Guanghua Company (Guanghua) and Dongda Company (Dongda) entered into a cooperation agreement to build a building jointly. They agreed that Guanghua would provide all the funds for the construction and hold half of the building, while Dongda would provide the land-use right for construction and also hold half of the building after construction; the ownership of the building would be held jointly by the two parties, but would be registered under the name of Dongda. They also stated in the agreement that any disposal of the building must only be decided with the written consent of both parties.Having completed the construction of the building and the registration of real estate, the two companies divided and held their parts of the building in light of the agreement. Several months later, in order to expand its business Dongda mortgaged the whole building to an Investment Co for RMB 10 million yuan. The mortgage agreement, registered by the parties, stipulated that if Dongda failed to pay off the principal and interest, the building would be automatically transferred to Investment Co. In doing so Dongda did not notify this transaction to Guanghua.Due to its unsuccessful new business, Dongda was unable to repay the principal and interest, Investment Co requested the transfer of the ownership of the building in light of the mortgage agreement but was refused by Dongda. Investment Co filed a lawsuit requesting the court to support this transfer. Having heard this information Guanghua also took a legal action based on the cooperation agreement, requesting the court to confirm its ownership to the building.Required:Answer the following questions in accordance with the relevant provisions of the Property Law of China and give your reasons for your answers:
(c) State whether the building should be transferred to Investment Co because of the failure by Dongda to repay the principal and interest. (4 marks)
