DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR DALAM WILAYAH PERSEKUTUAN, MALAYSIA BAHANGIAN DAGANG GUAMAN NO : 22M-208-12/2015
BANK KERJASAMA RAKYAT MALAYSIA BERHAD … PLAINTIF
KOPERASI BELIA NASIONAL BERHAD …
Grounds of Decision
Azizah Nawawi, J:
 This is the Plaintiff’s application for summary judgment for the sum of RM67,378,497.42 premised on Term Finance – i Facility which was granted by the Plaintiff to the Defendant.
 After hearing the parties, this Court has allowed the Plaintiff’s application for summary judgment with costs of RM5,000.00.
The Salient Facts
 The Plaintiff is a cooperative body registered under the Cooperative Society’s Act 1993, and is subject to the Bank
Kerjasama (M) Bhd (Special Provisions) Act 1978. The Plaintiff’s business includes the business of providing loans.
 The Defendant is a cooperative registered under the Cooperative Society’s Act 1993 and incorporated under the Companies Act 1965.
 Upon an application by the Defendant, the Plaintiff had approved a Term Finance – i Facility under the principles of Bai’ ‘Inah to the Defendant vide a letter of offer dated 11.4.2013, for the sum of RM50,000,000.00 which was accepted by the Defendant subject to such terms and conditions.
 Pursuant to the Bai’ Al – ‘Inah principles, the Asset Sale Agreement dated 11.04.2013 was signed by both parties whereby the Defendant has agreed to buy from the Plaintiff commodities bearing certificate No. CP011APR2013-01190-000 at the price of RM120,612,734.40. The Plaintiff signed the Agreement on
11.4.2013 at 3.30 pm whilst the Defendant signed the same at 3.32 pm.
 The parties then signed the Asset Purchase Agreement dated
11.4.2013 whereby the Defendant has agreed to sell, and the Plaintiff has agreed to buy the same asset at RM50,000,000.00. The Defendant signed the said Agreement on 11.4.2013 at 3.34pm whilst the Plaintiff signed the same at 3.35 pm.
 The purpose of the facility is to provide capital for personal loans of the members of the Defendant. Under the agreement between the Defendant and its members, any payments of the personal loans from its members will be collected by the Defendant through Biro Perkhidmatan Angkasa and paid into the Defendant’s account with the Plaintiff.
 Vide a Deed of Assignment (Proceeds) dated 11.4.2013, the Defendant had assigned all the payments due from its members to the Plaintiff.
 When the Defendant defaulted in the installment payments, the Plaintiff issued a notice of demand, and eventually terminated the agreement vide a letter dated 5.11.2015 when the Defendant continued with the default in the payments of the outstanding sum. The amount claimed in the said letter of demand is RM67,378,497.42 as at 31.10.2015.
The Findings of the Court
 In an application for summary judgment, this Court is guided by the principles laid down in National Company for Foreign Trade v. Kayu Raya Sdn Bhd  2 CLJ 220, where it was stated by the Federal Court as follows:
“… We think it appropriate to remind ourselves once again that in every application under O. 14, the first considerations are (a) whether the case comes within the order and (b) whether the plaintiff has satisfied the
preliminary requirements for proceeding under O. 14. For the purposes of an application under O. 14, the preliminary requirements:-
(i) the statement of claim must have been served on the Defendant;
(ii) the defendant must have entered an appearance;
(iii) the affidavit in support of the application must comply with the requirements of r. 2 of the O. 14
… If the Plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If however, these considerations are satisfied, the plaintiff will have established a prima facie case and he becomes entitled to judgment. This burden then shifts to the defendant to satisfy the court why judgment should not be given against him… ”
 In the present case, the Plaintiff had satisfied the preliminary requirements as laid down in the Kayu Raya’s case that is:
(i) the Statement of Claim have been served on been served on the Defendant;
(ii) the Defendant has entered appearance; and
(iii) the Affidavit in Support is in compliance with O. 14 r. 2 ROC 2012
Therefore, the burden is then shifted to the Defendant to satisfy the Court why Judgment should not be entered against them.
 In Bank Negara Malaysia v Mohd Ismail  1 CLJ 627 the
Supreme Court held that the duty of a Judge does not end as soon as the fact is asserted by one party, or denied or disputed by the other on affidavit. The Judge has a duty to reject such assertion or denial if such assertion or denial is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents or is inherently improbable. The Court will have to identify the issues of fact or law and to determine whether they are triable.
