4.

1 Definition - Charge
Definition
Sec 5 NLC: A charge is a “registered charge”.
Types of charge
Differences between charge and mortgage.
Mahadevan s/o Mahallingam v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266 at 270
Our land law does not recognize a mortgage if it means a mortgage in the sense of English land law
whereby the legal estate, i.e. ownership of the land is transferred to the mortgagee and what is left
with the mortgagor is only an equitable right to redeem, known as equity of redemption. But our land
law certainly recognizes a mortgage in the sense of Torrens system, whereby the mortgagor retains
the legal ownership whilst the mortgagee acquires a statutory right to enforce his security. For the
purpose of avoiding confusion, our National Land Code drops the word "mortgage" and uses the word
"charge" in place of Torrens mortgage.
Malayan United Finance Bhd v Tan Lay Soon [1991] 1 MLJ 504
This case basically says that equity of redemption in English and equity of redemption under the law
of New South Wales, Australia which is closely similar to Malaysia are no equal.
Interest in land
Ho Giok Chay v Nik Aishah [1961] MLJ 49
Here the land was a Malay reserve land and was charged by the Kelantan Land Enactment. However,
by the Malay Reservations Enactment, the vesting of interest in a Malay reserve land cannot by
transfer or transmission the interest be vested in a non Malay. The chargee was non-Malay. The order
for sale by public auction was dismissed and summons dismissed. 
T Bariam Singh v Pegawai Pentadbir Pesaka, Malaysia [1983] 1 MLJ 232
His Lordship said that a charge does not amount to interest in land because the charge is not gven any
interest as to the enjoyment of the use of land. Also, he said that it was not the intention of the
enactment to create charges in favour of non-Malays in the event of default as the land can never be
sold to a non-Malay. 
The case of Ho Giok Chay which charge was registered under the Kelantan Land Enactment 1938 no
longer applicable as it had been repealed by the NLC and now a chargee can enforce a sale on the
land. 
Malaysia Building Society Bhd v Johore Mining And Stevedoring Company Sdn Bhd [2004] 5 CLJ
82
I: D1 PA to D2 to obtain loan and subdivide land. D2 obtain loan from P but IDT in LO for
subdivision so charge not registered. Substituted PA made from D2 to P. Undertaking between made
between D2 and P that charge to be made once subdivision complete. D2 got RM 20million and
defaulted on repayment. D1 revoked 1st PA and refused to execute charges. P aggrieved and applied
for declaration for charge entitlement of subdivided land.
H: At the time the Substituted Power of Attorney was executed, the second defendant was the first
defendant’s lawful attorney. Hence, the assignment of the legal propriety interest in the parent land
and the power to sell and enter possession into the 1019 parcels in the event of default was in fact
granted to the plaintiff by the first defendant through its attorney, the second defendant. Consequently,
the plaintiff had a proprietary interest in the 1091 IDTs. That proprietary interest is more in the nature
of a right in rem taking the form of an equitable charge.
(a) What can be charged: s 241
Sec 241(1): Powers of charging
(a) the whole, but not a part only, of any alienated land;
(b) the whole, but not a part only, of any undivided share in alienated land; and
(c) any lease of alienated land, may be charged under this Act with-
(aa) the repayment of any debt, or the payment of any sum other than a debt; or
(bb) the payment of any annuity or other periodic sum.
Sec 241(2): The powers conferred by sub-section (1) shall include power to create second and
subsequent charges.
Sec 241(3): Restrictions
The said powers shall be exercisable in any particular case subject to-
(a) any prohibition or limitation imposed by this Act or any other written law for the time being in
force;
(b) any restriction in interest to which the land in question is for the time being subject; and
(c) in relation to leases, the provision thereof, express or implied.
Phuman Singh v Khoo Kwang Chong
Any charge created in contradiction with stipulated restrictions and requirements will be void ab
ibnitio & held unenforceable.
Sec 241(4): Without prejudice to paragraph (a) of sub-section (3), no charge may be granted to two or
more persons or bodies otherwise than as trustees or representatives.
Sec 244(1): Chargee can be entitled to the IDT (or in cases, the duplicate lease), in the event there is
still liability in the charge.
Types of land which can be charged:
Sec 247: Postponement of priority of a charge to a subsequent charge can be made by Form 16C.
Sec 245: Restriction on consolidation.

Sec 246: Tacking on further advances.

(b) Ways of creating a charge

Form 16A; or Form 16B
Form 16A: for a charge to secure the repayment of a debt or the payment of any sum other than a
debt.
Form 16B: charges providing for payment of an annuity or other periodic sum (plus required
stamping)
Subject to Sec 241(3) & (4)
What if you use the wrong form?
V Letchumanan v Central Malaysian Finance Berhad [1980] 2 MLJ 96
I: The loan was to be paid in installments until request made. On default, chargee sought to sell the
land, chargor objected on basis that Form 16A should have been registered.
H: FC held that 16A was correct as the statutory form is flexible enough. (it was not to deviate or
mislead, hence correct by virtue of the Interpretation Act)
Tan Yen Yee v Equity Finance Corp Bhd [1991] 1 MLJ 237
Instrument used should be appropriate but by the Interpretation Act, any instrument shall not be
invalidated by reason of any deviation that has no substantial effect and that is not calculated to
mislead. 

(c) Creation of second charge and subsequent charges

Sec 241(2): The powers conferred by sub-section (1) shall include power to create second and
subsequent charges.
Priorities to first registered charge 
Sec 244(2): A chargee having the custody of any issue document of title or duplicate lease shall, on
the written request of the proprietor or lessee, and within such reasonable period as is specified in the
request, produce the same at any Registry or Land Office so specified for any purpose for which it is
required under any provision of this Act.

2. Effect of a Registered Charge

Sec 243: registration is ‘mandatory’ and not a choice.

