Abdul Aziz Mohamad JCA:

[1] The appellant bank appealed against the dismissal by the High Court of their application for an order for sale under

s. 256(3) of the National Land Code of the respondents' land, which had been charged to the appellants as one of the securities for loan facilities granted by the appellants to a company by the name of Meko Offset Printing Sdn. Bhd. ("the borrower"). By a unanimous decision we allowed the appeal and remitted the case to the High Court to make the order for sale and ancillary orders.

[2] The loan facilities that were granted to the borrower comprised an overdraft to a limit of RM380,000 and various other facilities, also to a limit of RM380,000. They were granted on 30 November 1990, but those limits were increased limits approved on 11 April 1991. The lending bank was Oversea-Chinese Banking Corporation Limited, which on 1 July 1994 transferred its business to the appellant bank by a transfer that was given effect to by an order pursuant to s. 50 of the Banking and Financial Institutions Act 1989.

[3] The charge of the land was registered on 22 July 1991, having been executed by the first respondent and the then other owner, Ngiam Seng Lian, who, on 8 May 1995, transferred her undivided half share to the second respondent, who then, by virtue of cl. 37 of the charge annexure, became bound by the charge.

[4] The borrower defaulting in respect of the various facilities, on 27 June 2000 the appellants served on the respondents a notice of default in Form 16D of the National Land Code. As regards the overdraft facility, the notice stated that as at 31 May 2000 the amount outstanding was RM235,094.64. I mention the overdraft facility only because the cause that the learned judge in the High Court found to exist for refusing an order for sale related to the overdraft facility. The question of the cause came about as follows.

[5] On 18 April 1995 the borrower wrote to the appellants as follows:

We have the pleasure to inform you that during our EGM held on 6th April, 1995, we have come to resolve the followings [sic]:

That the Company's bank borrowing with you, pledged under 3rd Party Charge on property at No. 34, Jalan Azyze, Tanjung Bungah, Hillside, Penang, to be reduced as follows:

1. a) by 31.12.1995 borrowing to be reduced by RM50,000.00

b) by 31.12.1996 borrowing to be reduced by another RM100,000.00

c) by 31.12.1997 borrowing to be reduced by another RM100,000.00

d) by 31.01.1998 the property to be fully redeemed and discharged.

2. the company shall limit from issuing cheques exceeding the RM380,000.00 limit granted by your bank.

Kindly abide to our above requests which shall take immediate effect from the date hereof and keep us inform (sic) from time to time on our credit limit. And also, we request you to inform the Owners of the property from time to time, as and when, the limit is scaled down.

[6] It was not in dispute that that was a request to reduce the limit of the overdraft facility. In fact, such may be inferred from para. 6 of the first respondent's affidavit dated 30 April 2002, wherein he referred to three letters, which were exhibited, to show that the appellants started to reduce the limit of the overdraft. The first was a letter dated 18 January 1996, whereby the appellants informed the borrower that they had that day reduced the overdraft limit from RM380,000 to RM330,000. Another was a letter dated 6 January 1997, whereby the appellants referred to the borrower's said letter of 18 April 1995 and requested the borrower to make payment into their account to enable the appellants to further reduce the overdraft limit as requested. The last was a letter dated 13 January 1997, whereby the appellants informed the borrower that they had that day reduced the overdraft limit from RM330,000 to RM280,000. It was not in dispute, although it was not specifically stated in the affidavits, that those two reductions of the overdraft limit by RM50,000 each time was made be