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It is mandatory for the registered
chargee to serve a statutory notice in Form 16D or Form 16E to the charger before
applying the Order For Sale from Land Administrator or the court. As illustrated
in National Bank of Australasia v United
Hand in Hand and Band of Hope Co1, failure to give a notice would cause the application of Order For
Sale not to be effected, the Registrar might refuse to effect any transfer or
the charger might be granted an injunction in order to prevent the proceeding
of sale.

As pursuant to S.254 of the National Land Code, the chargee has to serve a notice
in Form 16D to the charger when there is breach of obligation either in implied
way or express way by the chargor under the loan agreement as stipulated in S.253(1) of the NLC. The form of breach
could be the breach of any charge provision or implied provision as provided in
S.249-S.252 of this Code. Besides that, S.254(1)
provided that the chargee might serve on the chargor a notice in Form 16D if
the breach has been continued for at least one month or such alternative period
as stated in the charge is more than a month.

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As according to S.255 of the NLC, Form 16E may be serve by the chargee when the
charge agreement provided that the chargee is entitled to demand or to claim
the principal sum. According to this section, the chargee is allowed to demand
the principal sum even the chargor did not breach on his part. If the chargor
failed to comply with the notice serve by the chargee in Form 16E within one
month from the date of the notice is served on the chargor, the chargee is
entitled to apply for Order For Sale without serving Form 16D. Form 16E could
not be use when there is no any provision in the charge agreement allowed the
chargee to demand the principal sum but in case where default chargee used Form
16E to claim the outstanding amount. As illustrated in VAM Hussain v BP Malaysia Sdn Bhd2, the court held that Form
16E was correctly used when the charge agreement stated that the principal sum
was payable on demand. Thus, the application is allowed.

Hence, chargee must determine the
provision in charge of the document before the application of a statutory
notice. If wrong form is being used, the application would be rejected. In case
where there was a breached of any obligation, then either Form 16D or Form 16E
may be served. This principle has been laid down in Jacob v Overseas Chinese Banking Corporation3.  Here, the Appellant charged his land to the
Respondent to secure repayment of an overdraft. The court opined that Form 16D
could be served in this case and allowed the Order For Sale.

In order to validate the statutory
notice, the contents on it must be in par with the National Land Code. If case where
Form 16D is served, the amount due must be indicated. Besides that, it required
the chargor to remedy the breach within one month where the notice have been
served on him or any prescribed time mentioned in the charge agreement. By looking
at the judgement laid down in Citibank v
Mohamad Khalid in Farzalur Rahaman & Ors4, the chargor is given
7days to remedy the default as prescribed in the agreement. The court here held
that alternative period must be greater than a month, and if the period is not
mentioned in the agreement, one month as according to the NLC should be given to
the chargor. On the other hand, before serving Form 16E, the chargee must
indicates the amount of the principal sum of demand and require the chargor to
make payment within one month from the date where notice is served.

S.430
to S.433 stipulated the service and publication of notice. The
form and methods of service has been prescribed under these provision. A notice
could be deliver by way of personal delivery, deliver the notice at the person’s
usual or last unknown address, by pre-paid registered post or by substituted service.
Once the notice have been sent, the time is begin to be counted. When the date
is expired and the chargee still not received any demand or payment from the
chargor, Order For Sale could be apply.

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