1. ) Ragavan a/ P.Subramaniam 2. ) Sivalingam a/l K Karuppiah 1. ) Pournamis Jewels (M) Sdn Bhd 2. ) Mageswary a/p Muniandy

WA-22NCC-86-02/2023 Kand. 41 29/01/2024 09:08:23 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA (COMMERCIAL DIVISION) SUIT NO.: WA-22NCC-86-02/2023 BETWEEN 1. RAGAVAN A/L P. SUBRAMANIAM (NRIC No.: 771026-08-7665) 2. SIVALINGAM A/L K KARUPPIAH (NRIC No.: 770707-08-6583) [both trading under a name and style DOUBLE 7 GOLD TRADING (No.Pendaftaran 002965172-U)] … PLAINTIFFS AND 1. POURNAMIS JEWELS (M) SDN BHD (Company No.: 1260584-P) 2. MAGESWARY A/P MUNIANDY (NRIC No.: 731203-10-5582) …DEFENDANTS JUDGMENT Introduction [1] The Plaintiffs’ pleaded case against the Defendant is based on a breach of an agreement dated 1.7.2021. However, at the trial, the S/N HqONrRHNUml8ciWzoUdQ 1 **Note : Serial number will be used to verify the originality of this document via eFILING portal Plaintiffs had deviated completely from their pleaded case. No application was made to amend the pleadings. [2] Further, based on the Plaintiffs’ case as advanced at the trial, it became painfully clear that the Plaintiffs had entered into an illegal moneylending transaction with the 1st Defendant. [3] For the above reasons, I dismissed the Plaintiffs’ action and I set out below my grounds as the Plaintiffs have appealed against my decision. Background facts [4] The Plaintiffs’ claim is that the 1st Defendant has breached a Sales Agreement dated 1.7.2021 (“the Sales Agreement”) by failing to pay the monthly instalments of RM64,000.00 per month for 36 months as agreed in clause 3 of the Sales Agreement. [5] The Plaintiffs’ claim is for a sum of RM1,149,450.38 which is pleaded as the balance amount due and payable to the Plaintiffs based on invoices listed out in the First Schedule of the Sales Agreement. [6] The Plaintiffs claimed that by a letter from the 1st Defendant dated 6.10.2022 to the Plaintiffs’ former solicitors, the 1st Defendant had admitted owing monies to the Plaintiffs and that the 1st Defendant had breached the Sales Agreement. S/N HqONrRHNUml8ciWzoUdQ 2 **Note : Serial number will be used to verify the originality of this document via eFILING portal [7] The Plaintiffs claimed against the 2nd Defendant based on a Personal Guarantee dated 25.11.2022 to guarantee the payment of RM2,000,000.00 under the Sales Agreement. [8] After the trial of this matter and upon hearing submissions of counsel and perusal of the written submissions and relevant cause papers, this Court dismissed the Plaintiffs’ claims with costs. Court’s Deliberations [9] In the Plaintiffs’ Statement of Claim, the Plaintiffs’ pleaded case is that under the Sales Agreement, the Plaintiffs would pay for 22 carats 916 gold bars to the value of RM2,390,400.00 for the use of the 1st Defendant’s business for which the Plaintiffs would invoice the 1st Defendant. The Plaintiffs claimed that the 1st Defendant had breached the payments in respect of the invoices raised. [10] By the Plaintiffs’ aforesaid pleaded case, it is not the case that the Plaintiff had sold and delivered to the 1st Defendant the said gold bars. Instead, the Plaintiffs are said to have paid for the same. [11] However, at the trial, when the Sales Agreement was adduced, the said document stated thus: “This Sales Agreement entered into … between DOUBLE 7 GOLD TRADING … (“Seller”) and POURNAMIS JEWEL (M) SDN BHD … (“Buyer”) S/N HqONrRHNUml8ciWzoUdQ 3 **Note : Serial number will be used to verify the originality of this document via eFILING portal … Seller owns certain Goods as defined below and Seller desires to and has sold such goods under the terms and conditions set forth in this Agreement; and … NOW THEREFORE, in consideration of the mutual promises and … the Parties, intending to be legally bound, hereby mutually agrees as follows: 1. Sale of Goods. Seller sold, transported and delivered to Buyer and Buyer agrees to have purchased and received the following items in the following quantities and at the prices (the “Goods”) described in the First Schedule. The Goods sold and delivered herein are Nine One Six (“916”) (22 carat) gold bars. 2. Purchase Price. Buyer will pay to Seller for the Goods and for all obligations specified in this Agreement, if any, as full and complete purchase price, the sum of Ringgit Malaysia Two Million Three Hundred and Ninety Thousand and Four Hundred (RM 2,390,400.00) Only ...” [12] Not only are the terms of the Sales Agreement (which stipulate that the Plaintiffs had sold and delivered to the 1st Defendant the 22 carat 916 gold bars) inconsistent with the Plaintiffs’ pleaded case, the Plaintiffs’ testimony at the trial also presented a completely different case against the Defendants. PW1 testified that the Plaintiffs never delivered any gold bars to the 1st Defendant but instead had transmitted cash to the 1st Defendant at her request. The relevant notes of proceedings are set out below: S/N HqONrRHNUml8ciWzoUdQ 4 **Note : Serial number will be used to verify the originality of this document via eFILING portal “PW1 We never delivered, we never delivered the gold. But she requests a cash for that. YA Ha? MURTTI Can you inform the Court again, what you have mentioned just now? Because I'm also confuse. PW1 Yang Arif, this purchase order being issued by Pournamis Jewels was dated on 27.10.2020, to request a good for 916 gold. We want to supply the gold, but the Pournamis Jewels the Defendant 1, has requested from us, we want the cash of RM200,000.00. Not a gold. In fact, I already stated earlier in my answer, my answer earlier, where we… first of all we never agreed of all this request, but based on this… so many times rayuan she brought by the Defendant 1, so finally we agreed and we transfer the cash to her. On the… based on the purchase order”. [13] Throughout the trial, the Plaintiffs’ testimonies in support of their claims against the Defendants were premised on a completely different cause of action, namely, that the Plaintiffs had provided cash to the 1st Defendant and that the 1st Defendant had failed to pay the Plaintiffs the cash paid based on invoices issued as agreed. There is no evidence that the Plaintiffs had paid for any gold bars as pleaded for use by the 1st Defendant in respect of its business. [14] The Plaintiffs conceded during cross examination that the invoices issued were never for any gold bars which were said to have been sold and delivered by the Plaintiffs to the 1st Defendant. In fact, the Plaintiffs were not even able to show that the 1st Defendant had purchased any gold bars from any third parties at all for which in S/N HqONrRHNUml8ciWzoUdQ 5 **Note : Serial number will be used to verify the originality of this document via eFILING portal accordance to the Plaintiffs’ pleaded case, the Plaintiffs were said to have paid on behalf of the 1st Defendant. [15] It is trite that the Plaintiffs are bound by their own pleadings and they cannot put forth a totally different case at the trial without even making any effort to amend their pleadings. [16] In Joseph Paulus Lantip v Tnio Chee Chang & Another Appeal [2020] 4 CLJ 79, the Court of Appeal held that it would be wrong for the Court to proceed to hear evidence on the tort of conversion where the pleaded case was one for specific performance of a contract. [17] On this ground alone, the Plaintiffs’ claim must be dismissed with costs. [18] Additionally, it is also my judgment that the Sales Agreement is a sham and that the true purport of the arrangement was in fact a moneylending agreement. [19] DW1 confirmed during her testimony that the true nature of the arrangement between the 1st Defendant and the Plaintiffs was that of an illegal moneylending transaction. This was what she said: “S21: Boleh beritahu Mahkamah kenapa kamu menandatangani Perjanjian Tersebut jika tidak bersetuju dengan kandungannya? J: Saya telah menandatangani perjanjian tersebut kerana Plaintif Pertama dan Plaintif Kedua telah memberitahu S/N HqONrRHNUml8ciWzoUdQ 6 **Note : Serial number will be used