JUDGMENT

Mohd Ghazali Yusoff JCA:

This dispute arose from the termination of an agreement for the sale and purchase of shares of a company entered into between the appellant as purchaser and the respondent as vendor. On 22 May 1998 the learned judge gave judgment in favour of the respondent and ordered the appellant to pay RM776,712.33 together with interest from 21 November 1997 to date of payment to the respondent. The appellant appealed to this court. The following are the agreed facts:

(1) On 17 April 1997 the respondent (vendor) and the appellant (purchaser) executed an agreement for the sale and purchase of shares of a company named Wangsa Merdu Sdn Bhd ("the agreement") at the agreed price of RM90 million.

(2) Pursuant to the agreement, the appellant paid RM9 million, ie, 10% of the purchase price as deposit leaving a balance of RM81 million to be paid ("the balance sum").

(3) Clause 4 of the agreement entitled "Completion Date and Extended Completion Date" reads:

4.1. Subject to the provisions of this Agreement, the Completion Date for the sale and purchase of the Sale Shares shall be seven (7) business days after the day the Purchaser receives the FIC approval or within six (6) months commencing from the day after the date of this Agreement, whichever is later (herein referred to as "the Completion Date").

4.2. PROVIDED ALWAYS and it is hereby agreed between the parties hereto that the purchaser shall be entitled to an extension of one (1) month, commencing on the day immediately after the Completion Date (hereinafter referred to as "the Extended Completion Date") subject to payment of the Agreed Interest calculated on a daily basis on the Balance Sum outstanding Provided that all accrued Agreed Interest shall be paid together with the Balance Sum.

Clause 1.1 of the agreement entitled "interpretation" provides the words "agreed interest" shall mean "interest at the rate of ten per centum (10%) per annum". Pursuant to cl. 4.2 of the agreement the parties agreed that if the appellant paid interest at 10% p.a. calculated on a daily basis on the outstanding balance sum, the appellant would be entitled to an additional month to pay the balance sum.

(4) By letter dated 13 October 1997 the appellant informed the respondent that they would be taking the additional month. Thus, the balance sum became due for payment on 17 November 1997.

(5) The appellant subsequently informed the respondent that they required an additional three days from 17 November 1997 to pay the balance sum. Thus, the balance sum became due for payment on 20 November 1997.

(6) By notice dated 20 November 1997, the appellant informed the respondent that they now refuse to pay the balance sum due on 20 November 1997.

(7) In response thereto, the respondent's solicitors informed the appellant, by letter dated 21 November 1997, that the respondent was:

(a) terminating the agreement;

(b) forfeiting the deposit; and

(c) demanding payment of RM776,712.33 being the agreed interest accrued on the balance sum for 35 days from 17 October 1997 to 20 November 1997 (inclusive) failing which interest shall continue to accrue on the sum of RM776,712.33.

(8) By letter dated 28 November 1997 the appellant's solicitors contended that pursuant to cl. 13.1 of the agreement, the parties have specifically agreed that the remedy to the respondent is to forfeit the deposit; the appellant does not agree that interest in the amount as claimed is due to the respondent on termination of the agreement. Clause 13.1 of the agreement reads:

Subject to the fulfillment of the Conditions Precedent, if the Purchaser shall fail neglect and/or refuse to pay the Final Balance and the Inter-Company Loan at the time set out in Clauses 4.1 or 4.2 hereof or in the manner set out in Clause 6 hereof, the Vendor shall be at liberty to terminate this Agreement by notice to the Purchaser whereupon the Deposit shall be forfeited to the Vendor absolutely and thereafter this Agreement shall terminate and re