Bank Islam Malaysia Berhad v Quantum Majesty Sdn. Bhd. (KA-38-14-01/2025)

By a Letter of Offer dated 25 November 2015, the Plaintiff granted financing facilities totalling RM44,000,000.00 to 5 Star Room Hotel Sdn. Bhd. (“the Borrower”). The Defendant, being the registered proprietor of the subject property, agreed to charge the property (“the Charged Property”) as security for the said facilities. Upon the borrower’s default, the Plaintiff terminated the facilities. On 1 December 2021, the Plaintiff issued a statutory notice in Form 16D of the National Land Code (“NLC”) demanding payment of the arrears amounting to RM114,360,539.22.

On 15 August 2022, the High Court granted an order for sale of the Charged Property (“the Order for Sale”). The Defendant’s subsequent application to set aside or cancel the Order for Sale was dismissed by the High Court on 1 March 2023. The Defendant appealed against that decision, but the Court of Appeal dismissed the appeal on 18 July 2025, thereby affirming the Order for Sale and rendering it final.

Following the Order for Sale, the Plaintiff proceeded with the execution of the same. However, three public auctions conducted failed to attract any bidders. The first auction on 7 November 2023 was conducted with a reserve price of RM33,000,000.00. The second auction on 10 July 2024 proceeded with a reduced reserve price of RM29,700,000.00. The third auction on 19 December 2024 was conducted with a further reduced reserve price of

On 15 January 2025, the Plaintiff filed the Enclosure 1 of this current enforcement matter and applied to fix a date for a fourth public auction with a further 10% reduction in the reserve price to RM24,057,000.00. By a decision dated 21 September 2025, the Senior Assistant Registrar (“SAR”) dismissed the Defendant’s objections to the valuation, fixed the reserve price as applied for, and scheduled the fourth auction to be conducted on 27 November 2025.

Dissatisfied, the Defendant appeals to this Court against the said decision, contending, inter alia, that the SAR has failed to consider a rescheduling agreement dated 31 January 2020 (“Rescheduling Agreement”) which allegedly reduced the outstanding indebtedness to approximately RM60 million, that the Form 16D notice was defective due to an incorrect debt amount, and that the alleged discrepancy raises Shariah issues under the Tawarruq facility requiring mandatory reference to the Shariah Advisory Council of Bank Negara Malaysia.

The Plaintiff maintains that the Court at the execution stage is confined to procedural matters relating to the conduct of the auction and lacks jurisdiction to reopen or revisit the substantive merits of the Order for Sale, which has attained finality.

The details of the parties’ arguments during this Appeal are as follows.

The Defendant’s appeal, brought by way of Notice of Appeal (Enclosure 36), is directed against the decision of the SAR.

By the appeal, the Defendant seeks, inter alia, an order setting aside or quashing the SAR’s decision, a stay of all execution proceedings, including the public auction fixed for 27 November 2025, and a direction that the Defendant’s objections be restored for determination on their full legal and factual merits before a High Court Judge.

The Defendant contends that the SAR committed errors of law and procedure. It is argued that the SAR adopted a contradictory approach by declining jurisdiction to consider the Defendant’s substantive objections while simultaneously exercising jurisdiction to fix the auction date and reserve price. The Defendant further submits that the SAR failed to consider material evidence, including the Rescheduling Agreement which allegedly shows that the debt claimed is inaccurate, alleged defects in the statutory notice in Form 16D, and evidence that the reserve price of RM24,057,000.00 does not reflect the true market value of the Charged Property. It is also contended that these matters constitute “cause to the contrary” within the meaning of sections 256 to 259 of the NLC.

The Defendant additionally alleges a breach of the rules of natural justice, contending that despite affidavits and documentary evidence having been filed, the SAR dismissed the objections without substantively adjudicating them on their merits, thereby denying the Defendant the right to be heard.

On the substantive legal issues, the Defendant argues that the Plaintiff’s demand of RM114,360,539.22 is inconsistent with the Rescheduling Agreement, which allegedly reduced the indebtedness to approximately RM60 million. As the financing facility is structured using Shariah contract of Tawarruq, the Defendant submits that the discrepancy raises a Shariah question requiring mandatory reference to the Shariah Advisory Council of Bank Negara Malaysia pursuant to sections 56 and 57 of the Central Bank of Malaysia Act 2009.

