Affin Bank Berhad v Gainvest Builders (M) Sdn. Bhd. (MA-24FC-37-03/2025)

This is an application by originating summons for an order for sale of charged land under sections 256 and 257 of the National Land Code (Act 828) ("the Code"), read with Order 83 of the Rules of Court 2012. The land is held under Pajakan Negeri No. 19882, Lot No. 4678, Mukim Cheng, Daerah Melaka Tengah, Negeri Melaka ("the charged land").

The Plaintiff is the chargee. The Defendant is the chargor and the registered proprietor of the charged land. The application is brought in exercise of the chargee's statutory remedy upon the chargor's default, and is opposed.

An application of this nature is governed by section 256(3) of the Code, which obliges the court to order a sale unless it is satisfied of the existence of cause to the contrary. The real controversy is therefore whether the Defendant has shown cause to the contrary within the meaning of that subsection.

The matters raised in resistance to the application, which define the issues, are three. The first is whether the statutory notice in Form 16D, and the antecedent notice of demand, were validly served upon the Defendant. The second is whether the quantum of the secured indebtedness is established. The third is whether the Defendant's financial difficulties following the Covid-19 pandemic, and its expressed wish to be allowed time to dispose of the charged land by private treaty, can stand against the making of an order for sale.

The originating summons (Enclosure 1) was filed on 20 March 2025.

By a series of Letters of Offer, Supplemental Letters of Offer, Facilities Agreements and Supplemental Facilities Agreements, namely the Facilities Agreement dated 20 June 2000, the Facilities Agreement dated 19 March 2001, the Supplemental Facilities Agreement dated 5 December 2003 and the Supplemental Facilities Agreement dated 4 February 2008, the Plaintiff granted to the Defendant overdraft, letter of credit, trust receipt, bankers' acceptance and bank guarantee facilities. Those documents are exhibited as Exhibits JCF-2 to JCF-5 to the Affidavit in Support affirmed by Jerome Christopher Fernandez on 17 March 2025 (Enclosure 2). In its Affidavit in Reply affirmed by New Ching Liong on 23 September 2025 (Enclosure 8), the Defendant expressly stated that paragraphs 1 to 5 of the Affidavit in Support were not disputed. The execution of those facilities documents and the utilisation of the facilities are therefore not in issue.

As security for the facilities, the Defendant executed four first-party charges with annexures over the charged land in favour of the Plaintiff, registered as Charge Presentation No. 5587/2000 on 24 June 2000, Charge Presentation No. 2604/2001 on 28 March 2001, Charge Presentation No. 14524/2003 on 24 December 2003 and Charge Presentation No. 2328/2008 on 6 March 2008. These charges are exhibited collectively as Exhibit JCF-6 to the Affidavit in Support (Enclosure 2). In its Affidavit in Reply (Enclosure 8), the Defendant did not dispute paragraphs 1 to 5 of the Affidavit in Support, and no challenge has been raised to the execution, registration or enforceability of the charges.

It is not disputed that sums fell due and remained unpaid. In paragraph 8 of Enclosure 8, the Defendant accepted that an outstanding amount remained payable under the facilities, attributing the non-payment to cash-flow difficulties following the Covid-19 pandemic.

By a Notice of Demand and Termination dated 18 November 2024, exhibited with proof of posting as Exhibit JCF-7 to Enclosure 2, the Plaintiff's solicitors demanded repayment. The breach not having been remedied, a notice of default in Form 16D under section 254 of the Code, dated 26 December 2024 ("the Form 16D"), was despatched by registered post on 27 December 2024 to six addresses, including the Defendant's registered and business address at No. 69, Jalan SS 6/10, Kelana Jaya, 47301 Petaling Jaya, Selangor. Exhibit JCF-8 to Enclosure 2 comprises the Form 16D and a statutory declaration of service affirmed by Norazam bin Isa on 31 December 2024. The registered-post receipts, stamped by Pos Malaysia Berhad, and the corresponding tracking numbers, accompany Exhibits JCF-7 and JCF-8.

