Mbsb Bank Berhad v Wardah Properties Sdn Bhd (WA-24MFC-189-02/2025)

This is a foreclosure proceeding commenced by MBSB Bank Berhad (“Plaintiff”) pursuant to Section 256 of the National Land Code 1965 (“NLC”) for an order for sale of the property held under Hakmilik Sementara Daftar H.S.(D) 76962, PT 2, Mukim Kuala Lumpur, Daerah Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur known as “Bangunan CIMB”, No. 3, Jalan Semantan, Damansara Heights, 50490 Kuala Lumpur (“the Charged Property”). The chargor, Wardah Properties Sdn Bhd (“Defendant”) opposes the application on the grounds that there exists “cause to the contrary” as envisaged under Section 256(3) of the NLC.

The material facts are largely undisputed. On or about 21 January 2022, the Plaintiff granted Islamic financing facilities amounting to RM26,600,000.00 to the Defendant under a Tawarruq structure. The facilities comprised Term Financing-i of RM25,600,000.00 for the purchase of the Charged Property and Cashline-i of RM1,000,000.00 for working capital. The facilities were secured by, inter alia, a legal charge over the Charged Property registered on 28 July 2022 (“the Charge”), a corporate guarantee from Widad Business Group Sdn Bhd (“WBG”), individual guarantees and assignments of rental proceeds.

The Defendant defaulted in its repayment obligations. The Plaintiff issued several notices of demand, a Notice of Termination dated 19 November 2024, and a statutory notice in Form 16D dated 15 January 2025 pursuant to Section 254 of the NLC. The Plaintiff also obtained a Judgment in Default (“the Default Judgment”) in a separate civil suit, WA‑22M‑40‑01/2025 (“Suit 40”), for the recovery of the outstanding debt. The Defendant has filed an application to set aside the Default Judgment, which is pending hearing.

Concurrently, in an unrelated suit, WA‑22NCC‑341‑05/2025 (“Suit 341”), a Mareva injunction was granted on 11 June 2025 against WBG (the Defendant’s parent company) restraining it from dealing with or diminishing the value of its assets, including its shareholdings.

The Plaintiff now seeks an order for sale of the Charged Property under Section 256 of the NLC. The Defendant resists the application primarily on three grounds: (i) defective service of the Form 16D; (ii) the pendency of the application to set aside the Default Judgment in Suit 40; and (iii) the existence of the ex-parte Mareva injunction against WBG in Suit 341, which it claims indirectly restricts the sale of the Charged Property.

On 9th October 2025, having considered the comprehensive written submissions, affidavits and authoritative legal references filed by the respective parties, this Court is satisfied that the Plaintiff has duly satisfied all statutory prerequisites and that the Defendant has not succeeded in establishing any valid cause to the contrary. Consequently, the order for sale was allowed.

Aggrieved by the decision to grant the order for sale, the Defendant proceeded to file a notice of appeal on 7th November 2025.

The sole statutory issue before this Court is whether the Defendant has shown “cause to the contrary” under Section 256(3) of the NLC to refuse the order for sale. This encompasses the following sub‑issues:

Whether the Plaintiff failed to properly serve the statutory notice (Form 16D) as required by Section 254 of the NLC;

(ii) Whether the pendency of the application to set aside the Default Judgment in Suit 40 constitutes a valid cause to the contrary; and

(iii) Whether the Mareva injunction granted against WBG in Suit 341 restricts the Plaintiff’s right to obtain an order for sale. ISSUE 1: Service of Form 16D

Defendant’s Contention:

Learned counsel for the Defendant, Encik Athari Bin Bahardin argues that the Defendant did not receive the Form 16D notice. Counsel argues that service is a mandatory condition precedent under Section 254 of the NLC and that the Plaintiff failed to discharge its burden of proving proper service. Counsel relies on authorities such as Jacob v Oversea‑Chinese Banking Corporation [1974] CLJU 54 (FC), which emphasise that sufficient notice must be given to the chargor before foreclosure proceedings.

