Discharge of Charge: Right in Personam

Section 279 of the National Land Code states about discharge by payment to registrar in cases of death, absence or disability of the chargor. It is interesting to note that entitlement to get discharge under this section only cover situation where the chargor intends to pay off his debt but not where the chargor had settled his debt in full fulfilling his part of contractual duty that arises from the loan facility agreement. This causes a lacuna in the context of discharge entitlement, where the code seems to neglect and overlook the right that should be enjoyed by the chargor.

Section 280 provides for memorialisation on discharge by payment. Several land-law authors commented that this section applies to circumstances laid down in section 279, and also where the chargor has paid the loan to the chargee but the chargee fails to provide a discharge.  

I opt to disagree with that stand. Reading the section we can find that that is actually a continuation of section 279 and if the legislators had intended to include the latter situation they would have mentioned about it in section 279. Perhaps it is best and safe to accept that this section applies to situations prescribed in section 278 and 279. 

Once the loan in question had been repaid in full in accordance with the facility’s terms and conditions by the chargor to the chargee (bank), the bank ‘will’ discharge the land. It should be pointed out that such act by the bank is not a statutory duty imposed by the law.  

The law neither prescribes the bank to discharge the land once payment is settled or prescribe a time frame for discharge to be done. This duty however lies purely on a contractual basis. In practice, the annexure to the instrument of charge, namely Form 16A shall provide such undertaking.  

Still, it must be noted that the bank as the provider of the annexure and other loan documents will not state the time frame for discharge. Due to this fact, once payment has been settled, a prudent chargor should inform the bank as soon as possible of his wishes that the land to be discharged. 

The case of Sri Minal Construction Sdn Bhd v. Hongkong Bank Malaysia Bhd [2007] 9 CLJ 579 illustrates the point above mentioned. In general the facts is that the chargor had for three years finished servicing his loan but during that time the bank has still not discharge the land. The chargor had made some arrangements with respect to the land with a third party but was aborted due to land’s status of still under a registered charge. For the loss of business opportunity the chargee decided to slap the bank with a suit for failing to discharge the land within a reasonable time. 

The court (Heliliah Yusof J) held that, “I find therefore that there was not express or implied contractual term nor statutory duty on the part of the defendant to prepare the discharge with a certain time frame. I also do not find a parallel tortious act attributed to the defendant. The matter of discharge had been assigned to the firm the services of which had been accepted by the plaintiff by deed and conduct. There was here a combination of causes that could not be described as the tortious act of the defendant bank. The bank’s responsibilities do not extend to extraneous and supervening events and even more so the conduct of the plaintiff in not communicating more information until a very late state. In other words the plaintiff’s own conduct vis-à-vis the defendant bank was instrumental in contributing towards the alleged failure of the sale and purchase agreement for it could not be said that the defendant bank ought to have known what other purposes the document was required for, other than the fact that the defendant bank was to take steps to have the discharge effected.” The court dismissed the case with costs. 

In my opinion, under a direct authority of the law the judgment above is proper in its own sphere of facts, circumstances and evidence. However, what if the chargor had informed the bank of the situation and it is the bank is the one who lags in its action to discharge? What is the best cause of action to be taken against the bank? 

As stated above, there is no express statutory provision that imposes duty to discharge to a chargee after settlement of payment. In this situation the chargor has to seek remedy from the court as was granted in the case of Eng Ah Mooi v Overseas Chinese Banking Corporation [1983]  CLJ  144 (Rep)  [1983] 1 CLJ 127, where the court explained that a charge is not irredeemable.  

