Lim Beng Choon J:

[1] The plaintiff instituted this action against Mohd Ismail bin Ali Johor (the first defendant) and two others on 13 December 1986. In the statement of claim endorsed on the writ, the plaintiff alleged that by an agreement in writing dated 21 July 1980 (the scholarship agreement) and in consideration of the plaintiff granting the first defendant a scholarship to pursue a course of study in the University of Malaya leading to the award of an Honours Degree in law, the first defendant inter alia undertook to serve the plaintiff for a period of ten years upon the completion of the said studies, failing which he would be liable to pay the plaintiff, on demand, agreed liquidated damages of RM70,000. It was also alleged that the first defendant completed his studies and commenced serving the plaintiff from 1 June 1984 but on 3 November 1984 the first defendant in breach of the said agreement, left the service of the plaintiff. It was further alleged that despite repeated demands from the plaintiff the defendant failed and/or refused to pay the plaintiff the agreed liquidated damages.

[2] The second and third defendants are being sued in their capacity as guarantors for the due performance of the scholarship agreement by the first defendant.

[3] On 22 December 1986 the three defendants filed a joint statement of defence. Their defence may be summarised as follows:

(1) As the plaintiff had breached a condition precedent of the scholarship agreement by failing to provide the first defendant with a post consistent with the qualification obtained by him, the obligation of the first defendant to serve the plaintiff, under the scholarship agreement was extinguished;

(2) In any event as the sum of RM70,000 is a penalty claim, the said claim is time barred as the action was filed after the expiry of the period of one year from the date of the breach;

(3) Alternatively the entire scholarship agreement should be struck down on the ground that it contained unconscionable terms and that it was opposed to public policy particularly when it was made by parties with unequal bargaining power;

(4) In the further alternative the defendants aver that:

(i) the plaintiff has waived its right under the scholarship agreement as it has entered into a new agreement with the defendants whereby it agrees not to claim the alleged sum of RM70,000 in the event that the first defendant is prepared to work with the Attorney-General's Chambers;

(ii) the first defendant has accepted the aforesaid offer when he applied to the Attorney General for a post on 15 September 1986;

(iii) the first defendant attended several interviews for the said post and he was only informed that his application was not successful when he received a letter dated 6 October 1987 from the Attorney-General's Department;

(iv) by reason of the first defendant's failure to secure a post with the Attorney General's Department, the aforesaid new agreement is frustrated. At any rate the defendants aver that the plaintiff is estopped from claiming against the defendants.

[4] On 18 January 1988 the plaintiff applied by way of summons-in-chambers (encl 3) for summary judgment under O 14 of the Rules of the High 1980 (the RHC) for RM70,000 with interest thereon at the rate of 8% pa In the affidavit in support affirmed by the personal manager of the plaintiff bank (encl 2) it was asserted inter alia that in response to demands from the plaintiff the first defendant admitted, among other things, the plaintiff's claim and a letter written by the first defendant dated 24 December 1985 was annexed as Exhibit 'BNM-2' to the said affidavit to show the extent of the said admission.

[5] The first defendant thereafter filed his affidavit in reply on 12 April 1988 (encl 8) to elaborate on the averments appearing in the joint statement of defence. He produced some contemporaneous letters to support the claims made by him in the joint statement of defence. I shall have more to say about these letters