Harun Hashim SCJ:

Cheam Kim Yu (Cheam) is the registered owner of land held under HS(D) LP513/83 PT No. 1054 in the Mukim of Hutan Melintang, Perak. He obtained a loan of RM95,000 from Malayan United Bank Bhd., now known as MUI Bank Bhd. (the bank) and as security for the loan charged the land to the bank on 29 September 1985. The charge was registered. Cheam failed to repay the loan. The bank sent the statutory notice in Form 16D of the National Land Code dated 5 January 1987 to Cheam to remedy the breach. The said notice expired on 4 February 1987. Cheam failed to remedy the breach. As at 31 January 1987 the outstanding balance of the loan was RM124,061.73 with interest to be calculated at the rate of 14.75% p.a. at yearly rests.

On 16 May 1987 the bank applied to the Court for an order for sale of the charged land under s. 256. On 29 August 1988 the Court granted the order for sale and the auction date to be held on 16 November 1988. Then several applications followed. On 6 March 1989 the Court fixed the reserved price at RM100,000 and 27 May 1989 to be the new auction date as the valuation report was not ready for the first auction date. There were no bidders and the auctioneer recommended that the reserved price be reduced to RM90,000. This was allowed by the Court on 16 October 1989 and a new auction date was fixed for 29 November 1989. The auction was not carried out and a new auction date was fixed for 27 January 1990. The auction again was abortive and a new date was fixed for 24 March 1990. This auction was successful and the property was knocked down to Ng Choon Meng (Ng) for RM110,350. The full purchase price was paid by Ng and the Registrar accordingly issued the certificate of sale by Court under s. 259 on 14 June 1990.

It appears that whilst the abovesaid proceedings were going on, other events were taking place. In January 1990, Cheam approached Beh Sai Ming (Beh) and offered to sell the charged land to Beh at the price of RM105,000. Beh agreed. He was also told that as the land was charged to the bank and as the purchase price was insufficient to pay off the outstanding loan in full they had to obtain the consent of the bank for the sale. They both went to see the branch manager of the bank at Bidor who said he had to obtain clearance from his Head Office. By letter dated 23 January 1990, the Bidor branch manager wrote to Cheam as follows:

MUI Bank Bhd.

23 January 1990

Our ref: BDR/84/16

Mr. Cheam Kim Yu

1, Parit 23 Batu 13

36400 Hutan Melintang

Hilir Perak,

Perak

Dear Sir,

Re: Term Loan No. TL85/10 for RM95,000 outstanding balance as at 22 January 1990: RM210,907.11 dr

We refer to the above and take pleasure to inform that we are agreeable to your proposal to dispose the charged property held under Title No. HS(D) LP 513/83 PT No. 1054, Mukim of Hutan Melintang by private treaty for RM105,000 but subject to the following conditions:

(1) The amount owing after disposal of the charged property is to be remained in the existing term loan account. You are to execute a letter of arrangement to this effect.

(2) The shortfall after disposing the charged property is repayable by 120 monthly instalments on condition that the whole principal amount becomes payable and that the bank has the liberty to apply the bankruptcy action against you if you default in the repayment.

(3) The interest rate chargeable on the shortfall is 2% + BLR p.a. (Our BLR is currently at 7.0% p.a.)

All other terms and conditions in our previous letter of offer dated 3 April 1985 remain unchanged.

Kindly indicate your acceptance by signing and resuming the copy of this letter to us. Please note that if we do not receive any response from you within fourteen (14) days from the date hereof, we shall henceforth treat the above arrangement as automatically cancelled and proceed with the bankruptcy proceedings.

Yours faithfully

for MUI Bank Bhd. Bidor branch.

Sgd. Gan Ching Lock

Branch Manager.

c.c. Banking Operations Division Zone I.

c.c.