The court stated in its own word that,“Just as a mortgage is not irredeemable, likewise a charge is not undischargeable. Under English law a mortgagee or any person interested in the mortgaged property has the right to demand the mortgagee to redeem the mortgage on tendering the amount of debt together with interest thereon due on the mortgage. Pearce v Morris [1869-70] 5 LR Ch App 227 at 230 & 231; see also 27 HLE, 3rd Edn., p. 232 paras 411 and 412. We see no reason to hold that this rule of English law is inapplicable to the present appeal. In our view this rule is applicable although a lot has been said elsewhere about the differences between the common law mortgage and a charge under the Torrens System… In essence both the common law mortgage and the charge under the National Land Code are legal encumbrances on the proprietary right of an owner.” Under this context, the above judgment is a most welcome judge-made law pronounced by Salleh Abas FJ (as he was then). 

It is interesting to note that the judgment in the Eng Ah Mooi case seems to rival the doctrine of indefeasibility of title under the Torrens system where section 340(1) of the National Land Code provides that all registered interest shall be indefeasible.  In the case of OCBC Bank (Malaysia) Bhd & Ors v. Lee Lee Fah & Ors & Another Appeal [2000] 1 CLJ 71 the court held that interest as owner and chargee is indefeasible unless there are evidence to their knowledge that there was fraud or misrepresentation or where the registration of the charge was obtained by forgery or where the title or interest was unlawfully acquired. It is clear that the exceptions provided in the judgment are the ones provided in section 340(2) of the Code. So, how would this matter fare? Should the indefeasibility doctrine reign supreme or should there be a window where it can be redeemed under the context of charge as in the Eng Ah Mooi case?  

The answer can be arrived at the better understanding of the Torrens system practiced in Malaysia, emphasis added. In our applied system there is a difference between immediate indefeasibility and deferred indefeasibility. Immediate indefeasibility occurs when a person gets an indefeasible title immediately after registration (M&J Frozen Food v Siland Sdn Bhd [1994] 1 MLJ 294). On the other hand a deferred indefeasibility occurs when the registered title and interest is challenged by a third party. The latter not the former is practised in the Malaysian system as was held in the case of Boonsom Boonyanit v Adorna Properties [1997] 2 MLJ 62.

Reverting to the before mentioned issue of whether there is clash between ‘Indefeasibility of Title’ and Eng Ah Mooi’s judgment, we can arrive at a conclusion that the charge can be redeemable or dischargeable simply because there is no third party involved in this matter as the party that seek remedy with regards to the discharge of charge is the registered proprietor of the land itself. 

My personal conclusion would be that it may be safe to accept that there is no statutory remedy provided under the National Land Code for situation where chargor has settled his debt but chargee is inaction with regards to the discharge, and to accept that the only remedy available to the chargor is to seek court order. In my opinion the chargor’s entitlement to a discharge once payment has been made can be protected and safeguarded if the last part of section 280 be interpreted openly by the Malaysian courts.

Anti Islam Film

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Freedeom of speech rearing its ugly head. yet again.

Asik-asik Kena Saman

“Aku kena saman siut”

“Pasal apa?”

“Tak bayar parking”

“Berapa kau kena?”

“50 hinggit… tapi masuk ni dah ada nam tiket. Jadi 300 la… kene denda lewat bayar lagi mau cecah 600”

“Relax la… tak yah bayar, tunggu next election, ko pangkah la opposition. Kalau menang semua cancel”

“Betul gak eh… haha” 

The act of several newly formed state government waving unpaid fines and compounds is accepted with great joy by the bulk of the Rakyat, of course in particular those who are drowning in heaps of compound tickets. 

Some criticised this act of ‘benevolence’ and show of gratitude by the new government saying that the waiver is seen as condoning law breakers and is unfair towards law abiding citizens.  

The new state governments are formed by those politicians who had aggressively called for an accountable government and society in Malaysia. It means that everybody regardless of position or status must be answerable for any wrong done. To me this is ironic because instead of promoting accountability to the society as preached they ‘educate’ the public with in-accountability with such waiver.  

I personally have yet the opportunity to view the relevant local authority bye-law, ordinance etc of the concerned states thus I cannot form an opinion from the legal point of view on whether such act of amnesty is in contravention of any law. 

