Kamalanathan Ratnam JC

This is an appeal by the second, third and fourth defendants against the decision of the learned senior assistant registrar ('SAR') who on 21 June 1995 granted the plaintiff judgment against the said defendants in an O 14 Rules of the High Court 1980 application.

The plaintiff was at all material times a finance company. By way of a loan agreement dated 23 April 1990, the plaintiff agreed to loan the first defendant RM140,000 for the development of a housing estate known as Taman Anggerik, Seremban ('the project').

It was pleaded in the plaintiff's statement of claim that by a guarantee, also dated 23 April 1990, the second, third, fourth and fifth defendants being the directors of the first defendant guaranteed payment on demand of all monies provided that the total sum recoverable exclusive of interest was limited to the sum of RM140,000. As the defendants had failed to pay on demand the accrued sum of RM116,645 as the principal, RM41,656.58 as interest at 12.5% per annum with monthly rests from 1 April 1993 making a total of RM165,168.74, the plaintiff issued out the said writ and proceeded by way of an O 14 application for summary judgment.

In its statement of claim and application for summary judgment, the plaintiff prayed for judgment for RM165,168.74 with interest at the rate of 12.5% per annum with monthly rests from the first day of April 1993 till the date of realization. The said loan agreement and the guarantee were tendered as exhibits in support.

The second, third and fourth defendants vide their affidavit in reply averred that the plaintiff had a first legal charge on nine pieces of land belonging to the first defendant and a debenture dated 23 April 1990 over all movable and immovable properties of the first defendant. The plaintiff had on or about 22 May 1991 appointed receivers and managers pursuant to the debenture dated 23 April 1990. The defendants averred that the said receivers and managers had to date, not submitted any financial reports to the Board of Directors of the first defendant. They also denied owing the said sum, as they averred that the managers and receivers had received/collected over RM1m from the various purchasers of houses in the project or from their financiers.

It was the contention of the second, third and fourth defendants that the receivers and managers having acted under the said debenture and having collected approximately RM1m, had failed to account for the monies collected and failed to discharge all or any outstanding debts due to the plaintiff by the first defendant.

According to the plaintiff, the first defendant had obtained a soft loan of RM1,050,000 under the Tabung Projek Perumahan Terbengkalai ('the Tabung'). It was a term fixed by Bank Negara that such a loan under the Tabung be given priority above all other existing secured and unsecured creditors. The loan in this case was also provided by the plaintiff who was also advised by Bank Negara to appoint receivers and managers for the project vide its letter dated 13 April 1991 to the plaintiff. Hence, the plaintiff averred that payments due to the first defendant from the purchasers of the housing project were paid into the receivers and managers' account and that they were obliged to make preferential and priority payments in accordance with the provisions of the Companies Act 1965 and to all other preferential creditors before effecting any payment to the plaintiff including payment of the loan to the Tabung. The plaintiff further averred that the interest chargeable by them was strictly in accordance with the terms and provisions of the loan agreement and that the plaintiff's base lending rate ('BLR') on 1 April 1993 was 10.5% per annum.

Subsequently, the plaintiff filed another affidavit through its manager of the loan rehabilitation and recovery department affirming that the figures and sums stated in its affidavits and supporting documents were derived from the entries in the plaintiff's led