MAYBANK ISLAMIC BERHAD v VIDA BEAUTY SDN BHD

Case Significance

A companion order-for-sale matter on a Commodity Murabahah facility, distinguishing a genuine 'cause to the contrary' from a quantum dispute over unearned profit and ibra', alongside a bid to set aside a default judgment.

This High Court decision is a companion order-for-sale matter between the same chargee bank and chargor, arising under sections 254 and 256 of the National Land Code 1965 in respect of an Islamic financing facility structured as a Commodity Murabahah Term Financing-i. While the statutory route to an order for sale mirrors that in the related application, the focus here falls on the chargor's challenge to the amount claimed and on its attempt to set aside a judgment in default.

The distinctive feature of Islamic-financing enforcement is that the figure recorded in the facility documents — the Sale Price agreed under the murabahah structure — is not the sum the chargor must pay to redeem. The Sale Price embeds profit that has not yet accrued over the full tenure of the facility, and on early termination following default the chargor is entitled to a rebate of that unearned profit through the mechanism of ibra'. A dispute about quantum therefore centres on whether the sum claimed correctly deducts the unearned profit and applies ibra', so that the chargee recovers only what is genuinely due rather than the full contractual Sale Price. Importantly, a dispute confined to quantum of this kind does not amount to "cause to the contrary" that would defeat the chargee's statutory right to an order for sale; it goes to the amount for which the order is made. The chargor also sought to set aside a default judgment, engaging the ordinary principles that govern such applications, including whether the judgment was regularly obtained given service of the Form 16D notice by registered post and the operation of deemed service.

The judgment is a useful illustration of the interaction between a chargee's statutory right to an order for sale under the National Land Code and the Islamic-financing principles of unearned profit and ibra', and of the distinction between a genuine "cause to the contrary" and a mere dispute as to the quantum secured by the charge.