[2017] 7 CLJ 127; [2016] 1 LNS 1458 

MAYBANK ISLAMIC BHD v. M-IO BUILDERS SDN BHD & ANOR
COURT OF APPEAL, PUTRAJAYA
ABDUL AZIZ ABDUL RAHIM JCA;   ROHANA YUSUF JCA;   HAMID SULTAN ABU BACKER JCA
[CIVIL APPEAL NO: W-02(MUA)(W)-1595-09-2014]
17 MAY 2016

BANKING: Banks and banking business - Islamic banking - Murabahah overdraft facility ('MOD facility') - Purchase and resale of same assets - Whether agreement complied with murabahah concept of financing - Whether purchase and resale of same assets prohibited under Syariah principal of financing - Whether facility null and void - Whether claim for ta'widh justified 

By a letter of offer ('first LO'), the appellant granted the first respondent, inter alia, a murabahah overdraft facility ('MOD facility') for RM3 million. The facility was secured by legal charges over landed assets and two letters of guarantee by the second respondent. The parties executed a master facility agreement, an asset purchase agreement ('APA') and an asset sale agreement ('ASA') dated 15 December 2003. Under the APA and ASA, the appellant purchased the 'rights, title, interest and benefit of the customer as derived from project 1 and project 2'. The MOD facility was later restructured to RM5 million vide a letter of offer ('second LO'). It was also a term, inter alia, in the second LO that the MOD facility was to be settled in one lump sum payment within the agreed 12 months financing period and that the MOD facility could only be utilised subject to a new APA and ASA. The restructuring of the MOD facility was executed vide a facility agreement and a new APA and ASA dated 23 December 2004. The subject of sale under the new APA and ASA were four parcels of land. The respondents failed to settle the outstanding amount due under the MOD facility. Therefore, the appellant upon terminating the MOD facility, proceeded to claim for the outstanding amount under the MOD facility. The respondents counterclaimed against the appellant seeking, amongst others, damages for an alleged wrongful and unilateral reduction of the MOD facility. Before the filing of the present action, the first respondent commenced another action against the appellant together with Malayan Banking Berhad. A consent order was entered in that suit whereby the first respondent admitted its liability to pay the appellant under the MOD facility but disputed the quantum. The High Court Judge in the present action ('HCJ') dismissed the appellant's claim on the grounds that the: (i) agreement relating to the MOD facility was unlawful for failure to comply with the requirement of Syariah under the guidelines issued by Bank Negara Malaysia titled '2013 Murabahah Guidelines' ('guidelines') as there was no fresh ASA and APA executed for the MOD facility as the assets used in respect of the MOD facility under the second LO was the same asset as the ASA and APA of the MOD facility under the first LO; and (ii) appellant had no right and no basis to charge ta'widh. Hence, the present appeal.


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