Edgar Joseph Jr SCJ:

[1] The issue of central importance to this appeal concerns the resolution of a priority dispute between two banks.

[2] The history of the matter concerning the two competing securities which calls for the consideration of this Court may be stated thus:

[3] On 29 March 1982, in consideration of the second respondent the United Asian Bank Berhad ("UAB"), granting to the first respondent Aluminex (M) Sdn Bhd ("Aluminex") overdraft facilities, Aluminex had issued to UAB a debenture ("the Debenture") creating a floating charge over all its property, present and future, the debenture specifically providing that Aluminex was not to be at liberty to create, save with the written consent of UAB, any other mortgage, debenture (whether fixed or floating), charge, pledge or lien ranking in priority to or pari passu to the debenture. The debenture was lodged and registered at the Registry of Companies, Kuala Lumpur, on 13 September 1982 pursuant to s 108 of the Companies Act 1965.

[4] Again, on 21 March 1984, in consideration of UAB increasing the limit of the overdraft facilities, Aluminex had issued to UAB a second debenture, ("the Supplemental Debenture") creating a floating charge over all its property present and future, this debenture also providing that Aluminex was not to be at liberty to create, save with the written consent of UAB, any other mortgage, debenture etc ranking in priority to or pari passu to the debenture. The supplemental debenture was lodged and registered at the Registry of Companies, Kuala Lumpur, on 23 May 1984, pursuant to s 108 of the Companies Act 1965.

[5] For brevity and convenience, we shall, where the context so requires, when referring to the debenture and the supplemental debenture collectively, refer to them as "the debentures".

[6] Now, in 1986, the second and the third defendants Takenaka Komuten Co Ltd and Pembinaan Maluri Sdn Bhd, respectively, in the Court below, but who are not parties to this appeal, were jointly the main contractors under a building contract for the construction of the headquarters building for Bank Pembangunan Malaysia Bhd, and had, on 18 April 1986, appointed Aluminex as the sub-contractor for the design, supply and installation of a glass curtain walling and frameless glazed screen, for that building. This sub-contract ("the Sub-Contract") was worth precisely RM4,688,177.

[7] To carry out its obligations under the sub-contract, Aluminex entered into a contract of sale and purchase ("the Contract of Sale") with Ming Sing Glass Sdn Bhd ("Ming Sing") for the supply of glass. The contract of sale was worth precisely RM2,300,000. But, to get that glass, Ming Sing had to rely on Korean suppliers. So, Ming Sing applied to the first respondent United Malayan Banking Corporation ("UMBC") for a loan to enable it to pay its Korean suppliers.

[8] By their letter of offer dated 15 September 1986 addressed to Ming Sing ("the Facility Letter"), UMBC had offered to grant to Ming Sing the financial assistance they sought, the facilities to be granted being described as a "Letter of Credit/Trust Receipt (L/ CTR)" facility, on certain terms, which included the following:

Security: The above facility is to be secured against assignment of the proceeds of the sub-contract awarded to Aluminex (M) Sdn Bhd ('Aluminex') valued at RM4,688,177 in favour of our bank. Aluminex is to open a collection account with us for this purpose.

Other terms and conditions: Please take note that your are to obtain a letter or undertaking from the principal contractor, Takenaka Maluri Joint Venture to pay the proceeds of the contract directly to Aluminex (M) Sdn Bhd's Collection account with us. The portion of the monies paid in respect of work done by your company, that is, 50% of the proceeds of the sub-contract awarded to Aluminex (M) Sdn Bhd is to be used to settle the above Letter of Credit/Trust Receipt facility.

[9] Pursuant to the facility letter, Ming Sing issued trust receipts in favour o