R & I Securities v Golden Castle Finance [1979] 1 MLJ 46 at 47.
I: Request and consent from first chargee required before second charge or any further security or
encumbrance could be executed over the land could be entered as in Clause 6 of the loan agreement.
Applicant was requesting for an extension of caveat on the said land of the registered proprietor. The
first chargee was not in agreement.
H: The registered proprietors had by Clause 6 of the first charge at their own instance disabled
themselves from creating further charges without consent of the first chargee. The applicants were
aware of the restrictions and in the circumstances the application must be dismissed.
Rights of the parties
Implied
Sec 249: Compliance with the sum secured for and interest and payment of any sum due to the State
Authority or lessee (if relevant) and perform in compliance to the conditions the land is subject to.
Sec 250: Agreement by chargor implied in absence of contrary intention: repair and keep all
buildings, insure it to full value against loss or damage by fire, permit chargee’s agent to inspect upon
notice, if failing, remedy may be taken.
Sec 251: Implied agreement by chargee as to consent to leases, etc: implied agreement on chargee that
consent to grant lease or tenancy is not be withheld without reasonable cause.
Express agreement of parties.
Sec 218(2): Transfer of charge by the act by Form 14B
Sec 215: Form, and effect generally, of transfer of land: title to vest in the transferee.
Sec 216: Additional provisions with respect to lands transferred subject to leases, charges, etc:
interests on land will continue etc.
Sec 244: Custody of IDT/Duplicate lease: Who keeps?
4.3 Effect of an Unregistered Charge – Equitable Charge
Void
Southern Bank Bhd v Chuah Beng Hock [1999] 5 MLJ 206
Charge created under Code only takes effect upon registration, no charge effective unless registered. 
Equitable charge
Chuah Eng Khong v Malayan Banking Bhd [1998] 3 MLJ 97
Equitable mortgage (charge) still can exist in the presence of the Code. NLC did not include
what Selangor Registration of Title Regulations 1891, Sec 4 which voided equitable mortgages. 
RRM Arunasalam Chetty s/o Sithambaram Chetty v Teh Ah Poh trading under the style of Mun
Seng Hin Kee & Anor [1937] MLJ 317
Expression of equitable mortgage -> Act of securing by deposit of title for a loan agreement, however
you don’t get a protection on par with the NLC, but the equitable charge bring an equitable favor to
the creditor. 
Mahadevan s/o Mahallingam v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266
H: an agreement to secure a debt by land – create equitable charge, give rise to equitable right though
not registered under NLC, so the remedy can’t be granted as per the NLC. If failed to register, lender
may be able to seek recognition 
Effects
Tan See Hock v Development and Commercial Bank Bhd [1993] 3 MLJ 250
I: P and 4 other landowners entered into agreement with Bantar Sdn Bhd whereby P agreed to transfer
land to B as trustee for development. Bantar charged the said land to the D1 (1st Charge) to secure
financial facility. Subdivision was approved and Bantar was the new registered proprietor without any
encumbrances such as the first legal charge of the first defendant thereon. P and D1 lodged respective
caveats on the land. The development was not carried out and B failed to repay the loan granted by
D1. The registrar of titles gave notice of Form 19C, to P by D1’s request of the registrar's intention to
remove the P caveats under s 326 of the NLC unless extended by an order of the court. The plaintiff
applied to extend the private caveats lodged by him on the said land, contending that he had
established an interest in the land and that there was a serious question to be tried with regard to the
ownership of the land. The plaintiff also asserted that Form 19C, which was issued by the registrar of
titles, was invalid as it was ultra vires.
H: P’s application allowed.
(1) Land had been freed and discharged from all titles upon re-alienation. This extinguished “interest”
of D1 with the initial first legal charge.
(2) Sec 340(1) NLC confers indefeasible title or interest to proprietor where at that time charge lease
or easement is being registered under. It does not recognize the interest of a chargee which has not be
registered. D1 was not a registered chargee, they could not avail themselves of the indefeasibility of
their interest in the said land.
(3) D1 was not registered chargee, hence no rights to proceed with Sec 326 of NLC. Therefore, the
notice by Form 19C of the NLC was ultra vires. Any other category of persons aggrieved should seek
relief by way of s 327 of the NLC.
Oriental Bank v Chup Seng Restaurant (Butterworth) Sdn Bhd [1990] 3 MLJ 493 (rights not by the
NLC)
I: The crucial issue was whether the plaintiffs who stepped into the shoes of Citibank NA by
subrogation, can obtain an order for sale under s 256 of the National Land Code 1965 despite not
being the registered chargee of the said property.
H: Though all the documents had been executed and ready for registration (P was now an equitable
chargee), the National Land Code 1965 clearly requires the charge to be registered in its prescribed
form before a chargee can enforce his right of foreclosure under the Code though does not prohibit the
creation of an equitable charge.
Mahadevan s/o Mahallingam v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266 FC [Note: PC did
not express any view on the status of the equitable charge in the Malaysian Torrens system.] (page1)
‘Equitable charge’ used in the following circumstances:

a. where a charge instrument has been executed but not presented for registration

Standard Chartered Bank v Yap Sing Yoke [1989] 2 MLJ 49

I: The charge registered had not been affected as they had been returned due to inadequate documents
supplied. There had been no registration as the P did not know of its return. There now was a private
caveat lodged on land, so does it have priority.
H: P had acquired a title in equity over the land because the IDT was in the custody of P at all times,
it had created a lien in equity over the said land. The equitable interest is not affect by absence of a
caveat. 
Oriental Bank v Chup Seng Restaurant (Butterworth) Sdn Bhd [1990] 3 MLJ 493

b. where no separate title has been issued and, instead of a charge, a loan agreement and a deed
of assignment are entered into to secure a loan

Malayan Banking Bhd v Zahari bin Ahmad [1988] 2 MLJ 135

I: The D owed the P a certain amount of money. Pursuant to the loan, a loan agreement and a deed of
assignment were executed, and the D defaulted on the repayment of the loan. P applied for court order
that they be at liberty to issue write of possession, and for an order that they may sell and proceeds go
to the repayment and interest owing to them.
H: NLC did not prohibit creation of equitable charges, its recognizable, hence the loan agreement and
deed of assignment created an equitable charge in form and substance. 
Southern Bank Bhd v Chuah Beng Hock [1999] 5 MLJ 206
Failed to register 2nd charge for the overdraft facility, but still disbursed $ 700,000. Order for sale
applied for upon default of payment, so the court said that Sec 243 charges by NLC require
registration. If above $ 1,800,000 wished to be recovered from the $ 2.5mil, then they have to obtain
from other sources (I.e. judgment debt). Court did not allow application for order for sale as there was
cause to contrary. 
Mastiara Sdn Bhd v Motorcycle Industries (M) Sdn Bhd [1998] 3 CLJ 874; [1999] 1 AMR 362
Chuah Eng Khong v MBB [1998] 3 MLJ 97; [1999] 2 CLJ 917
Phileo Allied Bank (M) Bhd v Bupinder Singh a/l Avatar Singh [1999] 3 MLJ 157
4.4 Default and Remedies
Real right and personal right for chargee:

 Order for sale

 Taking possession of land
 Appointing receiver (if chargor is a corporation)