On the practical side what if the BN (now the opposition in those states) is able to win back the states in the next election, will they follow the already set precedent by showing the same manner of gratitude? If there is such affirmative possibility then perhaps it is best to not waste money paying fines issued by the local authority or council. Instead of being a law (including bye-laws) abiding citizen by being accountable to our own faults why not just wait until the next election, vote for a new government and ‘Poof!’ all will be forgiven. 

Anybody want to give it a try? 

WP: Arwah bapak dulu selalu marah aku bila surat saman MBSA sampai kat rumah. Marah tetap marah tapi dibayarkan juga. Thanks bapak, miss you so much. Al-Fatihah.

Arok of Java

Recently I have finished reading a translation of a book bearing the above title authored by the legendary Pramoedya Ananta Toer, an Indonesian and a Nobel Prize of literature nominee. Originally entitled as Arok & Dedes, the story revolves around the ancient Hindu-Javanese kingdom of Kediri, heir and successor of the Srivijaya Empire. 

Pramoedya emphasised on the Hindu caste system applied in Java at that time, where a person’s status and future is determined by birth not by merit. He highlighted three distinct castes, the Sudra, the Ksatria and the Brahmin, which inhibit the system. The Sudra is the lowest caste formed by the bulk of the people whose trade are farmers, traders, artisans etc. The middle caste is the Ksatria who are mainly administrators and warriors. The highest caste is the Brahmin, mainly priests and monks.  

As per the book’s title, the main protagonist is Arok. He is a Sudra whom by fate is endowed with high intelligence and outstanding charisma. His arduous life journey gave him the chance to make use of his potentials to the fullest. His charisma allows him to be a natural born leader and together with his intellect he became a leader with a vision. These abilities have allowed him to transcend the caste barriers by becoming a Sudra, Ksatria and Brahmin altogether, a truly complete man. Along a typical protagonist versus antagonist narrative, Arok led a people’s revolution against a governor named Tunggul Ametung, a tyrant cum oppressor of the people and a vassal of King Kretajaya of Kediri. 

In my personal view, Arok & Dedes is actually a socio-political satire that was meant by the author to ‘educate’ his readers. The author brilliantly narrates the story using ancient history (folklore), system and religion in a way that any reader, I believe, will able to see that it is actually a portrayal of the timeless struggle of man in the context of socio politics. 

Through the play of the caste system, the author is able to show a society where the few lords over the many with an inherent feeling of perpetual superiority. Applying to today’s (local) political scenario, it is quite true that many politicians and their cronies share the same said feeling. Thinking that they are untouchable they abuse their power and authority at the expense of the public. Furthermore, vivid segregation of the public, as was practised in the caste system, causes severe rift in the society which then eventually reduces governmental check and balance thus crippling the whole country. 

Due to popularity of the Communism ideology during his time, Pramoedya seems fond of the idea of a red revolution as was practiced by the Bolsheviks and Mao Tze Tung. He seems to prefer the notion that to cause a change of government in order to usher a new utopian dawn for the benefit of the masses, a full scale revolution must be done. However, as if the author coming down to earth in realism, as the story unfolds it shows that such utopia exists only in our dream except in reality. 

This is certainly the best book I have read this year so far, it is filled with socio political cynicism, which I believe will allow its readers to analyse and reflect its substance with any current modern political scenario. 

WP: Searching for the Buru Quartet by Pramoedya…

Perjuangan yang perlu diselesaikan

Being sickened with the faggotic-propagandist nature of the mainstream media, I browsed the internet for alternative news, views and opinion. As I read through the Malaysian alternative media, I clearly see a lot of discontentment on part of the Rakyat. 

Many quarters pressure the PM to resign including those from UMNO inner circle. One MP personally dispatched a letter to the PM politely asking him to step down and together with several UMNO divisions which have voiced the same concern.  

In the face of those demands, instead of committing political hara-kiri, the PM remains adamant and resolute to not to yield to pressure by quitting the most coveted office in this country. The Rakyat regardless of their political allegiance become restless, fearing the uncertain. 

