DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANGKUASA RAYUAN) RAYUAN SIVIL NO: P-03-247-2008
J RAJU A/L M. KERPAYA
@ JAYARAMAN A/L M. KERPAYA … PERAYU
KWONG YIK BANK BERHAD … RESPONDEN
[Dalam perkara Mahkamah Tinggi No. 3 di Pulau Pinang Dalam Kebankrapan No. 29-440-1991 berkenaan dengan Notis Rayuan Kepada Hakim Dalam Kamar bertarikh 23-10-2008]
J Raju A/L M. Kerpaya @ Jayaraman A/L M. Kerpaya
Kwong Yik Bank Berhad
(1) TENGKU BAHARUDIN SHAH BIN TENGKU MAHMUD, JCA
(2) JEFFREY TAN KOK WHA, JCA
(3) SYED AHMAD HELMY BIN SYED AHMAD, JCA
GROUNDS OF JUDGMENT
The appeal herein is the continuing saga of the altercation between the parties in respect of bankruptcy proceedings initiated by the respondent bank on 30.4.91 in the Pulau Pinang High Court and registered as Bankruptcy No. 29-440-1991 pursuant to a summary judgment obtained on 15.10.87 against the appellant for the sum of RM1,337,287.01.
The filing of the Bankruptcy Notice on 30.4.91 was strenuously resisted by the appellant as evident by the two applications taken out by the appellant. The first application was made through the filing of an affidavit under Rule 95 of the Bankruptcy Rules 1969 on 9.12.91. Under the said Rule 95 the filing of an affidavit operates as an application to set aside the Bankruptcy Notice. It is imperative to note that in embarking upon this mode of setting aside it is incumbent upon the appellant to comply with the requirements as provided for by Section 3(1)(i) of the Bankruptcy Act (BA) in that he must within 7 days after service of the Bankruptcy Notice state in his affidavit that he has a counterclaim, set off or cross-demand which equals or exceeds the amount of the judgment debt. The application went through three stages of hearing – before the Senior Assistant Registrar which rejected the application on 13.12.93; on appeal to the Judge the application was allowed on 21.12.95 but was reversed by the Court of Appeal on 8.2.99 with the consequent result of the validity of the Bankruptcy Notice being intact.
The second application by the appellant was made pursuant to Rule 18 of the Bankruptcy Rules through the mechanism of a summons-in-chambers supported by an affidavit in support. Rule 18 regulates setting aside of a Bankruptcy Notice which requires the judgment debtor
to pay a judgment debt otherwise than in accordance with terms of the judgment.
The summons-in-chambers together with the supporting affidavit was filed by the appellant and the main ground upon which the application was founded was the excessive sum demanded in the Bankruptcy Notice occasioned by the failure to deduct the auction proceeds of RM823,200.00 derived from the sale of the auctioned property. Though the Bankruptcy Notice was struck out by the Senior Assistant Registrar nevertheless on appeal it was reinstated by the High Court Judge who accordingly amended the Bankruptcy Notice to reflect the deduction of the auction proceeds which reinstatement was affirmed by the Court of Appeal.
The respondent bank based on the valid Bankruptcy Notice proceeded with the filing of the Creditor’s Petition dated 23.3.92 on 21.4.92. A verifying affidavit of truth of the statement in the petition was filed on 3.6.92. Adjudication and Receiving Orders were granted by the Senior Assistant Registrar on 22.10.2008 and affirmed by the learned High Court Judge on 14.11.08.
Against the background aforesaid the appellant pursued his appeal before us and upon hearing same we accordingly dismissed the appeal and affirmed the Adjudication and Receiving Orders made by the court below.
The principal ground of challenge mounted by the appellant in this appeal is the failure of the respondent bank to verify by affidavit the Creditor’s Petition that was presented on 21.4.92. By reason thereof the appellant took the position that the Creditors Petition so presented was a
nullity due to the non-verification of same by an affidavit as required by Section 6(1) of the Bankruptcy Act 1967.
In advancing his argument that the verifying affidavit is a mandatory condition precedent to the issuance of the Creditors Petition learned Counsel for appellant referred us to two cases – Re: Arul Das a/l Michale, Ex parte Malayan Banking Berhad  1 AMR 1083 and Ghazali bin Mat Noor v Southern Bank Bhd and four other appeals  2 MLJ 142.
In addressing the challenge mounted the point to note is that though there was no verification affidavit at the time the Creditor’s Petition was presented on 21.4.92 nevertheless a verification affidavit was filed some 45 days later i.e. on 5.6.92.
The appellant’s challenge as to the Creditor’s Petition being a nullity owing to the non-verification of same by an affidavit as required by Section 6(1) of the Bankruptcy Act 1967 requires an examination of the relevant provisions of the Bankruptcy Act and Rules pertaining to Creditor’s Petition.
The conditions upon which a creditor is entitled to present a creditor’s petition is regulated by Section 5(i) of the Bankruptcy Act 1967 which provides for 4 conditions that must be present namely:-
5. Condition on which creditor may petition.
(1) A creditor shall not be entitled to present a bankruptcy
petition against a debtor unless –
(a) the debt owing by the debtor to the petitioning creditor, or if two or more creditors join in the petition the aggregate amount of debts owing to the several petitioning creditors, amounts to thirty thousand ringgit; and
(b) the debt is a liquidated sum payable wither immediately or at some certain future time; and
(c) the act of bankruptcy on which the petition is grounded has occurred within six months before the presentation of the petition; and
(d) the debtor is domiciled in Malaysia or in any State or within one year before the date of the presentation of the petition has ordinarily resided or had a dwelling house or place of business in Malaysia or has carried on business in Malaysia personally or by means of an agent or is or has been within the same period a member of a firm or partnership which has carried on business in Malaysia by means of a partner or partners or an agent or manager.
