Court upholds order for businessman to return widow’s house after ‘sham’ deal

PUTRAJAYA: The Court of Appeal today upheld a High Court ruling ordering a businessman to return a house in Klang to a widow after finding that a purported sale and purchase agreement for the property was a sham to secure an unlawful moneylending transaction.

A three-member bench chaired by Justice Alwi Abdul Wahab unanimously dismissed businessman Amit Chhabra’s appeal, affirming the High Court’s findings in favour of widow K Anuradha and the law firm of AG Roseli & Paul.

The panel, which also comprised Justices Shahnaz Sulaiman and Dean Wayne Daly, said there was no basis to interfere with High Court judge Norliza Othman’s findings, which dismissed Amit’s claims while allowing counterclaims by Anuradha and the law firm.

The Court of Appeal also ordered Amit to pay RM20,000 in costs to Anuradha and the law firm.

The dispute arose after Anuradha, a mother of two, turned to Amit for financial assistance in September 2019. She borrowed RM44,000 and was charged interest of 7% a month, amounting to RM3,080 monthly.

To secure repayment of the loan, the parties executed an SPA dated Aug 5, 2019, for a house in Bayu Perdana, Klang. Although Anuradha made partial repayments, she later encountered financial difficulties when one of her daughters fell ill.

Needing additional funds, she sought to borrow another RM50,000 from Amit. This time, however, she was required to sign a statutory declaration confirming that she had borrowed the RM50,000, and was made to deliver vacant possession of the house in Bayu Perdana to him.

Despite signing the SD, she said she never received the additional RM50,000.

Amit subsequently relied on the agreement to file a suit seeking specific performance to obtain ownership of the property. However, in separate interlocutory proceedings, the High Court declared the agreement null and void, and Amit never appealed those orders.

The High Court’s findings

In the High Court’s ruling in March last year, Norliza found that the SPA was a sham agreement meant to mask an illegal moneylending transaction and ordered Amit to deliver vacant possession of the property to Anuradha within 14 days.

The judge further held that the 7% monthly interest charged by Amit was unlawful and ordered him to refund RM17,600 collected from Anuradha as interest.

She also awarded Anuradha RM82,800 in damages for loss of rental income arising from Amit’s occupation of the house, with further damages to accrue until vacant possession is returned to her.

The High Court also awarded RM50,000 in exemplary damages each to Anuradha and AG Roseli & Paul after allowing their counterclaims.

Amit’s claim that the law firm failed to perform its duties in preparing the SPA and as stakeholder was dismissed, a decision the Court of Appeal affirmed today.

Chai Wy Keat appeared for Amit, while K Renuka Devi, Goh Jia Yee and T Lavin represented Anuradha. G Sivakumar, B Yaashnipriya and Liaw Yong Jian acted for AG Roseli & Paul.