1. Order for sale

Sec 253: Remedies of Chargee: Sale (purpose and scope of the chapter) – enables
the chargee to obtain the order for sale by public auction the sale of the land or lease
to which his charge relates in the event if there’s a breach.
Sec 254: Service of default notice, and effect thereof. One month or alternative
period (as specified in charge). Notice in Form 16D specifying the required info
and warning of order for sale.
Sec 255: Special provision with respect to sums payable on demand: Form 16E, related to monthly
repayment.
Sec 256: Application to Court for Order for sale.
Sec 257: Matters to be dealt with by order for sale: Form 16H: information required (please read).
Sec 258: Procedure prior to sale: notice, advertisement, conditions of sale, IDT deposition etc.
Sec 259: Procedure at sale (please read)
Sec 260: Application to Land Administrator for order for sale.
Sec 261: Land Administrator to hold enquiry.
Sec 262: Provisions as to enquiry.
Sec 263: Order for sale, and matters to be dealt with thereby.
Sec 264: Procedure prior to sale.
Sec 264A: Postponement or cancellation of an order for sale by Land Administrator.
Sec 265: Procedure at sale.
Sec 266: Right of chargor to tender payment at any time before sale.
Sec 266A: Statement of payment due.
Sec 267: Effects of sale.
Sec 267A: Application of deposit upon failure to settle purchase price etc..
Sec 268: Application of purchase money.
Sec 268A: Application of purchase money by chargee who is a financial institution.
Sec 269: Protection of purchasers.
Form 16D & 16 E: Two sets of procedures for the chargee to enforce his
remedy by way of sale on the ground of the chargor’s default depending on
the type of title.
RT: Sec 256, Order 83 RHC – High Court.
LOT: Sec 260 Land Administrator.
4.4.2 Taking possession of land
Sec 270: Limitation of powers to certain lands, and to first chargees only.
Sec 271: Power of chargee to take possession on any default by chargor.
Sec 272: Procedure for taking possession, Form 16J, Form 16K. Court order.
Sec 273: Duration of right to possession. As long as liability continues.
Sec 274: Position of chargee in possession – profits from land and rent etc.
Sec 275: Power of chargee in possession to grant leases and accept surrenders.
Sec 276: Provisions as to notices by chargees to receive rents.
Sec 277: Application of rents and profits by chargees in possession.
Sec 270(1)&(2): To registrar title, and to first chargees, only
Sec 271(1)(a): Power of chargee to take possession on any default by charger
Malaysia Credit Finance Bhd v Yap Hock Choon [1989] 2 MLJ 363
The learned judge said that it seemed that Sec 271 and 272 seemed to unmistakably give a right to the
chargee to oust the chargors from their possession of the charged land. 
Right to possession
The chargee has been conferred with power to take possession of land subject to lease or tenancy on
default by chargor. However Sec 270(1)(aa) seems to have restricted this from subject matters that
involve an undivided share in the land. 
Procedure for taking possession
Form 16J – Serve notice on lessee or tenant and a copy on chargor where he will collecting rental
from the rent to the chargor under any lease or tenancy. This will lead the rights of the chargor to be
passed to the chargee.
Form 16K – Serve this when chargor wishes to go into occupation. If within a chargor on whom a
notice in Form 16K is served fails within the period specified in that behalf in the notice to admit or
secure the admission of the chargee into occupation of the land, chargee can apply for a court order.
Duration of right to possession
A chargee can remain in possession until the loan remains unpaid. A chargee in possession by his
rights in Sec 275 has right to lease the land or obtain the rent payable under the lease. Form 16J
pursuant to Sec 272(2) or Sec 275(7) of NLC shall be in force and bind the lessee or tenant on whom
it is served and any subsequent transferee of the lease or tenancy in question, until it is withdrawn by
the chargee or cancelled by the chargor or by the purchaser of the land. Cancellation of notice of
possession must be made by serving on the existing lessee or tenant with a notice in Form 16L or
16M.
Effects of taking possession
Chargee can take all the profits accrued from the land. But chargee is liable to the chargee is liable to
the chargor for any act whereby the capital value of the land is impaired or the chargor is otherwise
put to other loss. 
Article: Challenges to Charges: Principle and Precedent, RR Sethu [1993] 3 MLJ xc
4.4.3 Appointing receiver
No provision in NLC.
Only happens when the chargor is a company registered under Companies Act 1965 which land is
charged to the financial institutions as security for loans granted to them.
Such right arises out of contract and not by virtue of the statutory powers conferred by NLC.
4.5 Order for Sale
Kimlin Housing Development Sdn Bhd (appointed receiver and manager (In liquidation) v Bank
Bumiputra [1997] 2 MLJ 805. Not a judgment debt. Order for sale is not a judgment or
decree: Kandiah Peter v Public Bank Bhd [1994] 1 MLJ 119.
4.5.1 Notice of Demand
(a) Form of notice: Form 16D or 16E
There are two types on notices prescribed by the Code: Notice of default (16D) or Notice of demand
(16E).
Form 16D: served to defaulter to notify intention to commence proceedings for sale as in the NLC in
respect of any breach of the terms of the charge (including failure to pay the money as agreed. A
duration of one month (or agreed duration) is given to correct the breach, if not; there will be
application for sale by public auction. Court will examine stipulated time to determine if the notice in
16D was given prematurely. Court can also give an alternative minimum period which is not less than
what stated in 16D
Form 16E: issued n respect of a debt where the principal sum is payable on demand whereby the
condition is that the payment will have to be made within a month from service or order for sales will
be applied, the duration under 16E cannot be reduced by chargee
Syarikat Kewangan Melayu Raya v Malayan Banking Berhad [1986] 2 MLJ 253
When two charges are lumped together in a notice of Form 16D, the court held it was not defective
because it did not prejudice or mislead. Whether the SD was defective in respect of its contents is a
question of fact. 
Jacob v Overseas Chinese Banking Corp, Ipoh [1974] 2 MLJ 161 FC
Issue 1: The chargee had used Form 16D when the principal sum was payable on demand within Sec
255. The chargee had not made demand by Form 16E and the chargor argued that it was the usage of
the wrong instrument as the letter sent by the chargee had been worded that it the payment was not
made, “no alternative but to recover the overdraft from you”. Sec 255 (1) does states chargee “shall”
make demand by Sec 16E and not compels the chargee to in the event of recovery of principal sum. It
seems that if the chargee had made a demand using Form 16E, he did not need to use Form 16D; and
if he did not use Form 16E, it would be okay to use Form 16D. The main concern of the legislature is
for there to be sufficient notice given to the chargor before coming to court.
Issue 2: Principal and interest would be mean for Form 16D, and principal would be for Form 16E, is
this argumentation true? The learned judge said that this is not true, as neither Sec 254 nor Sec 255
used the word “interest”, so interest could be claimed by either form. Sec 62 of the Interpretation Act
too states that in the event of deviation from forms, the form shall not be invalidated if it does not
have substantial effect to mislead. The judge sees that there is no reason why the word “and interest”
cannot be added to the heading of Form 16E.
OCBC Bank (M) Bhd v Lean Seng Pottery Factory Sdn Bhd [1999] 2 MLJ 402.
Central Malaysian Finance Bhd v Great Pacific Development Sdn Bhd [1983] 1 CLJ 134
Malayan United Finance Bhd v Tan Ah Moi @ Tan Nyor Pong (F) & Satu Lagi [1933] 2 CLJ 427 
Co-operative Central Bank Ltd v Mengkuang Properties Bhd [1991] 2 MLJ 283
Notice of demand of payment which does not specify the precise sum owing is not invalid if the
chargor is given a reasonable opportunity to comply with the notice by the chargee. Invalidation only
of the precise sum is mistaken.
VAM Hussain v BP Malaysia [1970] 2 MLJ 69
It was held that the proper notice to issue where the principal sum secured by a charge is payable on
demand should be in Form 16E. It was also held that inclusion of interest in Form 16E did not make
the notice defective.
Malayan Banking Bhd v PK Rajamani [1994] 1 MLJ 405
Perwira Affin Bank Bhd (formerly known as Perwira Habib Bank Malaysia bhd) v WT Low & Ng
Realty Sdn Bhd [1997] 5 MLJ 185
Citibank NA v Wong Ngai Poh [1983]
MIMB v Dhanoa Sdn Bhd [1988] 1 MLJ 257
Citibank Bhd v Mohamad Khalid Farzalur Rahaman & Ors [2000] 3 CLJ 739
Kekatong Sdn Bhd v BBMB [1998] 2 MLJ 440.
Khor Kim Yong v Public Bank Bhd & Anor [1998] 1 CLJ 668.
Cempaka Finance Bhd v Abbas bin Yaakob [1999] 2 MLJ 411.
Multipurpose Bank Bhd v Maimoon Bte Abdul Razak [1999] 6 MLJ 215.
Bank Kerajaan Rakyat Malaysia Bhd v Emcee Corporation Sdn Bhd [2003] 2 MLJ 408
Lee Gee Pheng v RHB Bank Bhd [2003] 4 CLJ 639; [2004] 1 MLJ 618
Alliance Bank Malaysia Bhd v MCK Development Sdn Bhd [2005] 5 CLJ 77
The Hong Kong & Shanghai Banking Corpn Ltd v Tan Sock Gin [1999] 7 CLJ 450.

