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Nonya is the registered proprietor of a piece of land in Kuala Pilah held under
Grant 17, Lot 18, Mukim Seri Menanti, Kuala Pilah, Negeri Sembilan. Pauzi and
Dollah agreed to purchase the said land from Nonya at a price of RM50.000. A
sale agreement was executed between Nonya and Pauzi and Dollah on 14
December 2008.
Subsequently, Pauzi informed Dollah that the transfer of the land cannot be
effected into both their names. He further claimed that the law does not permit a
transfer of land to two or more persons as co-proprietors over agricultural land in
Negeri Sembilan.
In view of this, Pauzi told Dollah that the said land should be transferred only
into his name. Pauzi promised Dollah that the land will soon be sub-divided into
two lots with separate documents of title for each lot and one lot will be
transferred to Dollah. Dollah believing what Pauzi has said, agreed to Pauzi's
suggestion. After the completion of the transfer, instead of transferring the land
to Dollah, Pauzi transferred the land to his wife, Aminah, as a gift. Aminah is not
aware of the arrangement between Pauzi and Dollah. The transfer was registered
on 15 January 2009. After the transfer was completed, Aminah kept the issue
document of title.
On 18 January 2009, Pauzi obtained a loan from Biru Bank for a sum of
RM500,000 and used the Negeri Sembilan land to secure the loan. Pauzi forged
Aminah's signature on the charge documents and it was done before the
solicitors appointed by Biru Bank. The charge was duly registered on 25 January
In the charge agreement, it was provided that the loan is payable on demand.
Based on this provision, Biru Bank demanded for the full payment of the loan
inclusive of interest by using Form 16E and served it on Pauzi on 15 March 2009.
Subsequently Biru Bank filed an application for an order for sale in the High Court
of Malaya at Seremban on 5 April 2009.
Recently, Dollah came to know of the transfer of the land to Aminah. When
confronted by Dollah, Pauzi told Dollah that he has lost all his legal rights in
respect of the land.
In the light of the facts above, answer the following:
a) Discuss whether Biru Bank attained indefeasibility of interest as the
registered chargee. (15 marks)
b) In view of the above situation, discuss as to whether there is an existence of
cause to the contrary in the application made by Biru Bank. (15 marks)