OSK CAPITAL SDN. BHD. v BUMI RIA DEVELOPMENT SDN. BHD.

Case Significance

Applies Low Lee Lian to confirm the summary nature of the order-for-sale jurisdiction under section 256 of the National Land Code: once a valid registered charge and default are shown, the court must order sale unless the chargor establishes a recognised 'cause to the contrary'; a bare challenge to the underlying loan does not suffice.

This High Court decision at Shah Alam concerns an application for an order for sale of charged land under section 256 of the National Land Code, and the limited grounds on which such an order may be resisted. The plaintiff, a licensed moneylender, invoked its rights under a registered charge and sought an order for sale together with consequential relief. The charge secured a moneylending agreement executed on 27 September 2021 for a credit facility of RM3,000,000. The defendant conceded the execution of that agreement and the registration of the charge, but mounted a vigorous challenge centred on the validity and enforceability of the moneylending agreement itself.

The court identified the governing principle from the Federal Court's decision in Low Lee Lian: on an application for an order for sale under section 256 of the National Land Code, the chargor may resist the order only by showing "cause to the contrary," and the judge hearing such an originating summons will not, and ought not to, enter upon a discussion of whether the chargor's complaints have any merit. The defendant's real complaint went to the validity and enforceability of the moneylending agreement — a matter the defendant itself accepted did not fall to be decided on this application. Because the challenge did not amount to a recognised "cause to the contrary" within the narrow categories the apex court has laid down, it could not defeat the chargee's statutory right to realise its security.

Applying Low Lee Lian to the facts, the court held it was obliged to allow the reliefs sought by the plaintiff and granted the order for sale, making no order as to costs. The judgment illustrates the summary and largely mechanical nature of the order-for-sale jurisdiction under section 256: once a valid registered charge and a default are shown, the court must order sale unless the chargor establishes one of the confined categories of "cause to the contrary," and a bare challenge to the underlying loan will not suffice.