Plaintiff’s Contention:

Learned counsel for the Plaintiff, Encik Muhammad Ezwar Rusydan Bin Mohd Basir argues that the Plaintiff had exhibited a copy of the covering letter for the Form 16D bearing the Defendant’s company stamp acknowledging receipt on 15 January

Counsel therefore argues that service was effected by hand at the Defendant’s registered address in compliance with Clause 10.14 of the Charge and Clause 20 of the Facility Agreement, which contain deeming provisions. Counsel cited Amanah Merchant Bank Bhd v Lim Tow Choon (Through Official Assignee) [1993] 1 MLRA 102 (SC), where the Supreme Court held that a deeming provision applies once the sender establishes that the notice was correctly addressed and delivered.

Court’s Findings:

I find the Defendant’s challenge on service to be without merit. The contemporary documentary evidence clearly shows the Defendant’s company stamp on the covering letter, acknowledging receipt. In the face of this objective evidence, the bare denial in the Defendant’s affidavit is insufficient to rebut the presumption of proper service. The deeming clauses in the Charge and Facility Agreement are clear and binding.

Clause 10.14 of the Charge and Clause 20.1 and 20.2 of the Facility Agreement states as follows:

10.14 Notice, Service of Notice and Legal Process:

Notice: Any service of notice or communication under or in connection with this Charge shall be in the manner as stipulated in the Facility Agreement.

Service of Legal Process: The service of any legal process under or in connection with this Charge shall be in the manner as stipulated under the Facility Agreement. …

20.1 Save as otherwise herein provided, any demand for payment of the monies to be paid by the Customer and any notice or request required or permitted to be given or made under this Agreement to the Bank shall be in writing and in the case of the Bank shall be under the hand of any duly authorized officer of the Bank or solicitor or firm of solicitors purporting to act for the Bank to the addresses set out below or as may be subsequently notified.

20.2 Any demand, notice, writ of summons or any legal process or request shall be deemed to have been sufficiently given or made if sent by registered post, addressed as aforesaid or delivered by hand to such address or faxed to such address and shall in the case of delivery by hand be deemed to have been duly served on and duly received by the other party at the time of delivery and in the case of delivery by registered post shall be deemed to have been duly served on and duly received by the other party after the expiration of three (3) days from the date it is posted notwithstanding that such letter may be subsequently returned unclaimed by the post office and in the case of facsimile shall be deemed to have been duly served on and duly received by the other party against due transmission evidenced by a print-out record of such transmission, subject to the condition that if such transmission is made after 5.00 p.m. on the day of transmission, it shall be deemed to have been served on the following Business Day. Any demand, notice or request by fax shall be followed by registered post or delivered by hand to such address as soon as practicable thereafter. [Emphasis added]

The purpose of Section 254, as underscored in Jacob v Oversea‑Chinese Banking Corporation (supra), is to ensure the chargor is informed of the default and given an opportunity to remedy it. That purpose was fulfilled here. The Plaintiff has therefore satisfied the statutory condition precedent.

Defendant’s Contention:

Counsel for the Defendant argued that it would be unjust and oppressive to grant an order for sale based on a Default Judgment that is contested and likely to be set aside. Counsel submitted that the Court should exercise its equitable jurisdiction under the third category of “cause to the contrary” from Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 2 CLJ 36 (SC) (i.e., where the order would be contrary to some rule of law or equity). Counsel also relied on Murugappa Chettiar v Letchumanan Chettiar [1938] 1 LNS 143 (HC) to argue that the Court should refuse a sale where it would be unjust.

Plaintiff’s Contention:

Learned counsel for the Plaintiff emphasised the fundamental distinction between an in personam action (Suit 40) and an in rem foreclosure proceeding (this application). Counsel cited the seminal case of Low Lee Lian v Ban Hin Lee Bank Bhd (supra), where the Supreme Court held that proceedings under Section 256 NLC are concerned only with the narrow question of whether cause to the contrary exists regarding the charge; contractual disputes are for separate in personam suits. Counsel also relied on Chan Boi Loi v Public Bank Bhd [2009] 2 MLRA 672 (FC), where the Federal Court affirmed that a chargee is entitled to pursue all available remedies simultaneously unless expressly contracted otherwise.

