RESTRAINTS OF DEALINGS

DEFINITION
Part 19
th
of the NLC provides two kinds
of restraints of dealings.
(i) Caveat
The word caveat means warning or
cation!. The word caveat also means
let nothing "e done withot notice to the
person lodging the caveat.
s. # defines caveat as registered caveat.
Principall$% caveat is aimed at
maintaining or preserving the stats &o
of parties pending the resoltion of their
disptes "$ a cort of law% which has $et
to take place.
(ii) Prohibitory Order
s. ''( defines it as an order made
prsant to rles of cort "$ a cort of
competent )risdiction prohi"iting the
)dgement *de"tor from entering an$
dealing in respect of his land.
Lis Pendens nder s. +##(+) of the
Corts of ,dicatre -ct 19. is entered
on the register pending a cort action. /t
is not restraint of dealing
T. Damodarn v Choe Kuan Him.
Inun!tion in the form of interloctor$
althogh there are same similarit$ with
the caveat in the sense that it is granted
to preserved stats &o pending
settlement of disptes
En" #ee $on" % Ors.v Let!humanan
0t there are some difference "etween
them that an in)nction is granted on
)dicial discretion "t caveat is stattor$
provision.
N &an"edase'am v #ahadevan %
(nor
1ffian LP held that a caveat is not final
and conclsive "t it is like an interim
in)nction and its prpose is to preserve
the stats &o pending the taking of
steps "$ the caveator to enforce his
claim to an interest in the land "$
proceeding in the corts.
THE C(&E(T )$)TE#
(1) (nother E*!e+tion to Inde,easibi'ity
2nder the Torren 1$stem% registration is ever$thing.
34ever the NLC also provides that protection to
nregistered interest.This is o"tain throgh caveat
s$stem.
(+) Nature O, Caveat )ystem
(a) The caveat does not create an$ interest or right
over the land "t it onl$ pt things in stats &o.
Ths the effect of caveat is to "ind the land to prevent
the registered owner from dealing with his land. /n
En" #ee $on" v Leth!umanan it was held that 5 a
ver$ grave crtailed of the rights of the proprietor!.
(") s. '+( caveat is issed e6 parte "$ the 7esgistrar
acting in an administrative capasit$ w4ot the
intervention of the cort . 7egistrar is not concerned
with whether the claim is "aseless or not. 1o long as
the docments is in correct form .
(c )2nder s. '+9 the caveator will "e lia"le for an$
damage if he o"tained the caveat w4ot reasona"le
case.
(d) Caveat serves as a notice warning an$ third part$
intending to deal with the land that there is a prior
claim affecting it. -s sch the third part$ is prevented
from "eing defraded "$ the registered owner.
F-NCTION) OF C(&E(T
8enerall$ there ( main fnctions of caveat9
(a) it restrain the registered proprietor from dealing
with the land
(") it protects the interest of the caveator for the
time "eing ntil the final disposal of his claim
against the proprietor
(c) /t serves as a notice to the world at large that
the caveator has an interest in the land which
he is protecting "$ means of the caveat and
(d) /t free:es the sitation "$ maintaining the
stats &o of all parties concerned ntil the
final disposition of the case.
Chin Chen" Hon" v Hameed % ors
Caveat e6ists for the protection of alleged as well as
proved interests% an of interests that have not $et
"ecome actal interests in land.
.ut'er v Fair!'ou"h % (nor
Caveat operates as notice to all the world that the
registered proprietor;s title is s")ect to the e&ita"le
interests alleged in the caveat.
Temmen""on" )e!urities Ltd. % (nor v /e" o,
Tit'e 0ohor % Ors.
The prpose of the caveat is to preserve the stats
&o pending the taking of timeos steps "$ the
applicants to enforce his claim to an interest in the
land "$ proceeding in the corts.
T$PE) OF C(&E(T)
The NLC provides for classes of caveats
.<ach t$pes of caveats has its own distinct
procedres and prposes.
(a) Private Caveats
(") 7egistrar;s caveats
(c) Lien=holder;s caveats
(d) Trst caveats
ON-) OF P/OOF
Cahya #a1mur Ho'din"s )dn..hd. 234456 3
#L0 573
The >ns of Proof lies on the Caveator .The
cort followed the -nn ?ong;s case.