to verify the originality of this document via eFILING portal saya bahawa perjanjian pinjaman dengan faedah tidak boleh dibuat kerana menyalahi undang-undang. Oleh itu perjanjian yang terbaik yang boleh dibuat adalah perjanjian seperti yang dilampirkan dimuka surat 25- 35 Ikatan Dokumen Bersama. Perjanjian tersebut hanyalah dibuat bagi mengelak Plaintif untuk menunjukkan bahawa Plaintif telah sebenarnya memberikan Pinjaman dengan faedah kepada Defendan Pertama … ” [20] That the arrangement between the Plaintiffs and the 1st Defendant was a moneylending transaction is also clear from the terms of the Loan Personal Guarantee which provides: “LOAN PERSONAL GUARANTEE. THIS GUARANTEE dated this 25th day of November, 2022 is between MAGESWARY A/P MUNIANDY of … (“Guarantor”) and DOUBLE 7 GOLD TRADING … OF … (hereinafter known as the “Lender”). IN CONSIDERATION OF the Lender extending a loan of Ringgit Malaysia Two Million Three Hundred and Sixty Thousand and Four Hundred (2,290,400.00) TO Pournamis Jewel (M) Sdn Bhd …(hereinafter known as the “Debtor”) … the receipt and sufficiently of which is hereby acknowledged, the Guarantor personally guarantees the prompt, full and complete performance of any and all present and future duties, obligations and indebtedness (the Debt”) due to the Lender by the Debtor, up to a limit of Ringgit Malaysia Two Million(RM 2 Million), under the terms of the Loan Agreement signed … S/N HqONrRHNUml8ciWzoUdQ 7 **Note : Serial number will be used to verify the originality of this document via eFILING portal The Guarantor guarantees that Debtor will promptly pay the full amount of principal and interest of the Debt as when the same will, in any manner be or become due … Date : 25th November,2022 Debtor’s Signature Lender’s Signature SIGNED SIGNED Guarantor’s Signature SIGNED [21] In paragraph 6 of the Defence, the issue of moneylending was raised by the Defendants: “Defendan-Defendan merujuk kepada perenggan-perenggan 6,7 dan 8 Penyata Tuntutan dan menyatakan seperti berikut:- (i) Bahawa Defendan Pertama ada menerima sejumlah wang sebanyak RM 2,360,00 daripada Plaintif tetapi ianya bukanlah merupakan satu urusan perjanjian jualan seperti yang dinyatakan didalam perenggan 6 Penyata Tuntutan. (ii) Jumlah yang diterima daripada Plaintif tersebut adalah merupakan satu pinjaman dengan faedah yang dikenakan oleh Plaintif………” [emphasis added] S/N HqONrRHNUml8ciWzoUdQ 8 **Note : Serial number will be used to verify the originality of this document via eFILING portal [22] In any case, the Court can always take cognizance of any illegality even if it is not expressly pleaded. In Wai Hin Tin Mining Co. Ltd v Lee Chow Beng (1968) 2 MLJ 251, the High Court held as follows: “…On the question whether in the absence of any specific defence on the ground of illegality and since O 19 R 20 of the Rules of the Supreme Court a bare denial of non est factum did not operate as a denial of the legality of the transaction, I could take cognizance of such transaction. I thought the law, on the authority of Scott v Brown, Doering, McNab Assurance & Co… was clear that in some cases the court would itself take notice of the illegality of the contract in which the plaintiff was suing if it appeared on the face of the contract and from the evidence brought before it by either party, although the defendant had not pleaded the illegality. It would suffice to refer to the first-mentioned case of Scott v Brown … A.L Smith L.J (as he then was) had this to say: “In my opinion, the maxim In pari delicto potior est conditio possidentis applies, and this court ought not to assist the plaintiff when he seeks to recover the $632,3s5d back from the defendants …” Lindley L.J (as he then was), with respect, put it more succinctly in these words: “Ex turpi causa non oritur action, This old and well-known legal maxim is founded in good sense, and expresses a clear and well- recognized legal principle, which is not confined to indictable offences. No court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligation alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the court, and if the person invoking the aid of the court is S/N HqONrRHNUml8ciWzoUdQ 9 **Note : Serial number will be used to verify the originality of this document via eFILING portal himself implicated in the illegality. It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality the court ought not to assist him. If authority is wanted for this propositions, it will be found in the well-known judgment of Lord Mansfield in Holman v Johnson … ” [emphasis added] [23] There is no dispute that the Plaintiffs are not licensed moneylenders and it is also equally clear that the amount that the Plaintiffs are claiming from the Defendants under the various invoices are substantially more than the said sum of RM 2,390,400.00 that was advanced to the 1st Defendant, thereby invoking the presumption that this was a moneylending transaction. [24] The Court of Appeal in Global Globe Property (Melawati) Sdn Bhd v Jangka Prestasi Sdn Bhd (2020) 6 CLJ 1 has opined that once a transaction is found to be a moneylending transaction, then the provisions in the Moneylenders Act 1951 must be complied with. [25] Further, in Mahmood Ooyub v Li Chee Loong & Other Appeals (2021) 1 MLRA 609, our Court of Appeal further where the arrangement is a moneylending transaction, the whole agreement, no matter how it is structured is unenforceable under section 15 of the Moneylenders Act 1951. The headnotes of the case are reproduced below: S/N HqONrRHNUml8ciWzoUdQ 10 **Note : Serial number will be used to verify the originality of this document via eFILING portal “Held (allowing the appeals with costs); (1) When there was the allegation that an agreement was a sham and a fabrication with object of circumventing the law, the trial court must examine the external evidence to see if the pieces in the puzzle would fit to form a coherent whole. The court must probe further to see if there were unusual features in the agreement as in this case, a sale and purchase agreement and examine the circumstances evidence such as the conduct of the parties that may arouse suspicion. ... (4) The moment a court of law made a finding that the transaction was moneylending and the fact that the lender was not licensed to lend with interest that made the whole agreement no matter how it was structured, into an illegal moneylending agreement which was unenforceable under Section 15 of the Moneylending Act 1951. In the instance, the device of a sale and purchase agreement and a memorandum of transfer duly signed as security for a loan with interest charged was clearly to circumvent the provisions of Moneylenders Act 1951 designed to protect the borrower from being exploited. Hence, the transactions in this case were illegal as it was clearly forbidden under the Moneylenders Act 1951, against public policy and caught by s 24(a), (b),(c) and (e) of the Contracts Act 1950”. [26] Accordingly, it is my judgment that the Plaintiffs’ claim should also dismissed on the ground that the Sales Agreement was in fact an illegal money lending transaction and is therefore unenforceable. S/N HqONrRHNUml8ciWzoUdQ 11 **Note : Serial number will be used to verify the originality of this document via eFILING portal Conclusion [27] In the premises, the Plaintiffs’ claim is dismissed with costs. Dated the 24th day of January 2024 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 Counsel: 1. Gayassthri K. Segran for Plaintiffs Messrs. Gaya & Co. (Kuala Lumpur) 2. Sundra Murtti Chinapan for Defendant Messrs. Sundra Murtti & Co. (Subang Jaya) Case Reference: 1. Wai Hin Tin Mining Co. Ltd v Lee Chow Beng (1968) 2 MLJ 251 2. Global Globe Property (Melawati) Sdn Bhd v Jangka Prestasi Sdn Bhd (2020) 6 CLJ 1 3. Mahmood Ooyub v Li Chee Loong & Other Appeals (2021) 1 MLRA 609 Legislation Reference: 1. Section of 15 Moneylenders Act 1951 S/N HqONrRHNUml8ciWzoUdQ 12 **Note : Serial number will be used to verify the originality of this document via eFILING portal