Court’s Finding:

I agree entirely with the Plaintiff’s position. The principle is well‑settled: a foreclosure proceeding under Section 256 NLC is an in rem action to enforce the security, wholly independent of any in personam action for the debt. As held in Low Lee Lian v Ban Hin Lee Bank Bhd (supra), the Court’s role here is confined to examining whether the chargor has established a cause to the contrary relating to the charge itself. The merits of the underlying debt, or challenges to a judgment obtained in a personal action, are irrelevant to this proceeding. The Defendant’s remedy, if any, lies in Suit 40.

The interpretation of ‘cause to the contrary’ is said to be too narrow and restrictive. Its restrictive nature was acknowledged by Gopal Sri Ram JCA in Low Lee Lian v. Ban Hin Lee Bank Berhad (supra) wherein His Lordship stated that the rationale behind this narrow interpretation lies in policy reasons. The money that banks lend as loans are funds deposited by their customers, which needs to be recovered promptly. When a borrower defaults in paying back a loan, the only way to recover the money is via the sale of the security charged on that loan. If ‘cause to the contrary’ is liberally interpreted, banks and financial institutions would lose confidence in their right to recover money this way, and become reluctant to lend money. Given the significant reliance of many businesses on loans, such a scenario would result in numerous adverse economic consequences, which Courts would be compelled to prevent.

Furthermore, the rationale behind this strict interpretation of 'cause to the contrary’ is justified, given that the procedures outlined in section 256 of NLC are intended to be quick and summary in nature. The Court's role under this section is to assess whether the necessary statutory notices have been provided, if procedural requirements according to Order 83 of the Rules have been adhered to, and ultimately to determine whether the chargor's argument constitutes a valid 'cause to the contrary'.

Specific to Islamic banking, the case of Arab-Malaysian Merchant Bank Bhd v Silver Concept Sdn Bhd [2005] 5 MLJ 210 (HC), Suriyadi J (as His Lordship then was) held that: “Any transacted Islamic banking business must be presumed to be in order at the outset unless rebutted later. At its inception, so long as the bank genuinely adhered to the very fundamentals of the al-Quran and authentic hadith, ie the exact demands of the religion of Islam, and the papers on the face of it were in order, that bank may proceed with the relevant banking transaction.” (paragraph 16).

To stay this foreclosure pending the outcome of the setting‑aside application would effectively undermine the Plaintiff’s statutory and contractual right to realise its security, a right which the authorities consistently protect. The case of Murugappa Chettiar v Letchumanan Chettiar (supra) is distinguishable on its facts, as it involved unique circumstances of joint ownership and sham transactions not present here.

Defendant’s Contentions:

Learned counsel for the Defendant, argues that the Defendant through its Further Affidavit (Enclosure 25) and Further Written Submissions, shows that the ex-parte Mareva injunction dated 11 June 2025 obtained by Primus Equities and Assets Sdn Bhd in Suit 341 against inter alia its parent company WBG indirectly restrains the sale of the Charged Property. Counsel contended that a sale would diminish the value of WBG’s 100% shareholding in the Defendant, thereby undermining the freezing order. The Defendant relied on the English Court of Appeal decision in Lakatamia Shipping Co Ltd v Su & Others [2015] 1 WLR 291 (CA), which stated that a Mareva injunction can cover assets indirectly affected if a disposition would diminish the value of the defendant’s restrained assets (e.g., shareholdings).

Plaintiff’s Contention:

Learned counsel for the Plaintiff raised a preliminary objection to the admissibility of Enclosure 25, arguing it was filed out of time without leave after affidavit evidence was closed. On merits, the counsel argued that the Mareva injunction binds only WBG, not the Defendant, which is a separate legal entity. The Charged Property is an asset of the Defendant, not WBG.

