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1 IN THE HIGH COURT IN MALAYA AT IPOH 5 IN THE STATE OF PERAK DARUL RIDZUAN ORIGINATING SUMMON NO.: AA-24MFC-41-01/2024 Dalam perkara mengenai Seksyen 256 Kanun Tanah Negara 1965, Akta 56 10 Tahun 1965; Dan Dalam perkara mengenai 15 Aturan-Aturan 28 dan 83, Kaedah-Kaedah Mahkamah 2012 Dan 20 Dalam perkara mengenai Gadaian yang Perserahan No.11132/2020 berhubung dengan hartanah yang 25 dipegang di bawah Geran No. 12421, Lot 627N, Mukim Bandar Ipoh (U), Daerah Kinta, Negeri Perak 30 BETWEEN MAYBANK ISLAMIC BERHAD [COMPANY NO.: 200701029411] ...PLAINTIFF 35 AND RUBY ENGINEERING AND ELECTRICAL SDN BHD (COMPANY NO.: 706652-K) ...DEFENDANT 40 GROUNDS OF JUDGMENT Introduction [1]. This is the defendant’s application under Enclosure 34 seeking a stay of execution of the Order for Sale dated 7 January 2025 (Enclosure 37), pending the disposal of the defendant’s application 45 to set aside the Judgment in Default dated 27 December 2023 filed before the Ipoh High Court (Suit No. AA-22M-51-11/2023), which is currently fixed for decision on 31 July 2025. This case boils down to the question of the Court’s exercise of discretion in such circumstances. 50 [2]. The plaintiff opposes the stay primarily on the grounds that (i) the foreclosure proceedings are premised upon the statutory rights under the National Land Code (right in rem) and are not dependent on the Judgment in Default (right in personam); and (ii) the defendant failed to appeal against the Order for Sale, rendering it 55 final and binding. Background facts [3]. In or around 2020, the defendant, a company specialising in electrical and electronic engineering services for commercial developments and highway infrastructure, secured a financing 60 facility in the sum of RM1,700,000 from the plaintiff, Maybank Islamic Berhad, to acquire a shop lot situated in Mukim Bandar Ipoh, Daerah Kinta, Perak. The facility was secured through a statutory charge over the said property. [4]. The defendant diligently serviced the loan until the economic impact 65 of the COVID-19 pandemic severely disrupted business operations. Faced with cash flow difficulties, the defendant engaged the plaintiff in negotiations to restructure or reduce the repayment terms. Despite experiencing delays, the defendant continued making repayments in good faith, albeit not strictly in accordance with the 70 original schedule. [5]. However, without forewarning, the plaintiff suspended the defendant’s loan account and commenced legal proceedings. The plaintiff’s claim included a demand for a total sum of RM3,963,606.70, which encompasses unearned profit projected 75 until the facility's maturity in the year 2047, and is excessive and unconscionable. The defendant further alleges that the plaintiff’s conduct in demanding full settlement and rejecting restructuring proposals amounts to oppressive enforcement. [6]. Consequently, the plaintiff initiated both civil and foreclosure 80 proceedings. The foreclosure proceeding concluded with an Order for Sale granted on 7 January 2025. In the civil action, a Judgment in Default of Appearance was entered against the defendant on 27 December 2023, and separately, a summary judgment was obtained against the defendant’s director, who had provided a 85 personal guarantee for the facility. The Judgment in Default (“JID”) is currently being challenged and is awaiting a decision on 31 July 2025. [7]. The defendant filed an application to set aside the JID. The defendant contends that the JID was entered in bad faith because it 90 was obtained while case management was still ongoing and despite the defendant’s active participation. The defendant argues that the plaintiff acted contrary to Court directions by filing for default judgment prematurely, without allowing proper opportunity to defend its case on serious disputes on the quantum claimed. The defendant 95 argues that the alleged indebtedness is yet to be conclusively determined and that to lose the property in such circumstances is unjustified, particularly when there was an acknowledged settlement proposal by the plaintiff in a letter dated 19 April 2024, allowing repayments under revised terms. 