LWM 738 Islamic Banking and Finance

Discussion on Case Review

TAN SRI ABDUL KHALID IBRAHIM v.

BANK ISLAM MALAYSIA BHD & ANOTHER CASE [2010] 4 CLJ
HIGH COURT MALAYA, KUALA LUMPUR
ROHANA YUSUF J

Summary Facts:

1. Bank Islam agreed to provide 2 Murahaba Facilities to Tan Sri Khalid to acquire more
shares in Kumpulan Gutrie Berhad
2. Due to repeated breaches by Tan Sri Khalid, Bank offered him a restructuring and Tan Sri
Khalid agreed.
3. But later, Tan Sri Khalid breached the restructuring agreement. Bank sued.

Issues:

1. whether there existed a collateral agreement between the parties orally and by conduct;
whether the validity of the BBA Facility Agreement was challenged for want of compliance
with the principles of Syariah;
2. whether the mode of execution of Asset Purchase Agreement (APA) and Asset Sale
Agreement (ASA) was improper because Tan Sri Khalid was made to sign the agreements
first before they were passed back to be completed by the Bank;
3. whether there was wrongful sale of pledged shares because of (1)the Banks failure to
obtain the consent from Tan Sri Khalid and (2) that there may have been impropriety on
the part of CIMB Investment Bank Berhad who handled the sale of the pledged Guthrie
Shares.

Summary Judgement:

1. In relation to the first issue:

The court does not consider the existence of any collateral agreement between the
parties since documentary evidences proved that Tan Sri Khalid acknowledged his liability
under the BBA Facility Agreement.

The court thinks that it is inappropriate & Not bona fide for Tan Sri Khalid to challenge the
validity of the BBA Agreement after he benefited from it, and this a mere afterthought.

2. In relation to the second issue:

The mode of execution of APA and ASA was proper in line with required standards of Bank
Negara.

The court said that in Shariah, the obligation to settle debts is of high importance.
 3. In relation to 3rd issue:
Tan Sri Khalid had given his full mandate & consent that upon signing the BBA Facility, the
Bank has full rights to sell the shares of Kumpulan Guthrie.

The Bank was just executing its rights under the BBA Facility and this is fine.

Conclusion: Tan Sri Khalid needs to settle his debt.