Counsel cited the principle of corporate separateness from Salomon v. Salomon & Co Ltd [1897] AC 22 (HL) and local authorities like Public Bank v New Ace Digital Print Sdn Bhd & Anor [2019] 3 MLRA 347 (FC), which hold that a shareholder has no legal or equitable right to the company’s assets. Counsel distinguished Lakatamia Shipping Co Ltd v Su & Others (supra) as dealing with a defendant’s control over third‑party assets, not an injunction against a separate corporate entity.

Court’s Finding:

As to the admissibility of Enclosure 25, while the affidavit was filed late, this Court, in exercising its discretion under Order 2 Rule 3 of the Rules of Court 2012 and guided by the interest of justice, admits it for consideration as the Plaintiff was given full opportunity to respond and did so in Enclosure 27.

On the merits, the Defendant’s primary argument remains fundamentally flawed. The Mareva injunction in Suit 341 is expressly issued against WBG and its assets. The Charged Property is legally and beneficially owned by the Defendant, a distinct legal person. The corporate veil cannot be pierced merely due to sole shareholding, absent allegations of fraud or impropriety, which are notably absent here. The injunction does not name the Defendant, nor does it list the Charged Property.

While the Defendant, in a belated and speculative flourish, seeks to invoke principles from cases such as Lakatamia Shipping Co Ltd v Su & Others (supra), suggesting that the assets of a wholly-owned subsidiary may be indirectly caught by an injunction restraining the parent from diminishing the value of its shareholding, this argument does not establish that the injunction applies directly to the Charged Property. It remains, at best, an unproven assertion, and an argument more suited to the inter partes hearing in Suit 341; a hearing which was scheduled on 24 June 2025. This Court observes with some irony, that the said urgent inter partes hearing has been postponed for various reasons and remains outstanding to this day, leaving the ex parte order in a state of unresolved limbo, and conveniently being weaponized by the Defendant to stall this foreclosure action.

Critically, even if one were to entertain the Defendant’s speculative argument that the Mareva injunction could be construed as indirectly affecting the Charged Property under the Lakatamia principle, it would present no substantive bar to this proceeding. The authority of Taylor v Van Dutch Marine Holdings Ltd & Ors [2017] 4 All ER 627 (HC) is directly on point and dispositive. In the said case Mann J held as follows: “Thus, in my view, a third party with security over property which is frozen by the freezing order would not need to obtain permission in order to exercise that security because the exercise of disposal rights under that security would not be an act prohibited by the order. If, for example, the third party uses a power of sale in order to dispose of the property, that would not be a disposal by the defendant notwithstanding any technicality which might arise out of the fact, which is common to many securities, that the exercise of a power of sale is technically done as agent for the mortgagor. Nor would it be any form of dissipation because the secured debt already exists and the secured property is already encumbered with it. The enforcement by the mortgagor would not be an infringement of the letter of the order; nor would it be contrary to the spirit of the order which, as I have explained, does not operate so as to give the claimant a prior right in the form of security over the assets. If the freezing order does not destroy, or affect, the rights of a charge or mortgagee (which it does not) there is no reason why it should operate so as to restrain the exercise of the rights of that person. The exercise of those rights would not infringe the order. It follows therefore, in my view, that strictly speaking a chargee or mortgagee, in a normal case, would not need to obtain a release or variation of the freezing order.”

Therefore, a Mareva injunction does not inhibit a secured creditor from enforcing its proprietary rights. The rationale is clear: the enforcement of a security is not an act of disposal by the defendant prohibited by the order, nor does it constitute "dissipation," as the asset is merely being applied to satisfy the prior encumbrance.

Nevertheless, in line with prudent practice and to avoid any potential ambiguity or dispute over compliance, a secured creditor in the Plaintiff’s position would typically seek a variation or clarification from the court that granted the Mareva injunction, confirming that the order does not restrain the enforcement of its security. Third parties in the cases of Bakarim v Victoria P Shipping Co Ltd (the “Tatiangela”) [1980] 2 Lloyd’s Rep 193 (HC) and Iraqi Ministry of Defence v Arcepey Shipping Co SA (the “Angel Bell”) [1981] 1 QB 65 (HC) did apply for variation. This cautionary step is reinforced by Lord Denning’s ruling in Z Ltd v A-Z and AA-LL [1982] 1 QB 558 (CA) which held that a Mareva injunction, though made in personam, operates in rem without creating rights in rem. Therefore, every person who has knowledge of a Mareva injunction must do what he reasonably can to preserve the asset. He must not assist in any way in the disposal of it. Otherwise he is guilty of contempt of court.

