Abdul Hamid Omar FJ:

The appeal is against the decision of Anuar J dismissing the appellant's application for sale of land held under Grant for land Nos. 3735 and 3736 for Lots Nos. 7355 and 7356 respectively in the Township of Ipoh (`the said land') by public auction to realise all moneys due to the appellant (chargee) under Charge Presentation No. 1672/70 and 1673/70.

The facts not in dispute are carefully set out in the written judgment of the learned Judge. The 1st respondent Ngan Kim Yong (chargor) the registered proprietress of the said land executed two separate charges over the said land in favour of the appellant on 4 February 1970 and 10 March 1970 respectively to secure the repayment of two loans of RM90,000 and RM20,000 on 17 March 1971. Both charges were registered.

Notice in Form 16E under s. 255 of the National Land Code demanding payments of both loans was given on 17 February 1971. The chargor failed to comply with it. Thereupon the chargee applied for an order for sale of the said land and obtained an order in default of appearance. The order was however set aside upon successful application by the 2nd to 7th respondents (the respondents) that they be joined as co-respondents.

The appellant's application was again heard on 11 September 1972 and an order for sale was granted. On 20 August 1973, on appeal the Federal Court set aside the order and further ordered that the case be remitted back to the High Court for the application to be heard in open Court. It was heard on 14 May 1981. The application was dismissed.

It is also not in dispute that the chargor was a land developer. For consideration he entered into an agreement with each of the respondents 2nd to 7th to build houses for them. These agreements were entered into during the second half of 1966. When the respondents became aware of the charge sometime in the month of August 1970 they lodged the caveats.

The respondents opposed the appellant's application for an order for sale on the ground that the appellant had failed to make all necessary and proper inquiries both as regards the land and the building erected thereon before the execution of the charges. They contended that if proper inquiries had been made the appellant would have discovered that the chargor had entered into sale agreements with them. They also contended that the appellant ought not to have relied solely on the normal searches on the titles in the Registry of Titles which revealed no encumbrances except for a charge on each title in favour of Public Bank Bhd.

The learned Judge was of the view that the appellant had not carried out sufficient investigation into the nature of the land, the subject matter of the charge. If there had been careful inquiries the appellant would have discovered that the buildings on the land had been sold to the respondents.

The learned Judge held that the appellant had constructive notice of the respondents' interest in the land, as at the time the charge was executed the chargor was bound by contract to sell the land to the respondents.

The learned Judge further held that the appellant's demand for sale of the land in the face of such notice is unconscionable and constituted a fraud on the respondents. It is also his finding that "by virtue of s. 340 of the National Land Code the title of the registered proprietor of the land shall not be indefeasible where there is fraud to which he is a party." The learned Judge accordingly dismissed the application.

Mr. R.R. Chelliah Counsel for the appellant raised a number of grounds which may be briefly stated as follows:

(a) whether the appellant had constructive notice of the respondents' interest in the land (ground 1);

(b) whether the demand for sale by the appellant in the face of the notice was unconscionable and constituted a fraud: Was the appellant a party to the fraud? (grounds 2,3 and 4);

(c) whether the purchase agreement conferred upon the respondents equitable title or merely equitable intere