Finally, the Defendant contends that if the execution is allowed to proceed, it would suffer irreparable prejudice through the loss of its equity of redemption, rendering the appeal academic and causing permanent financial loss.

The Plaintiff maintains that its application to proceed with a fourth public auction is legally sound, procedurally regular, and necessary to recover the outstanding indebtedness. The Plaintiff’s submissions are premised on the finality of the Order for Sale, the propriety of the valuation relied upon, and the limited jurisdiction of the execution court.

The Plaintiff submits that its application complies with the applicable procedural and statutory requirements. The application to fix a new auction date and reserve price was made in accordance with the High Court Registrar’s Practice Directions No. 1 of 2014 and No. 1 of 2018, as well as section 256 of the NLC. Further, pursuant to section 259(2)(c) of the NLC, the Court is empowered to fix a new reserve price where a prior auction has failed. The Plaintiff contends that the reduction of the reserve price by 10% from the third failed auction, to RM24,057,000.00, is a standard and reasonable measure to attract bidders after three unsuccessful auctions.

On valuation, the Plaintiff relies on a report prepared using the comparison method, which assesses the forced sale value of the Charged Property for auction purposes. The Plaintiff submits that this method reflects prevailing market realities. The Defendant’s valuation of RM46.6 million, which is based on the residual method, is said to be speculative and unsuitable, as it is premised on future development potential. The Plaintiff points out that the land remains agricultural and that prior development approvals have been cancelled, rendering the Defendant’s valuation unrealistic for a public auction.

The Plaintiff further emphasises the principle of finality. The Order for Sale granted by the High Court on 15 August 2022 was affirmed by the Court of Appeal on 18 July 2025. No further appeal was pursued. The Order for Sale has therefore attained finality and is binding on all parties. The Plaintiff submits that the Defendant is barred by the doctrines of res judicata and functus officio from reopening substantive issues, including the validity of the Form 16D notice and the quantum of indebtedness, which ought to have been raised during the foreclosure proceedings at the originating summons stage.

The Plaintiff also submits that the jurisdiction of the execution court is strictly limited. At this stage, the court’s role is confined to the administrative management of the auction process, namely the fixing of the auction date and reserve price. The execution court has no jurisdiction to review, set aside, or nullify a substantive Order for Sale that has already been issued by the High Court and affirmed on appeal.

Finally, the Plaintiff asserts that it is acting in good faith in exercising its statutory rights as a chargee to recover a debt that remains outstanding. The Plaintiff characterises the Defendant’s appeal in this enforcement suit and repeated attempts to stay the execution as an abuse of process designed to delay recovery and prolong litigation. The Plaintiff further submits that the Shariah-based objections now raised are belated and contrived, having been introduced only at the execution stage in an attempt to circumvent the finality of earlier court decisions.

As per the Defendant’s Affidavit in Support of their application, in this appeal, the Defendant is challenging the decision of the SAR, alleging that the SAR has erred in law by holding that she lacked jurisdiction to hear the Defendant’s objections, while at the same time proceeding to fix the auction date.

It is also the Defendant’s case that the SAR also failed to consider material evidence filed by the Defendant, including:

The Rescheduling Agreement;

Alleged defects in Form 16D issued under the NLC;

The valuation report and reserve price, which are said not to reflect the true market value of the property; and

The existence of “cause to the contrary” under sections 256 to 259 of the NLC.

Although the affidavits and supporting documents were duly filed, they were never heard or determined on their merits. The SAR’s decision is therefore said to have violated the Defendant’s right to be heard (audi alteram partem).

The Defendant further contends that if the auction scheduled for 27 November 2025 is allowed to proceed, it will suffer prejudice through the loss of its equity of redemption, rendering the present appeal academic.

The Defendant first contends that the SAR erred in law by declining jurisdiction to consider the Defendant’s substantive objections, while at the same time exercising jurisdiction to fix the date of the fourth auction and the reserve price. The Defendant argues that the SAR could not selectively exercise her powers to advance execution while refusing to consider matters raised to restrain it.

The Defendant further submits that the SAR has failed to consider material evidence amounting to “cause to the contrary” under Sections 256 to 259 of the NLC. In this regard, reliance is placed on the Rescheduling Agreement, which is said to demonstrate that the amount demanded is inaccurate. The Defendant also challenges the validity of the statutory notice in Form 16D and disputes the valuation relied upon, contending that the reserve price of RM24,057,000.00 does not reflect the true market value of the charged property.