Be that as it may, such an application serves a salutary purpose in ensuring procedural clarity and forestalling any satellite dispute. It remains, however, a matter of procedural caution and not a legal prerequisite to enforcement. Its inevitable outcome would be a declaration that the Plaintiff's rights are unimpaired, particularly in light of the express provision within the Suit 341 Mareva order which safeguards financial institutions in the exercise of their contractual and statutory rights, including the right of set-off.

In conclusion, the Plaintiff has definitively proven the Charge, the default, and due service. The Defendant has failed to discharge its burden of establishing any “cause to the contrary.” Its reliance on Suit 40 is irrelevant to this in rem proceeding. Its Mareva injunction argument is a double failure: as a matter of fact, the injunction binds a separate entity, and as a matter of law, the principle in Taylor v Van Dutch Marine Holdings Ltd & Ors (supra) affirms the Plaintiff’s paramount rights. While obtaining a variation in Suit 341 would be the acme of prudence, it is a procedural step that would not alter the substantive outcome. The Plaintiff’s entitlement to an order for sale is absolute and unimpeded.

Consequently, no cause to the contrary having been established, this Court is duty bound under Section 256(3) of the National Land Code 1965 to make an order for sale. Accordingly, the Plaintiff’s Originating Summons (Enclosure 1) is hereby allowed with costs fixed at RM10,000.00. Dated: 3rd December 2025 Yusrin Faidz Bin Yusoff Judicial Commissioner High Court of Malaya Kuala Lumpur Counsel for the Plaintiff: Muhammad Ezwar Rusydan Bin Mohd Basir (Together with Nurul Ariesya Binti Ezhar Fahim (pupil-in-chambers)) Messrs. Hisham, Sobri & Kadir, Wisma HSK, 48G, Jalan PJU 5/22, Encorp Strand, Kota Damansara, 47810 Petaling Jaya, Selangor Darul Ehsan. Counsel for Defendant: Athari Bin Bahardin (Together with Muhammad Shah Irman Bin Mohd Sahit (pupil-in-chambers)) Messrs. Athari, C-3-5, Block C, Radia Bukit Jelutong, 40150 Shah Alam, Selangor Darul Ehsan.

Jacob v Oversea‑Chinese Banking Corporation [1974] CLJU 54

Amanah Merchant Bank Bhd v Lim Tow Choon (Through Official Assignee) [1993] 1 MLRA 102 (SC).

Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 2 CLJ 36 (SC).

Murugappa Chettiar v Letchumanan Chettiar [1938] 1 LNS 143

Chan Boi Loi v Public Bank Bhd [2009] 2 MLRA 672 (FC).

Arab-Malaysian Merchant Bank Bhd v Silver Concept Sdn Bhd [2005] 5 MLJ 210 (HC).

Lakatamia Shipping Co Ltd v Su & Others [2015] 1 WLR 291

Salomon v. Salomon & Co Ltd [1897] AC 22 (HL).

Public Bank v New Ace Digital Print Sdn Bhd & Anor [2019] 3

Taylor v Van Dutch Marine Holdings Ltd & Ors [2017] 4 All ER

Bakarim v Victoria P Shipping Co Ltd (the “Tatiangela”) [1980] 2 Lloyd’s Rep 193 (HC).

Iraqi Ministry of Defence v Arcepey Shipping Co SA (the “Angel Bell”) [1981] 1 QB 65 (HC).

Z Ltd v A-Z and AA-LL [1982] 1 QB 558 (CA).

O.2 r.3, O.28 & O.83 r.1 of the Rules of Court 2012.

Sections 254, & 256(3) of the National Land Code 1965.