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>-? @A4 -./B+ C3-+4/ 4.A-34D
EF
.-?C 4@+-D D-+-G@4- .3/ H -?I>30A *-@0
HICH COLRJ MALAYA, KLALA LLMPLR
ROHANA YLSLI ]
]SLIJ NOS: D4-22A-216-2uu7 & D4-22A-227-2uu7]
21 ALCLSJ 2uu9
!"#"$ &'(!)*+'), !"##$%& (")*#+,- . /00123$-24, 54% . 6%2$71+
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9:+-:+% -:+%+ Q$8 2#0%40%2+-& 2, 8$1+ 45 8:$%+8
Jhere were wo legal suis involving he paries. One was a claim
Ey Banl Islam Malaysia Berhad agains Jan Sri AEdul Khalid
IErahim (Jan Sri Khalid) in sui no. D4-22A-227-2uu7 and he
oher was a claim Ey Jan Sri Khalid agains he Eanl in sui
D4-22A-216-2uu7. Boh suis were consolidaed. Pursuan o sui no.
22A-227-2uu7, his applicaion in encl. 5, Ey Banl Islam Malaysia
Berhad, was made under O. 14 of he Rules of he High Cour
19Su. R2)+ a vesing order daed 14 IeEruary 2uu6, all righs and
oEligaions of Banl Islam (L) Ld were ransferred o and vesed in
Banl Islam Malaysia Berhad. Boh Banl Islam (L) Ld and Banl
Islam Malaysia Berhad would hereafer Ee referred o inerchangeaEly
as 'he Banl`. Jhe Eaclground facs were ha he Banl had
provided wo MuraEaha Iaciliies o Jan Sri Khalid, o redeem and
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acquire more shares in a company called 'Kumpulan Cuhrie
Berhad`. However, due o repeaed Ereaches Ey Jan Sri Khalid, he
Eanl offered o resrucure he MuraEaha Iaciliies o assis him in
meeing his ousanding oEligaions o he Eanl. Jan Sri Khalid
agreed o he resrucuring and Ey ha accepance, he wo
MuraEaha Iaciliies were resrucured ino a Revolving Al-Bai
Bihaman Ajil Iaciliy (BBA Iaciliy Agreemen). Jhe salien erms
of he BBA Iaciliy Agreemen were, 2,-+% $12$, (a) he Eanl o
purchase from Jan Sri Khalid 9,6S1.562 shares of Kumpulan
Cuhrie (Cuhrie Shares) for LSD56,5uu,uuu, (E) he Eanl o resell
he shares o Jan Sri Khalid a a sale price, (c) a every six
monhly inervals, he paries would have o execue an Asse Sale
Agreemen (ASA) and an Asse Purchase Agreemen (APA) in
respec of he Cuhrie Shares in he specified form, (d) he sale
price o Ee paid in insalmens Ey Jan Sri Khalid, (e) he Eanl has
he mandae and aEsolue discreion o sell all or par of he
Cuhrie Shares pledged o i as securiy in saisfacion of sums due,
(f) defaul of paymen gave he Eanl he righ o declare ha he
indeEedness was due and payaEle Ey Jan Sri Khalid and o enforce
he BBA Iaciliy Agreemen. Jan Sri Khalid defauled he firs
insalmen under he resrucured BBA Iaciliy Agreemen and
hence, his sui. In encl. 5, he Eanl was applying o ener
summary judgmen for a sum of LSD1S,521,Su6.1 or is equivalen
in Ringgi Malaysia. Jan Sri Khalid, however, alleged an exisence
of a collaeral agreemen and aemped o challenge he validiy of
he BBA Iaciliy Agreemen on various grounds. Jhe issues ha
arose were: wheher here exised a collaeral agreemen Eeween he
paries orally and Ey conduc, wheher he validiy of he BBA
Iaciliy Agreemen was challenged for wan of compliance wih he
principles of Syariah, wheher he mode of execuion of Asse
Purchase Agreemen (APA) and Asse Sale Agreemen (ASA) was
improper Eecause Jan Sri Khalid was made o sign he agreemens
firs Eefore hey were passed Eacl o Ee compleed Ey he Banl,
wheher here was wrongful sale of pledged shares Eecause of (1)
he Banl`s failure o oEain he consen from Jan Sri Khalid and
(2) ha here may have Eeen impropriey on he par of CIMB
Invesmen Banl Berhad who handled he sale of he pledged
Cuhrie Shares.
37=M S:==<;K8T 9N7 :UU=KV:9K<8 K8 78V=F WXY
S&X Jhe erms of he alleged collaeral agreemen were direcly in
conradicion wih he erms under he BBA Iaciliy
Agreemen, hough hey may have Eeen par of negoiaions
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prior o he accepance of resrucuring. Jhe allegaion of an
exisence of a collaeral agreemen Ey Jan Sri Khalid also
seemed implausiEle in view of he wo leers Ey Jan Sri Khalid
seeling indulgence from he Eanl for defermen of paymen.