The dispute as to service. In paragraphs 6,7 and 10 of Enclosure 8, the Defendant denied knowledge or receipt of the Notice of Demand and Termination and the Form 16D, on the footing that those notices were sent by registered post only and that no acknowledgement-of-receipt card (A.R. card), or other independent proof of actual delivery, had been produced. Whether the notices were validly served is the principal matter in contest.

The secured indebtedness is certified by a certificate of indebtedness as at 28 April 2025 (Exhibit JCF-1 to the Affidavit (Further) affirmed by Jerome Christopher Fernandez on 18 April 2025 (Enclosure 5)) in the sum of RM8,873,938.61, comprising RM4,879,799.03 under the overdraft and RM3,994,139.58 under the bankers' acceptance. (The originating summons had earlier claimed RM8,502,598.63 as at 30 September 2024, the difference reflecting the continuing accrual of interest.) The Defendant did not, in Enclosure 8, dispute the certified sum or allege any error in the certificate.

The chargor's further averment. In paragraph 9 of Enclosure 8, the Defendant deposed that, were it allowed time, it could identify investors or third parties willing to purchase its assets, and so propose a settlement of the indebtedness. C. ISSUES FOR DETERMINATION

The application turns upon whether the Defendant has shown cause to the contrary under section 256(3) of the Code. That question resolves into three issues:

whether the Form 16D, and the antecedent notice of demand, were validly served upon the Defendant, so that the conditions precedent to the application are satisfied;

whether the quantum of the secured indebtedness is established; and

whether the Defendant's financial difficulties, or its wish to be allowed time to sell the charged land by private treaty, constitute cause to the contrary, or otherwise warrant the withholding or postponement of an order for sale. D. THE STATUTORY AND LEGAL FRAMEWORK [14] Section 256(3) of the Code provides that, on an application for an order for sale, the court shall order the sale of the land or lease to which the charge relates unless it is satisfied of the existence of cause to the contrary. The provision is mandatory, and the expression "cause to the contrary" is confined. In Low Lee Lian v Ban Hin Lee Bank Bhd [1996] 2 MLRA 1 (SC), Gopal Sri Ram JCA, delivering the judgment of the Supreme Court, held that cause to the contrary may be established in, and only in, three categories of case: first, where the chargor brings the case within an exception to indefeasibility under section 340 of the Code, so defeating the chargee's right to apply; secondly, where the chargee has failed to satisfy a condition precedent to the application, as where it cannot prove the making of a demand or the service of a notice in Form 16D, or where the notice demands sums not lawfully due; and thirdly, where the grant of the order would be contrary to some rule of law or equity. Those categories were reaffirmed by the Federal Court in Thameez Nisha Hasseem v Maybank Allied Bank Berhad [2023] 4 MLRA 492 (FC). [15] The making, registration and validity of the charges not being in issue, the first category does not arise. The controversy lies within the second category (the service of the statutory notices) and the third (whether the chargor's circumstances furnish a ground in law or equity to withhold the order). The law upon those matters is taken up in the analysis, where it bears directly upon the issues; it is unnecessary to rehearse the law upon facts that are not seriously in dispute. E. ANALYSIS AND DETERMINATION

