Edgar Joseph Jr FCJ:

This application is a sequel to our judgment in the case of The Co-operative Central Bank Ltd. v. Feyen Development Sdn. Bhd. [1995] 4 CLJ 300 which held that Charge transactions under the National Land Code 1965 ('the Code') which breached s. 133(1) of the Companies Act 1965 ('the Act') , did not give rise to civil consequences, and the subsequent judgment of the Court of Appeal in Harta Empat [1997] 2 CLJ 94 , which held to the contrary, on the ground that that part of our judgment was mere obiter.

With respect, it is difficult to see how the criticism that this application by Feyen Development Sdn. Bhd. although couched in terms of a prayer for "clarification and rectification" of our judgment in Feyen , is really a facade for inviting us to revisit Feyen and to reverse it having regard to Harta Empat , can be rebutted. Our reasons for this will appear later.

In Harta Empat , the Court of Appeal, whilst on the one hand, paying lip service to our judgment in Feyen , when it said: ([1997] 2 CLJ 94 at p. 98)

The question whether s. 133(1) of the Companies Act 1965 operates to invalidate a security provided by a company for a loan made to a director of the company by another person in contravention of the subsection or whether it merely prohibits the giving of such security on pain of incurring criminal liability is no longer justiciable, at least in this country, since the decision of the Federal Court in Co-operative Central Bank Ltd. v. Feyen [1995] 4 CLJ 300 ; [1996] 1 SCR 75; [1995] 3 MLJ 313.

then embarked on an attempt to debunk our judgment in Feyen in the following remarkable passages:

The subsection (subsection (1) of s. 133 ) by itself does not invalidate the forbidden transactions, so that the company may incur civil liability for entering into them; see Feyen . However, before the company can be made liable, the transaction itself must be a valid and enforceable one.

In the instant case, we are concerned with a charge under the National Land Code so that the question that arises is whether the provisions of the National Land Code operate to invalidate the charge.

Feyen did not refer to the provisions of the National Land Code when it considered the question of the validity of the two charge transactions in the case, nor did it discuss them.

Therefore, any opinion expressed by Feyen on the validity of a charge must necessarily be obiter. (Italics supplied)

The provisions of the Code, which the Court of Appeal assumed that the Federal Court in Feyen had overlooked were s. 241(3)(a) and s. 301 condition (c). Commenting on these provisions, the Court of Appeal said, inter alia, this:

Put shortly, a charge is subject to 'any prohibition ... imposed by ... any ... written law for the time being in force' (s. 241(3)(a)). The charge takes effect upon registration (s. 243). Registration of the charge is obtained by presenting it to the Registrar (s. 292(1)(c)) but only if the charge is fit for registration (s. 301), and the charge is fit for registration if condition (c) of s. 301 is satisfied, that is to say, "that the dealing which it effects is not contrary to any prohibition ... imposed by ... any ... written law for the time being in force" (s. 301) condition (c).

In conclusion, the Court of Appeal said this:

The upshot is this. Under the National Land Code the immovable property in the instant case could be charged but the charge was subject to any prohibition imposed by written law. Section 133(1) of the Companies Act forbade the appellant company from providing the security for the loan made to its director by the respondent.

The prohibition in s. 133(1) had rendered the charge unfit for registration under s. 301, condition (c) of the National Land Code. The charge is therefore invalid.

We are mindful of the fact that Harta Empat is the subject of a pending application for leave to appeal to the Federal Court, but Counsel for Feyen , Mr. Hira Singh, who was also Counsel for