Upon the conditions being fulfilled the proceedings are
regulated by Section 6 which prescribes as follows:-
6. Proceedings and order on creditor’s petition.
(1) A creditor’s petition shall be verified by affidavit of the creditor or of some person on his behalf having
knowledge of the facts, and shall be served as prescribed.
(2) At the hearing the court shall require proof of –
(a) the debt of the petitioning creditor; and
(b) the act of bankruptcy or, if more than one act of bankruptcy is alleged in the petition, someone of the alleged acts of bankruptcy; and
(c) if the debtor does not appear, the service of the petition,
and if satisfied with the proof may make a receiving order in pursuance of the petition.
(3) If the court is not satisfied with the proof of the petitioning creditor’s debt or of the act of bankruptcy or of the service of the petition, or is satisfied by the debtor that he is able to pay his debts, or that for other sufficient cause no order ought to be made, the court may dismiss the petition.
(4) when the act of bankruptcy relied on is non-compliance with a bankruptcy notice to pay, secure or compound for a judgment debt, the court may if it thinks fit stay or dismiss the petition on the ground that an appeal is pending from the judgment.
(5) Where the debtor appears on the petition and denies that he is indebted to the petitioner, or that he is indebted to such an amount as would justify the petitioner in presenting a petition against him, the
court, on such security, if any, being given as the court may require for payment to the petitioner of any debt which may be established against the debtor in due course of law and of the costs of establishing the debt, may, instead of dismissing the petition, stay all proceedings on the petition for such time as may be required for trial of the question relating to the debt.
(6) Where proceedings are stayed the court may, if by reason of the delay caused by the stay of proceedings or for any other cause it thinks just, make a receiving order on the petition of some other creditor, and shall thereupon dismiss, on such terms as it thinks just, the petition in which proceedings have been stayed as aforesaid.
(7) A creditor’s petition shall not after presentation be withdrawn without the leave of the court.
It is evident from the express wording of Section 5 that there is no requirement for a verification affidavit as a condition for the presentation of a creditor’s petition.
It is also pertinent to note that unlike a winding up petition Section 6(1) though prescribing the creditor’s petition to be verified by affidavit nevertheless does not stipulate at what point of time it needs to be filed. That being the case we are of the considered view that there is no statutory requirement that the creditor’s petition must be accompanied by an verification affidavit at the time of its filing and/or issuance. The High Court in Re Arul Das a/l Michale, Ex parte Malayan Banking
Berhad  1 AMR 1083 to our mind fell in error by holding that Section 6(1) makes the affidavit verifying the petition a condition precedent and is tantamount to reading into the section an requirement which does not exist. The rationale behind the necessity of filing a verification affidavit is to enable the Court to make the appropriate orders on the creditor’s petition at the hearing thereof. If no verification affidavit was placed before the Court on the hearing of the Creditor’s Petition then invariably the merits are not proved to the satisfaction of the Court and would accordingly be dismissed. The wording of Section 6(1) of the Act in our view merely requires the petitioning creditor to file in the affidavit verifying the Creditor’s Petition at any time prior to the hearing of the petition.
Adverting to the reference to the case of Ghazali bin Mat Noor (supra) it is of no assistance to the appellant in the determination of the issue at hand as the ratio relates to the invalidity of a bankruptcy notice for non quantification of the exact amount due as at the date of the bankruptcy notice.
As regards Re Arul Das (supra) the decision was influenced more by winding-up principles which specifically provides for a verifying affidavit to be filed within 4 days after the presentation of the winding up petition. The express time period stipulation make it’s compliance mandatory. Bankruptcy matters are regulated by statutory and regulatory provisions which are different from statutory and regulatory provisions in winding up proceedings. The Courts must apply statutory and regulatory provisions regulating bankruptcy proceedings in bankruptcy matters. The verifying affidavit herein though filed 45 days after the Creditor’s Petition was before the Court at the hearing date and the Court being satisfied with proof of the petition adjudicated on
same by granting the Adjudication and Receiving orders. There is no error on the part of the Court below for appellate interference.
We accordingly dismiss the appeal and affirm the decision of the learned High Court Judge.
(DATUK SYED AHMAD HELMY BIN SYED AHMAD)
Court of Appeal,
Dated this 6th day September of 2011
Counsel for the Appellant
Ms Geetar Kaur Tetuan Karupiah & Co., Peguambela & Peguamcara No. 7076A, Tingkat 2 Jalan Kampong Gajah 12000 BUTTERWORTH Pulau Pinang
Counsel for the Respondent
Mr. Leong Wai Hong bersama Ms Ng Chian Huey Tetuan Skrine & Co Peguambela & Peguamcara Unit No. 50-8-1 Tingkat 8 Wisma UOA Damansara 50 Jalan Dungun Damansara Heights 50490 KUALA LUMPUR.
Cases referred to:
1. Datuk Lim Kheng Kim v Malayan Banking Berhad  3 CLJ 324.
2. Arul Das a/l Michale, Ex parte Malayan Banking Berhad  1 AMR 1083.
3. Ghazali bin Mat Noor v Southern Bank Bhd and from other appeals  2 MLJ 142.
4. Re Arul Das a/l Michale, Ex parte Malayan Banking Berhad  1 AMR 1083.