Raja Azlan Shah J:

In the event that has happened, the first issue to be decided in the present case is whether the charge executed by the first defendants on 16 February 1962 in favour of the plaintiffs is valid.

The facts are as follows. The first defendants, a limited company subject to the provisions of the Companies Ordinance, took a loan of $75,000 from the plaintiffs and executed a mortgage and general charge, and as security they deposited the title deed for land held under EMR 4031, Lot 703, in the Mukim of Bukit Raja, Klang, in the State of Selangor, of which the first defendants are the registered proprietors. The charge was never registered in the Land Office although it was registered with the Registrar of Companies on 9 March 1962. The plaintiffs lodged a caveat in respect of the said land with the Collector of Land Revenue, Klang, and it was duly recorded in the Register of Document of Title on 23 April 1962. On 31 October 1963 the second defendant obtained judgment in the sum of $20,514.87 against the first defendants in Civil Suit No. 26l of 1962, and on 14 November 1963 he obtained a prohibitory order against the said land and presented the same to the Collector of Land Revenue for registration under the provisions of the Land Code. The prohibitory order provided that it was subject to caveats and prohibitory orders. By an order of the Court dated 6 February 1964 in Civil Suit No. 261 of 1962 the second defendant obtained an order for the sale of the said land by public auction at a reserve price of $25,000. In April 1964 the plaintiffs issued their writ against both defendants.

The first defendants are said to have no other assets. They have not repaid the principal sum of $75,000 nor any interest thereon to the plaintiffs despite a demand for payment made to them on 10 February 1964. Furthermore, the plaintiffs state that they gave notice to the second defendant of their prior lien on the said land but nevertheless the second defendant proceeded to by-pass their rights and interests in the matter.

The plaintiffs now pray for judgment in the sum of $82,500 including interest against the first defendants, a declaration that the plaintiffs' lien on the said land has priority of right, claim and interest over that of the second defendant's prohibitory order, an order to set aside the order of sale dated 6 February 1964, alternatively that the said land be auctioned with a reserve price of $90,000.

The first defendants did not enter appearance and judgment by default was accordingly entered against them.

Mr. Devaser on behalf of the second defendant argued that the charge was not "created" within the meaning of s. 80 of the Companies Ordinance 1940 and is therefore void. Counsel submitted that for the charge to be "created" under the Ordinance it must be created in conformity with the provisions of the land Code. Counsel concluded by arguing that if the charge is void it is void for all purposes and the plaintiffs are not entitled to rely on any part of it.

Section 80(1) of the Ordinance provides that every charge created after the fixed date, namely, 10 February 1915, by a company registered in the Federation shall be void against any creditor unless the prescribed particulars of the charge together with the instrument, if any, by which the charge is created or evidenced are delivered to or received by the Registrar for registration within 21 days after the date of its creation. Section 80(10)(c) provides that a charge on land situated in any Malay State shall be deemed to be created at a time when the charge is created pursuant to s. 90 of the Land Code (Cap. 138).

Therefore, in considering the date of creation of a charge on land it is necessary to look into the relevant provisions of the Land Code. (See Johore Para Rubber Co. Ltd. v. Registrar of Companies, Malayan Union [1948] MLJ 135 at 136). Section 65 of the Code, inter alia, provides that land comprised in any entry of the Mukim Register