Those who are totally blinded by contempt and hatred of BN and the man at its helm say that the PM is irresponsible, power-monger and an idiot due to his act of staying in power. Some also see his act of defiance as a futile attempt to cling on the mantle of power. Harsh as it may sound but it is the true picture of what the masses perceive of him nowadays. 

I on the other hand think otherwise. I say that the PM’s decision to stay in office is a respectable decision. For me him quitting is not a wise option and action during this uncertain times; it is like a sea-captain who abandons his ship and crew in the face of a mighty tempest. I like to think that the PM does take responsibility of the ‘defeat’ by biting the bullet in order to set things right again. And set things right he must unless he is willing to see his legacy be tarnished and blown away by the winds of change.  

Unlike the Tun whose legacy is known for his grandiose project and policies, the current PM during his five years tenure has also made his own brand of legacy. Foreign investments acquired, foreign debts minimised. Though minute in comparison with the Tun’s, still what he had done is also for the betterment of the nation.

 

 

The jihad (struggle) to set things right again for Malaysia must go on. If the Tun is famous with the saying ‘perjuangan yang belum selesai’, then let the PM be known with ‘perjuangan yang perlu diselesaikan’. Wallahualam.

The Sacred Order of the External Mind

Welcome to the Sacred Order of the External Mind. Coming not so soon to developing countries such as our beloved Malaysia.

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Travelogue Pulau Kapas, Terengganu

Trip date: 23/03/2008

“Berapa lama naik bot gi Pulau Kapas?” (How long will it take to go to Pulau Kapas?)

“Dalang lima belah minik…” (About fifteen minutes…)

“Dekat gila,.. pulau kalau dekat dengan tanah besau cantik ke?” (Its too damn near, will an island close to mainland be beautiful), I told myself.

The unsettling thought that the island to be so close with the mainland thus degrading its beauty crept through my mind. Nevertheless my wife and I continue with the trip as planned and we took a boat at the Marang jetty at 930 a.m. As soon as the boat ploughs through the Marang tidal barriers (built by the BN government but littered with PAS flags), open yonder lies magnificently before us. “Subhanallah” is all that I can say, the scenic beauty of the South China Sea is totally breathtaking, it is like an infinite canvas masterpiece drawn by a supreme artist with no equal.

Upon our arrival at the Pulau Kapas jetty, my previous feeling of the degraded scenery of the island is swept and washed away. The island is surprisingly clean, its water crystal clear and finally a nice tropical weather complements it all.

Being “main redah” tourists of Pulau Kapas, we have not made any arrangement with the Island’s local tour guides. We decide to “gamble”. Without any inkling of what to do we strolled down the sandy white beach the island until we met with a guide who manages to decorate his abode of trade so well so as to attract our attention to query for his services. He offered us a snorkelling trip at Pantai Panjang, the farthest and best stretch at Pulau Kapas he said. We both agree for the trip and coughed out RM 50 (RM 25 per person), which we later came to the knowledge that recently some Japanese babes (young, beautiful and sexy, I presume) managed to acquire that guide’s service for much lower payment. Hmm… I can’t help but to wonder.

Waiting for the boat to Pantai Panjang to be prepared, we have a little chit chat with one of the guide’s friend.

“Tempat ni tanah sendiri ke bang?” (Is this your own land?)

“Ye la” (Yes)

“Camne ada orang putih boleh buat resort kat sini plak?” (How come a foreigner can build a resort here?)

“Dulu kawan, lepas dapat tanah terus ada masalah…” (We use to be friends until he gets the land)

“Orang putih dapat tanah?” (A foreigner able to obtained land?)

