Call Option dated 19-01-2001 made between the Plaintiff and the. Defendant.
The transaction between the parties arose as a consequence of the Plaintiff ...
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DALAM MAHKAMAH TINGGI DI KUALA LUMPUR (BAHAGIAN DAGANG) WRIT SAMAN NO. 22NCC-975-2010
ANTARA
PERBADANAN NASIONAL BERHAD
...PLAINTIF
DAN
ARIF BIN AWANG
...DEFENDAN
GROUNDS FOR DECISION
This is the Plaintiff’s application for specific performance of a Put and Call Option dated Defendant.
19-01-2001 made between the Plaintiff and the
The transaction between the parties arose as a
consequence of the Plaintiff having agreed to invest in a company known as Cybron Sdn. Bhd. It is not in dispute that the Plaintiff has as its main objective, the provision of financial assistance to bumiputera entrepreneurs. The Defendant approached the Plaintiff for financial assistance to be granted to Cybron by way of equity investment which the Plaintiff acquiesced to. Vide letter dated 14-11-2000 addressed to
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Cybron, the Plaintiff offered to invest a total sum of RM11 million by way of subscription of 3,000,000 ordinary shares in the company at RM2.50 per share and the acquisition of 1,400,000 ordinary shares in the Company from one Mr. Philip Yong Wee Sing at the price of RM2.50 per share. It was a further term of the letter of offer that the Defendant would purchase from the Plaintiff both the subscription shares and the acquisition shares. Pursuant to this the parties entered into:-
(a) A share sale agreement dated 19-01-2001 between the Plaintiff and one Mr. Philip Yong Wee Sing for the purchase and transfer of 1.4 million shares in favour of the Plaintiff;
(b) A share Subscription Agreement dated 19-01-2001 between the Plaintiff and the Company for the subscription of 3 million ordinary shares in the Company; and
(c) A Put and Call Option Agreement dated 19-01-2001 between the Plaintiff and the Defendant.
It is this last agreement that forms the basis for the current action. Pursuant to the Put and Call Option Agreement of 19-01-2001 (‘the P & C Ag.’) the Plaintiff granted the Defendant a call option to purchase the Option shares comprising the total number of subscription and purchased shares, i.e. 4.4 million shares (‘Option Shares’) during a period of 3 years commencing from the date of subscription of the subscription shares and/or the purchase of the acquisition shares (whichever is the earlier) which is called the Call Period. Additionally the
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Defendant granted the Plaintiff a put option to require the Defendant to purchase the Option Shares within the period of 6 months from the expiry of the Call Period. The mode of computation of the purchase price of the Option Shares was to be computed under the terms of the agreement according to a formula set out in Schedule 1 of the P & C Ag. It is not in dispute that the Plaintiff invested in Cybron in the manner set out above by purchasing the Option Shares. Then vide letter dated 19 May 2004 the Plaintiff wrote to the Defendant exercising the Put Option granted by the Defendant to the Plaintiff and exercisable by the Plaintiff to require the Defendant to purchase the Option Shares, namely 4.4 million ordinary shares valued at RM12,980,000. The date when the Plaintiff chose to exercise its Put Option is well within the Call period.
The Defendant failed to respond. The Plaintiff vide letter of 1 September 2004 wrote on a without prejudice basis to the Defendant, stating that there was no extension of the Call Option period. Essentially the letter provided that the Plaintiff was free to deal with the Option shares as provided in Section 2.01 (3) of the Agreement dated 19 January 2001 which stipulates that the plaintiff shall be entitled to divest itself and deal with the Put Option Shares in such manner as it deems fit and look to the Defendant by way of indemnity for any shortfall.
The Plaintiff found no buyers and seeks to enforce the Put Option against the Defendant. The Defendant opposes the Order 81 application primarily on two grounds:-
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(a) That it is a moneylending transaction because of the imposition of an element of ‘interest’ by the Plaintiff which the Plaintiff is not entitled to do because it is not a licensed institution under BAFIA;
(b) The letter of 1 September 2004, which it is contended shows that the Plaintiff has ‘waived’ its right to require the Defendant to purchase the Option shares. It is contended that the letter means that the Put Option has expired and therefore the Plaintiff is unable to enforce or recover the monies it loaned at the behest of the Defendant.
Dealing with issue (b) first:- A perusal of the September 2004 on the face of it does not disclose that the Plaintiff has given up all its rights in relation to the Put Option.
It reaffirms that the Plaintiff asked the
Defendant vide its notice of 19 May 2004 to purchase the subject Option shares. The Plaintiff then states that as the Call Period lapsed on 7 June 2004 they were going to deal with the shares as they deemed fit. It must not be forgotten however that the Plaintiff did exercise its right to require the Defendant to purchase the Option Shares within the Call Period, and well before the expiry of the Call Period. So the exercise of the Put Option was within the permitted time under the P & C Agreement.
A perusal of the terms of 2.01(3) which the Plaintiff was invoking, allows the Plaintiff to attempt to sell the shares and look to the Defendant for any shortfall. The Plaintiff deposes to the fact that it could not find any buyers and looks to the Defendant for specific performance by the remittance of RM12, 980,000 being the agreed purchase price for the
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Option Shares under the P & C Agreement. It cannot be said that simply because:-
(a) The Defendant failed to comply with the Option notice dated 19 may 2004 that the Put and Call Option has lapsed. In fact after the exercise of the option, it became incumbent upon the Defendant to purchase the Option shares at the agreed price;
(b) The Call Period may well have lapsed by 7 June 2004, but the option was exercised prior to that date.
(c) The letter of 1 September 2004 does not alter the foregoing facts, namely of the due exercise of the option within the call period or the fact that the Defendant failed to adhere to his obligations thereunder. This letter does not operate to exonerate or ‘waive’ or alleviate the Defendant’s liability in any manner. It merely gives notice that the Plaintiff was going to divest of the shares in any way it saw fit in keeping with clause 2.01(3) of the P & C ag.
(d) None of these matters comprises an issue that needs further ventilation at trial. I therefore cannot conclude that the foregoing raises a ‘triable’ issue.
(e) The other issue put forward by the Defendant related to what he submitted was the imposition of ‘interest’ which it was maintained the Plaintiff was not entitled to do. A perusal of Schedule 1 of the P & C Agreement shows that the Buy Back Price is worked out on the following basis as contracted between the parties:-
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Buy-back price =
Cost of Investment + [Cost of Investment x
Maybank BLR at the time of exit x investment period in years + 10% profit sharing (net)]
It is evident from the foregoing that the Maybank BLR that the Defendant objects strongly to as amounting to the levy of interest is nothing of the sort. It is merely a formula to compute the purchase price of the Option Shares at the time of exit or buy back by the Defendant. This is an express term that both parties agreed to when executing the P & C ag. It does not amount to the imposition of interest illegally. There is therefore no contravention of BAFIA as contended by the Defendant. This too, cannot amount to a ‘triable’ issue.
In all these circumstances it appears to me that the Plaintiff is entitled to judgment as prayed for. Accordingly the Plaintiff is granted an Order in Terms of prayers (a), (b) as amended to read six weeks from today; prayer (c) and costs of RM300-00.
Nallini Pathmanathan J. 10 January 2011
