KUALA LUMPUR (March 22): The High Court (commercial division) earlier this month partially dismissed Kenanga Investors Bhd's suit against Impiana Sdn Bhd and its majority shareholder Datuk Seri Ismail @ Farouk Abdullah for their failure to abide by the Options Agreement 3, which entailed a call option to acquire back Impiana Hotels Bhd (IHB) shares.

However, Judge Datuk Mohd Arief Emran Arifin ordered Impiana Sdn Bhd and Ismail to pay jointly or severally to Kenanga a sum of RM362,957.63 as agreed returns on the account of the Options Agreement 2. The judge however disagreed on giving the award returns for the Options Agreement 3.

“I find that Impiana Sdn Bhd did not admit that the sums of RM4.839 million and RM337,635 are due but was only seeking additional time to purchase the shares back from Kenanga. Before these sums become due and payable, the said option to force Impiana Sdn Bhd to purchase the shares must be issued. If the said option was not triggered, then there was no forced sale of shares to Impiana Sdn Bhd at the price that was agreed upon.

“For the purposes of the claim, this court cannot find that there existed an admission of debt, as the debt has not been crystallised on the terms agreed between parties. The notice [to reacquire the shares] was not issued by Kenanga. At best, there was only a proposal that the shares be sold at a later date to Impiana Sdn Bhd by Kenanga at the price agreed upon,” Mohd Arief ruled on March 5.

The judge made no order as to costs and ordered parties to bear their costs as defendants have successfully defended a substantial part of the claim.

The written judgment to the case, which was sighted by The Edge, came out on Friday.

Kenanga was represented by Shaikh Abd Saleem along with Teoh Jo Vi, while Edward Kuruvilla and Soh Lip Shan appeared for Impiana Sdn Bhd and Ismail.

Kenanga filed the suit on Nov 2, 2022, after Impiana Sdn Bhd and Ismail who is the guarantor to acquire the IHB shares following its purported failure to exercise the call option under Option Agreement 3 after earlier granted extensions in Option Agreement 1 and 2.

This involves a repayment of the sum of RM4.502 million on account of the buyback of IHB option shares. Where Kenanga claims that in the event parties are unable to agree to an extension of the Options Agreement 3, Impiana Sdn Bhd would pay the admitted agreed returns under Options Agreement 2 and Options Agreement 3 as well as repurchase of the IHB option shares.

Kenanga claims that in reliance to the terms proposed in the December 2021 understanding, Kenanga did not exercise the put option (under Option Agreement 3) on its due date on Dec 14, 2021.

The company claimed that parties were unable to agree on terms with respect to the extensions of the Options Agreement 3. As a result, a letter of demand (LOD) dated Jan 17, 2022 was issued to Impiana Sdn Bhd and Ismail demanding the payments of the sum due under Options Agreements 2 and 3, as well as the repurchase of the IHB shares.

Following this, Kenanga is seeking RM4.502 million as purchase consideration of the IHB shares it held, plus the RM362,957.63 on account of the Options Agreement 2 agreed returns and RM337,635 on the Options Agreement 3 agreed returns and costs.

Impiana Sdn Bhd in its defence claims that the mere fact that parties were negotiating with regards to Options Agreement 3, does not and cannot have any bearing or effect to the expiry of the put option under the Options Agreement 3 on or before Dec 14, 2021.

Impiana Sdn Bhd also said the LOD dated Jan 17, 2022 are inadmissible in evidence in the proceedings as negotiations are still conducted and claim Kenanga is not entitled to the relief sought.