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 340 340(! (! "ational "ational Public lic Fin Financ ancee Bh Bhd. d. v Nar Naraya ayanas naswam wamy y (197 (1971) 1) 2 MLJ MLJ 2! 2! land and code #$%& Pub Ferderal "#ur$. The chargor subdivided his land and sold it off to sub'purchasers.
e charged the same land for a bridging bridging finance in favour of the chargee) chargee) who *new that the land had been fragmented) sold and some of the sub'purchasers had even gone onto possession of their respective portion. The +hargor defaulted in ma*ing repayment of the bridging loan and the chargor applied for order for sale from the court. ,n 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 party.The court had refused to grand order for sale. +ase with scenario (e-ample! Mr. Mr. /inso inson n is an illit illiter eracy acy and and owne owned d a piec piecee of land land prop proper erty ty which which registered under the "ational and code ("+! #$%& in Malaysia. e has a child who ready to study in university after graduated from secondary school. Mr. 1obby is a best friend of /inson. 2ecently) a ban*er relative of 1obby wor* in S1+ 1an* told him that his friend /inson has owned a piece of land in *epong which are worth 2M #.& million. 1an*er started to as* 1obby to persuade /inson to cheat him transfer his land title to 1obby in order for the investment purpose and education funds of his child oversea further study. 1an*er prepares a transfer land title document to /inson sign up for his forgery investment planning. /inson has agreed with the planning of 1obby and transfer the registered land title to 1obby. "ow "ow 1obby is the second owner of the land with registered land title under "ational and +ode #$%&. 1obby is immediately charge it to the ban* through his ban*er relative. uring the whole process of purchasing land are included guilty of fraud ) forgery and collusion between 1obby and ban*er of S1+ S1+ 1an*. ccording ccording to the case of 5ublic 5ublic 6inance 6inance 1hd v "arayanasamy "arayanasamy(#$7# (#$7#!) !) 1obby has a title to the land is defeasible. ,t is because he get the land title is transferred by the way of fraud and collusion with third party which is S1+ ban*. /inson may ta*e bac* his land title with provided under section 340(! of the "ational and +ode #$%&. 1y using the fact in Example, /inson has to prove that his friend 1obby got the
land title by the way of collusion and fraud. /inson has to show evidences about 1obby and ban* provided a forgery investment planning to cheat him transfer the land title under 1obby name. ,n this case) the land was transferred to transferee by fraud and collusion. ,t was charged to the ban* immediately in order to get the money. The charge created of the ban* is defeasible as ban* collusion with 1obby to cheat /inson from the land title. 1y using the facts in Example, when 1obby get the land title and charge it to the S1+ ban* in order to get an amount of 2M #.& million for his personal use. 1y referring to the facts of case 5ublic 6inance 1hd v "arayanasamy8#$7#9 M:3) 6ederal +ourt) since 1obby and S1+ 1an* created in favour of fraud and collusion to cheat /inson;s land title in this case. /inson is entitled to recover bac* of the title as now. 1obby;s land title can be challenged and interest can be defeated. /inson has the right to ta*e bac* his land title through under Section340 (! of "ational and +ode #$%&. ,n the other hand) 1obby does not en
