The charge is void on the ground of fraud.

Most application for order for sale

was challenged on the basis that the charge acquired by the chargee is defeasible
because it was obtained under any of the circumstances in Section 340(2) National
land code 1965 Public Finance Bhd. v Narayanaswamy (1971) 2 MLJ 32,
Ferderal Court. The chargor subdivided his land and sold it off to sub-purchasers.
He charged the same land for a bridging finance in favour of the chargee, who knew
that the land had been fragmented, sold and some of the sub-purchasers had even
gone onto possession of their respective portion. The Chargor defaulted in making
repayment of the bridging loan and the chargor applied for order for sale from the
court. In an application for an order for sale the sub-purchasers contented when the
charge was registered, the chargor disregard the unregistered interest of the third
party.The court had refused to grand order for sale.
Case with scenario (example):
Mr. Winson is an illiteracy and owned a piece of land property which
registered under the National Land code (NLC) 1965 in Malaysia. He has a child who
ready to study in university after graduated from secondary school. Mr. Bobby is a
best friend of Winson. Recently, a banker relative of Bobby work in HSBC Bank told
him that his friend Winson has owned a piece of land in kepong which are worth RM
1.5 million. Banker started to ask Bobby to persuade Winson to cheat him transfer his
land title to Bobby in order for the investment purpose and education funds of his
child oversea further study. Banker prepares a transfer land title document to Winson
sign up for his forgery investment planning. Winson has agreed with the planning of
Bobby and transfer the registered land title to Bobby. Now Bobby is the second owner
of the land with registered land title under National Land Code 1965. Bobby is
immediately charge it to the bank through his banker relative. During the whole
process of purchasing land are included guilty of fraud , forgery and collusion
between Bobby and banker of HSBC Bank.
According to the case of Public Finance Bhd v Narayanasamy(1971), Bobby
has a title to the land is defeasible. It is because he get the land title is transferred by
the way of fraud and collusion with third party which is HSBC bank. Winson may
take back his land title with provided under section 340(2) of the National Land Code
1965. By using the fact in Example, Winson has to prove that his friend Bobby got the

land title by the way of collusion and fraud. Winson has to show evidences about
Bobby and bank provided a forgery investment planning to cheat him transfer the land
title under Bobby name. In this case, the land was transferred to transferee by fraud
and collusion. It was charged to the bank immediately in order to get the money. The
charge created of the bank is defeasible as bank collusion with Bobby to cheat Winson
from the land title. By using the facts in Example, when Bobby get the land title and
charge it to the HSBC bank in order to get an amount of RM 1.5 million for his
personal use. By referring to the facts of case Public Finance Bhd v
Narayanasamy{1971}2 MLJ32, Federal Court, since Bobby and HSBC Bank created
in favour of fraud and collusion to cheat Winsons land title in this case. Winson is
entitled to recover back of the title as now. Bobbys land title can be challenged and
interest can be defeated. Winson has the right to take back his land title through under
Section340 (2) of National Land Code 1965. In the other hand, Bobby does not enjoy
indefeasibility land title provided under Section340 (1) of National Land code 1965.