Whether The Statutory Notices Were Validly Served [16] The issue is whether the condition precedent of service of the Form 16D under section 254 of the Code was satisfied, the want of such service being, on the authority of Low Lee Lian (SC), a recognised head of cause to the contrary. The Defendant's position, as deposed in Enclosure 8, is not that the notices were misdirected, but that actual receipt was not proved for want of an A.R. card. [17] The mode by which a notice is to be served, and the consequences of posting, are governed by the parties' own agreement. The facility agreements and the annexures to the charges (exhibited as Exhibits JCF-2 to JCF-6 to Enclosure 2) contain deeming-of-service provisions to the effect that any notice or demand left at, or sent by ordinary or registered post to, the Defendant's registered office or any of its stated addresses shall be deemed sufficiently served two days after posting, irrespective of whether it has in fact been received. The question is what such a provision requires of the chargee. [18] That question is answered by authority binding on this Court. In Amanah Merchant Bank Bhd v Lim Tow Choon (through the Official Assignee) [1993] 1 MLRA 658 (SC), the Supreme Court, construing a contractual deeming provision for service, held that it was unnecessary for the serving party to prove that an A.R. card had been returned duly acknowledged. It was sufficient to establish that the notice had been correctly addressed, prepaid, delivered to the post office and acknowledged for service by the postal authority. Once those facts were established, the deeming provision operated and service was deemed effective. The same principle was subsequently applied by the Court of Appeal in Affin Bank Berhad v HlB-C Industries Sdn Bhd & Ors [2013] 5 MLRA 525, where the Court held that, where the parties have agreed to a contractual deeming provision, proof that the notice was properly addressed and posted to the stipulated address is sufficient to constitute service notwithstanding that the notice may subsequently be returned undelivered. Accordingly, the absence of an acknowledged A.R. card does not, without more, displace the operation of an agreed deeming provision. [19] The contention that proof of an A.R. card is indispensable cannot be reconciled with an agreed deeming provision. The rule that the posting of a writ by A.R. registered post is not conclusive proof of service and that the affidavit of service ought to disclose the status of the A.R. card, is concerned with the service of originating process under Order 10 of the Rules of Court 2012, where due service is a jurisdictional precondition to the entry of judgment in default. It is not concerned with the service of contractual or statutory notices that the parties have, by an express deeming provision, agreed shall take effect on posting irrespective of receipt. Where such a provision governs, the contractual bargain prevails, and Amanah Merchant Bank and Affin Bank Berhad v HIB-C Industries are directly in point. [20] On the affidavit evidence, the Plaintiff did not rest upon bare posting. Exhibit JCF-7 exhibits the Notice of Demand and Termination with proof of posting; Exhibit JCF-8 exhibits the Form 16D together with the statutory declaration of service of Norazam bin Isa affirmed on 31 December 2024; and the registered-post receipts and tracking numbers accompany both exhibits. The notices were posted to six addresses, among them the address at No. 69, Jalan SS 6/10, Kelana Jaya, which the Defendant itself accepts, in Enclosure 8, to be its registered and business address. I accept that evidence as establishing that the notices were correctly addressed, prepaid and posted. The deeming provisions were thereby engaged, and the requirement of service under section 254 was met. [21] Against that, the Defendant offers only a denial of receipt. That denial is unparticularised, and it comes from a deponent who admits that the address served was the Defendant's own registered address. A bare assertion of non-receipt, in the face of proof of due posting to the correct address and an express deeming clause, does not displace the service so effected; nor, on any view, does it rebut the presumption of service that such proof raises. The first issue is determined in favour of the Plaintiff: the conditions precedent were satisfied, and no cause to the contrary arises under the second category.

Whether The Quantum Of The Secured Indebtedness Is Established [22] The facility agreements and annexures contain conclusive-evidence clauses providing that a statement or certificate of the sum due, signed by an authorised officer of the Plaintiff, shall be conclusive. A certificate issued under such a clause is, absent manifest error or fraud, conclusive evidence of the amount due, and casts upon the chargor the burden of displacing it: Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2005] 2 MLRA 736 (FC). [23] Exhibit JCF-1 to Enclosure 5 is a Certificate of Indebtedness certifying the sum of RM8,873,938.61 as at 28 April 2025. Enclosure 8 contains no averment alleging fraud, manifest error, or any specific challenge to the correctness of the certified indebtedness. Indeed, the Defendant does not dispute the existence of the indebtedness.The Court notes two apparent inconsistencies on the face of the papers. First, paragraph 13 of the Plaintiff's Affidavit in Reply (Enclosure 9) refers to a sum of RM8,866,477.87 as at 25 April 2025, which differs from the sum stated in Exhibit JCF-1 in the Further Affidavit (Enclosure 5) i.e RM 8,873,938.61. Secondly, Exhibit JCF-1 certifies indebtedness as at 28 April 2025, whereas the Further Affidavit exhibiting the certificate was affirmed on 18 April 2025. However, neither inconsistency has been the subject of any challenge by the Defendant, nor has the Defendant identified any manifest error in the computation of the indebtedness or disputed the validity of the Certificate of Indebtedness itself. In the circumstances, the Court makes no finding as to the reason for these inconsistencies. What is material is that the Defendant has not challenged the correctness of the certified indebtedness and has admitted the existence of the debt. On the evidence before the Court, the Certificate of Indebtedness remains uncontroverted. Accordingly, the indebtedness certified therein stands unrebutted, and no cause to the contrary arises on this account.

