Suriyadi Halim Omar JCA:

[1] This appeal arose from the dismissal with costs on 5 November 2002 by the learned High Court Judge of the appellant's application, for an order for sale in respect of land held under H.S. (D) 83488, number P.T 43, Mukim Kuala Lumpur, Wilayah Persekutuan which the respondent had charged to the appellant. The appellant is a financial institution governed by the Moneylenders Act l951 and the respondent a third party chargor. The respondent had created a third party first legal charge dated 20 April 1998 registered in favour of the appellant vide charge presentation No. 4823/98 to secure a loan of RM7.5 million from the appellant to one, Tow Kong Liang ("the borrower") and granted vide Memorandum of Loan Agreement dated 27 February 1995. It was admitted and agreed upon by all the parties that the purpose of the loan of RM7.5 million, granted to the borrower, was for share financing.

[2] In the midst of the loan agreement period, the appellant alleged that an exemption was granted by the Housing & Local Government Ministry under s. 2A(2) of the Act , for the period from 29 August 1997 until 28 August 2001 ("the exemption period) of all the provisions of the Moneylenders Act 1951 . As it were, the borrower defaulted in the repayment of his loan and the appellant's solicitors sent letters of demand to the borrower dated 18 June 1998 and 1 July 1998. As the borrower failed to remedy the breach, the appellant through its solicitors sent a letter of demand dated 4 February 1999 to the respondent and subsequently issued a notice under Form 16D of the National Land Code 1965 dated 12 June 2000, seeking repayment of the sum secured under the charge. With the respondent's failure to remedy the breach, the appellant filed an application for an order for sale on 4 October 2000. That application was supported by an affidavit affirmed by one Lim Cheng Chooi on 11 October 2000. Before the High Court judge, as said above, the application was dismissed with costs.

[3] Even though this appeal was a rehearing, we certainly were not unmindful of the reasons supplied by the learned High Court judge when dismissing the appeal. Indisputably the charge was an independent security document, and the rights of the appellant in the normal course of event would be protected, as contracted to by the parties hereto as provided for by the relevant agreement. If it were enforced it would merely be enforcing its statutory rights founded on that registered charge and would not face the hassle of having to sue for a debt. In the case of Kandiah Peter v. Public Bank Berhad, [1994] 1 MLJ 119 the Supreme Court on p. 334 had held:

He merely enforces his rights as a chargee by exercising his statutory remedy against the chargor in default. The chargee, therefore, does not sue for a debt. It is also clear that his claim for an order for sale is not based upon a covenant but under the registered charge. The order for sale when made under s. 256 of the Code is not a judgment or a decree. The Court hearing the application for foreclosure does not make, and in any event ought not to make, any adjudication upon any substantive issues.

[4] In James Edward Buxton & Anor v. Supreme Finance (M) Berhad, [1992] 2 MLJ 481 the Supreme Court had held:

In all these cases, it was held that the interest of a registered charge is indefeasible by s. 340(1) of the Code unless it is made defeasible by s. 340(2) . ... The interest of a bona fide purchaser for value cannot prevail over that of a registered chargee.

[5] By further analogy, in the case of Perwira Habib Bank Malaysia Berhad v. Viswanathan Ramakrishnan, [1997] 4 MLJ 474 , it was held at p. 506:

[1] A decision on whether or not to allow the plaintiff's application for an order for sale could not be grounded on agency law alone, but on the broader investigation under s. 256(3) of the NLC . Agency law could not be applied directly to deny the plaintiff of his right which was contracted, under the statut