Siti Norma Yaakob J:

On 10 May 1984, the applicants entered into a sale and purchase agreement, wherein they agreed to sell their freehold land held under Grant No. 8069, Lot 3308, Mukim of Kuala Lumpur, together with a single storey detached house to the respondent for a consideration of RM445,000. The respondent paid the initial deposit of RM45,450 and the balance of the purchase price was to be settled not later than 3 months from the date of the agreement from a loan to be obtained by the respondent and in the event of its default, the applicants were entitled to treat the agreement as being terminated and to forfeit the deposit paid to account.

The respondent failed to settle the balance of the purchase price on the due date and explains its failure to do so by alleging that the applicants had breached Clause 10 of the agreement and it had on 29 August 1984 informed the applicants that it was repudiating the agreement and demanded the refund of the deposit and other disbursements incurred. Clause 10 of the agreement contains a warranty or undertaking by the applicants that they have not been served with any notice of any intended acquisition of the land by any authority or that they were aware of any such intended acquisition. However, before the completion date, the respondent discovered that 56% of the land was intended to be acquired by Dewan Bandaraya for the purpose of constructing a link road connecting Jalan Sungei Besi to Jalan Cheras.

Denying any knowledge of such intended acquisition, the applicants, by letter dated 12 September 1984, refused to accept the respondent's repudiation of the agreement. In turn, they had by their letter dated 11 October 1984, notified the respondent that they were also terminating the agreement for the respondent's breach in failing to pay the balance of the purchase price on the due date and they forfeited the deposit. The respondent rejected this purported termination and to protect its interest over the land, lodged a caveat on 17 October 1984. Following this, it also filed a civil suit, C. 4021/84 against the applicants seeking a refund of the deposit, reimbursement for all expenses incurred and general damages on the ground of the applicants' breach of Clause 10.

From the pleadings in the civil suit, it is clear that both sides had alleged breaches of the agreement against each other, both had, as a result, terminated the agreement and both had rejected the other's purported termination.

It is against such a background that the applicants now seek to have the caveat removed on the ground that the respondent has no registrable interest on the land. The respondent considers it otherwise and it contends that it has the right to retain the caveat until after the disposal of the civil suit so that the status quo of both parties can be maintained.

Thus the only issue before me is whether the respondent has a registrable interest over the land capable of being protected by a caveat. The respondent admits that although it is claiming for an unsecured debt in the civil suit, nonetheless such a claim can be protected by a caveat as the debt arose out of a land transaction pursuant to a sale and purchase agreement and it is the validity of the termination of the agreement that is disputed in the Civil Suit. It goes further to state that as the debt is linked to the agreement, the caveat should be allowed to remain until after the disposal of the civil suit. For this contention the respondent relies on the decision of the Federal Court in Mahadevan & Anor. V. Patel [1975] 1 MLRA 659, [1975] 2 MLJ 207 where the facts show that in reliance of an arrangement, that one Ratnavale, the proprietor of 2 pieces of land, would charge his properties to secure a loan, the respondent lent him RM225,000. Ratnavale however did not charge his lands and to protect his interest, the respondent lodged a caveat. On Ratnavale's death, his executors and trustees; the appellants applied to have the caveat rem