Jhese wo leers could no Ee anyhing less han admission Ey
Jan Sri Khalid of his liaEiliies under he MuraEaha
Agreemens, which was now resrucured. Jhe evidence of
negoiaions, if any, prior o resrucuring of he BBA Iaciliy
Agreemen was no evidence ha could Ee admied in view of
ss. 91 and 92 of he Evidence Ac 195u, as hey direcly
conradiced he expressed wrien provisions of he BBA Iaciliy
Agreemen. (para 9)
S$X Jan Sri Khalid was an experienced and asue Eusinessman. He
was hen Chief Execuive Officer of Cuhrie Berhad and now
he Meneri Besar of Selangor. I was oo preposerous o expec
a person of such sanding o rely on oral promises which
conradiced he agreemens he signed freely and volunarily. He
surely mus have undersood and was fully aware of he
implicaions of wha he had signed. Jhis was no an appropriae
case where a pary o a conrac could Ee said o have relied on
oral promises ha ran conradicory o wha he had agreed in a
wrien documen. Jo use oral evidence o conradic his
wrien oEligaions under an agreemen or o allow exrinsic
evidence Ee used o conradic or avoid oEligaions under he
wrien agreemen would run foul of s. 91 of he Evidence Ac
195u. Even if here was any indulgence graned Ey he Banl, i
could no Ee inerpreed o creae a parnership Eeween hem.
Jhe allegaion of an exisence of a collaeral agreemen, and
ha he relied upon hem, was highly improEaEle, given he
circumsances. (para 1u)
S!X Quesioning he validiy of an agreemen afer Eenefiing from
i and upon defaul, in iself lacled 74,$ 52)+. Jan Sri Khalid
was in he posiion o oEain any Syariah or legal advice a he
ime he enered ino hese agreemens wih he Eanl. Jo urn
around and challenge he validiy of an agreemen enered
volunarily afer reaping he Eenefi under i appeared o Ee a
mere aferhough. (para 1)
S)X Secion 16B of he Cenral Banl of Malaysia Ac 195S creaes
he Syariah Advisory Council (SAC) under he aegis of he
Banl Negara Malaysia (Banl Negara). Secion 16B designaes
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.:8P 4Q=:O D:=:RQK: .NM H -8<9N76 *:Q7
he SAC o Ee he auhoriy for he ascerainmen of Islamic
law for he purposes of Islamic Eanling Eusiness, alaful
Eusiness or Islamic financial Eusiness. In view of s. 16B(7), i
would no Ee wrong o assume ha when Banl Negara
issued direcives involving Syariah maer i would have he
approval or he advice of he SAC. Jhus an approval of Banl
Negara for Iinancial Insiuions o offer Islamic Banling
producs would and mus have had he Eenefi of he advice
of he SAC. An enquiry was made o he SAC as o wheher
a ruling had Eeen made on he saus of he BBA Agreemen.
Jhe secrearia o SAC had responded wih a wrien ruling
from he SAC which saed essenially, ha he BBA
Agreemen was accepaEle and a recognised ransacion in
Islam. While counsel for Jan Sri Khalid argued ha here was
a whole hos of Syariah rules ha mus Ee complied wih in
his ransacion, i mus Ee poined ou ha here was anoher
side o fulfilling conracual oEligaions in he eyes of he
Syariah. Jhe demand on a person o fulfil conracual
oEligaions in Syariah was an onerous one. (paras 15, 16 &
22)
SWX Jhe consensus Eeween paries had Eeen arrived a he poin
he leer of offer was acceped Ey Jan Sri Khalid. Jhe
agreemen o Ee Eound was suEjec o formaliies of he
execuion of various documens. Signing of he wrien
agreemens was o formalise and o ranslae he consensus of
paries in he erms clearly agreed upon. I was always he
pracice, for he Eorrower o affix signaures on all Eanling
documens Eefore he Eanl execued he same, and i was
raher inconceivaEle o sugges ha i could affec he validiy
of he conrac. Iurhermore, a wrien confirmaion from he
Banl`s own Syariah council confirmed ha he mode employed
for he execuion of he documens in he presen case was in
order and had no Eearing from Syariah perspecive. (para 16)
SZX Jhere was no clause in he agreemen ha required he Eanl
o seel Jan Sri Khalid`s consen o sell he pledged shares.
Wha was clear was ha he documens were drawn o gran
cusody o hold he pledged shares where he Eanl had full
access and auhoriy o sell hem o cover ousanding due Ey
Jan Sri Khalid. Jhe pledged shares were sold Ey he Eanl,
when Jan Sri Khalid failed o remedy he Ereaches specified in
he wo noices given o him. If he Eanl had no enforced his
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securiy, he Eanl would Ee Elamed for no exercising is righ
under he securiy documens firs, Eefore any acion was alen
agains Jan Sri Khalid. As such, his cour failed o see he
relevance of his argumen when Jan Sri Khalid had already
agreed o give he Eanl his full mandae o sell off he pledged
shares o remedy his ousanding. Iurher, CIMB is a Eanl
regulaed under Banl Negara`s supervision and any malpracices
of CIMB would have come under close scruiny of Banl Negara
or he Securiies Commission. In any even, here was no
evidence of such impropriey shown o his cour. (paras 2 &
24)
S[X Jan Sri Khalid had on a numEer of occasions admied his
liaEiliy o repay he amoun due under Eoh MuraEaha
Agreemens and he BBA Iaciliies Agreemen. His leers in
exh. MR and MR5 sough o defer paymen under he
MuraEaha Agreemens. Jhe Memorandum of Accepance in
MR6 signed Ey Jan Sri Khalid admied him owing he Banl
under he earlier MuraEaha Agreemens. ExhiEi MR6 provided
so plainly and clearly ha he purpose of he resrucuring
agreemen was o finance he exising MuraEaha Iaciliies.