LIEN8 HOLDE/9s C(&E(T)
236 Creation and E,,e!t o, Liens
(1) s. +@1 provides that an$ proprietor of land
or an$ lessee for time "eing ma$ deposit with
an$ other person or "od$% as secrit$ for a
loan% his /AT or dplicate lease% as the case
ma$ "e.
(+) 2pon sch deposit "eing made% the
depositee ma$ appl$ to the 7egistrar 4s. ''B
for the entr$ of a lien=holder;s caveat in
respect of the land or lease. 2pon entr$ of
sch caveat the depositee "ecomes entitled
to a lien over the land or lease. 1. +@1(1)
(') The Lien=3older if had o"tained a
)dgement for he npaid amont de to him
"$ the proprietor or the lessee he can appl$
to cort to sell the land or the lease. 1. ''B
(')
256 Creation and E,,e!t o, a Lien8Ho'der9s
Caveat
(a) an application mst "e made in Corm
19A to the 7egistrar % dl$ attested as
prescri"ed 4s. +11 and accompanied
/AT or dplicate lease and also fees
(") pon application the 7egistrar shall
note the time it was received nless
he is prohi"ited "$ 7egistrar;s caveat%
private caveat %trst caveat or
prohi"itor$ order% he mst enter the
caveat as soon as possi"le.
(c) 3e mst enter the caveat in 7AT or
lease and mst notif$ in Corm 19- to
the proprietor or lessee . s. ''B(')
(d) The 7egistrar mst endorsed the
words 5caveat (Lien)D on the 7AT
together with the statements 9 (/)
whterh the caveat "inds the land itself
or a lease (ii) the person or "od$ who
appl$ the caveat (iii) the effectiive time
(iv) the reference nder which the
application was made.
(e) 1 se&ent lien=holder;s caveats.
T/-)T C(&E(T)
(a) s. ''' (1) - trst caveat is entered in respect of an$
land or interest which is e6pressed to "e held "$ an$
persons or "odies as trstees. /t ma$ "e entered "$ the
trstees themselves or the settlor of the land or interest in
&estion.
(") The application mst "e made in Corm 19< and mst
"e attested and accompanied "$ prescri"ed fee.
(c ) 2pon receiving the application the 7egistrar shall
endorse the caveat with the word caveat (trst)! on the
7AT.3e mst states whether the caveat is on land or its
interest.
(d) s. ''' (#) - trst caveat shall contine in force ntill it
is cancelled "$ the 7egistrar pon application in that "ehalf
"$ the trstees for time "eing and all the persons and
"odies "eneficiall$ entitled nder the trst.
The .an1 o, To1yo Ltd v /e"istrar o, Tit'es: )e'an"or
P applied to remove the trst caveat entered "$ the
Aefendants in respect to a land. +
nd
A had alleged that he
was the trstees of the land "t his name was not
registered on the titles as trstees. 3e mst first enter his
name as trstees 4s. ''+ (1) NLC and s. '((.-s sch A+
has no locs standi% so ordered to remove the caveat
trst. .
2;6 E,,e!t o, Lien Ho'der9s Caveats
(a) s''B(#) states that the lien=holder;;s caveat has the
prohi"itive effect against s"se&ent registration of
dealings% endorsement in respect of tenanc$
e6empt from registration and entr$ of s"se&ent
lien=holder;s caveat.
(") /f the "orrower (proprietor or lessee) wans to mae
an$ dealing on the land% the lien holder;s caveat
mst "e taken care first.
#er!hanti'e .an1 Ltd. v The O,,i!ia' (ssi"nee
The proprietor of a land had deposited his land to
appellants as secrit$ for a loan. 3e failed to repa$ and on
+@4(4.. )dgement was o"tained as against the proprieter.
>n 94.4.. a "ankrptc$ notice was served against him. >n
+4@4.. -pp. <nter a lien holder;s caveat agaisnt the land
4s. ''B. Propritor died on -pril 19.E. 3eld9 The >fficial
-ssignee stepped into the proprietor shoes as soon as
"ankrpts$ order is served. -t that time the propert$ was
stiil free from lein holder caveat. 0t the -ppl has e&ita"le
rights "$ wa$ of contract .-s sch the$ can enter into and
register the lien holder caveat at an$ time.
