Lakshmanan A/L K.R.P Perumal @ Pethaperumal VsAnanth A/L Shanmugam

  

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DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR

 

(BAHAGIAN DAGANG)

 

DALAM KEBANKRAPAN NO. 29NCC-2967-06/2014

 

Per : LAKSHMANAN A/L K.R.P PERUMAL @ PETHAPERUMAL

 

( No. K/P: 4600428-10-6359/

 

A1208700) – Penghutang Penghakiman

 

Ex Parte: ANANTH A/L SHANMUGAM ( NO. KP: 781029-10-5717)

 

( sebagai Pentadbir Harta Pusaka SAROJA NAGAMMAI IK SHANMUGAM

 

NO. K/P: 420730-71-5026) – Pemuitang Penghakiman

 

GROUNDS OF JUDGMENT

 

Enclosure 35 is the Judgment Debtor’s (JD’s) application for the stay of this bankruptcy proceeding until all costs in the previous bankruptcy proceeding have been paid by the Judgment Creditor (JC).

 

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Facts

 

[2] On 22nd February 2010, the JC had obtained a summary judgment against the JD for the principal sum of RM695,000.00. As at 10th June 2014, the date the bankruptcy notice in this bankruptcy proceeding was filed, the total judgment sum, including interest and cost owing to the JC was RM1,272,423.28. The JD had appealed to the Court of Appeal against the said judgment of 22nd February 2010. However the Court of Appeal on 10th March 2011 dismissed the JD’s appeal with cost of RM10,000.00 be awarded to the JC. The JD later filed for leave to appeal to the Federal Court. But the Federal Court dismissed the application on 28th July 2011 with costs of RM5000 be awarded to the JC. With that decision, the total cost owed by the JD to the JC in respect of the appeal against the judgment dated 22nd February 2010 is thus RM15,000.

 

[3] Based on that judgment, the JC had in 2012 filed an earlier bankruptcy proceeding vide Case No: 29-592-02/2012. The JD’s application to set aside the said bankruptcy proceeding was dismissed by the High Court. However, on appeal, the Court of Appeal on 24th April 2014 allowed the JD’s appeal with cost of

 

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RM10,000 to be paid by the JC to the JD. Hence, the total costs owed by the JC to the JD is thus RM10,000.

 

[4] The JC then withdraw the earlier bankruptcy proceeding vide 29-592-02/2012 and paid RM500.00 as ordered by the Registrar and filed the current bankruptcy proceeding which is now before this court.

 

Issue

 

[5] Whether the bankruptcy proceeding before this court ought to be stayed until all costs of the previous bankruptcy proceeding have been paid by the JC to the JC.

 

Submissions by Parties

 

[6] It is the JD’s submissions that in the light of the absence of any specific provision for stay of proceedings until costs is paid under the Bankruptcy Act 1969 ( Act 360) , reliance is made on Order 21 rule 5 of the Rules of Court 2012 i.e:

 

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“ (1) Where a party has discontinued an action or counterclaim or withdrawn any particular claim made by him therein and he is liable to pay any other party’s costs of the action or counterclaim or the costs occasioned to any other party by the claim withdrawn, then, if before the payment of those costs, he subsequently brings an action for the same or substantially the same cause of action, the Court may order the proceedings in that action to be stayed until those costs are paid.

 

(2) An application for an order under this rule may be made by a notice of application. ”

 

[7] The JD also refers to Palaniappan v Ramanathan & 2 Ors

 

[1972] 1 MLJ 227 which adopted the principle in Martin v Earl Beauchamp [1884] 25 ChD 12, CA (Eng) and held that:

 

“ (a) All further proceedings in this suit be stayed until the plaintiff provides security for costs in the sum of S3,500.00 and has paid the first defendant all costs due and outstanding from him to the first defendant in the civil suit NO. 1138 of 1966 in the High Court at Kuala Lumpur and the appeal therefrom.”

 

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[8] The JD also submits that the cost of RM15,000 that arose in the civil action has been incorporated and merged in the judgment sum which forms the basis for this bankruptcy action. As such, the JC is not entitled to set-off the cost of RM10,000 awarded in the previous bankruptcy action against the cost of RM15,000 awarded in the civil action.