c. Contents of Notice of Demand

 Sec 254(1)(a) & (b): Specifying breach in question, requiring it to be
remedies within one month or any other alternative period with warning if
notice not complied with, proceedings to obtain an order for sale will be
taken.
Sec 254(2): After the service of notice, the charge land is vested in any
other person or body, the notice is valid unto the person as though it was
served against to.
Sec 245(3): What happens if breach occurs? Whole some charge will be payable to the chargee.
Syarikat Kewangan Melayu Raya Bhd v Malayan Banking Bhd [1984] 1 MLJ 115 FC
When two charges are lumped together in a notice of Form 16D, the court held it was not defective
because it did not prejudice or mislead. Whether the SD was defective in respect of its contents is a
question of fact. 
Co-operative Central Bank Ltd v Meng Kuang Properties Bhd [1991] 2 MLJ 283.
A notice of demand which does not state the precise sum owing is not invalid if the chargor is given a
reasonable opportunity to comply with the notice and if the notice does not demand payment of
something to which the chargee is not entitled. Here, the plaintiff bank was found to not be prima
facie entitled to the remedies sought by them in the originating summons, hence the matter had to go
to trial.

Standard Chartered Bank Malaysia Bhd v Tunku Mudzaffar Bin Tunku Mustapha [2005] 1 MLJ
604
Service of notice is mandatory
Powers and requirements for issuing of notices are provided under s 254 & 255 NLC
Issue 1: is one month period a mandatory?
Sec 254(1) allows one month or otherwise agreed.
Mohamad Khalid b Farzular Rahaman & Ors v Citibank Bhd [2000] 5 MLJ 421 – can be shorter than
one month.
Issue 2: Will service of wrong notice be a bar to the chargee’s application for order for sale?
Jacob v Oversea Chinese Banking Corp (FC).
Accepted by OCBC Bank (M) Bhd v Hotel Rasa Sayang Sdn Bhd [2005] 7 MLJ 301.
Issue 3: whether the chargee can impose other charges (not provided in the charge agreement)?
Co-operative Central Bank Ltd v Meng Kuang Properties Bhd [1991] 2 MLJ 283 – not prima facie
entitled.
Illegality
Tan Ah Tong v Perwira Affin Bank Bhd & Ors [2002] 5 MLJ 49
Malayan Banking Bhd v PK Rajamani & Anor [2004] 3 CLJ 79
Perwira Affin Bank v Tan Ah Tong [2003] 5 MLJ 193
4.5.2 Powers of Court
Registry title – Sec 256 NLC; Order 83 RHC
Sec 257: Matters decided by the court, Form 16H
Sec 258-259: Procedure at sale.
Order 83 Rules of the High Court 1980: Non compliance will cause the case to be struck off.
Citibank NA v Ibrahim bin Othman [1994] 1 MLJ 608
Bank Pertanian Malaysia v Zainal Abidin bin Kassim & Anor [1959] 2 MLJ 537
Phileo Allied Bank (Malaysia) Bhd v Bupinder Singh Avatar Singh & Anor [2002] 2 CLJ 621
Chang Keat Realty Sdn Bhd v Ban Hin Lee Bank Bhd [2003] 3 CLJ 532

a. Circumstances where the order for sale is not granted

S 256: ‘cause to the contrary’.

Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 1 MLJ 77 – Gopal Sri Ram CAJ has stated that if
“cause to contrary” could be established by the charger, it would defeat the application for order of
sale. The case divided “cause to contrary” into three parts that were:
(i) when chargor brings any exception to indefeasibility;
(ii) when chargor could demonstrate that the chargee failed to meet conditions precedent to making
the application; and
(iii) when a chargor could demonstrate that the grant of an order for sale would be contrary to some
rule of law or equity.
Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd & Anor [1989] 1 MLJ 457, 460 PC
It was cautioned here that any attempt to refuse relief merely on the ground that the court felt sorry for
the borrower that it regarded the lender as arrogant, boorish and unmannerly. Therefore, if there is NO
cause to the contrary that could be proved to be in existence, the court is obliged to make an order for
sale on the application of the chargee. 

