CHARGE II

FORM 16 D and FORM 16E RELIEF FR THE CHARGOR AND THIRD PARTIES While pending foreclosure period, the chargor has at time resorted to various strategis to save himself and his property.Some of these has been accepted by the court and the others were rejected. Phuman Singh v Kho Kwang Choon The FC held that an order for sale will not be granted if the provision of the Moneylenders Ord is not complied with. Public Finance vBhd v Narayanasamy FC held that it is fraudulent for the chargee to act in collusion with the chargor to defeat the rights of purchasers in the land. In this case the P knew that some of the land had been subdivided and sold to 3rd parties yet he granted the loan. He later commenced order for disclosure. Tai Lee Finance Co. Sdn.Bhd. v Official Assignee & Ors. In this case th FC held that in order to render the interest of the registered owner of the charge defeasible,the fraud must have been committed prior to or at the time of registration.It must be proved that the circumstances in which the chargee obtained registration of the charge were constituted fraud. Kheng Soon Finance v Retnam P applied for an order of sale of land u/s. 256 but FC rejected on the gr of unreasonable conduct of the Appelant and the equity of the purchaser.It was further held that default of the chargor will not automatically entitle for order for sale. The court must consider which would amount to a ‘cause to the contrary’ within the meaning of s. 256(3) which will be sufficient for the court to refuse order for sale. Syarikat Kewangan Melayu Raya Bhd. V Malayan Banking Bhd. The chargor raised the issue of defective procedure.In this case the chargee issued a notice of default in Form 16D citing two charges therin and lumoing together the outstanding sums from the two loans granted to the chargor.It was held that whther such notice is defaukt or not depends whther the chargor were mislead by any defect in the notice. So as to render the granting of an order of sale unjust.

POWERS OF THE LAND ADMINISTRATIVE In Suppiah v Ponnampalam It was held that the Collector`s duty is to see whether the charge was ion register or not.If registered he only have to see whether or not there have been any default if so he may make an order.According to the court he has no power to investigate whether there is fraud or not. Gurpal Singh v Kananayer & Anor It was held that the LA in exercising his power of enguiry u/s. 261 must be limited and must not go beyond to search of fraud et u/s. 340(1). If any chargor wants to challenge on the ground of fraud ,misrep , forgery or insufficient or void instrument must bring to HC. The issue of a charge on Land Office title where the court has no jurisdiction can the matters stated in s. 340(1) be brought to court. It was held in Sundram v Chew Choo Khoon that the issue may be raise in HC meanwhile the LA shall wait pending the court order.

s. 254 Where the chargor breach any condition and the breach continues for 1 month or such other period as may be specified, the chargee may serve on the chargor a Notice in Form 16D. (Notice of Default With Respect To A Charge) s. 255 Where the principal sum secured by any charge is payable by the chargor on demand, the chargee may make the demand by a notice in Form 16E (Demand For Payment Of A Principal Sum) If the said sum not paid within 1 month, he may seek an order for sale w/out being required to serve a notice in Form 16D. The Issue is whether serving a different form is material or not. Eliathamby v Sheik Mohamed B. Said The chargor challanged theuse of Form 16E by the Chargee seeking Demand forPayment of Principal Sum due to the default of Chargor.The issue was whether the Form 16E issued was valid. Held:It was held as not valid becox since the demand was for principal sum F16D u/s. 254 must be issued V.A.M. Hussain v B.P. Malaysia The owner of a piece of land had entered into an agreement with the R to turn it into a petrol filling station.Monies were advanced by R to the owner (App) with an undertanding that App must return back the money if the application was not approved.Finally it was not approved.R gave a Notice to recover in Form 16E.It was argued that the correct form to be used is Form 16D.FC helkd that Form 16E had been properly used to sought monies “payable on demand” Syarikat kewangan Melayu Raya Bhd. V MBB (Refer side) Jacob v Overseas-Chinese Banking Corp. Upon default to pay the debt, Chargee served anotice of demand payment and interest in Form 16D on failure chargee applied to court for order of sale.This was challanged by the Chargor .He argued that the correct form is Form 16E as required by NLC. R argued that Form 16D is for demand of principal & interest but Form 16E is demand for principal only. Suffian LP: The Court refered to s. 62 of Intepretation Act whichstates that if there is a diviation in the use of the form as required by law and if the deviation does not effect or was not intended to mislead then it cannot be invalidated. Held that where there was a demand for payment of principal and interest , Form 16E could be used as well as Form 16D.The demand may be made by either forms. .

UNREGISTERED CHARGE If the charge is not registered then it become unregistered charge.The chargee only has remedy in contract or equity.If there is an agrement between the parties, then contract will be applicable. If not the equitable redemption.[s. 206(3) ] UMBC v Pemungut Hasil Tanah K.Tinggi It was held that NLC is a complete and comprehensive code of law governing tenure of land in Malaysia…there is no room whatsoever for the importation of English equitable principle. Malayan Banking Bhd. V Zahari Ahmad It was held that NLC does not prohibit the creation of equitable charges and our land law recognised it. Mahadevan s/o Mahalingam v Manilal & Sons (M) Sdn.Bhd. Salleh Abbas CJ held that the decision in Hj. Abd.Rahman`s case does not prevent the creation of an equitable charge.T/fore equitable charge and Lien are permitted under NLC. Development & Commercial Bank Bhd. V Che Wan Developement Sdn.Bhd. This case is about the claim of priority of interest made by the equitable interest holder against registered interest holder u/s. 340 NLC. The D was the registered proprietor of a piece of land and had executed 3 separate charges over the land in favour of P as consideration of loan. The charge was registered in Aug 83, Feb 88 and Apr.88. In 1987 four years later the registration of the first charge, the intervenor bought the piece of charge land from the defendants chargor.The D then breach of the termsthe charge and the P brough an action for foreclosure. The intervenor applied to the court to intervene the proceeding. The issue is on the indefeasibility of prior registration i.e. whether the intervener can claim priority over the land as she bought the land after the charge has been registered. NLC requires all dealings to be registered. Once it is registered the registered proprietor or interest has a priority and indefeasibility over the land.H/ever this right is not conclusive and can be challanged under s. 340(2). Intervenor argued that since she had bought the land she had built a house as such enhance the value. Held:as the intervenor`s interest was acquired some 4 years after the charge was registered, NLV provides that a registered interest is an indefeasibly title unless there had been allegation of fraud or misrep or, forgery, etc to which the chargee was privy. The could held that the registered chargee had priorityand indefeasibility of interest because it was registered. The intervenor only has equitable interest and rank next. BBMB v Mahmud b Hj. Mohammed [189] it was held that the registered interest will have the priority over the equitable interest eventhough the interest has been registered after the creation of equitable interest.