Zaleha Zahari JCA::

[1] Appeal No W-02–665 of 2004 and Appeal No W-02–619 of 2000 were heard jointly.

[2] For convenience of reference, in this judgment, Kuala Lumpur High Court Civil Suit No D5–22–363 of 2000 will be referred to as ‘the D5 Civil Suit’ and appeal therefrom (Appeal No W-02–619 of 2000) as ‘the Civil Suit appeal’. As for Kuala Lumpur High Court Originating Summons No S2–24–2274 of 1999, this will be referred to the ‘D2 OS’ and appeal therefrom (Appeal No W-02–619 of 2000) as ‘the OS appeal’.

[3] Parties will be referred to as follows: AEH Capital Sdn Bhd, the plaintiff in the High Court in respect of both proceedings (the D5 Civil Suit and the D2 OS), will be referred to as ‘AEH’; AM-EL Holdings Sdn Bhd, the first defendant in the D5 Civil Suit and the defendant in the D2 OS will be referred to as ‘AM-EL’; Tempamas Sdn Bhd, the second defendant in the D5 Civil Suit as ‘TSB’; and Low Koon Chuan, the third defendant in the D5 Civil Suit will be referred to as ‘Low’ or as ‘guarantors’ jointly.

[4] Unless expressly stated, reference to any legal provision refers to the Moneylenders Act 1951 (‘the Act’).

KUALA LUMPUR HIGH COURT ORIGINATING SUMMONS NO S2–24–2274 OF 1999

[5] Vide the D2 OS, AEH applied for orders for sale of 47 condominium units which had been charged to them by AM-EL. Particulars of the loan [*497] account of AM-EL and the amount outstanding was particularised in para 15 of the affidavit of Chitra Ganesalingam affirmed on 2 June 2000 and filed in support of the application.

[6] In opposing the D2 OS, AM-EL alleged that the loan agreement dated 4 June 1996 was not in compliance with the Act and contended that the loan transaction was ‘unlawful, unconscionable, inequitable, invalid, unjust’ and should be set aside. AM-EL further alleged that AEH had failed to disclose all documentation in connection with the loan, that the interest imposed was ‘excessive and contrary to law’, that the imposition of interest upon interest contravened s 11 of the Civil Law Act 1956.

[7] AM-EL’s case was that there was in existence an oral agreement by which agreement AEH had agreed to furnish a proper statement of account and to release 22 condominium units which had been charged to AEH upon payment of RM1,500,000 towards the loan. AM-EL further contended, although RM1,500,000 had been paid, AEH had failed to release the 22 condominium units which had orally been agreed upon. AM-EL averred to having suffered loss by reason of being deprived of the benefit of the sale of 22 condominium units arising from the alleged breach of the oral agreement.

[8] On the part of the guarantor, Low, in para 8(i) of the affidavit affirmed on 29 June 2000 in opposition to the application for the order for sale in the D2 OS, reference was made to the defence and counterclaim filed in the D5 Civil Suit, that the validity of the term loan taken from AEH had been challenged.

[9] The High Court judge on 10 August 2000 dismissed AEH’s application for orders for sale of the condominium units which had been charged to them as security for the loan granted. The exemption order under s 2A(2) of the Act accorded to AEH, was only applicable if the loan granted had been utilised in respect of a share financing transaction. As the exemption order under s 2A(2) of the Act had been challenged, it was incumbent upon AEH to produce evidence to respond to that challenge. The onus lies upon AEH to hold out the relevant share purchase agreement and the price of the shares. AEH’s failure to annex documents to their affidavit showing that the loan was in respect of a share financing scheme to purchase the paid-up capital of Mahabudi (Development Sdn Bhd (‘Mahabudi’) was held to be fatal. The directors’ circular resolution of AM-EL stating the purpose of the loan ‘to part finance the purchase of the fully issued and paid-up capital of Mahabudi’ was held to be insufficient.

[10] AEH’s appeal against this decision of the High Court