Iinally, his leer in exh. MR1 showed his admission on his
liaEiliy. On his ground alone, he applicaion in encl. 5 should
Ee graned. (paras 24 & 25)
S"X Jhere were no 74,$ 52)+ riaEle issues raised in his applicaion.
*:Q7SQX 67\7667M 9<Y
/%$7.?$1$&82$, >2,$,3+ ;:) AN 6$#$, =:8$, V$&$ !), ;:) W X%8Y Z40+%$82
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[KLLH] G E^V `H_ aE 234567
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G E^V MKJ E/ 234567
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+7TKQ=:9K<8 67\7667M 9<Y
Cenral Banl of Malaysia Ac 195S, s. 16B(2), (7), (S)
Conracs Ac 195u, 24
Evidence Ac 195u, ss. 91, 92
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Islamic Banling Ac 19S, s. 2
Rules of he High Cour 19Su, O. 14
>4% -:+ 01$2,-255 . 64##& 6:4#$8 Bc$,+8$, b+-:2 Q2-: :2#CY ?d8 64##&
6:4#$8
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?d8 6:4#$8 T:21208
@+04%-+) 7& !":$2,$: 9$:2)"))2,
,B/2D0?>
A<N:8: G5Q5\ ,Y
#&' Jhere are wo legal suis involving he paries. One is a claim
Ey Banl Islam Malaysia Berhad agains Jan Sri AEdul Khalid Ein
IErahim (Jan Sri Khalid) in Sui No D4-22A-227-2uu7 and he
oher is a claim Ey Jan Sri Khalid agains he Eanl in Sui D4-
22A-216-2uu7. Boh suis are now consolidaed. Pursuan o Sui
No. 22A-227-2uu7 his applicaion in encl. 5, Ey Banl Islam
Malaysia Berhad is made under O. 14 of he Rules of he High
Cour 19Su.
#$' Jhe original paries o he agreemens are Jan Sri Khalid and
Banl Islam (L) Ld Malaysia Bhd. R2)+ a vesing order daed
14 IeEruary 2uu6, all righs and oEligaions of Banl Islam (L) Ld
were ransferred o and vesed in Banl Islam Malaysia Berhad. Boh
Banl Islam (L) Ld and Banl Islam Malaysia Berhad will hereafer
Ee referred o inerchangeaEly, as "he Eanl.
.:VPT6<58M 1:V9Q
#!' Jhe relaionship Eeween he paries Eegun when he Eanl
provided wo MuraEaha Iaciliies o Jan Sri Khalid, o redeem and
acquire more shares in a company called "Kumpulan Cuhrie
Berhad. Jan Sri Khalid failed o pay he firs insalmen under he
firs MuraEaha Iaciliy Agreemen which was due on 24 OcoEer
199S. He sough a defermen of paymen of he ousanding A2)+ a
leer daed 16 OcoEer 199S (exh. MR). He also defauled under
he second MuraEaha Agreemen when he failed o pay he firs
insalmen hereunder and sough a defermen of paymen A2)+ a
leer daed 2u OcoEer 1999 (exh. MR5).
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A7Q965V956K8T
#)' Due o repeaed Ereaches Ey Jan Sri Khalid, he Eanl
offered o resrucure he MuraEaha Iaciliies o assis him in
meeing his ousanding oEligaions o he Eanl. Jan Sri Khalid
agreed o he resrucuring when he acceped he offer of he
Eanl daed 17 April 2uu1 in exh. MR6. By ha accepance, he
wo MuraEaha faciliies were resrucured ino a Revolving Al-Bai
Bihaman Ajil Iaciliy (BBA Iaciliy Agreemen). Jhe BBA Iaciliy
Agreemen comprises he following documens,
(i) Leer of offer o resrucure MuraEaha Iaciliies daed 17
April 2uu1 (in exh. MR6.)
(ii) Memorandum of accepance Ey Jan Sri Khalid (in exh. MR6.)
(iii) Maser Revolving BBA Iaciliy (BBA Agreemen) in exh.
MR7.
(iv) Memorandum of charge over shares daed u April 2uu1
(in exh. MRS.)
(v) Iund adminisraion and cusodian agreemen (in exh. MR9.)
Jhe salien erms of he BBA Iaciliy Agreemen are as follows.
(i) Jhe Eanl purchases from Jan Sri Khalid 9,6S1.562 shares of
Kumpulan Cuhrie (Cuhrie Shares) for LSD56,5uu,uuu.
(ii) Jhe Eanl resells he shares o Jan Sri Khalid a a sale price
o Ee deermined on he Easis of he cos of Iunds plus
u.75%.
(iii) A every six monhly inervals, he paries will have o execue
an Asse Sale Agreemen (ASA) and an Asse Purchase
Agreemen (APA) in respec of he Cuhrie Shares in he
specified form.