100 [8]. The defendant asserts that the enforcement of the Order for Sale, granted on 7 January 2025, would irreversibly prejudice its right in the event the setting aside application were to be allowed. Furthermore, the property holds significant sentimental value for the defendant’s director, Mr. Ravichandran, who views the property as 105 part of his long-term legacy for his family. [9]. The application now before this Court is for a stay of the Order for Sale, pending the disposal of the defendant’s application to set aside the Judgment in Default. The defendant’s grounds of contention in summary are: 110 a) That the JID was entered mala fide and contrary to Court directions; b) That the defendant was deprived of the opportunity to file a defence due to procedural irregularity and miscommunication; c) That there is a bona fide dispute on the quantum claimed and 115 evidence of ongoing payments under a restructured arrangement; d) That the defendant would suffer irreparable prejudice if the sale proceeds prematurely, while the legitimacy of the debt remains disputed; and 120 e) that allowing the foreclosure to proceed would undermine the principles of natural justice and deny it the opportunity to ventilate its defence on the merits fully. Issues for determination [10]. The central issue is whether, in the interest of justice, the Court 125 should stay the execution of the Order for Sale pending the disposal of the application to set aside the JID, in a parallel civil action, which is currently fixed for decision on 31 July 2025. COURT’S FINDING A. Whether the foreclosure proceeding is separate from the JID 130 [11]. The plaintiff rightly contends that foreclosure is an action in rem, founded on the Charge itself, not on the judgment in personam. As affirmed in Malayan Banking Bhd v Skycon Development Sdn Bhd [2015] 7 MLJ 491; [2014] CLJU 429; [2014] AMEJ 0843; [2014] MLRHU 1441, the outcome of an in personam civil suit does 135 not bar the enforcement of a statutory charge. The Court in that case held that: “[26] It is trite law that the outcome of an action in personam is wholly irrelevant and has no effect on foreclosure proceedings commenced based on the charge executed by 140 the chargor. The dismissal of the civil action, therefore, cannot and does not prevent the plaintiff from applying for an order for sale… The plaintiff is not suing for a debt and its claim is not based upon a covenant but under the Charge. [27] In Low Lee Lian ( [at 10] supra), the Federal Court 145 addressed the issue in the following passage : "A judge who makes an order for sale… is unconcerned with the issue whether the same facts are sufficient to support an action in personam that may be brought by the chargor against the charge." 150 [28] The decision in Low Lee Lian establishes that in foreclosure proceedings, the Court is not concerned with whether the plaintiff had succeeded in proving the amount due and owing in the civil proceedings or otherwise. The outcome of the civil action has no bearing and relevance in 155 foreclosure proceedings, which is an action in rem.” [12]. Nevertheless, the Court retains inherent jurisdiction to ensure proceedings are conducted fairly and that enforcement mechanisms are not abused or employed to result in disorder. 160 B. Presence of special circumstances [13]. The defendant presented a case of irregularity in the entry of the JID while case management was still ongoing, despite the defendant’s director having physically appeared in Court. It is contended that the plaintiff proceeded contrary to the Court’s directions by entering the 165 JID on 27 December 2023, even though the next case management was fixed for 5 February 2024. [14]. Furthermore, the defendant has raised a substantial dispute over the amount claimed, asserting that overpayments and a restructuring arrangement have not been factored into the 170 computation. [15]. The Court is persuaded that these are issues for consideration in the application to set aside the JID. If the issues are eventually resolved in the defendant’s favour in setting aside the JID, then it may render the foreclosure unjust and prejudicial. The defendant 175 has also demonstrated that a private purchaser is ready to redeem the property, a factor that may be frustrated by a premature sale by auction. [16]. The Court is guided by the principles in Low Nam Hui & Sons Sdn Bhd v Huang Yan Teo [2007] 7 MLJ 13; [2007] 6 CLJ 27; [2007 180 6 AMR 649; [2007] 2 MLRA 301 and Pan Northern Air Services Sdn Bhd v Maybank Islamic Bhd & Another Appeal [2021] 3 MLJ 408 ; [2021] 3 CLJ 34 ; [2020] MLRAU 370, which emphasise that where a bona fide challenge exists and injustice may result, a stay should be considered to preserve the status quo. The grant of such 185 a stay lies within the discretion of the presiding judge and is not governed by statute or the Rules of Court. His Lordship Mokhtar Sidin JCA stated as follows in Low Nam Hui (supra): “[13] The statutes or the rules of court do not define what constitutes a special circumstance. This is left practically to 190 the opinion and judicial discretion of the presiding judges. In a nutshell, a special circumstance must mean something out of the ordinary or something unusual. The category of special circumstances can never be limited or closed, as from time to time and case to case different and various factors may be 195 accepted as special circumstances. The judge sitting alone or the judges of an appellate court must decide, on the available evidence disclosed in the competing affidavits before him or