Raja Azlan Shah J:

This is an application for an order to sell the lands held under ENR 877 lot No. 817 and ENR 1479 lot No. 1535 both in the Mukim of Penjom, in the District of Lipis, state of Pahang, by public auction and other incidental reliefs.

The facts in their chronological events are not disputed. In October 1964 How Han Teh deposited the documents of title over the said land with the applicants for the purpose of securing a loan. He failed to repay the loan and on 28 April 1966 judgment for the sum of $217,085.71 was entered against him. On 19 May 1966 a bankruptcy notice was issued against him and that was served on him on 9 June 1966. On 17 June 1966 he failed to pay up the monies and thus committed an act of bankruptcy. On 2 August 1966 the applicants registered caveats against the titles deposited with them as security under the provisions of s. 330 of the National Land Code. A petition was subsequently filed against him on 5 October 1966 and receiving and adjudication orders were made against him on 19 November 1966. The said How Han Teh died in April 1967, intestate. Since the date of judgment the applicants have received a sum of $30,683.63 to account. The principal sum now due is $186,401.72. The applicants are apparently the only creditors of the said How Han Teh and there are virtually no other assets of the bankrupt other than these lands which are valued at $18,000.

The application is opposed by the Official Assignee in pursuance of s. 47 of the Bankruptcy Act, 1957 read with s. 281 (1) of the National Land Code. Section 47 (1) of the Bankruptcy Act provided that the bankruptcy shall relate back to and commence at the time of the act of bankruptcy being committed, upon which the order is made. Section 281 (1) of the National Land Code provides that the depositee of the issue document of title shall become entitled to a lien if he had registered a lien-holder's caveat under Ch. 1 Pt 19 of the Code.

It is settled law that when the said How Han Teh was adjudged a bankrupt on 19 November 1966, the Official Assignee stepped into his shoes, and the latter's title relates back to and commences at the time of the act of bankruptcy, that is, on 17 June 1966. At that time what is the nature of the bankrupt's property? There are the two pieces of land but the Official Assignee claims that the applicants are not the lien-holders on this property as at the time of the act of bankruptcy there is no caveat entered under the National Land Code.

For the applicants it is submitted that at the time when the act of bankruptcy was committed the applicants with whom the issue document of titles were deposited had equitable rights to a lien in contract. He relied on the case of Vallipuram Sivaguru V. Palaniappa Chetty , Official Administrator as Administrator of the Estate of Gan Inn, deceased [1937] MLJ 59. In that case the first defendant as depositee of the document of title acquired the first right to present a caveat and so entitled to create a lien under s. 134(i) of the Land Code, as against the rights of a subsequent assignee who had lodged a caveat prior to the first defendant's. In my view that case is authority for the proposition that although no lien is created under the Land Code until the caveat is registered, the Court in the absence of express words in the statute is not preventing "from doing justice between parties by giving effect to equitable rights by way of contract." In other words, although failure to lodge a caveat does not entitle the depositee with whom the issue document of title is deposited, to a lien under the Code, he still possesses a right to it in equity. He can exercise that right by registering the caveat under s. 134 at any time. In dealing with such equitable rights the Courts in general act upon the principles which are applicable to equitable interests in land which are not subject to the statutes. In the case of two conflicting equities, the first in time prevails, all ot