 The first issue raised by the Defendant is that there was no actual agreement between the parties to buy the commodities, Crude Palm Oil (‘the CPO’) because the Defendant did not have the intention nor the agreement to buy the said CPO. Therefore, the Defendant submits that there was no actual consent to support the Asset Sale Agreement dated 11.4.2013 and the said Agreement is in breach of section 13 of the Contracts Act 1950 which provides that “Two or more persons are said to consent when they agree upon the same thing in the same sense.”
 The Defendant also submits that Asset Sale Agreement dated
11.4.2013 was in breach of section 31 and 32 of the Sale of Goods Act 1957 as there was no intention on the part of the Plaintiff to give possession of the said CPO to the Defendant. Therefore, the Defendant submits that Asset Sale Agreement
dated 11.4.2013 is null and void as it is in breach of the Contracts Act 1950 and the Sale of Goods Act 1957.
 On this issue however, I agree with the Plaintiff that since the Defendant has signed the contract, they have agreed to the terms and conditions stipulated therein. This is admitted by the Defendant in paragraph 3 of the Statement of Defence dated 22.1.2016 where the Defendant pleads that “…aset yang dijualbeli melalui Perjanjian Jualan dan Perjanjian Belian bertarikh 11.4.2013 adalah Crude Palm Oil (CPO) sebanyak 16,452.78052 tan dengan harga jualan secara tertangguh pada harga RM120,612,734.40.” Therefore pursuant to section 10 of the Contracts Act 1950, the said contract is valid when both parties have freely consented to enter into the contract, for a lawful consideration and with a lawful object. In Arab-Malaysian Merchant Bank Bhd v Silver Concept Sdn Bhd  8 CLJ 9, the Court held that:
“ Parties have agreed before executing the agreements, and without any undue pressure or persuasion, to the preconditions of the Islamic based contract. As mentioned above, as parties have agreed to be bound by theal-aqd and hence have a conclusive contract (Uqud), they are thus bound by the obligation. Both parties are equally bound and must comply with the conditions of the Uqud as ordained by Allah at Ch. 5:1 of the al-Quran. On that premise the defendant here must comply and be bound by his willingness to
contract into the impugned agreements. He cannot contract out now unless there are cogent reasons to justify that act. Here I found none.”
 In Smallholders Corp Sdn Bhd & Ors v Utusan Transport Sdn
Bhd  4 MLJ 587, the Court held that:
“ When documents containing contractual terms are signed, then in the absence of fraud or misrepresentation the party signing it is bound, and it is wholly immaterial whether he has read the document or not. In this case no plea of fraud or misrepresentation has been raised and the defendant is bound by his own admission.”
 In the present case, there is no plea of fraud or misrepresentation that has been raised by the Defendant and therefore the Defendant is bound by its admission in paragraph 3 of the Statement of Defence dated 22.1.2016 that it has signed the said Asset Sale Agreement dated 11.4.2013. In Tan Sri Abdul Khalid Ibrahim v Bank Islam Malaysia Bhd & Anor case  4 CLJ 388, the Court held that:
“(3) Questioning the validity of an agreement after benefitting from it and upon default, in itself lacked bona fide…”
 The next issue raised by the Defendant is that there are several breaches of the Syariah Advisory Council (SAC) Circular on the
resolution on Bai’ ‘Inah, and this renders the Asset Sale Agreement dated 11.4.2013 to be null and void.
 It is common ground that whether an Agreement is valid or not, this Court will have to examine the same against the resolutions issued and published by the SAC. In respect of the Bai’ ‘Inah, the SAC resolutions at page 109 of The Syariah Resolutions in Islamic Finance by Bank Negara Malaysia, 2nd edn states:
“Bai’ ‘Inah refers to a contract which involves sale and buy back transactions of an asset of a seller. In those transactions, the seller sells an asset to the buyer on cash basis and then buys back the asset at a deferred price, which is higher than the cash price. It may also be conducted where the seller sells the asset to the buyer at a deferred price and subsequently buys back the asset on cash basis at a lower price than the deferred sale price. Bai’ ‘Inah concept is used in Malaysian Islamic Banking and Islamic capital market system to fulfil the various needs of market players, mainly during the initial development state of Islamic financial system.” (see Malaysian Debt Ventures Berhad v FLH Services Sdn Bhd & Anor  1 LNS 1349)
 In order for a Bai’ ‘Inah contract to be valid, the SAC in its 16th meeting dated 11th November 2000 and 82nd meeting dated 17th February 2009 resolved that the following conditions must be present:
(i) The contract must consist of two clear and separate contracts, namely a purchase and sale contract;
(ii) No stipulated condition in the contract to repurchase the asset;
(iii) Both contracts are concluded at different times;
(iv) The sequence of each contract is correct, whereby, the first sale contract shall be completely executed before the conclusion of the second sale contact; and
(v) Transfer of ownership of the asset and a valid possession (qabd) of the asset in accordance with Shariah and current business practice (‘urf tijari).