(iv) Jhe sale price is o Ee paid in insalmens Ey Jan Sri
Khalid, and he firs insalmen Eeing payaEle six monhs
from he dae of each Asse Sale Agreemen and he second
insalmen, six monhs hereafer.
(v) Jhe Eanl has he mandae and aEsolue discreion o sell all
or par of he Cuhrie Shares pledged o i as securiy in
saisfacion of sums due.
(vi) Jhe Banl reserves he righ o insruc Jan Sri Khalid o
op-up or o increase he securiy in respec of he faciliy a
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any ime.
(vii) Defaul of paymen on due daes and inadequae securiy
give he Eanl he righ o declare ha he indeEedness is
due and payaEle Ey Jan Sri Khalid and o enforce he BBA
Iaciliy Agreemen.
#W' Jan Sri Khalid defauled he firs insalmen under he
resrucured BBA Iaciliy Agreemen and hence, his sui. In
encl. 5, he Eanl is applying o ener a summary judgmen for a
sum of LSD1S,521,Su6.1 (as a 1 NovemEer 2uu6) or is
equivalen in Ringgi Malaysia.
#Z' Jan Sri Khalid did no dispue he defaul or he amoun
ousanding. He insead, alleged an exisence of collaeral agreemen
and aemped o challenge he validiy of he BBA Iaciliy
Agreemen on various grounds.
*<==:976:= -T677O789
#[' Iirs, learned counsel for Jan Sri Khalid, Encil Malil Imiaz
Sarwar (Encil Mahew Jhomas Phillip wih him) conends ha
here exiss a collaeral agreemen Eeween he paries orally and Ey
conduc. He conends ha, i was he inenion of he paries o
avail Jan Sri Khalid o ale up 2u% shares in Cuhrie wihin en
years following an opion given o him Ey PerEadanan Nasional
Berhad, ha he enure of BBA Iaciliy Agreemen would Ee for a
period of en years and he principal amoun would only Ee due for
paymen Ey 2u11, he half yearly profis due o he Eanl under he
BBA Iaciliy Agreemen would Ee saisfied hrough he ransfer of
shares Ey Jan Sri Khalid o he Eanl and Ey an allocaion of
dividends from ransferred shares o he Eanl o allow he faciliy o
Ee seen as performing, no paymen needed o Ee made Ey Jan Sri
Khalid and he BBA Iaciliy Agreemen will Ee rolled over a he
end of every six monhs as a maer of course. I was also
conended ha here was no reques made Ey he Eanl for Jan Sri
Khalid o op-up securiies alhough he ransfer of his shares o
he Eanl had progressively reduced he securiy coverage. Iinally i
was conended ha he relaion Eeween paries mus Ee viewed as
a parnership of muual Eenefi, in a win-win siuaion upon he
ulimae sale of he Cuhrie Shares. Jhe BBA Iaciliy Agreemen
mus herefore Ee viewed in he conex of all hese collaeral
promises.
#"' In response, learned counsel for he Eanl Encil Jommy
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Jhomas (Encil Canesan Nehigananarajah wih him) suEmis ha
he inenion of he paries are clearly spelled ou in he BBA
Iaciliy Agreemen and paries enered ino hese agreemens wih
he inenion o Ee Eound Ey heir respecive erms, and nohing
more. Relying on hese erms he Eanl disEursed LSD56,5uu,uuu o
refinance monies owing under he earlier wo MuraEaha Agreemens.
Jhe Eanl ool a gradual disposal of he pledged shares o recoup
paymens in respec of he amoun owing o he Eanl Ey Jan Sri
Khalid. Jhe proceeds of sale of par of he pledged Cuhrie Shares
are shown in he saemen of accoun in exh. MR24. Resuling
from his, he amoun of he pledged Cuhrie Shares had decreased,
and he Eanl A2)+ exh. MR25 demanded Jan Sri Khalid o furnish
furher securiies. Jan Sri Khalid failed o op up. Jhe Eanl issued
noice of 1S ]uly 2uu5 (in exh. MR26) for him o remedy his
defaul, Eu received no response. Anoher noice was issued Ey he
Eanl daed 4 Augus 2uu5 (in exh. MR27) when he firs noice
was no complied.
#J' I will now deal wih he issue on collaeral agreemen. I noe
ha he erms of he alleged collaeral agreemen are direcly in
conradicion wih he erms under he BBA Iaciliy Agreemen,
hough hey may have Eeen par of negoiaions prior o he
accepance of resrucuring. Jhe allegaion of an exisence of a
collaeral agreemen Ey Jan Sri Khalid also seems implausiEle in
view of he wo leers in MR and MR5 seeling indulgence from
he Eanl for defermen of paymen. I agree wih he conenion of
Encil Jommy Jhomas ha hese wo leers canno Ee anyhing
less han admission Ey Jan Sri Khalid of his liaEiliies under he
MuraEaha Agreemens, which is now resrucured. Jhe evidence of
negoiaions if any, prior o resrucuring of he BBA Iaciliy
Agreemen are no evidence ha his cour can admi in view of
s. 91 and 92 of Evidence Ac 195u, as hey direcly conradic he
expressed wrien provisions of he BBA Iaciliy Agreemen.
