PERWAJA TERENGGANU SDN BHD v ASM PROPERTIES SDN. BHD.

Case Significance

Illustrates that an order for sale under section 256 of the National Land Code 1965 is a statutory in rem action on a registered charge, defeated only by a 'cause to the contrary' going to the charge, not by disputes about the underlying debt.

This High Court decision concerns an application for an order for sale of charged property under the National Land Code and the limited grounds on which such an application may be resisted. The plaintiff chargee sought, by Originating Summons under section 256 of the National Land Code 1965 and Order 83 of the Rules of Court 2012, an order for the sale of the defendant's property — a commercial building of which the defendant was the registered owner — to recover the sums secured by numerous registered charges. The central question was whether the defendant had shown any "cause to the contrary" within the meaning of section 256 that would prevent the court from ordering the sale. The court explained the settled principle that a foreclosure application under section 256 is a statutory action in rem on a registered charge, not a suit for the recovery of a debt: the order for sale, when made, is neither a judgment nor a decree, and the court hearing the application does not, and ought not to, adjudicate on any substantive issue such as the quantum or validity of the underlying debt. Issues raised about the debt are therefore not "cause to the contrary" but matters that may be pursued in a separate suit. Applying this framework, the court found that none of the issues raised by the defendant amounted to a "cause to the contrary" capable of defeating the application. It accordingly allowed the Originating Summons with costs, recording the outstanding sum secured by the charges as RM257,542,200.00 as at the date shown in the supporting affidavit. The judgment illustrates that a chargor resisting an order for sale must establish a "cause to the contrary" going to the charge itself, and that disputes about the underlying debt do not suffice. The court's approach confirms that the summary foreclosure procedure is designed to give a chargee prompt recourse to its security, leaving disputes over the amount owed to be resolved in separate proceedings rather than at the order-for-sale stage.