Che< )=e )un v #uthiah Chettiar
/f Lien holder caveat enter earlier% it will prohi"itthe entr$ of
s"se&ent private caveat on the same land.
Determination o, a Lien Ho'der Caveat
(a) s. ''1 (1) = - lien holder caveat ma$ "e withdrawn
at an$ time "$ a notice in writing given to the
7egistrar "$ the person or "od$ who entitled to the
"enefit of the lien.
(") The 7egistrar pon receiving the notice mst cancel
it as soon as possi"le.
(c) 1. ''1(') = The 7egistrar ma$ also cancel the
caveat when there is proof that the de"t is dl paid.
(d) 1. ''1 (+) = Fhen the land or lease is sold nder
cort 4s. +@1(+) an$ certificate presented to register
"$ the new prchaser shall "e deemed presented
"$ the consent of the lien holder and pon
registration the caveat lapse.
/E>I)T/(/9) C(&E(T
s. '+B = - 7eg Caveat ma$ "e entered to an$ land "$ 7eg if he
thinks necessar$ or disera"le and it has the following G
? Fun!tions o, /e"istrar9s Caveat@
(a) to prevent frad or improper dealings
(") to protect the interests of Cederation or 1- or an$ disa"le
person (minor% nsond %mind% mental disorder)
(c) to secre that land will "e availa"le to secre an$ de"t
de to Cederations or 1- whether secred or nsecred
de"ts % whether or not )dgement has "een o"tained
(d) to correct errors in 7AT or /AT or an$ instrments relating
to it.
Nature % E,,e!t O, /e"istrar9s Caveat
(a) to prohi"it the registration % endorsement or entr$ on the
7AT of an$ instrments of dealing eventhogh the
instrment was presented prior to the time the 7egistrar;s
caveat takes effect.(eg) /f -hmad presentated a lien
holder caveat on 14149B "t onl$ registered on 14+49B. The
7egistrar ma$ enter his caveat at an$ time "efore 14+49B.
s. ;34 236
(") to prohi"it the entr$ of an$ claims to the "enefit of a
tenanc$ e6empt from registrations and a lien holder;s
caveat. s. ;34 236 2a6 and 2b )
Pro!edure To Enter /e"istrar9s Caveat
(a) where the srronding circmstance or conditions e6ist to
)stisf$ its entr$% the interested part$ (Cederation% 1- %
an$ private person who fear frad or improper dealing is
committed or an$ disa"le person ) ma$ seek a 7egistrar;s
caveat.-7 Palaniappa Chettiar v Letchmnam Ch H
-nor9 3eld9 7egistrar power is discretionar$ power and he
is performing a &asi )dicial fnction as sch mst act in
good faith.
(") 1. '+1 * /f 7egistrar decides to enter his caveat% it shall
"e (i) in Corm 19C (ii) endorse in the /AT the words 5
7egistrar Caveat <nterD and the time of entr$ (iii) 7eg
mst serve a notice to the proprietor of the land a
notification in Corm 19-
(c) Aration * it contines to in force till cancelled "$
(/) 7egistrar either his own motion or throgh
an application the owner of the land
(//) Cort >rder made on appeal nder s. (1@
NLC when 7eg had refsed for cancellation.
- notification mst "e made to the proprietor of the land
once it is cancelled.
)eet )oh N"oh v &en1ates<ara )dn..hd. % (nor
<venthogh it is the discretion of the 7eg.% "t a cort ma$ order
him to enter sch caveat 4s. (1E on application "$ interested
part$.
Temen""on" )e!urities Ltd. % (nor v /e" o, Tit'es 0ohor %
Ors. -pp. entered an agreements to prchase a piece of land
from the vendor.++494E+ fll amont was paid and the vendor
handed over /AT and he e6ected the transfer to -pps. >n
1(41+4E+ the docments were presented to the 7egistrar for
registration. >n 1941+4E+ 8ovt of Iala$sia gets + )dgments as
against the vendor for their de"ts and as sch o"tained a
prohi"itor$ orders. The 7egistrar enter his caveats 7AT and
informed the -ppl that their transfer was re)ected. -pp applied to
remove the 7eg caveat "t was re)ected. -ppeal to CC. 3eld9
that after ++494E+ the vendor does not have an$ interest in that
land as sch the registrar had wrongl$ enter his caveats. >rder
to remove.