PUTRAJAYA: The Court of Appeal today set aside a High Court's summary judgment ordering Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim to repay Bank Islam Malaysia Bhd RM66.67 million in loan facilities taken to purchase shares in Kumpulan Guthrie Bhd in 2001 and ordered a full trial to proceed.

Court of Appeal Judge Datuk Zainun Ali today delivered the three-judge panel's unanimous decision which set aside the Kuala Lumpur High Court's summary judgment which ruled in Bank Islam's favour.

High Court Judge Datuk Rohana Yusuf had on Aug 21, 2009 allowed Bank Islam's application for the summary judgment in the bank's counter-suit against Khalid to recover the RM66.67 million.

Bank Islam filed its counter-suit on May 24, 2007, claiming that Khalid had breached the Al-Bai Bithaman Ajil (BBA) agreement when he failed to repay the loan.

The counter-suit came a week after Khalid sued Bank Islam on May 18, 2007, alleging wrongful sales of his shares in Guthrie under the BBA loan facility dated April 30, 2001.

Khalid, who was Guthrie's CEO from 1995 to 2003, had also sought a court declaration that there was a collateral contract between him and the bank relating to the BBA loan facility and was also seeking general damages from Bank Islam.

Zainun, who sat with Court of Appeal Judges Datuk Jeffrey Tan Kok Wha and Datuk Syed Ahmad Helmy Syed Ahmad, today also ordered a full trial to proceed between Khalid and the bank as the issues involving Islamic banking principles “should be ventilated in full trial”.

Zainun also said the judges agreed with the Court of Appeal's previous decision in another case, also involving Bank Islam, that the views of Islamist jurists' were needed to determine whether certain Islamic banking procedures were in accordance with Islamic precepts.

The High Court has fixed four days from March 15 to hear both Khalid and Bank Islam's suits against each other. Earlier, Khalid's counsel Malik Imtiaz Sarwar argued that his client had raised issues of "illegality" with respect to the BBA loan facility and had obtained the opinions of three experts, which purportedly point to certain "illegalities" or non-compliance with Islamic principles in the transactions and agreements.

Malik also argued that there had been a collateral agreement between Khalid and the bank, which required the Guthrie shares to be held in a pool for a certain period of time with the bank receiving payments from dividends.

"If there is a need for the shares to be sold at any time, it is a collective decision (between the bank and Khalid)," Malik said, arguing that Khalid was not informed of the share disposal.

Bank Islam's counsel Tommy Thomas, meanwhile, argued that the case involving Khalid and the bank was a "straight forward customer-bank breach of contract claim".

Thomas pointed to several clauses in Khalid's contract with Bank Islam which purportedly gave the bank the right to sell the shares without any notice in the event of a breach in agreement. Thomas also briefly outlined a chronology of events in the suits, beginning in 1998 when Khalid approached the bank for financing to purchase the Guthrie shares.

"Khalid was offered 5% of Guthrie shares because he was the star of the dawn raid. He was being rewarded," Thomas said.

Thomas was referring to Khalid, who was Pemodalan Nasional Bhd (PNB) CEO from 1979 to 1994 and had lead a "dawn raid" in 1981 on the London Stock Exchange which resulted in the government investment vehicle gaining a 51% stake in British plantation company Guthrie Group Ltd within two hours.