#&%' Lnder s. 91, when he erms of a conrac have Eeen reduced
o he form of documen, no evidence shall Ee given o prove he
erms of he conrac, excep ha i should Ee consrued wihin he
four corners of he documen iself. Lnder s. 92, no oral evidence
or saemen can Ee admied for he purpose of conradicing,
varying, adding o or suEracing he wrien erms. Encil Malil
Imiaz cies in auhoriy he Iederal Cour case of 6$, !Q++ a4+ E4
^-) AN /12 a"88$2, ;%48 ]1979] 1 LNS 11, o suppor his conenion
ha oral promises can Ee alen ino accoun, and assurances given
in he course of negoiaion may give rise o a conracual
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oEligaion. In ha same case a quesion was posed as o why oral
promise which paries place so much imporance on are no wrien
ino he agreemen. In response he Iederal Cour aclnowledges
he need for he law o accommodae he ordinary people and no
o expec response of asue Eusinessman in all cases. However,
such leaning in favour of he ignoran or innocen canno apply in
his case as i is a lnown fac ha Jan Sri Khalid is an
experienced and asue Eusinessman. He was hen he Chief
Execuive Officer of Cuhrie Berhad and now he Meneri Besar
of Selangor. I is oo preposerous o expec a person of such
sanding o rely on oral promises which conradic he agreemens
he signed freely and volunarily. He surely mus have undersood
and was fully aware of he implicaions of wha he signed. Jhis is
no an appropriae case where a pary o a conrac can Ee said
o have relied on oral promises ha run conradicory o wha he
has agreed in a wrien documen. Jo use oral evidence o
conradic his wrien oEligaions under an agreemen or o allow
exrinsic evidence Ee used o conradic or avoid oEligaions under
he wrien agreemens will run foul of s. 91 of he Evidence Ac.
Even if here is any indulgence graned Ey he Eanl, i canno Ee
inerpreed o creae a parnership Eeween hem. Jhe allegaion
of an exisence of a collaeral agreemen, and ha he relied upon
hem in my view are highly improEaEle, given he circumsances.
4==7T:=K9R
#&&' Jan Sri Khalid challenged he validiy of he BBA Iaciliy
Agreemens for wan of compliance wih he principles of Syariah.
Encil Malil Imiaz for Jan Sri Khalid conends ha he BBA
Iaciliy Agreemen is conrary o principles of Islam due o he
following hree main reasons. Iirs, he BBA Iaciliy Agreemen
eiher read ogeher wih he securiy documens or even
independenly will denoe ha hey are financing arrangemen and
no sale ransacion as hey purpor o Ee. Secondly, he BBA
Iaciliy Agreemen Eecome 'Eay al-inah` as he recial of he
Agreemen shows here is connecion Eeween he Asse Purchase
Agreemen (APA) and Asse Sale Agreemen (ASA). Jhirdly, he
disposal of he pledged Cuhrie Shares Ey he Banl wihou
noifying Jan Sri Khalid is conrary o Islamic principle lnown as
'Al-Rahnu` which requires consen of pledgees. Consequenly he
suEmied ha he BBA Agreemen is conrary o law or puElic
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policy and canno Ee enforced under s. 24 of he Conracs Ac
195u.
#&$' According o him, hough Eeing challenged on he Syariah
complian, he Eanl did no produce opinion o he conrary nor
any approval from he Banl`s Syariah Supervisory Council. He
suEmis ha exper opinion is required o deermine he issue a
hand. He cies he case of !2#4, ?$:$,%$( /00$)"%$& W /,4% AN
@+*2,$1) /,$,)$ W /,4% ]19S1] CL] 16, ]19S1] CL] (Rep) 271. In
ha case, he learned High Cour judge oEserved ha, where he
cour is no in a posiion o form a correc judgmen wihou he
help of persons who have acquired special slill or experience on a
paricular suEjec, he cour should no allow summary judgmen.
Jhis is Eecause he weigh of he exper opinion can only Ee esed
a a rial as i would Ee challenged on is accuracy. He produced
hree Syariah opinions which essenially raise issues wih BBA
Agreemen in he eyes of Syariah. Such, and in view of he
complexiies of Eoh facs and law he conends ha his case meris
a rial. Jhis is Eecause under an O. 14 applicaion, he cour need
only consider wheher or no here are issues o Ee ried Eu no o
delve ino heir meris as saed in b4: a&4",* !+4< AN T+%Q2%$ /552,
;:) ]2uu4] 2 CL] 64. In b* a++ 6:4,* W /,4% AN T"7123 ;$,< ;:)
]1995] 1 CL] 6u9 CA i is saed ha, since he effec of O. 14 is
o shu he defendan from having his day in he winess Eox i
should only Ee involed in cases where here is no 74,$ 52)+ riaEle
issue.
