Lord Fraser:

This appeal raises two main issues. They are whether the respondent, in obtaining a charge on land situated in Malaysia as security for a loan, and in attempting to enforce the charge, was (1) transacting banking business within the meaning of s. 2 of the (Malaysian) Banking Act 1973, contrary to s. 3(1) of that Act and/or (2) acting in contravention of s. 9(1) of the (Malaysian) Exchange Control Act 1953. If, in consequence of either of these questions being answered in favour of the appellant, the charge is illegal a further question will arise as to what relief, if any, the appellant is entitled to receive.

The respondent is a bank registered in Singapore and carrying on business there. The appellant is the registered proprietor of land in Malaysia, namely the land comprised in grant 23940, lot 2605, in the Mukim of Senai-Kulai ("the land") containing approximately 53 acres. By a charge dated 22 May 1973 the appellant charged the land as security for advances on current account made, and to be made, by the respondent to Overseas Lumber Private Ltd., a corporation registered in Singapore, up to a limit of a principal sum of $350,000 with interest thereon. The charge was executed in Singapore. Thereafter it was registered in Malaysia.

Also on 22 May 1973 the appellant executed two other charges on the land in favour of the respondent, as security for advances by the respondent to two other companies. These companies were both registered in Malaysia, but it has not been suggested that that fact has any relevance to the issues raised in this appeal. The Federal Court ordered that the decision in this appeal should be binding in the consolidated appeals concerning the two other companies. Their Lordships will refer hereafter only to the facts of this appeal.

In terms of the charge the appellant bound himself to repay the amount owing to the respondent upon demand in writing. By notice dated 22 August 1976 in the appropriate form under the National Land Code, the respondent required payment of the principal sum of $350,000 with interest, the total sum of principal and interest amounting to $420,328.63 on 9 January 1975. No payment was made by the appellant. The respondent then applied to the Court in Malaysia for an order for sale of the land by public action. After sundry procedure Syed Othman Bin Ali J by order dated 28 December 1978 ordered that the land be sold by public auction. The appellant appealed against that order but the Federal Court (Lee Hun Ho CJ, Wan Suleiman FJ and Hamid J) dismissed the appeal.

When the matter was before Syed Othman Bin Ali J the application for an order was resisted by the present appellant on several grounds which are no longer insisted upon and which need not now be considered. The first contention which he now puts forward is to the effect that the charge is illegal and void on the ground that its creation and the attempt to enforce it were contrary to s. 3 of the Banking Act 1973. Sections 2 and 3 of that Act, so far as immediately relevant, provide as follows:

2. In this Act unless context otherwise requires - `bank' means any person who carries on banking business;

`banking business' means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, and making advances to customers and includes such other business as the Central Bank, with the approval of the Minister may prescribe for the purposes of this Act:...

[Their Lordships understand that no other business relevant to this appeal has been prescribed by the Central Bank].

3(1) Banking business shall not be transacted in the Federation except by a corporation which is in the possession of a licence in writing from the Minister authorising it to do so.

...

(5) Any person who contravenes the provisions of this section shall be guilty of an offence and shall on conviction be liable to a fine not exceeding five thousand dollars or to imprisonment for