Oriental Bank v Chup Seng Restaurant

 Facts:
 Borrower deposit IDT to the lending
Bank with discharge of existing
charge and an instrument of charge
duly executed in the bank favour
 Charge was not registered.
 Borrower defaulted. Bank applied
OFS. Claiming that to be subrogated
to the interest of the existing
registered chargee which they had
taken under an assignment.
 Decision
 High Court (Dzaiddin J): refusing the
application. Before the Bank can invoke its
right under Section 256, it must be registered
as charges.
 “that an equitable chargee does not have
the same legal rights as those of a
registered chargee. He cannot apply for an
order for sale in the event of default by the
chargor.
 Cont…
 It must , 1st and foremost, be recognised that
the…Code ….adheres strictly to the principle of
registration and recognises only parties who are
registered under the Code…Thus, whilst the Federal
Court on 1 hand, held that the Code….does not
prohibit the creation of an equitable charge,
the Code being a complete and comprehensive code of
law governing land, on the other hand, clearly
requires the charge to be registered in the
prescribed form before a chargee can enforce
his right of foreclosure under the Code”