Low Hop Bing J:

Preliminary Objection

At the outset of the hearing of foreclosure proceedings by way of an originating summons in encl. (1) commenced by the plaintiff on 11 February 1999 against the defendant on the basis of a registered charge over landed property pursuant to s. 256 of the National Land Code 1965(NLC) ("registered charge"), En. Thakurdas Jethwani, learned counsel for the defendant, raised a preliminary objection on the ground that the plaintiff has failed to comply with the vesting order (together with all the consequential amendments) ("the vesting order") made in favour of the plaintiff in the Kuala Lumpur High Court No. D9-24-27-2001. The defendant seeks an order that the plaintiff's said originating summons be struck out or stayed until the plaintiff has fully complied with the vesting order. In other words, it is said for the defendant that the plaintiff cannot proceed with the originating summons unless and until the registered charge has been registered in the name of Malayan Banking Bhd., which he added must be done by filing the vesting order with the appropriate land authority. For the purpose of this judgment, a reference to the vesting order shall include all the consequential amendments thereto.

Common Ground

It is common ground that pursuant to an exercise pertaining to the merger of banks, the plaintiff's business and assets (which for the purposes of this judgment would include the registered charge) had been vested in Malayan Banking Bhd. pursuant to the vesting order, as a result of which the plaintiff ceased to be the beneficial owner and Malayan Banking Bhd. became the new owner thereof.

Defendant's Contention

It is the defendant's contention that while complying with para (D) of the vesting order, the plaintiff however had ostensibly not complied with, inter alia, para (B)(xvi) and (xvii) thereof which required registration, with the relevant authority, "for the purpose of vesting in the TRANSFEREE" the registered charge.

It was further submitted for the defendant that s. 50(1) of the Banking and Financial Institutions Act 1989(Act 372) ("BAFIA") provides for the vesting of any property or business and that s. 50(3)thereof requires the vesting to be done in accordance with the terms of the vesting order.

The argument for the defendant is that s. 50(1), supra, covers the vesting not only of landed property and the interests therein but also the transfer of any property or business, including furniture, cars, receivables, goodwill and the like, all of which are not landed properties and so do not require registration, as vesting would take place on the transfer date prescribed in the vesting order.

In respect of landed property, the view advanced for the defendant is that under s. 50(3)vesting could only take effect after it has been registered with the relevant authority, in accordance with para. (C) of the vesting order. Defendant also relied on s. 420 of NLCfor supporting the contention that the vesting order covering landed properties must be registered with the relevant authority.

Plaintiff's Response

The short answer given by En. Chang Wei Mun and Cik Lim Siew Ming, both learned counsel for the plaintiff, is that under s. 50(3), supra,the vesting order supersedes all written laws, even NLC and that the terms of the said vesting order allow the plaintiff's originating summons to continue without the necessity of substituting Malayan Banking Bhd. as the plaintiff or transferring and registering the registered charge in the name of Malayan Banking Bhd. at the appropriate land registry. In the circumstances, they are of the view that the defendant's preliminary objection is without merits.

Decision Of The Court

By way of recapitulation, the preliminary objection raised for the defendant is that the plaintiff cannot proceed with this originating summons unless and until the registered charge has been registered in the name of Malayan Banking Bhd. by way of filing the vesting order