the respondent landlord for any damage, loss etc occasioned to the said demised premises in the following form:

"The Tenant shall be responsible for and indemnify the Landlord against all damage, loss(es), cost(s), expense(s), action(s), demand(s), proceeding(s), claim(s) and liability(ies) occasioned to the Demised Premises or any adjacent or neighbouring premises or to any person caused by any act default or negligence of the Tenant or the servant agents or, licensees or any persons in the Demised Premises expressly or impliedly with the Tenant's authority SAVE AND EXCEPT those caused by latent defect, and to pay and make good to the Landlord all and every loss and damage whatsoever incurred or sustained by the Landlord as a consequence of every breach, non-performance or non-observance of the Tenant's covenants conditions or other provision herein contained".

(at pp 240-241 of Appeal Record Jilid 2(1) Bahagian C)

[4] In fact, the registered proprietor of the said demised premises was not the respondent landlord but one Cubic Electronic Sdn Bhd ('Cubic Electronic'). Cubic Electronic was wound up by way of a winding up order dated 25 July 2011. The respondent landlord had secured a tenancy of the said demised premises from the said Cubic Electronic vide a tenancy agreement dated 14 January 2011.

[5] The appellant tenant failed/refused to pay rental pursuant to the tenancy agreement commencing February 2012 purportedly because the appellant became aware that the respondent landlord was not the registered proprietor of the said demised premises for the first time in February 2012. According to the appellant tenant it acquired this information for the first time when the liquidators of Cubic Electronic began soliciting offers including from the appellant for the sale and purchase of the said demised premises.

[6] The failure/refusal of the appellant to pay the monthly rental, in turn, resulted in the respondent landlord being unable to fulfill the payment of rentals to the liquidators of Cubic Electronic pursuant to the terms of its own tenancy agreement with Cubic Electronic. The default on the part of the respondent landlord caused the liquidators of Cubic Electronic to terminate the tenancy agreement with the respondent landlord vide its solicitors letter of 27 March 2012.

[7] The appellant tenant's refusal to recognise the validity of the tenancy with the respondent landlord and the respondent landlord's default of the terms of its tenancy agreement with Cubic Electronic resulted in two claims being filed with the High Court in Malacca. In Civil Suit No: 22-NCVC-33-03-2012, the appellant tenant sought inter alia a declaration that its tenancy agreement with the respondent landlord to be invalid and that it was under no obligation to pay the monthly rentals. The respondent landlord, in turn filed Civil Suit No: 22- NCVC-34-03-2012 seeking inter alia orders for the payment of all outstanding rental under its tenancy agreement with the appel