(see FLH Services Sdn Bhd & Anor v Malaysian Debt Ventures Bhd  1 CLJ 243)
 However, on the factual matrix of this case, there is nothing in the Statements of Defence filed by the Defendant to plead and/or to declare that the agreements entered between the parties are null and void as these agreements are in breach of the SAC Circular and/or resolutions. As this is not a pleaded issue, the Defendant cannot simply raise the same either in the affidavit or in their submission. In Janagi v Ong Boon Kiat  2 MLJ 196, the Court held as follows:
“A judgment should be based upon the issues which arise in the suit and if such a judgment does not dispose of the questions as presented by the parties it renders itself liable not only to grave criticism but also to a miscarriage of justice. It becomes worse and is unsustainable if it goes outside the issues. Such a judgment cannot be said to be in accordance with the law and the rules of procedure. It is the duty of the courts to follow the rules of procedure and practice to ensure that justice is done. These rules are meant to be observed and respected.”
 The only syariah issue raised by the Defendant in the Statement of Defence dated 22.1.2016 is in paragraph 14, which reads as follows:
“14. Defendan menafikan Perenggan 14 Pernyataan
Tuntutan dan mengatakan seperti berikut:
a. Bahawa tuntutan Plaintif di sini bagi mendapatkan bayaran Harga Jualan barangan yang berasaskan Perjanjian Jualan yang tidak sah, terbatal dan tidak berkesan di sisi kontrak dan/atau syariah adalah wajar ditolak oleh Mahkamah yang Mulia ini.
b. Secara alternative, sekiranya Mahkamah yang Mulia ini mendapati Perjanjian Jualan adalah sah, Defendan menyatakan tuntutan Plaintif bagi bayaran secara sekaligus sebanyak
RM67,378,497.42 adalah pra-matang kerana Perjanjian Jualan memperuntukkan bayaran Harga Jualan adalah kena dibayar mengikut kalaan sebagaimana yang telah dipersetujui.
c. Bahawa tuntutan bayaran balik sebanyak RM67,378,497.42 dikira setakat 31.10.2015 bagi pinjaman asal sebanyak RM50 juta adalah berasaskan riba yang haram di sisi syariah.
d. Oleh kerana niat pihak-pihak ialah untuk memasuki kontrak patuh syariah, maka tuntutan berasaskan riba yang haram di sisi syariah adalah bertentangan dengan niat untuk memasuki transaksipatuh syariah.”
However, in the written submission of the Defendant, the Defendant claims that the Asset Sale Agreement dated 11.4.2013 has breached the SAC Circular on the resolution on Bai’ ‘Inah, which stipulates that both buy and sell contract must be concluded at different times. In this case, both agreements are dated 11.4.2013.
Again as can be seen from Statement of Defence dated 22.1.2016, in particular paragraph 14, these issues on the specific non compliance with the SAC Circular and/or resolutions have not been specifically pleaded. There material facts have not been pleaded in the Statement of Defence, and therefore the
Defendant cannot amplify the same in their affidavits or in their submission. (State of Perak v Muniandy  1 MLJ 490, SC)
 On this issue, the Defendant’s submission is based on the SAC resolutions and the SAC Circular on the “Implementation of Syariah Advisory Council of Bank Negara Malaysia’s Resolution on Bai’ ‘Inah” which was approved by the SAC in its 128th meeting on 25 September 2012. The said Circular was issued pursuant to subsection 59(1) of the Central Bank of Malaysia Act 2009.
 Paragraph 6.13 of the SAC Circular reads as follows:
“ The execution or signing of both sets of sale and purchase agreements must be executed at different intervals. Ex parte execution of both documents simultaneously by any contracting party in bai’ ‘inah transaction will render the contract to be void from Syariah perspective. In this regard, Bank Negara Malaysia (the Bank) expects IBI to record the time (time stamp) of execution or signing of both documents as evidence of compliance to this Syariah requirements.”