i. Defective or Improper Notice of Demand

Procedural defect in application

Co-operative Central Bank Ltd v Meng Kuang Properties Bhd [1991] 2 MLJ 283
Here the bank had sent a notice of demand which included the charge of default interest. The court
held that the plaintiff bank was not entitled to charge default interest since they had not given any
notice pursuant to clause 5 of the charge annexure which required that a notice that default interest
was to be imposed, before it was actually could be imposed. The courts mentioned that on the issue of
whether the plaintiff bank is not entitled to claim for default interest, the issue stood on a different
footing for if the plaintiff had in their notices of demand asked for something to which they were not
entitled then the notice would be rendered ineffective and invalid. Hence, the defendant had included
the more than prescribed interests, which was definitely contrary to what had been agreed between
parties (20% instead of 15%). The Learned judge, decided that by this circumstance, the plaintiff bank
was not entitled to the remedy they sought for in the originating summons.
RHB Bank Bhd lwn Syarikat Sungei Nal Timber Industries Sdn Bhd [2007] 4 MLJ 567
Court was to decide the position in Form 16D on the basis that (i) it was not served, (ii) no specific
details of the breach and (iii) amount claimed was more than allowed. Court held that (i) the breach in
Form 16D is sufficient for the purpose of Section 254(1)(a) of the NLC, (ii) the notice in the Form
16D is in relation to the breach or failure to pay the amount demanded in their earlier letter of
demand, as such the P was correct in stating in Form 16D that the said breach was as a result of
failure to pay the amount demanded in the said letter of demand; (iii) and details of the breach that
resulted in the facilities being recalled and the later demand, is sufficient for it to be stated in the letter
of demand sent earlier to the D.

ii. Fraud

Tai Lee Finance Co Sdn Bhd v Official Assignee [1983] 1 MLJ 81 FC

An application for order for sale of land in question will not be granted by the courts in cases where
the chargee has been fraudulent or where the chargee and the chargor have acted in collusion to
defraud third parties.
I: A land had been double charged and upon default in repayment, the default order for sale was set
aside by 2nd and 7th R. the A’s application was subsequently heard for order for sale but set aside. The
chargor had entered an agreement with Rs to develop the land. R opposed A’s application due to him
failing to make proper inquiries as in regards to the land before executing the charges and shouldn’t
have solely relied on titles search in the Registry and the trial judge agreed. Inquiries would have led
to knowledge of the sale, hence there was constructive notice and chargor bound to sell to R. A’s
demand for sale of the land was held to be unconscionable and constituted a fraud on the respondents.
He accordingly dismissed the application. The appellant appealed.
H: (4) in this case in the light of the affidavit evidence, at the very most the appellant had constructive
notice of the respondent's prior beneficial interests. There was no evidence to satisfy the court that
there was fraud to which the appellant was a party. The respondents had not proved beyond
reasonable doubt that the appellant had acted dishonestly, wilfully and consciously disregarding or
violating the right of the respondents or in any way in collusion with the chargor; (5) the appeal must
therefore be allowed and the application of the appellant's for sale of the land allowed.
Overseas Chinese Corporation Ltd v Lee Tan Hwa & Anor [1989] 1 MLJ 261
The interveners (bona fide purchasers) successfully prevented the chargee from selling the charged
land on the basis that, one firm of solicitors had acted for all the parties, and the chargees were aware
to the registration of that the chargor retained only a limited interest in the land due to the sale of most
of it to the interveners. 
Eng Ah Mooi v Overseas Chinese Banking Corporation [1983] 1 MLJ 209 FC

iii. Contravention of Statutes

Defeasible under Sec 340(2):

Non-compliance with the requirements of the Moneylenders Ordinance 1951
Phuman Singh v Kho Kwang Choon [1965] 2 MLJ 189 FC
Order for sale will not be granted in cases of non-compliance with the provisions of the
Moneylender’s Ordinance 1951. Trial judge’s decision upheld, that the registration of the charges
under the Moneylenders Ordinance after an application had been commenced for an order for sale was
out of time, and by reason of want of registration, they were consequently unenforceable. 

Associated Finance Corporation Ltd v Poomani [1972] 1 MLJ 117

High Court of Ipoh held that non compliance to the Moneylenders Ordinance 1951 (now the
Moneylenders Act 1951, revised 1989) would render the contract unenforceable. 
Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd & Anor [1989] 1 MLJ 457 PC
The court refused an application by the chargee for an order for sale, stating that there is a duty on the
part of the chargee to enquire if the housing developer (chargor) has a valid housing developer’s
license. In the instant case, the chargor was not in possession of a valid developer’s licence. The being
so, the court held that the charge was void ab initio. 
United Malayan Banking Corp Bhd v Syarikat Perumahan Luas (No 2) [1988] 3 MLJ 352
Charge having been registered in breach of an explicit statutory prohibition imposed on the title to the
charged land pursuant to the provisions of Sec 120 (restrictions towards the land), the title or interest
of the charge is defeasible since registration thereof had been obtained by means of insufficient or
void instrument. Also Registrar of Titles is registering charge ultra vires to his power (Sec 340(2)(c)).
If the terms of a statute are absolute and do not admit of any relaxation or exemption, anything done
in contravention thereof, will be ultra vires and no person can be estopped from putting forward the
contention that what was done was illegal or void.
Effect: void and unenforceable: Co-operative Central Bank Ltd (In receivership) v Feyen
Development Sdn Bhd [1995] 3 MLJ 313.
On allowing the appeal for a third party charge that was initially held to be void, the court stated that
the though the general rule is that where a contract is prohibited by statute expressly or impliedly, and
the statute stipulates penalties for those entering into it, the contract shall be void and unenforceable
(unless saved by the statute itself or if there are contrary intentions), however, the trend of the courts
seem to be that they are less ready to consider it illegal or unenforceable simply because it
contravenes with a statute. 

See also the Court of Appeal decision in Harta Empat Sdn Bhd v Koperasi Rakyat Bhd [1997] 1 MLJ
381 for a different opinion from Feyen case, and the explanation by Federal Court in Co-operative
Central Bank Ltd (In Receivership) v Feyen Development Sdn Bhd [1997] 2 MLJ 829.
In Harta Empat case, the court was not absolved by S 133 (1)(a) of the Act from the restriction against
providing the security for the loan made to its director by the respondent merely made it because the
loan was for the benefit of the appellant. In the case, the funds were not meant to meet the
disbursements of the director so that the prohibition against the appellant company providing the
security would still be applicable.

iv. Existence of Cause to the Contrary –s 256(3)

Contrary to the rule of law or equity – limited application.

