Development & Commercial Bank Bhd v Land Adinistrator, Wilayah Persekutuan & Anor

The issue in this case is whether appellant as charge can seek declaratory order for purpose of determining priority of the charged land. There is also an issue whether appellant can apply to Court for cancelling the Registrar’s Caveat on the land.

Based on the fact of the case, the land owner had charged his land to the chargee as security for the loan agreement. Four years later, appellant initiated foreclosure of proceeding against the charged land due to default of payment. However, respondent which is Registrar had entered caveat on that land upon application by Inland Revenue Department under Section 320(1)(ba) of National Land Code 1965 and this entry of caveat had freeze the land from any dealings. The issue arise here when Registrar sent notice of caveat to both land owner and Inland Revenue but did not inform appellant. Section 418 of the Code gave right to the party who felt aggrieved by Registrar’s decision to make an appeal to the High Court within three months. However, since appellant did not get notice of caveat, his right to appeal has expired. Therefore, appellant applied for declaration order under Section 41 of Specific Relief Act 1950 to determine priority coupled with ancillary order under Section 417 of the Code to give effect to the declaratory judgement. This application has been dismissed in the High Court and appellant appealed.

The Supreme Court held that the act of Registrar in entering caveat was lawful. Also, under indefeasibility of interest stipulated in Section 340 of the Code, registered chargee takes priority over the subsequent Registrar’s Caveat under Section 320(1)(ba). The judges also held that based on this case, appellant charge has no alternative remedy other than declaration and order to set aside the caveat under Section 417 of the Code. It must be noted that Section 321 did not give right to chargee to apply to Registrar for removal or cancellation of the caveat. Moreover, under Section 321(3), charge can only appeal against registrar’s decision to enter caveat but not against registrar’s decision refusing to cancel the caveat. Since it is impossible to cancel the caveat, as well as in making appeal against decision of entering caveat, the Court held that declaratory relief should be granted and under Section 417, the Court ordered respondent, which is Registrar to cancel caveat pursuant to the declaration sought by appellant.