 However, having considered the Asset Sale Agreement dated 11.04.2013, the Plaintiff had signed the Agreement on 11.4.2013 at 3.30pm whilst the Defendant signed the same at 3.32 pm. The parties then signed the Asset Purchase Agreement dated 11.4.2013 whereby the Defendant has signed the said Agreement on 11.4.2013 at 3.34 pm whilst the Plaintiff signed the same at
3.35 pm. Therefore, the execution or signing of both sets of sale and purchase agreements were executed at different intervals.
 It is also the submission of the Defendant that there was a breach of the Syariah Advisory Council (SAC) resolution on Bai’ ‘Inah, that there must be a valid possession (qabd) of the assets in accordance with Syariah practice. This is based on paragraph 6.1.5 of the Circular which reads:
“The ownership in the subject matter of sale in bai’ ‘inah transaction must be effectively transferred from the seller to the purchaser. The transfer of ownership shall result in the purchaser’s having absolute rights and control on the asset under permissible mechanism by Syariah and generally accepted trade practices (‘urf tijari).
The purchaser is regarded to have ownership right in the underlying asset through physical possession (al-qabd al-haqiqi) or constructive possession (al-qabd al-huqmi).”
 Having considered clause 2.1 of the Asset Sale Agreement, I am of the considered opinion that there is no merit in this argument because under clause 2.1, the title and beneficial ownership in the assets shall pass to the Customer (the Defendant) upon the execution of the said Agreement.
 The Defendant further submit there was a breach of the Syariah Advisory Council (SAC) resolution on Bai’ ‘Inah in respect of paragraph 6.1.2, which reads:
“ The sale and purchase agreements must not stipulate any terms and conditions or create an obligation for both transacting parties to repurchase or resell the subject matter of sale. Failure to observe this Syariah requirement may render the agreements to be void from Syariah perspective…”
 However having considered the Letter of Offer and the Asset Sale Agreement, there is nothing in these documents which stipulate that there must be an obligation for both transacting parties to repurchase or resell the subject matter of sale.
 The Plaintiff’s claim for RM67,378,497.42 as at 31.10.2015 is also supported by the Statement of Account, Exhibit A- 7. Exhibit A- 7 is issued pursuant to Clause 10.1 of the Asset Sale Agreement, which states:
“10.1 Evidence of Indebtedness
A statement by a duly authorized officer of the Bank for the time being as to the amount or amounts payable by the Customer under this Agreement, or any other Transaction Document and/or the amount or amounts of any costs, charges, expenses, compensation (ta ‘widh) and other monies payable shall in the absence of manifest error be conclusive evidence that such amount or amounts of any costs, charges, expenses, compensation (ta ‘widh) and other monies is or are in fact due and payable by the
Customer for all purposes including for the purpose of legal proceedings.”
 Therefore, pursuant to the case of Chempaka Finance Bhd v Ho Lai Ying & Anor  2 MLJ 685, I am of the considered opinion that the Certificate of Indebtedness is prima facie evidence of the sum owing. The onus then lies with the Defendant to disprove the amount claimed. However, the Defendant did not dispute the amount claimed except to state that facilities are non Islamic or non syariah compliant. In Arab -Malaysian Finance Bhd v Siva Subramaniam Appupillai  8 CLJ 23, the Court said this:
“The appellant had produced a statement of account showing the amount outstanding. In the light of the conclusive evidence clause in the guarantee, it would not be open for the respondent to dispute the amount as stated by the appellant in the final account.”
 In the present case, the Defendant did not adduce any facts to support its contention. In RHB Bank Bhd v Tan Swee Long
Holdings Sdn Bhd & Ors  10 CLJ 519, the Court held it is not enough for the defendants to merely deny the amount owed, “but the defendants must plead any salient and relevant facts which negative the existence of the debt or which show that the claim is not maintainable on other grounds. ”
 In the premise, and based on my reasons enumerated above, I find that the Defendant has failed to raise any triable issue and the Plaintiff’s application is allowed with cost of RM5,000.00.
(AZIZAH BTE HAJI NAWAWI) JUDGE
HIGH COURT MALAYA (Commercial Division) KUALA LUMPUR
Dated: 27th July 2016
For the Plaintiff : Asmadi Othman and Nur Athirah Ahmad
Messrs Zulpadli Edham Kuala Lumpur.
For the Defendant: Kiswaty Abdullah
Messrs Kiswaty Abdullah & Partners Kuala Lumpur.