Whether Hardship Or The Wish For Time To Sell Privately Constitutes Cause To The Contrary [24] The remaining matters are the Defendant's pandemic-related difficulties (Enclosure 8, paragraph 8) and its wish to be allowed time to find a purchaser and settle the debt (Enclosure 8, paragraph 9). Neither falls within any of the three categories in Low Lee Lian (SC). The first is, in substance, a plea of impecuniosity; the second, a request for the court's indulgence. [25] That such matters cannot constitute cause to the contrary follows from the mandatory character of section 256(3). The court may not withhold an order for sale merely because it is sympathetic to the borrower's position. A chargor's inability to pay is the occasion for the chargee's application, not an answer to it; and once the court is not satisfied of cause to the contrary, section 256(3) leaves no residual discretion to refuse, or to defer, the order so as to await a hoped-for private sale. I would observe that the chargor's legitimate interests are not thereby left unprotected: the order fixes a reserve price reflecting the current market value, and the auction is to be held not less than one month hence, within which period the Defendant remains at liberty to redeem or to complete any sale and so discharge the debt. The third issue is determined against the Defendant.

CONCLUSION [26] It follows that none of the matters relied upon by the Defendant amounts to cause to the contrary within section 256(3) of the Code. The conditions precedent to the application have been satisfied and the secured indebtedness is established. The court is, in those circumstances, obliged by the subsection to order a sale; the statutory remedy of the chargee cannot be withheld.

ORDERS OF THE COURT [27] I therefore ordered the sale of the charged land by public auction under sections 256 and 257 of the Code, substantially in the terms prayed in the originating summons. In particular:

the total sum due to the Plaintiff under the charges as at the date of the order is fixed in accordance with the certificate of indebtedness (Exhibit JCF-1 to Enclosure 5), namely RM8,873,938.61 as at 28 April 2025, together with continuing interest at the contractual rate until full settlement, subject to any updated certificate of indebtedness filed for the date of the order;

the reserve price is to be fixed by the Deputy Registrar upon a current valuation of the charged land;

the sale is to be conducted by a licensed auctioneer on a date to be fixed, being not less than one month after the date of the order;

a successful bidder (other than the Plaintiff) is to pay a deposit of ten per cent of the purchase price, and to pay the balance of ninety per cent within one hundred and twenty days of the date of sale, failing which the deposit is liable to forfeiture under section 267A of the Code;

the Defendant and all occupants are to deliver vacant possession of the charged land within seven days of service of the order;

the net proceeds of sale are to be applied towards the sums due to the Plaintiff under the charges, any surplus to be paid to the Defendant, and the relevant authority is to register the purchaser as proprietor free of encumbrances;

the Plaintiff is at liberty to bid and, if it becomes the purchaser, to set off the purchase price against the sums due under the charges;

the costs of and incidental to the order and the sale are to be taxed and paid out of the proceeds of sale; and

there is liberty to apply. [28] For completeness, an application for an order for sale under section 256 of the National Land Code is the enforcement of a statutory remedy under a registered charge. It is not a claim for a money judgment, nor does the Court, in determining such an application, adjudicate substantive rights in personam between the parties: Malaysian International Merchant Bankers Bhd v Dhanoa Sdn Bhd [1987] 1 MLRA 288 (SC) (see also American International Assurance Co. Ltd v Union Builders (Malaysia) Sdn Bhd. [197. The present decision is therefore confined to whether the Plaintiff has established its entitlement to the statutory remedy sought and whether the Defendant has shown any cause to the contrary within section 256(3) of the Code. No determination is made on any separate cause of action or claim not arising for decision in this application. Dated 26 June 2026 (YA Dato' Sri Raja Segaran A/L S. Krishnan) (Judicial Commisioner) High Court Of Malaya Malacca High Court (MELAKA) Lawyer For Plaintiff Encik Ng Qing Rui Tetuan Manjit Singh Sachdev Mohmmad Radzi & Partners Peguamcara dan Peguambela No. 1, 11th Floor, Wisma Havela Thakardas, Jalan Tiong Nam, Off Jalan Raja Laut, 50350 Kuala Lumpur.