them, whether there are special circumstances relating to the enforcement of the order or judgment in order 200 to justify a stay of the order or judgment appealed against, and on what terms, if any, which are reasonable. There may be a situation in which one single factor by itself will not constitute a special circumstance. Depending on the facts of the case, there may also be a situation in which merit of the 205 appeal and one or more factors considered together may amount to a special circumstance justifying a stay. The judge will have to balance the competing interests of the parties…” (underlined emphasised) 210 [17]. This Court finds that, while the plaintiff’s statutory rights under the Charge must be preserved for the time being, the balance of justice presently favours preserving the property pending resolution of the defendant’s pending challenge of the JID. [18]. In exercising its inherent jurisdiction under Order 92 rule 4 of the 215 Rules of Court 2012, the Court is empowered to prevent injustice and suppress any abuse of its process. As affirmed in Tan Guek Tian v Tan Kim Kiat [2007] 6 MLJ 260; [2007] 9 CLJ 215; [2007] 5 AMR 136; [2007] 2 MLRH 584, such powers are an essential attribute of a superior court and may be invoked where procedural 220 fairness is at risk, as in this case. His Lordship Justice Malik Ishak puts it aptly in these words: “What is the true nature of the inherent jurisdiction of the court? It is difficult to advance a simple answer. There are a number of features that can readily be identified. It is a 225 correct assertion to make when we say that the inherent jurisdiction of the court is exercisable as part and parcel of the process of the administration of justice. It is procedural in nature and it is applicable to both civil and criminal cases (Connelly v DPP [1964] AC 1254; and R v Jefferies [1968] 3 230 WLR 830 ; [1968] 3 All ER 238). It is not part of the substantive law and it is usually invoked when the parties are in the midst of litigation. What is of importance is this. That the glaring and distinctive feature of the inherent jurisdiction of the court is that it can be exercised in a summary process 235 — at any time. It is part and parcel of the machinery of justice. It is an armament that can be used in any fact situation. It may be invoked not only in relation to the parties in pending proceedings but also in relation to anyone, whether a party or not, and in respect of matters that are not raised as issues 240 in the litigation between the parties. Thus, it can be said that the inherent jurisdiction of the court may be invoked in an inexhaustible variety of circumstances and may be exercised in different ways and manners. It has the capacity to diversify. It is very viable. The ongoing viability of the inherent 245 jurisdiction of the court can never be doubted.” (underlined emphasised) Conclusion [19]. In light of the totality of the circumstances, this Court is of the view 250 that granting a stay is the most appropriate and just course of action. The defendant’s application to set aside the Judgment in Default is already fixed for decision on 31 July 2025, which is not far off. Allowing the Order for Sale to be executed in the interim would risk rendering the setting aside application academic and cause 255 irreversible prejudice, particularly when bona fide issues are still pending adjudication. The Court therefore finds that this is a fitting case for exercising its inherent discretion to grant a stay. [20]. Accordingly, Enclosure 34 is allowed. The execution of the Order for Sale dated 7 January 2025 (Enclosure 37) is hereby stayed pending 260 the final disposal of the defendant’s application to set aside in Suit No: AA-22M-51-11/2023. No order as to costs. Dated : 2 July 2025 265 MOSES SUSAYAN Judicial Commissioner High Court in Malaya at Ipoh, Perak 270 Counsel 275 For the Plaintiff : Wong Weng Yew Advocates and Solicitors [Messrs Sucha Singh & Partners] Kuala Lumpur 280 For the Defendant : Sathiswaranji s/o Samyraw [together with Hussein bin Akhtar] Advocates and Solicitors [Messrs Hussein Akhtar Sathiswaranji & Co] 285 Petaling Jaya (Notice: This Grounds of Decision is subject to official editorial revision) Headnotes Civil Procedure — Execution — Stay — Stay of order for sale pending 290 application to set aside judgment in default — Foreclosure as action in rem distinct from in personam claim — Judgment in default obtained while case management ongoing — Allegation of procedural irregularity and mala fides — Dispute on quantum and offer to restructure — Whether special circumstances present — Whether foreclosure should be stayed 295 to prevent injustice — Court’s inherent jurisdiction under O 92 r 4 to safeguard procedural fairness — Whether pending application may be rendered academic if stay refused — Whether balance of justice justified preserving status quo