“Alaa… macam cerita orang belanda mintak tanah laa…” (Its like the Dutch an the land story)

The phrase “Orang Belanda minta tanah” reminds me one legend of the Melaka Sultanate where Portuguese traders, not Dutch as the phrase above, who asked for land in Melaka. After setting foot at Melaka, the traders met with the Sultan asking whether they could be given a patch of land so that they can build warehouses in Melaka. The Sultan denies the request but later agreed when told by the traders and affirmed by corrupt local officers that all that the Portuguese wanted is a land with the size of a rug. The conniving traders then pulled out the threads from the rug and tie them together making a very long thread. With this, they claim a large area of land which area depends on the breadth and circumference of the thread. The Sultan knowing that he had been tricked cannot do anything but to concur. It is said that this patch of land was then used by the Portuguese in their conquest of Melaka later on.

Coming back to our Pulau Kapas escapade, the mat-saleh operated resort seems to be better managed than his Malay neighbours. While the Malay eateries barely managed to score “B” for cleanliness, the mat-saleh scored an “A”. This fact alone is enough to show the mat-saleh seriousness in business. The Malays, doing nothing to compete spend most of their time loitering and bitching about the entrepreneurial foreigner.

The snorkelling trip at Pantai Panjang is indeed memorable. With some bread to spare my wife and I managed to get ourselves swarmed by the friendly fishes of many colours eager to accept our treat of hors-de-oeuvres i.e. plain bread. The corals however deliver a bit of disappointment. Due to uncontrolled human activity, most of the corals in the reef area died. It is sad to see that nature is the one that has to pay in the name of human greed and enjoyment.

Regretfully, there are no pictures available for this trip since we left our camera at home. Albeit without pictures, the beautiful island backdrop of Pulau Kapas remains etched in our mind and heart as vivid memories that will never be forgotten. Insyallah.

WP: At the back of the ferry ticket from Marang to Pulau Kapas it states S.O.S (Save Our Seas). Amin.

Bai Bithaman Ajil, Riba’ & Contractum Trinius

(The following is an article I narrated due to my disagreement with the Bai Bithaman Ajil transaction in the current Islamic Banking – tulis dah lama dah benda ni, baru post today) 

“Those who charge usury are in the same position as those controlled by the devil’s influence. This is because they claim that usury is the same as commerce. However, God permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgment rests with God. As for those who persist in usury, they incur Hell, wherein they abide forever (Quran 2:275)” 

The Islamic Banking Act 1983 provides the statutory definition for the term “Islamic Banking Business” which means a banking business whose aims and operations do not involve any element which is not approved by the religion of Islam. In a conventional loan transaction, the said element which contradicts Islam and thus considered as haram is the element of Riba’. It means usury and is forbidden in the Islamic economic jurisprudence. According to some, this refers to excessive or exploitative charging of interest, though according to others, it refers to the concept of interest itself.  

With the rise of Islamic understanding, consciousness and its practice particularly in Malaysia, the government has encourage banks to delve into the prospect of implementing an Islamic version of banking that negates all the elements that is haram according to the syariah. The banks in this country accepted this encouragement and provide the public with a form of banking that is the Islamic banking. The public, especially the Muslims greeted this new concept with high hopes and anticipation that the burdensome interest charged by the conventional system will be lifted thus ushering the Islamic concept of banking which has been “thought” as just, fair and affordable. It seems that the new dawn that is hoped for by the Muslims never rises because the Islamic banking concept which has been introduced and implemented by the banks seems to be only an elaborate masking of its conventional counterpart. 

I wish to note that my further views are strictly with regards to the Islamic loan facility with security a.k.a the Al-Bai Bithaman Ajil (BBA). The courts in the case of Bank Islam Malaysia Bhd v Pasaraya Peladang Sdn Bhd [2004] 7 MLJ 355 defines that the Al-Bai Bithaman Ajil facility is a common Islamic banking facility involving immovable properties as collateral. It involved three separate agreements. The bank would purchase the property concerned from the chargor pursuant to the first agreement. In the second agreement, the bank would sell the property to the chargor. The third agreement was a charge given by the chargor to the bank to enable the bank to sell the property in the event of default by the chargor. 

