A loan agreement that charges excessive interest is void and unenforceable under the Moneylenders Act, and courts will not assist parties in recovering amounts from illegal agreements.

[1] This appeal by the appellants is against the decision of the Court of Appeal allowing only in part their appeal against the decision of the High Court ordering them to pay RM1.6 million to the respondent by substituting it with an order that judgment be entered against the 1st and 3rd appellants for a reduced sum of RM800,0000.00 together with interest at 4% from the date of judgment in the High Court to the date of realisation. The judgment of the Court of Appeal is reported in Triple Zest Trading & Suppliers Sdn Bhd & Ors v. Applied Business Technologies Sdn Bhd [2023] 3 MLRA 430; [2023] 2 MLJ 374.

[2] The appellants' case before this Court is that they are not liable to pay any sum of money to the respondent, not even the principal loan sum of RM800,000.00 that the Court of Appeal ordered them to pay back to the respondent.

[3] Having given careful consideration to the submissions of the parties, both written and oral, we allowed the appellants' appeal with costs and set aside the decision of the Court of Appeal. These are our grounds for allowing the appeal.

[4] The facts are deceptively simple. The 1st appellant is a family-owned company whose business address is at No 3, Ground Floor, Lorong Kiara 1, Taman Kiara, 32020 Sitiawan, Perak and/or at C-06-05 Desa Putra, Jalan Wangsa Perdana 3, Wangsa Maju, 53300 Kuala Lumpur. The 2nd and 3rd appellants are its directors. The 2nd appellant is also the mother of the 3rd appellant and one Mumtaz Shafinaz ("Mumtaz") who is not a party to this appeal. At the trial in the High Court, she was sued as the 4th defendant.

[5] The respondent is involved in the business of general trading, supplying petroleum products, construction works and information technology. Its registered address is at No 73A, Jalan SS 22/23, Damansara Jaya, 47400 Petaling Jaya, Selangor. It has no licence to carry on the business of moneylending.

[6] The narrative is that the 1st appellant required funds for its business and approached the respondent for a loan of RM800,000.00, which the Courts below described as a "friendly loan". The respondent agreed, subject to the loan amount of RM800,000.00 being repaid with another RM800,000.00 as "agreed profit".

[7] Upon the signing of the loan agreement, the 1st appellant deposited with the respondent as collateral the title deeds to two parcels of land, four undated cheques in favour of the respondent each in the sum of RM400,000.00 from the 1st appellant's current account with a total value of RM1.6 million. Personal guarantees were also provided by the 2nd and 3rd appellants guaranteeing repayment of the RM800,000.00 loan. The 2nd appellant and Mumtaz are the co-owners of the two parcels of land.

[8] When the 1st appellant defaulted in repayment of the RM800,000.00 loan, the respondent sued the appellants and Mumtaz for, inter alia, the following reliefs:

(a) an order that the two parcels of land be transferred to it or, alternatively;

(b) the appellants pay back the am