#&!' Iollowing he well esaElished principle in b* a++ 6:4,* i
mus Ee Eorne in mind ha he riaEle issue raised in resising an
O. 14 applicaion mus Ee 74,$ 52)+. Jhe issue Eefore me is
herefore wheher he challenge on he validiy of he BBA Iaciliy
Agreemen is a 74,$ 52)+ riaEle issue. In my view, quesioning of
he validiy of an agreemen afer Eenefiing from i and upon
defaul, in iself lacls 74,$ 52)+. I say his Eecause Jan Sri Khalid
was in he posiion o oEain any Syariah or legal advice a he
ime he enered ino hese agreemens wih he Eanl. Jo urn
around and challenge he validiy of an agreemen enered
volunarily afer reaping he Eenefi under i appears o Ee a mere
aferhough. Jhis is also alin o a case of a Muslim who goes ino
a resauran, had a meal, only o inquire afer he meal if he food
is non halal and when old ha is so, refuses o pay for i. Such
conduc canno reflec a serious concern of he Syariah compliance,
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Eu more of an aemp o renege conracual oEligaions which
have Eeen volunarily agreed and aced upon Ey he oher pary.
#&)' Be ha as i may, i would Ee necessary o analyse he issue
raised on his poin. Encil Malil Imiaz suEmis hree Syariah
opinions, one Ey Dr. Lgi Suharo (in exh. AK1-16), an Assisan
Prof. Deparmen of Economics of he Inernaional Islamic
Lniversiy Malaysia (IILM) anoher, from Dr. Aznan Ein Hassan,
(in exh. AK1-55) an Assisan Prof of Kuliyyah of Laws IILM and
anoher, from Mr. Mohd El Iaih Hamid (exh. MEL1), a fellow
(Professor) a he Lniversiy of Kharoum. Essenially all hese
opinions quesion he validiy of BBA Agreemen under he Syariah.
Encil Malil Imiaz conends ha since BBA Agreemen is no in
line wih Islamic law he BBA Agreemen is an illegal conrac or
agreemen agains puElic policy and are null and void under s. 24
of he Conracs Ac 195u.
#&W' I would lile firs o appraise myself wih he legislaive
provision ha deals wih his issue as found in s. 16B of he
Cenral Banl of Malaysia Ac 195S. Secion 16B creaes he Syariah
Advisory Council (SAC) under he aegis of he Banl Negara
Malaysia (Banl Negara). Secion 16B designaes he SAC o Ee he
auhoriy for he ascerainmen of Islamic law for he purposes of
Islamic Eanling Eusiness, alaful Eusiness or Islamic financial
Eusiness. Banl Negara, under s. 16B(7) mus consul he SAC on
Syariah maers relaing o Islamic Banling Business, Jalaful
Business, Islamic Iinancial Business, Islamic Developmen Iinancial
Business, or any oher Eusiness which is Eased on Syariah
principles. Banl Negara, may issue wrien direcives o Eanls and
Iinancial Insiuions in relaion o Islamic Eanling or Islamic
financing Eusinesses in accordance wih he advice of he SAC. Is
memEership as deermined under s. 16B(2) is made of memEers
from relaed disciplines, Eesides Syariah scholars. Looling a s.
16B(7), I would no Ee wrong o assume ha when Banl Negara
issues direcives involving Syariah maer i would have he approval
or he advice of he SAC. Jhus an approval of Banl Negara for
Iinancial Insiuions o offer Islamic Banling producs would and
mus have had he Eenefi of he advice of he SAC. I raise his
poin also Eecause in he suEmission of Encil Jommy Jhomas for
he Banl, he confirmed ha he resrucuring of his paricular
BBA Iaciliy Agreemen received he sancion of Banl Negara,
which in reurn would have had he Eenefi of he SAC`s advice.
#&Z' Lnder s. 16B(S), i is provided ha in any proceedings Eefore
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he cour when a quesion arises concerning a Syariah maer, he
cour or he arEiraor may ale ino consideraion any wrien
direcives issued pursuan o suE-s. (7) or refer such quesion o he
SAC for is ruling. Relying on his clause in fac, afer he
suEmissions was made Eefore me Ey Eoh counsels on he Syariah
issue raised, I had caused an enquiry o Ee made o he SAC as o
wheher a ruling has Eeen made on he saus of BBA Agreemen.
Jhe secrearia o SAC responded wih a wrien ruling from he
SAC which saes essenially, ha BBA Agreemen is accepaEle and
a recognized ransacion in Islam. I have furnished he said wrien
ruling from he SAC o Eoh counsels. Jhereafer, counsel for Jan
Sri Khalid in a leer daed 5 May 2uu9 seels leave for a furher
suEmission on he Syariah issue. In a furher wrien suEmission,
learned counsel conends ha he mode of execuion of APA and
ASA was improper Eecause Jan Sri Khalid was made o sign Eoh
agreemens firs Eefore hey were passed Eacl o Ee compleed Ey
he Eanl. Jhere was herefore no separaion of he APA wih he
ASA and no disincion in erm of ime of execuion as required
under he said ruling of he SAC. As such here was no complee
sale of shares o he Eanl under he APA Eefore he Eanl can resell
shares o Jan Sri Khalid in he ASA. Jo my mind, his issue is
Eased on mere echnicaliy and a rivial one. Jhe consensus Eeween
paries has Eeen arrived a he poin he leer of offer was acceped
Ey Jan Sri Khalid. Jhe agreemen o Ee Eound is suEjec o he
formaliies of he execuion of various documens. Signing of he
wrien agreemens is o formalise and o ranslae he consensus of
paries in he erms clearly agreed upon. Besides, i has always Eeen
a pracice, for he Eorrower o affix signaures on all Eanling
documens Eefore he Eanl execue he same, and i is raher
inconceivaEle o sugges ha i can affec he validiy of he
conrac. Iurhermore, a wrien confirmaion from he Eanl`s own
Syariah Council in exh. CN4 confirmed ha he mode employed for
he execuion of he documens in he presen case is in order and
has no Eearing from Syariah perspecive. Wih seven ses of APA
and ASA documens signed in he same manner, he paries would
have condoned and acceped such pracice. As such, I fail o see
how hese agreemens will no Ee Einding on paries merely Eecause
hey are signed wihou following orders of preceden, when afer
enering ino he seven ses of ransacion he defendan never
proess or raises any issue.