In a conventional loan, the bank will disburse to the borrower a sum of money which the borrower shall, in accordance of the facility agreement entered between the two parties, repay the sum loaned to him periodically together with a sum of money known as interest. On the other hand, the BBA facility is preached to not contain in it the element of interest and this lackness of interest has been substituted with a two tier property purchase transaction where the bank will first buy the property and then later re-sell it to the borrower at a very much higher price, often more than double the purchase price, thus allowing huge amount of profit to be viciously reaped by the bank and at the same time circumventing the element of interest or Riba’.  

This circumvention of a theological canon is relatively not a new practice, back in the middle ages the church condemned and prohibited the element of usury in business transactions. This causes the merchants at that time to circumvent that canon by implementing the Contractum Trinius, a set of contracts that were presented to someone seeking a loan which are an investment, a sale of profit and an insurance contract. Each of these contracts was permissible under Church law, but together they replicated the effect of an interest bearing loan. The way this procedure worked was as follows. The lender would invest a sum equal to the amount of financing required by the borrower. The lender would then purchase insurance for the investment from the borrower, and finally sell to the borrower the right to any profit made over a prearranged percentage of the investment. This system replicated the effects of a loan with any interest rate agreed between the two, yet provided protection to the lender against default, while the borrower remained under the protection of the law when it came to collection of the money by threats or force. 

By looking at the workings of the Contractum Trinius mentioned above we can see the similarity between the mentioned contracts and the BBA under the newly propounded concept of Islamic banking, both seems to try to circumvent those that are illegal and haram. I do believe that the religions’ negation of Riba or usury is caused by the oppressive nature of those elements. The lenders who are of course the rich have power over the borrowers by dictating any terms that favours only one party of the transaction that is themselves. If another form of transaction is applied that eliminates the Riba element but in the same time replicates that element in another way, can we say that the new method conforms to Islamic law? By agreeing to that statement it is as same as propagating mockery to the teachings of Islam which erodes the true spirit of Islam and its application.  

The superficiality of implementation of Islamic law and practice in the BBA facility has been clearly shown by the court’s attitude in this matter. In the case of Bank Kerjasama Rakyat Malaysia Bhd V Emcee Corporation Sdn Bhd [2003] 2 MLJ 408 the court held that, although the facility was an Islamic banking facility that did not mean that the law applicable in this application was different from the law that was applicable if the facility was given under conventional banking. The charge was a charge under the National Land Code. The remedy available and sought was a remedy provided by the Code. The procedure was provided by the National Land Code and the Rules of the High Court 1980. The court adjudicating it was the High Court. So, it was the same law that was applicable, the same order that would be, if made, and the same principles that should be applied in deciding the application. 

There we could see that even though the background of the transaction involves the so-called Islamic principles, still the law that governs it is the same that governs conventional facilities. The mere availability of Arabic terms in an agreement does not mean that the transaction is Islamic and falls under the ambit of syariah, the Islamic law. For those who are pious that seek the blessing of Allah by leaving those that are haram whom then transacted in accordance to this principle may find themselves cheated since they are all labouring under false pretences and misconceptions concocted by the Banks under Islamic guise. 

However in a recent judgment of the court in the case of Malayan Banking Bhd v Ya’kup bin Oje & Anor [2007] 6 MLJ 389 the court held that Islamic contract relating to commercial transaction is not only subject to the terms of the contract but must be decided subject to the Quranic injunctions and/or Islamic worldview as the case may be. For this very purpose, the court can on their own motion decide the issue or alternatively call experts to give their views, pursuant to s 45 of the Evidence Act 1950 or pose the necessary questions to the Syariah Advisory Council for their views. Personally I applaud this judgment because of its attempt in implementing somewhat a degree of Islamic law where advices of the Syariah Advisory Council are accepted in the court of law. This implementation can actually be applied and practised by the court to an extent that that act will bring great benefit to matters that involves Islamic principles in the sense that Islamic view be held relevant in our courts. But still, such an attempt may be easily thwarted because at any time it can be seen and argued as an encroachment of syariah in to the civil courts jurisdiction. 