It is the finding of this Court that the Plaintiff has provided substantial evidence to support the Valuation Report used in their application, which the Defendant has failed to demonstrate in their arguments, despite it being one of the main issues in their appeal to this court.

This Court agrees with the Plaintiff in their submission where they welcomed the Defendant to challenge the valuation report. However, the Defendant must produce substantial report(s) to counter this, and that has to be done during the Order for Sale stage and not during enforcement stage. The Plaintiff quotes the case of Mustapha Bin Mohamed (AsThe Receiver and Manager Of Sykt Ji Seng Hong Plastic Manufacturing Sdn Bhd) V Ji Seng Hong Plastic Manufacturing Sdn Bhd (Ng Bak Soon & Ors, Petitioners) [2014] 11 MLJ 793 in which Che Mohd Ruzima JC (now, FCJ) held: “[45] As regards the petitioners’ submission on the market value and their objection to the method of valuation done by the valuer on the industrial lot, I agree with the applicant’s counsel that the petitioners while alleging and disputing the valuation report, have not discharged their burden of proof thereof by producing another evidence of valuation to counter the value given by the applicant. Without the benefit of having another expert opinion, I don’t have the option to evaluate the other opinion as to the value of those assets. There are various method of valuation and what was tendered in court by the applicant is one of it. I cannot say that the valuation is defective unless it can be shown that the method used is fundamentally wrong and contrary to the basic principles of valuation. The petitioners failed to do so.” [Emphasis added]

Accordingly, this Court finds that this was the position of the Defendant, particularly in light of the fact that its appeal against the Order for Sale dated 15 August 2022 was dismissed by the Court of Appeal on 18 July 2025. The dismissal affirmed the Order for Sale and, consequently, entitled the Plaintiff to proceed with its enforcement application.

Therefore, the Court further finds no error in the SAR’s decision to retain the Plaintiff’s valuation report and to reduce the reserve price by 10%. This was a proper exercise of discretion in accordance with section 259(2)(c) of the NLC, particularly in light of the fact that three previous auctions had failed.

In applying the principles of valuation to the competing reports, this Court has scrutinised the methodologies employed by both parties. This Court accepts the Plaintiff’s submission that the Defendant’s valuation report is fundamentally unsuitable for the purpose of these execution proceedings.

As correctly highlighted by the SAR, a critical distinction must be drawn between a valuation for 'Financing' and one for 'Auction'. The Defendant’s report relies on the former. It is trite that a valuation for a judicial sale must reflect the current market reality in the context of a forced sale. A financing valuation often adopts optimistic assumptions—such as future development potential—that do not account for the exigencies of a public auction.

Conversely, the Plaintiff’s valuation report was prepared specifically for the purpose of the 'Auction'. It employs the comparison method to assess the forced-sale value, which this Court finds consistent with the statutory purpose of these proceedings.

Furthermore, the Defendant’s valuation is critically flawed as it relies on a development order which has since been cancelled or revoked, reverting the land status to agriculture. Relying on a valuation based on a non-existent development potential yields an inflated figure that would only serve to deter bidders, thereby defeating the very purpose of execution. Therefore, the SAR was correct, both in law and in fact, to prefer the Plaintiff's report.

I also find merit in the Plaintiff’s submission regarding the history of the reserve price. It is on record that the first auction in 2023 carried a reserve price of RM33 million, to which the Defendant raised no objection. The current reserve price of RM24,057,000.00 is merely the mathematical result of statutory 10% reductions following unsuccessful auctions, pursuant to Section 259(2)(c) of the NLC.

It is legally untenable for the Defendant to proffer now a valuation of approximately RM46 million—significantly higher than the initial RM33 million and the subsequent reduced reserve prices, which failed to attract any single bidder. This belated objection contradicts the market reality proven by the failed auctions and appears to be an afterthought intended to delay the execution.

From what has been gathered from both the Defendant’s and Plaintiff’s submissions, it is clear to this Court that much, if not all, of the contentions brought up by the Defendant in this present appeal are on the substantive merits of the case. These are matters which ought to have been raised during the originating summons stage of the recovery process. Those contentions, if supported by solid and substantial reasoning, would enable the foreclosure court and the subsequent Court of Appeal (on appeal) to deliberate the same without the need to reach this enforcement stage.