 

[9] On the part of the JC, rule 97 ( actually section 97) of Act 360 is cited which reads as follows:

 

“ the court may at any time, for sufficient reason, make an order staying the proceedings under a bankruptcy petition, either altogether or for a limited time, on such terms and submit to conditions as the court thinks just”.

 

[10] The JC also submits that a stay of proceedings will not be granted unless there are special circumstances and cites the Federal Court case of Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2003] 4 CLJ 1 to support the argument.

 

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[11] The JC also cites inter alia the case of Re Chai Min Sin, Ex P MBF Finance Bhd [2004] 5 CLJ 272 wherein it was held:

 

“ [1] The commencement of a bankruptcy proceeding against a party who had been ordered to pay a judgment sum was a form of execution, and for there to be sufficient grounds for a stay, special circumstances must be shown. In this case, the judgment debtor’s affidavit in support of the application for stay did not disclose any ground that gave rise to special circumstances. The judgment debtor did not provide facts or evidence to show how he would suffer irreparable damage or be prejudiced. Hence, it was impossible for the court to form a reasonable opinion as to whether the grounds raised to get the order for stay were sufficient or not. Mere allegations were not enough and the fact that there was an appeal pending was also not a sufficient ground to grant a stay.”

 

[12] The JC also submits that it is illogical to argue that the costs owed by the JC can constitute enough of a reason to stay this entire bankruptcy proceeding, when the amount sum owed by the JD towards the JC is phenomenally larger in comparison.

 

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Decision

 

[13] I have perused the cause papers and considered submissions made by the parties, written as well as oral.

 

[14] With due respect to the JD, the authorities referred to in their submissions have nothing to do with an application for a stay in bankruptcy proceedings. It is my view that when a stay is applied in bankruptcy proceedings, the provision which needs to be looked at and considered is section 97 of Act 360. That provision as cited above, requires sufficient reason to be shown before the court can make an order staying the bankruptcy proceedings. Sufficient reason also means special circumstances as decided by Re Chai Min Sin’s case ( Supra).

 

[15] To me, the non-payment of costs of RM10,000 by the JC to the JD cannot constitute sufficient reason. What more there is also the cost of RM15,000 which the JD still owe the JC. If there were to be a set-off the JD is still indebted not only for the judgment sum amounting to RM1,272,423.28 as at 10th June 2014, but also for an extra RM5000 for the cost.

 

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[16] The JD’s argument that the said cost of RM15,000 has been incorporated and merged in the judgment sum which form the basis for the current bankruptcy action is also, with due respect, without merit as page 3 of enclosure 1, the Bankruptcy Notice, only states “ Kos yang diawadkan RM1,000.00″. Nowhere in the Bankruptcy Notice as shown in enclosure 1 has the sum of RM15,000.00 been incorporated or merged or included.

 

[17] I therefore agree with the JC that the costs issue raised by the JD does not form part and parcel of this bankruptcy proceeding. The costs allegedly owed by the JC towards the JD are costs forming around an earlier appeal for an earlier bankruptcy proceeding. These two are entirely different matters altogether.

 

[18] What is important and cannot be disputed, money is owed by the JD to the JC and that money owed exceeds RM30,000.00 as stipulated in Section 5 of Act 360 and that in itself has legitimized the Bankruptcy Notice.

 

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[19] It is noted that the suit in which the judgment obtained which formed the basis of this bankruptcy proceeding was initially filed in the year 2005. Hence it is not wrong for me to assume that the issue of costs is merely raised by the JD to delay the court process and to prejudice and delay the JC’s rights. As submitted by the JC, the JD cannot approbate and reprobate and insists on payment of costs due to him, when he himself has not paid costs of RM15,000.00 to the JC which accrued much earlier.

 

Conclusion

 

[20] Based on the above, I entirely agree with the JC and find no sufficient reason under Section 97 of Act 360 for me to grant the stay sought by the JD. Hence enclosure 35 is dismissed with cost.

 

DATO’ ZALEHA BINTI YUSOF JUDGE

 

HIGH COURT OF MALAYA KUALA LUMPUR

 

Dated: 29th January 2015

 

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For the Judgment Debtor: Anis Eznin bin Ishak; Messrs Lazaroo & Associates

 

For the Judgment Creditor: Parminder Kaur with A. Nagarajan; Messrs Parminder K & Associates

 

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