MBF Finance BHD v Pendaftar Hakmilik Negeri Perak & Anor

The issue in this case is whether chargee has priority over the charged land rather than Director General of Inland Revenue. There is also issue on whether registrar had acted ultra vires in entering Registrar’s Caveat over the said land.

                Based on the fact of the case, Applicant, which is a charge over a charged land, applied for removal of Registrar’s Caveat. He wanted to get the order of sale over the said land since the debt owed by proprietor exceeded the market value could not be pay by the land owner. However, landowner also has debt due to the Inland Revenue. Director of Inland Revenue wanted to protect their interest over the said land and applied to Registrar for entering Registrar’s Caveat over the said land under Section 320(i)(ba) of National Land Code. This provision is said to be conflicted with Section 340 which gives indefeasibility of title to the registered interest.

                The Court then in allowing the application by applicant, held that Registrar does has quasi-judicial power to enter Registrar’s Caveat upon application by the first respondent, as stated under Section 320(1)(ba) to satisfy the income tax liability. However, the onus is caveator to show to the Court that there is a serious question to be tried in order to prevent the removal of caveat. In this case, respondent failed to raise it. Also, the Court also opined that Registrar had failed to consider interest of the chargee and the fact that the debt owed to chargee is larger than the market value of the land. Since chargee has priority over the charged land, the Court consider that and owner can never satisfy debt due to Inland Revenue. Since Registrar failed to consider this, he considered as acted ultra vires and order of removal of Registrar’s Caveat has been made.