In considering the Defendant’s appeal against the decision of the SAR, the Court finds that the matter has progressed to the execution stage, being a continuation of the Order for Sale previously granted. It is trite law that, at this stage, the jurisdiction of the execution court is confined to the conduct and management of the auction process, including the fixing of the reserve price and auction date, and does not extend to a re-examination of the substantive merits of the case.

The Court therefore agrees with the Plaintiff’s submission on the limits of the SAR’s jurisdiction. The plaintiff premises that the Order for Sale obtained on 15 August 2022 remains valid and operative. In support of this position, the Plaintiff relies on the decision of the Federal Court in Stone World Sdn Bhd v Engareh (M) Sdn Bhd and Another Appeal [2020] MLJU 1226, where Nallini Pathmanathan FCJ held as follows: [13] It is settled law that once a court has pronounced a final order, it does not possess the authority to reopen, alter, amend and supplement the final order and judgment relating to the dispute it has adjudicated upon. This rule, known as the doctrine of functus officio, stems from the principle of finality in litigation. There would be great uncertainty and chaos if courts were permitted to review and reconsider final orders and judgments. [14] This doctrine has been described as “…..one of the mechanisms by means of which the law gives expression to the principle of finality.” (See ‘The Origins of the Functus Officio Doctrine, with Specific Reference to its application in Administrative Law ‘ 122 S. African L.J. 832 (2005) by Daniel Malan Pretorius). [15] The general rule is that an adjudicator only exercises his decision-making powers once, in respect of a particular matter, so as to give a final and conclusive order or judgment in respect of the particular legal rights or claims made. This decision cannot be revoked or varied by the decision maker. It is important to emphasise in this context that the court is not so much bereft of jurisdiction but is bound by the said rule not to exercise such power in the interests of the finality of litigation.” [Emphasis added]

The Federal Court in Stone World (supra) further explained that the doctrine of functus officio is one of the mechanisms by which the law gives effect to the principle of finality in litigation. As a general rule, an adjudicator exercises decision-making powers only once in respect of a particular matter, so as to render a final and conclusive determination of the rights of the parties. Once such a decision is made, it cannot be revoked or varied by the same decision-maker, not on account of a lack of jurisdiction, but because the court is bound by the rule in the interests of finality.

In other words, it is settled law that once a court has pronounced a final order, it does not possess the authority to reopen, alter, amend or supplement the final order and judgment relating to the dispute it has adjudicated upon. The doctrine of functus officio stems from the principle of finality in litigation. There would be great uncertainty and chaos if courts were permitted to review and reconsider final orders and judgments.

Any disputes relating to the validity of the Charge, alleged defects in Form 16D, or the legal effect of the Rescheduling Agreement are substantive matters which ought to have been raised during the foreclosure proceedings at the originating summons stage, before the granting of the Order for Sale. The foreclosure court has since granted the Order for Sale.

It is also important to recognise that the Court of Appeal had already affirmed the Order for Sale in 2025. The issues raised have therefore attained finality and are binding on all parties.

The Defendant also alleges a breach of natural justice, contending that although affidavits and documents were filed in support of its objections, the SAR dismissed the application without substantively hearing or determining those issues on their merits, thereby denying the Defendant the right to be heard.

Turning to the legal challenges, the Defendant submits that as a third-party chargor, it is not bound by the previous judgments involving the borrower. Reliance is placed on Kandiah Peter v Public Bank Bhd [1994] 1 MLJ 119 to argue that res judicata does not apply to foreclosure proceedings.

This Court finds this submission misconceived. While Kandiah Peter distinguishes between a judgment debt and an order for sale, it does not grant a chargor carte blanche to reopen substantive issues regarding the validity of the charge or the quantum of the debt after the Order for Sale has been granted and perfected. The Order for Sale dated 15 August 2022 was granted directly against the Defendant. Any objection regarding the status of the Defendant, the validity of the Form 16D, or the Shariah compliance of the Tawarruq facility, if at all, ought to have been raised during the foreclosure stage to oppose the making of that order.