The public, thinking that a banking product that carries an Arabic name comes with it the best of the Islamic principles may soon be unfazed by the workings of the so called Islamic banking facility in this country. True that BBA will offer a fixed amount of repayment unlike its conventional cousin that the amount of repayments fluctuates depending on the market rate, but why in general the full settlement repayment for a BBA facility usually is greater in amount compared to a conventional loan? On one hand it promotes certainty in repayment, that is good, but on the other hand it slaps and oppresses the borrower with a huge repayment sum, is this what is intended in Islam? I believe the answer is a big “No”. 

The oppression done by an Islamic banking facility can be seen in the case of Affin Bank Bhd v Zulkifli bin Abdullah [2006] 3 MLJ 67. In this case the defendant bought a double storey link house and secured the loan under the Syariah principle of Al-Bai Bithaman Ajil from the plaintiff, who was his employer at that time, for a sum of RM 346,000-00. The loan was to be repaid over 18 year tenure by 216 monthly instalments and a charge was registered against the title. However, at the end of December 1997, the defendant resigned from the plaintiff bank and at his request, the loan facility was restructured whereby under the revised facility, the bank selling price of the house was RM 992,363-40, payable over a period of 25 years. No fresh set of documents was executed, although earlier, the bank had requested. After making several payments totalling RM 33,454-19, the last of which was in June 2001, the defendant again defaulted. The plaintiff issued a notice of default in Form 16D of the National Land Code seeking the repayment of RM 958,997-21. Subsequently, two actions were filed, namely an order for sale and an order to recover such sums in the event of a deficiency in the proceeds of sale. The issue before the court was the actual amount that a customer has to pay to the provider of an Al-Bai Bithaman Ajil facility in the event of a default, in this case, after having paid RM 33,454-19 in instalments. 

Held, granting the order for sale and reducing the amount of repayment:

1.       If the customer is required to pay the profit for the full tenure, he is entitled to have the benefit of the full tenure. It follows that it would be inconsistent with his right to the full tenure if he could be denied the tenure and yet be required to pay the bank’s profit margin for the full tenure. To allow the bank to also be able to earn for the unexpired tenure of the facility, means the bank is able to earn a profit twice upon the same sum at the same time.

2.       The profit margin that continued to be charged on the unexpired part of the tenure cannot be actual profit. It was clearly unearned profit. It contradicted the principle of Al-Bai Bithaman Ajil as to the profit margin that the provider was entitled to. Obviously, if the profit had not been earned it was not profit, and should not be claimed under the Al-Bai Bithaman Ajil facility.

3.       The profit margin could be calculated and derived with certainty. Even if the tenure was shortened, the profit margin could be recalculated with equal certainty. The total due on the date of the judgment was RM 616,080-99 and after crediting the defendant with all the payments he had made of RM 33,454-19, the balance due on the date of judgment was RM 582,626-80.

4.       Once it was established that there had been a default, then unless there was cause to the contrary, the order for sale must be given since a charge is an ad rem right to dispose of the security to recover a secured debt. 

Obiter:When the gratification of being able to satisfy the pious desire to avoid financing containing the elements of Riba gives way to the sorrow of default before the end of tenure of an Al-Bai Bithaman Ajil facility, the revelation that even after the subject of security had been auctioned at full market value there remains still a very substantial sum still owing to the bank, comes as a startling surprise. All the more shocking when it is further realized that a borrower under conventional loan is far better off. The consequence of a default under the Al-Bai Bithaman Ajil facility proved to be far more burdensome upon the unfortunate and bewildered defaulter. 

I believe the obiter by Abdul Wahab Patail J says it all. Tepuk dada tanya selera. Wallahualam.