#&[' Reurning now o he SAC, i is clear from s. 16B ha he
SAC is he Eody empowered for he "ascerainmen of Islamic Law
for he purpose of Islamic Eanling Eusiness .... Jhe legislaure had
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inended he SAC o Ee a legally recognized Eody under he law
o ascerain he Islamic law applicaEle o Islamic Banling and
Iinance. Wih such specific legislaive provision i is oEvious ha
he SAC is a Eody empowered and recognized under he
legislaion o issue ruling and direcion on he applicaEle Syariah
Law in Islamic Banling Business.
#&"' Jo my mind here is good reason for having his Eody. A
ruling made Ey a Eody given legislaive auhoriy will provide
cerainy, which is a much needed elemen o ensure Eusiness
efficacy in a commercial ransacion. Jaling cognisance ha here
will always Ee differences in views and opinions on he Syariah,
paricularly in he area of muamala, here will ineviaEly Ee varied
opinions on he same suEjec. Jhis is mainly due o he permissive
naure of he religion of Islam in he area of muamala. Such
permissive naure is evidenced in he definiion of Islamic Banling
Business in s. 2 of he Islamic Banling Ac 19S iself. Islamic
Banling Business is defined o mean, Eanling Eusiness whose aims
and operaions do no involve any elemen which is no prohiEied
Ey he Religion of Islam. I is amply clear ha his definiion is
premised on he docrine of "wha is no prohiEied will Ee
allowed. I mus Ee in conemplaion of he differences in hese
views and opinions in he area of muamala ha he legislaure
deems i fi and necessary o designae he SAC o ascerain he
accepaEle Syariah posiion. In fac, i is well acceped ha a
legiimae and responsiEle Covernmen under he docrine of siasah-
as-Syariah is allowed o choose, which amongs he conflicing views
is o Ee adoped as a policy, so long as hey do no depar from
Quran and Islamic Injuncion, for he Eenefis of he puElic or he
ummah. Jhe designaion of he SAC is indeed in line wih ha
principle in Islam.
#&J' Having examined he SAC, is role and funcions in he area
of Islamic Banling, I do no see he need for me o refer his issue
elsewhere hough I am mindful ha under s. 16B(7) I am no
Eound Ey is decision. Irom is consiuens in s. 16B(2) he
memEers are made of people of varied disciplines Eesides Syariah
scholars. Jhis, I Eelieve will enaEle he Eody o arrive a a well
informed decision insead of deciding he Syariah issue in isolaion.
Bearing in mind he response from he SAC o his case, namely,
ha BBA is a recognized form of ransacion and is wihin Syariah,
I have no hesiaion o accep ha view and will no venure any
furher ino is finding. In addiion o ha, I hold he view ha
since here are differences in Syariah views, paries may generally
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ener ino an agreemen Easing on any paricular view or opinion
and hey are Eound Ey he conracing erms Eased on ha
paricular Syariah posiion. In his case Jan Sri Khalid had agreed
wih he Banl o Ee Eound Ey he BBA erms as per wrien erms
Eeween hem and i is no open o him o now says ha he
BBA erms should have Eeen inerpreed and implemened
differenly.
#$%' Jhe issue of validiy of BBA Agreemens was earlier Erough
o cour in he /%$7.?$1$&82$, >2,$,3+ ;:) AN 6$#$, =:8$, V$&$ !),
;:) W X%8Y Z40+%$82 !+%2 Z4-$ ;"<2- E:+%$<$ ;:) B6:2%) T$%-&C /,)
X-:+% E$8+8 ]2uu9] 1 CL] 419. Among he issues raised was wheher
he BBA agreemen is valid and enforceaEle Eecause i is no a sale
ransacion as i purpors o Ee, Eu a lending agreemen. Jhe
Appeal Cour had however, overruled ha decision and held ha he
BBA Agreemen is valid and an enforceaEle conrac. Jhus, he
judgmen of he High Cour ha BBA Iaciliy Agreemen is no a
sale agreemen Eu a loan agreemen, an argumen also pu
forward Ey Encil Malil Imiaz in he presen case has Eeen
overruled Ey he Cour of Appeal. Lnforunaely, a he poin his
decision is wrien I have no had he privileged and Eenefi of he
wrien judgmen of he Appeal Cour, hough I was appraised
wih he order graned Ey he Cour of Appeal relaing o he
same issue, in anoher case ha was Eefore me.
