AL SAKB CAPITAL BERHAD v 1. ) RAHMAN BROTHERS AUTOMOTIVE SDN. BHD. 2. ) RABIATUL ADAWIYAH BTE ABDUL RAHMAN

wa-22m-1624-10-2023 High Court (Mahkamah Tinggi) 24 November 2025 • WA-22M-1624-10/2023 • 13 min read

2 cases cited (0 SG, 2 foreign)

Outcome

For all the reasons set out above, the Plaintiff’s claim is dismissed with costs fixed at RM30,000.00 in favour of the Defendants.

Quoted verbatim from the judgment of High Court (Mahkamah Tinggi) (wa-22m-1624-10-2023). Read the full judgment on the official Malaysia Courts portal for the complete decision.

Catchwords

Contract – Musharakah agreement – Nature and proof of claim – Plaintiff suing for breach – Whether claim proven on balance of probabilities – Plaintiff founding case on agreement – Obligation to abide by all material terms – Loss-sharing as defining characteristic of musharakah – Plaintiff claiming fixed returns without accounting for venture losses – Failure to discharge legal burden of proof – Claim dismissed. Contract – Prematurity of action – Settlement and extension of time – Binding variation – Acceleration clause – Whether action maintainable when filed before extended due date – Plaintiff invoking general acceleration clause for “any breach” – Clause 2.7 of extension letter – Whether triggered by mere non-payment before maturity date – Principle that acceleration clause requires breach of substantive obligation – No breach of covenant alleged prior to suit – Action held premature and struck out. Illegality – Moneylending – Sham transaction – Allegation that musharakah agreement a disguise for unlicensed moneylending – Defence of illegality – Whether agreement void ab initio – Burden of proof – Factors considered: fixed periodic payments, informal references to “loan”, absence of licence – Whether sufficient to displace written terms of formal agreement – Court finding illegality not proven – Observation that claim disposed of on prematurity and failure of proof – Unnecessary to make conclusive finding on illegality.

Practice Areas

Contract Civil Procedure

Judges (1)

Yusrin Faidz bin Yusoff Delivered

Counsel (6)

Raj, Ong & Yudistra Firm Wan Sarimah & Co. Firm Damian Kiethan A/L Anthony Jeyakumar Counsel Defendant Justin Lee Soong Jun Counsel Defendant Muhammad Syahmi Akif Bin Jamili Counsel Plaintiff Nur Adam Syahmi Bin Samril Counsel Plaintiff

Parties (3)

AL SAKB CAPITAL BERHAD Plaintiff RAHMAN BROTHERS AUTOMOTIVE Sdn Bhd Defendant Rabiatul Adawiyah Bte Abdul Rahman Defendant

Case Significance

An Islamic musharakah financing claim dismissed because the financier sought fixed returns without accounting for the venture's losses, contrary to the loss-sharing that defines a musharakah.

This High Court decision concerns a claim founded on a musharakah agreement — an Islamic partnership financing arrangement — in which the plaintiff financier sued the first defendant company and an individual second defendant, a director who had executed a written undertaking to indemnify the plaintiff in consideration of an extension of time for repayment. The plaintiff alleged breaches of the agreement and claimed substantial sums; the factual matrix was largely documentary and not significantly in dispute.

The decisive issue was the nature of a musharakah and what a claimant relying on it must prove. A defining characteristic of a musharakah is the sharing of loss as well as profit: the parties participate in a venture and bear its outcomes together, so that the financier's return is tied to the venture's actual performance rather than fixed in advance. The Court found that the plaintiff had founded its case on the agreement while claiming fixed returns without accounting for the losses of the venture, a stance inconsistent with the loss-sharing that gives a musharakah its character. Having chosen to sue on the agreement, the plaintiff was bound to abide by all its material terms, including the risk-sharing that distinguished it from a conventional loan. The Court held that the plaintiff had failed to discharge the legal burden of proving its claim on the balance of probabilities.

Related questions concerned whether the action was premature in light of a settlement and an extension of time said to constitute a binding variation, and the operation of an acceleration clause. Concluding that the plaintiff had not made out its claim, the Court dismissed it. The judgment is a useful illustration of how the courts hold a financier relying on a musharakah to the loss-sharing essence of that structure, and of the difficulty of recovering fixed returns under a partnership financing arrangement without accounting for the venture's losses.

Why did the plaintiff's musharakah claim fail?

The Court held that a defining feature of a musharakah is loss-sharing, so the financier's return depends on the venture's actual performance; the plaintiff claimed fixed returns without accounting for the venture's losses and failed to discharge the legal burden of proving its claim on the balance of probabilities, so the claim was dismissed.

What other issues were raised?

The defence also raised prematurity of the action in light of a settlement and extension of time said to be a binding variation, and the operation of an acceleration clause, but the claim failed on the plaintiff's inability to prove its case consistently with the loss-sharing character of the musharakah.

Statutes Cited

Contracts Act 1950 (Cap 136)

Cases Cited (2)

MY (2)

[2020] 6 MLJ 755 [2023] 10 CLJ 187

Judgment

Read the full judgment on the official Malaysia Courts portal.

Read on eJudgment

Source: eJudgment (wa-22m-1624-10-2023)