WP: Special thanks to Wikipedia and the Malayan Law Journal

Raja Adil Raja disembah…

In English the above means, a just king is a king served (I am sorry for any misinterpretation). If I am not mistaken the above was said, in legend, by Laksamana Megat Sri Rama an admiral of the Johor navy whose wife was killed by Sultan Mahmud without a valid or reasonable cause. In an act of revolution the admiral mutinied and assassinated the Sultan and got himself killed in that process. 

The Malaysian government system is somewhat unique because it is based on a constitutional monarchy system which is now practiced only by few countries in the world. Similar to the Magna Carta this system maintains the availability and appearance of the Royals in the government but in the same time “erodes” their power in accordance to the limits prescribed by the Constitution of the land. Absolute rule of the Royals is no more and the rule of law via the Rakyat reigns supreme. 

In the recent news from Terengganu, the Sultan has appointed a Chief Minister on his majesty’s own deliberation, after being lobbied by several Terengganu UMNO divisional leaders, whom is not supported by majority of the members of the state legislative assembly. The former Chief Minister who is said to command the support of the majority of the assembly was brushed aside for reasons unknown to the Rakyat. 

Some say that it happened because of the Sultan’s concern to the best interest of the Rakyat. Is this so? This is questionable since the Sultan seems to violate the “treaty” with the Rakyat by appointing a person to be Chief Minister whom has not commanded the support of the state legislative assembly in particular and the masses of the public in general. Furthermore, can we confidently say that the Sultan who wishes himself to be built a “Istana” on Bukit Chendering that costs the tax payers money RM 200 million plus, is a monarch who is thinking for the best interest of his Rakyat? That fact alone seems to show otherwise. 

If the royalties are indeed pissed-off with the former Chief Minister’s act of building the Taman Tamadun Islam (including other projects) which cost somewhat similar to the soon to be build palace, putting aside the “Dhirar” issue at least the Islamic park project is done with the intention to boost tourism in Terengganu and it is accessible for all to come and see. On the other hand the grand istana is strictly for the use, enjoyment and amusement of the Royals, certainly inaccessible to us common peasants. 

In my view the act of appointing a Chief Minister without taking into consideration the “advise” of the Prime Minister and the voice of the Rakyat through the state legislative assembly is not in line with the spirit of the Malaysian constitution. Allowance of such an act or appointment will cause derogation to the rule of law in Malaysia and it will also set a precedent of a new dawn in monarchic power-play in this country. As to the topic above, the saying of “Raja adil Raja disembah” needs to be addressed. The authority should be transparent on this matter so that the masses know about the truth of what is going on in Terengganu. Based on valid and reasonable cause let the people decide whether that appointment is “Adil” or not.  

WP: Power to the people man… (“to be pronounced in a deep Jamaican accent”)

Apology, my Lord

In my last post, I wrote that the appointment of Zaid Ibrahim into the cabinet is a thing that we all can look forward to in these times of uncertainty. A question that can be posed against him as the new de facto law minister is that will he strive to provide the Rakyat with the much awaited reform of the judiciary? Today (for now) perhaps the above posed question has been answered with a big NO or with a small not-yet-lah.

 

Recently Zaid told the media that the government should make public apology to the victims of the 1988 judicial crisis, in particular to Tun Salleh Abbas. The Tun’s dismissal from office years ago may have scarred the whole judicial institution and I bet that the wanton episode scarred Tun Salleh the most and no apologies, whether public or not, can effectively heal such injury inflicted to a person’s good name.

 

These questions cross my mind, in the current situation are such a publicized apology needed? With all the scandals that beset the judiciary now, do we really need to revisit such matter that already is part of history?

 

In my view, rather than digging up old issues which most Rakyat has already forgotten is not a wise move. It can be perceived by the masses as a diversion made by the government to swerve the Rakyat’s attention away from current issues and scandals that involves the judiciary. If in the nearest future there is no acceptable update on the Linggam tape enquiry, then I believe, with a non-paranoidal thinking, that such diversion does exist. 23 March 2008