#$&' Looling Eacl, he BBA Agreemen had in fac Eeen enforced
since he case of ;$,< =81$# ?$1$&82$ ;:) AN /),$, X#$% ]1994]
CL] 75 and ;$,< Z+%($8$#$ @$<&$- ?$1$&82$ ;:) AN S#3++
E4%04%$-24, !), ;:) ]2uu] 1 CL] 625. In he laer case, he Cour
of Appeal had also oEserved ha he law applicaEle o an Islamic
Eanling ransacion is no differen from he law given under
convenional Eanling.
#$$' Whils counsel for he Jan Sri Khalid argued ha here is a
whole hos of Syariah rule ha mus Ee complied wih in his
ransacion, i mus Ee poined ou ha here is anoher side o
fulfilling conracual oEligaions in he eyes of he Syariah. Jhe
demand on a person o fulfil conracual oEligaions in Syariah is an
onerous one. I have in an earlier decision in ;$,< Z+%($8$#$ @$<&$-
?$1$&82$ ;+%:$) AN T!E b$A$1 D43<&$%) !), ;:) ]2uuS] 1 CL] 7S4
HC made my oEservaion on sanciy of conrac and he demand
on performance of a conracual oEligaions in he eyes of Syariah.
I do no now wish o repea hem here.
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#$!' Jwo main issues were raised on he pledged shares. Iirs, he
Banl was alleged o have wrongfully sold he pledged shares for
failure o oEain he consen from Jan Sri Khalid. Jhis according
o Encil Malil Imiaz is agains he principle of Ar-Rahnu. Lnder
he Iund Adminisraion and Cusodian Agreemen (in exh.
(AKI-6), he cusodian of he shares is Bimsec Nominees (Asing)
Sdn. Bhd. I do no find any clause in his agreemen ha require
he Eanl o seel Jan Sri Khalid`s consen o sell he pledged
shares. I also do no find any clause ha paries are enering ino
his agreemen Eased on he principle of Ar-Rahnu. Wha is clear
is ha he documens are drawn o gran cusody o hold he
pledged shares where he Eanl has full access and auhoriy o sell
hem o cover ousanding due Ey Jan Sri Khalid. Jhe pledged
shares were sold Ey he Eanl, when Jan Sri Khalid fails o remedy
he Ereaches specified in he wo noices given o him. If he Eanl
had no enforced his securiy, he Eanl would Ee Elamed for no
exercising is righ under he securiy documens firs, Eefore any
acion is alen agains Jan Sri Khalid. As such, I fail o see he
relevance of his argumen when Jan Sri Khalid had already agreed
o give he Eanl his full mandae o sell off he pledged share o
remedy his ousanding.
#$)' Jhe sale of he pledged Cuhrie shares was carried ou
hrough CIMB Invesmen Banl Bhd which assised he Eanl in
monioring he daily marle condiion o ensure efficien sale price.
Encil Malil Imiaz suggesed possiEle impropriey on he par of
CIMB who possessed lnowledge of he impending merger of Cuhrie
Berhad and oher companies which resuled in he Synergy Drive
Sdn. Bhd. I find his argumen oo speculaive. Jhe Eanl has no
relaion wih Synergy Drive Sdn. Bhd. CIMB is a Eanl regulaed
under Banl Negara`s supervision and any malpracices of CIMB
would have come under close scruiny of Banl Negara or he
Securiies Commission. In any even, here is no evidence of such
impropriey shown o his cour o suppor ha suggesion. Issue
was also raised on he mehod of valuaion adoped in he iniial
sale price of Cuhrie shares se ou in he firs ASA (exh. MR1u)
under he BBA Iaciliy Agreemen which was no fixed o he
curren marle price of he Cuhrie shares. Jhe prevailing marle
price was RM1.Su per share, resuling in LSD19,uuu,uuu in value.
However he Eanl had 'over valued` hem in line wih ousanding
Ey Jan Sri Khalid which was LSD56,5uu,uuu. If he Eanl had
followed he marle price i would mean ha Jan Sri Khalid would
have o pay he differences hen Eesides i would resul in
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coninuous flucuaion in he amoun due o he Eanl. Jhis would
have affeced he whole Eusiness efficacy in he process.
-MOKQQK<8
#$W' Having considered all hese argumens, one fac remains
clear. Jan Sri Khalid had on a numEer of occasions admied his
liaEiliy o repay he amoun due under Eoh MuraEaha
Agreemens and he BBA Iaciliies Agreemen. As I have referred
o earlier, his leers in exh. MR and MR5 seel o defer paymen
under he MuraEaha Agreemens. Jhe Memorandum of
Accepance in MR6 signed Ey Jan Sri Khalid admied him owing
he Eanl under he earlier MuraEaha Agreemens. ExhiEi MR6
provides so plainly and clearly ha he purpose of he
resrucuring agreemen was o finance he exising MuraEaha
Iaciliies of LSD5u,uuu,uuu million and LSD11,75u,uuu
respecively. Iinally, his leer in exh. MR1, goes o show his
admission on his liaEiliy. I agree wih Encil Jommy Jhomas ha,
on his ground alone, he applicaion in encl. 5 should Ee graned.
#$Z' In view of he foregoing, I do no find any 74,$ 52)+ riaEle
issue raised in his applicaion, I hereEy allow he applicaion in
encl. 5 wih coss.