Court may not refuse relief merely because it feels sorry for the borrower or because it regards the
lender as arrogant, boorish or unmannerly or because of the existence of prior unregistered
claims: Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd & Anor [1989] 1 MLJ 457 PC.
Examples:
Buxton v Supreme Finance (M) Bhd [1992] 2 MLJ 481
OCBC v Lee Tan Hwa [1989] 1 MLJ 261
Excluding: the submission that there is a breach of contract
For example, Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 1 MLJ 77
(b) Position of Bona Fide Purchasers
The interest of a bona fide purchaser with or without notice of the charge cannot prevail, in the
absence of section n 340(2), over that of a registered charge. This was held in the cases Keng Soon
Finance Bhd v MK Retnam Holdings Sdn Bhd & Anor[1989] 1 MLJ 457 PC and Buxton v Supreme
Finance (M) Bhd [1992] 2 MLJ 481 SC, however, OCBC v Lee Tan Hwa & Anor differed.
Buxton v Supreme Finance (M) Bhd
There were purchasers who had obtained end-financing from the chargee. The properties of those
purchasers were not included in the chargee’s application for the order for sale. It had been stated in
Clause 30 that a separate account be kept for the monies from the purchasers but this was held to not
apply. The indefeasibility of the chargee’s registered interest is not affected by the chargor’s conduct,
however unconscionable or deceitful it may be. The SC by way of obiter, would seem to suggest that
such a measure could have protected the other purchasers. Whether this would have constituted
“cause to contrary” in the sense that the chargee would be estopped from denying the rights of the
purchasers, however was not discussed.
OCBC v Lee Tan Hwa
Parts of the land in question were sold and subsequently, a charge was created over the whole of
transactions. It was held by the HC that knowledge of the solicitor as to the existence of the prior
claims of the purchasers could be imputed to the chargee. As a charge could not be created over land
which the chargor did not own and as the chargee had notice of the purchaser’s claim, the charge was
not valid. Hence, the grant of order for sale would be unjustifiable.
Note: this was decided before Keng Soon and even so, HC’s decision made no reference to Keng
Soon, hence it has been submitted that this has been overruled by Keng Soon and Buxton. 
For the position under Land Code (Cap 81), Sarawak, s 148(2)(c), see also Kuching Plaza Sdn Bhd v
Bank Bumiputra Bhd v& Anor [1991] 3 MLJ 163 SC
The application of “cause to the contrary” under s 256(3) is different from the Islamic
financing: Arab-Malaysian Merchant Bank Bhd v Silver Concept Sdn Bhd [2005] 5 MLJ 210

Other cases:
Oriental Bank v Santhnavakey [1998] 4 CLJ Supp 417
Phileo Allied Bank (M) Bhd v Narendran s/o Zhambimuthu [1999] 3 AMR 3721
OCBC Bank (M) Bhd v Astano Electric Sdn Bhd [1999] 3 MLJ 618
Ban Hin Lee Bank Bhd v Pang Lai Hin [1999] 2 MLJ 234
Overseas Union Bank (M) Bhd v L&H Properties Sdn Bhd [1999] 2 MLJ 637
Phileoallied Bank v Saddhona Indran Sevapragasan [1999] 3 CLJ 649
Perwira Affin Bank Bhd v Saad b. Abdullah & Anor [1999] 6 MLJ 418
Hong Kong Bank (M) Bhd v Nor Harizan binti Mohd Ali [1999] 2 AMR 2493
(c) Other important issues:
Sec 253: Purpose and scope of this Chapter: Order for sale
Sec 256(2): Registry title; procedure Order 83 Rules of High Court 1980.
Kandiah Peter v Public Bank Bhd [1994] 1 MLJ 119
Failure of the chargee to obtain order for sale does not prohibit the chargee from taking action in
personam against the chargor.
I: The appellant had charged certain lands to the respondent. The respondent later obtained orders for
sale of the appellant's land. The appellant unsuccessfully applied to set aside the orders and
subsequently brought an action for a declaration that the charges and annexures relating to the land
were null and void and for consequential relief. In his statement of claim, the appellant raised and
relied on facts and issues which the trial judge found to be identical to those raised by the appellant in
the foreclosure proceedings. The trial judge therefore dismissed the appellant's claim on the ground
that the matter was covered by the doctrines of estoppel and res judicata. The appellant appealed.
H: (1) A chargee who makes an application for an order for sale in foreclosure proceedings does not
commence an action. He merely enforces his rights as a chargee by exercising his statutory remedy
against the chargor in default. In order for the doctrines of res judicata, cause of action estoppel or
issue estoppel to apply, the earlier proceedings must have resulted in a
final judgment or decree. This requirement is not met by foreclosure proceedings which do not result
or terminate in a final judgment or decree.
(2) Where a chargor raises issues and relies upon facts to show 'cause to the contrary' in proceedings
brought against him by the chargee, he is not barred from bringing a fresh action against the chargee
(notwithstanding that an order of sale has been made) and raising in that action the same or similar
facts and issues as those raised by him in the foreclosure proceedings. Neither res judicata nor cause
of action estoppel nor issue estoppel are available to the chargee to meet the chargor's action.
(3) The trial judge was in error when he held that the appellant was estopped by res judicata from
raising in the subsequent action the identical issues which he had raised in the foreclosure
proceedings. The appeal was therefore allowed and a retrial of the action was ordered.
Perwira Affin Bank Bhd v WT Low & Ng Realty Sdn Bhd [1997] 5 MLJ 185.
Other cases:
Malayan Banking Bhd v Yong Chao Foo [1992] 2 CLJ 842
Arab-Malaysian Bhd v Razshah Enterprise Sdn Bhd [1993] 1 CLJ 41
United Malayan Banking Corp Bhd v Chong Bun Sun and another application [1994] 2 MLJ 221
Bank Pertanian Malaysia v Mohd Gazzali Mohd Ismail [1997] 3 CLJ Supp. 299
EON Bank Bhd v Deb Brata Das Gupta & Anor [1999] 6 MLJ 714
Foo Yoke Foon v Public Bank [2000] 3 CLJ 405
Public Bank Bhd v Noor Ehsannuddin bin Mohd Harun [2001] 5 MLJ 246
United Merchant Finance Bhd v Chang Miau Sin [2001] 1 CLJ 660
Phileo Allied Bank (Malaysia) Bhd v Koahish Credit & Leasing Sdn Bhd [2000] 4 CLJ 788
Arab-Malaysia Finance Bhd v Chan Sai Mee [2001] 6 CLJ 1
Malaysian Building Society Bhd v Univein Sdn Bhd [2002] 2 CLJ 81
Bumiputra Commerce v Tengku Ngah Putra bin Tengku Ahmad Tajuddin [2002] 4 MLJ 63
Lum Choon Realty Sdn Bhd v Perwira habib Bank Malaysia Bhd [2003] 4 MLJ 409
EON Bank Bhd v Hotel Flamingo Sdn Bhd [2005] 5 CLJ 253
OCBC Bank (Malaysia) Bhd v Au Kee Sian & ANor [2006] 4 CLJ 597