The Defendant had failed to do so during the foreclosure stage. Allowing the Defendant to litigate these issues now, under the guise of an appeal against the reserve price, would constitute an abuse of the court process, as envisaged in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 CLJ 783. The principle of finality applies with equal force to a chargor who had the opportunity to defend the foreclosure action but opted to remain silent until the eleventh hour of the enforcement. As a registered chargor, the Defendant’s liability is tied to the security created under the NLC, and having submitted to the Order for Sale, it cannot now disclaim liability by pleading issues regarding the Customer's facility restructuring.

The Defendant’s attempt to reframe these objections as Shariah issues requiring reference to the Shariah Advisory Council under Sections 56 and 57 of the Central Bank of Malaysia Act 2009 does not assist them. The mere repackaging of previously available arguments in religious or statutory terminology does not circumvent the operation of issue estoppel. In substance, the Defendant is challenging the same indebtedness that underpinned the final Order for Sale.

The Court accepts the Plaintiff’s submission on the limits of this Court as an enforcement court on determining the legitimacy of the Plaintiff’s application, during the enforcement stage, only to administrative management of the auction process, such as fixing of the auction date and reserve price.

Expanding from that point, the Plaintiff relies on the case Radiant Splendour Sdn Bhd & Anor V Dr Mohammad Hanis Bin Osman [2025] 10 MLJ 310, where Yusrin Faidz JC held: “[55] In light of these findings, I am compelled to agree with the defendant that the doctrine of issue estoppel squarely applies to bar the present claim. The principle, as enunciated by the Supreme Court in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd, is that a party is estopped not only from relitigating issues which were actually decided in a prior action, but also from raising any issue which could and should have been litigated in the earlier action, but was not — whether due to oversight, tactical reserve, or strategic omission. [56] The rationale is firmly grounded in the need to ensure finality of litigation and to guard against the piecemeal presentation of claims across multiple proceedings involving the same subject matter and parties. As Azimah Omar J (as Her Ladyship then was) rightly held at para [58] of Suit 793 judgment: … Litigants cannot be allowed to reveal their causes of action on a staggered basis, intending to inundate the court and the opposing party in an unending saga of litigation. There must be finality in litigation, and to decide against such finality would only open the courts to a chasm of unending litigations. [57] In the present suit, the plaintiffs are once again attempting to challenge the validity of the same settlement agreements and transactional conduct on substantially similar grounds. This assertion, though newly framed in religious and statutory language via a request for reference under s 56 of the Central Bank of Malaysia Act 2009, does not escape the boundaries of issue estoppel. It is plainly an attempt to relitigate matters that either were or ought to have been raised in Suit 793 case and the related proceedings. [58] Accordingly, I find that the plaintiffs are estopped from seeking the reliefs now prayed for in this action. The doctrine of issue estoppel bars this court from entertaining claims which should have been finally adjudicated in prior litigation. To permit otherwise would render the doctrine of res judicata a nullity and expose the judicial system to repetitive and vexatious litigation.” [Emphasis added]

Finally, as the Plaintiff’s application in Enclosure 1 was properly made and in compliance with the applicable execution procedures, the Court finds no reasonable or legal basis to intervene in or disturb the SAR’s decision. The Appeal by the Defendant to this Court is hereby dismissed with costs (subject to allocator). Dated: 16th February, 2026 -------------------------------------------------------------------- DR. HJ JOHN LEE KIEN HOW @ MOHD JOHAN LEE JUDGE HIGH COURT OF MALAYA ALOR SETAR Solicitor : Nur Aini Binti Yaakob & For the Plaintiff Farah Sakinah Binti Paridul Adras Sidek Teoh Wong & Dennis Solicitor : Ahmad Farid & Kamal Hisham For the Defendant Ahmad Farid & Associates Authorities Cases Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd. [1995] 3 CLJ 783 Kandiah Peter v Public Bank Bhd [1994] 1 MLJ 119 Mustapha Bin Mohamed (As The Receiver and Manager Of Sykt Ji Seng Hong Plastic Manufacturing Sdn Bhd) V Ji Seng Hong Plastic Manufacturing Sdn Bhd (Ng Bak Soon & Ors, Petitioners) [2014] 11 Mlj 793 Radiant Splendour Sdn Bhd & Anor V Dr Mohammad Hanis Bin Osman [2025] 10 MLJ 310 Stone World Sdn Bhd v Engareh (M) Sdn Bhd and Another Appeal [2020] MLJU 1226