Dr. Visu Sinnadurai J:

At the conclusion of the hearing of both these applications, this Court ruled that the orders sought for the sale of the charged properties by way of private treaties be refused, indicating that the reasons for the decision would be given subsequently in a written judgment. I now give my reasons for refusing the orders. A short but important issue with far-reaching practical consequences, particularly to banks and other financial institutions, arose for consideration in these applications. The question that arose in these two applications relates to the chargee's right to sell a charged land by way of a private treaty, subsequent to the making of an order for sale by the Court under s. 257 of the National Land Code. In both these applications, the chargee applied to the Court for an order to enable it to sell the charged property by way of private treaty.

The most common situation where a chargee applies to Court for such an order to enable it to sell the charged property by way of a private treaty is when, pursuant to s. 256 of the National Land Code, an order had been made by the Court to sell the charged property by way of a public auction, but the chargee is unable to do so, as the property could not be sold at the public auction at a specified reserved price.

The National Land Code provides that on the default by a chargor, a chargee may obtain an order for the sale of the charged land: s. 253(1). If the chargee intends to pursue this remedy, the chargee, under the provisions of the National Land Code, must comply with certain requirements as spelt out by the Code. Only when all such requirements have been complied with, can an application for an order for sale be made to the Courts: see generally the recent Supreme Court decision in Citibank v. Jong Tze Khiok [1993] 3 MLJ 449 , as to some of these procedures which need to be complied with by the chargee under the Sarawak Land Code (Chapter 81), and the earlier Supreme Court decision in Nira Sdn. Bhd. v. Malayan Banking Bhd. [1990] 1 SCR 154 .

The chargee also needs to comply with the requirements of O. 83 of the Rules of the Court 1980: see the recent judgment of Shankar J. in Citibank NA v. Ibrahim bin Othman [1994] 1 MLJ 608. The requirement that the chargee must comply with the procedural rules (the relevant provisions of the Rules of the High Court 1980) is also spelt out in s. 256(2) of the National Land Code which reads as follows:

Any application for an order for sale under this Chapter by a chargee of any such land or lease shall be made to the Court in accordance with the provisions in that behalf of any law for the time being in force relating to civil procedure.

Section 256(3) provides that on any such application, and if satisfied, that there is no cause to the contrary, the Court shall order the sale of the land. I shall revert to this section in the later part of this judgment.

In so making the order for sale, certain matters need to be dealt with by the Court. Under s. 257 of the National Land Code every order for sale made by the Court shall provide as follows:

(a) provide for the sale to be by public auction; (b) require the sale to be held on, or as soon as may be after, a date specified therein, being a date not less than one month after the date on which the order is made; (c) specify the total amount due to the chargee at the date on which the order is made; and (d) require the Registrar of the Court to fix a reserve price for the purpose of the sale, being a price equal to the estimated market value of the land or lease in question.

The Court may also make such other directions with respect to the sale as the Court thinks fit, especially where the charge in question relates to more than one piece of land: s. 257(2).

I state these provisions of the National Land Code so as to appreciate the true nature of the chargee's right to seek an order for sale under the provisions of the Code.

It is clear from these pr