4.5.3 Powers of Land Administrator

Sec 260: Application to Land Administrator for order for sale.
Applicable to Land Office title, form qualified title under the LO, subsidiary title,
whole or undivided share or lease. Effected by Form 16G
Sec 261: Enquiry
Upon receiving such application, LA will appoint a time and place to hold an
enquiry, will notify the chargee of the time and place of the enquiry and cause a
summons to be served on the chargor, requiring him to appear at the enquiry.
Sec 262: Provisions as to enquiry
Persons allowed to adduce evidence as appointed by chargor or chargee, chargor
and chargee allowed to apply for postponement or change of venue. If chargee fails
to appear, application dismissed. If chargor isn’t there, they LA shall decide if it is
to be held ex parte or at a later date (with fresh summons served). If many chargees
or chargors, and only some or one appear, it may be adjourned. 
Q: What is the Land Administrator’s jurisdiction?
Suppiah v Ponnampalam [1963] MLJ 202
At the enquiry to determine whether an order for sale should be made, the LA should not go behind
the register. If he is satisfied that the charge in question is on the register, he has only to decide
whether or not there has been a default in the payment provided for and if so, he is obliged to make an
order for sale.

Government of Malaysia v Omar bin Hj Ahmad [1983] 1 CLJ 242

At the conclusion of the enquiry, the LA, where he is satisfied that there is no existence of any cause
to contrary, is obliged to make an order for sale. In this case, the chargor paid in monthly installments
that were by deduction from his salary, but upon change of work (Lembaga Tembakau Negara to
Information Department), a possible technical error occurred which caused the monthly deduction to
stop. Chargee requested for an order for sale under Sec 260. Eusoff Chin J said in his judgment that
Sec 263(1) imposes a duty on the Collector to order the sale of land which the charge relates unless he
is satisfied that there is no existence of the charge or that there is no breach by the chargor of the
agreement complained of, or if the breach was not caused by the chargor. 
Gurpal Singh v Kananayer [1976] 2 MLJ 34
Learned judge in this case said that the Assistant Collector’s duty is not to adjudicated pleadings
usually heard in Court. The Land Office is not a court under Section 3 of the Subordinate Courts Act
1948. The duty of a Collector is limited and does not involve going behind the charge in view of Sec
340(1). He quoted Suppiah v Ponnampalam [1963] MLJ 202 which stated that the Collector was
bound to accept the register and once he was satisfied that the charge with which he was concerned
was on the register then the only question for him to decide was whether or not there had been a
default in payments provided for and if he was so satisfied to make an order for sale.
See also the powers of LA under Sec 23-39. The power to enquiry is limited and not as wide as the
Court.
4 limitations:

i. Sec 33: No alterations to decisions made by an LA except circumstances mentioned

under Sec 34.

New evidence: admitted by Sec 37 appeal, not more than 3 years after such
decision made.
Lim Yoke Foo v Eu Finance Bhd [1985] 1 MLJ 17
It is only at the conclusion of the enquiry that the LA has jurisdiction to order a sale. The LA has no
power whatsoever to cancel such an order once made, although he may postpone the sale, if
expedient, or correct verbal errors or remedy accidental defects or omissions if not matters of
substance. 

ii. Order for sale to be made if no existence of cause to contrary.

Government of Malaysia v Omar Bin Hj Ahmad [1983] 1 CLJ 242

At the conclusion of the enquiry, the LA, where he is satisfied that there is no existence of any cause
to contrary, is obliged to make an order for sale.

iii. Sec 419: Power of LA/Registrar to refer questions to the court.

Gurpal Singh v Kananayer [1976] 2 MLJ 34

iv. Sec 265(2): Procedure at sale: LA may delay the sale if no bids or land/lease withdrawn
from sale

NKM Properties Sdn Bhd v Rakyat First Merchant Bankers Sdn Bhd [1992] 2 MLJ 349 SC.
The power of LA under s 263(1) is to order for sale of the charged land or lease. The order can only
be set aside if there is cause to the contrary. See s 261(1)(c).
4.5.4 Other matters pertaining to order for sale
Sec 263: Order for sale, and matters to be dealt with thereby -> 16H
Sec 264: Procedure prior to sale -> notice to chargor/chargee/public
Sec 264A: Postponement or cancellation of an order for sale by LA
Sec 265: Procedure at sale
Sec 266: Right of chargor to tender payment at any time before sale.
Sec 266A: Statement of payment due
Cases:
Bank Bumiputra Malaysia Bhd v Pentadbir Tanah Daerah, Gombak [1992] 1 MLJ 78
Perwira Affin Bank Bhd v Lim Weo Co [1998] 3 MLJ 56
Bank Pertanian Malaysia v Bakar @ Ismail b. Pelan [1999] 1 AMR 228
Procedure safeguarding the public auction
Eon Bank Bhd v Deb Brata Das Gupta & Anor [1999] 6 MLJ 714
Oriental Bank Bhd v Sykt Zahidi Sdn Bhd [1999] 1 CLJ 810
Lee Phet Boon v Hock Thai Finance Corp Bhd [1999] 3 MLJ 501
United Merchant Finance Bhd v Diamond Peak Sdn Bhd [1999] 3 CLJ 791
4.5.5 Powers of Court/ Land Administrator after the Granting of an Order for Sale
MUI Bank Bhd v Cheam Kim Yi (Beh Sai Ming, Intervener) [1992] 2 MLJ 642 SC
Once an order for sale has been granted, drawn up and perfected, the court is funtus officio.
M&J Frozen Food Sdn Bhd v Siland Sdn Bhd [1994] 1 MLJ 294 SC.
Malayan United Finance Bhd v Liew Yet Lan [1990] 1 MLJ 317; Siland Sdn Bhd v M&J Frozen Food
Sdn Bhd [1990] 2 MLJ 502.
Chi Liung Holdings Sdn Bhd v L&T Realty Sdn Bhd [2000] 3 MLJ 171 CA.
Maimunah Bt Megat Montak v Maybank Finance Bhd [1996] 2 AMR 2473.
Other cases:
Association Finance Corporation Ltd v Poomani [1972] 1 MLJ 117
Tan Teng Pan v Wong Fook Shang [1973] 1 MLJ 31
Asia Commercial Finance v Dev & Realtor [1992] 2 MLJ 504
Lum Choon Realty Sdn Bhd v Perwira habib Bank Malaysia Bhd [2000] 3 CLJ 119
Pan Wai Mei v Sam Weng Yee & Anor [2006] 1 CLJ 914
4.6 Rights /Relief for the Chargor and Third Parties
Until the registration and notwithstanding the conclusion of the sale, the chargor is not divested of his
proprietary rights. He has the right to intervene to set aside any sale on the ground of fraud,
impropriety or any breach of any statutory or contractual terms of the sale.
Sec 266: Right of chargor to tender payment any time before sale.
Rights of chargor
Malayan United Finance Bhd, JB v Liew Yet Lan [1990] 1 MLJ 137
The rights of a chargor may still remain to an extent. 
M&J Frozen Food Sdn Bhd v Siland Sdn Bhd [1994] 1 MLJ 294 SC
The right of discharge of a charge is available at the instance of a chargor and no other.
Until registration of purchaser & notwithstanding the conclusion of the sale, the creditor is not
divested of his proprietary rights. He has the right to intervene to set aside any sale on ground of
fraud, impropriety, or any breach of statutory or contractual term of sale. (In the event where the new
purchaser fails to pay, the subsequent chargee can intervene before the new order for sale and try to
obtain the property by paying the price owed plus the necessary costs incurred)
Kimlin Development Sdn Bhd v Bank Bumiputra Malaysia Bhd
You can still discharge of the charge as long as its before the auction is successful. 
Malayan United Finance Bhd v Tan Lay Soon [1991] 1 MLJ 504.
4.7 Effect of order for sale
Sec 267(1): Effect of Sale
Sale given under Sec 259 or 265 in respect of charge land or lease will be registered
with (a) a title discharged of all liabilities (b) as if the chargor had transferred the
land or lease to the purchaser as if under Part 14 (transfer of land)
Position after the registration of certificate of sale:
The position before the registration but after the payment of full purchase price: M&J Frozen Food
Sdn Bhd & Anor v Siland Sdn Bhd [1994] 1 MLJ 294.
Effect on the tenancy without endorsement: Hotel Ambassador (M) Sdn Bhd v Seapower (M) Sdn
Bhd [1991] 1 MLJ 404 SC.
Effect on the interest other than the method created under the NLC, see Holee Holdings (M) Sdn Bhd
v Chai Him & Ors[1997] 4 MLJ 601.
Other cases:
Malayan United Finance Bhd, Johore Bahru v Liew Yet Lan [1990] 1 MLJ 317
Perdana Properties Bhd v Yong Chon [1990] 1 MLJ 433
KL Finance v Yap Poh Khian [1992] 1 MLJ 472
Puah Bee Hong & ANor v PTD Wilayah Persekutuan Kl & Anor (Teo Keng Tuan Robert, Intervener)
and another appeal [1994] 2 MLJ 601
Lee Kim Guan v Malayan Produce Co Sdn Bhd [1993] 2 AMR 29:1259
(a) Purchase price obtained from the sale
Sec 267A: Application of deposit upon failure to settle purchase price etc -> as what required in Sec
268
Sec 268: Application of purchase money -> State Authority whatever required, payment for
administration etc.
(b) Sale – Private Treaty
Kimlin Housing Development Sdn Bhd v Bank Bumiputra Malaysia Bhd [1997] 2 MLJ 805
Court held that remedy of chargee of the land charged is only limited to the provisions of the NLC.
This kind of sale can be done outside the NLC (i.e. debenture) If you want to follow NLC, its only by
public auction, but if there’s not title charge, then you can go through a private auction/treaty.
Chung Khiaw Bank v Lau Ah Yen [1989] 2 MLJ 247
Where it was held that the provisions of section 260 of the NLC contemplates a sale by public auction
only and as such the court has no power to order sale by private treaty under the Code. But Wan
Adnan J noted that the court may allow a sale by PT in circumstances where the court is satisfied that
the proceeds of such sale are not less than the amount due to the chargee under the charge and that the
chargee will be duly paid in full out of the proceeds. Also, it was noted that the court refused
permission for sale by PT referring to express terms of Sec 259(2)(c) of the NLC which require the
land to be put for public auction, but on terms of Sec 266(1), it seemed to support the right to fall back
on PT when attempts to sell by public auction have been exhausted.
Priyamas Export Corp Sdn Bhd v Bank Buruh (M) Bhd [1998] 3 MLJ 273.
Kimlin case has criticized Chartered Bank v Pakiri Maidin [1963] MLJ 276
See also: Malaysia Credit Finance Berhad v Yap Hock Choon [1989] 1 MLJ 232.
Malayan United Bank v Cheah Kim Yu [1991] 1 MLJ 313
Malaysia Credit Finance v Yap Hock Choon [1989] 1 MLJ 232
Inter-Rally Motor Sdn Bhd v Karupiah a/l Palaniasamy [1992] 2 MLJ 650
Mui Bank Bhd v Cheam Kim Yu (Beh Sai Ming Intervener) [1992] 2 MLJ 642
UMBC v Chong Bun Sun and Nor Application [1994] 2 MLJ 221
4.8 Discharge of Charge
Chargee is obliged to discharge the charge upon full and final settlement of the loan amount secured
by the charge. NLC provides that Sec 278 provides that by Form 16N charge of the land or lease and
release the land from all further liability.
The discharge is effective from the date on Form 16N as registered at relevant land office. 
In the sale of a private treaty, the chargee should discharge the charge so as to give full effect to the
sale. In this case, if the partial discharging of the charge also means not obtaining a security over the
remainder of the debt, the risk is to be borne by the chargee. In some occasions, the debt is protected
outside the NLC, perhaps by a third party, which may cover the rest of the debt. Though the charge is
discharged, the guarantee will remain in force. In the full discharge, it is doubtful whether the
guarantee which is linked to the debt remains in force, in this case, when a primary debt is discharged,
so will the accessory obligation. So nowondays they use the word “guarantor and principal debtor”.
This means that event there is a discharge, the chargor is not released from his personal liability. 
Discharge by payment to Registrar in Cases of Death, Absence or Disability
Relief can be applied to the Registrar by Sec 279(1) if he is entitled to pay off the charge but chargee
is unable or unwilling to accept the payment:-

a. Chargee dead, or cannot be found, or evade/refuses to receive payment

b. Unable to trace anyone who can receive on his behalf

The money received by the Registrar for such discharge can be:-

a. Played in custody of Public officer Registrar feels fit

b. Be claimed by person or body entitled within 6 years of date of deposit
c. If not claim, paid to the Consolidated Fund of the State

If land/lease discharged from liability under any charge by payment to the Registrar under Sec 279,
the registration of the charge shall be cancelled by the Registrar pursuant to Sec 314.
Malayan United Finance Bhd v Tan Lay Soon [1991] 1 MLJ 504.
Eng Ah Mooi v Overseas Chinese Banking Corporation [1983] 1 MLJ 209 FC.