IN THE HIGH COURT AT KUALA LUMPUR (COMMERCIAL DIVISION) BANKRUPTCY NO. D4-29-1854-2005
SOO SHUI CHING (NO.K/P lama : 4128432)
(NO.K/P baru : 510706-08-5502)
MALAYAN BANKING BERHAD (No. Syarikat: 3813-K)
IN THE HIGH COURT AT KUALA LUMPUR (COMMERCIAL DIVISION)
BANKRUPTCY NO. D4-29-1855-2005
Per : KOH KIEN HONG
(NO.K/P lama : 8133924)
(NO.K/P baru : 540819-10-5669)
Ex parte : MALAYAN BANKING BERHAD
(No. Syarikat: 3813-K)
(digabung melalui Perintah Mahkamah bertarikh 23.5.2008)
BEFORE THE HONOURABLE JUDGE
Y.A. HAJI HAMID SULTAN BIN ABU BACKER
This is my judgment in respect of enclosure 40 the bankrupt’s appeal against the receiving and adjudicating orders granted on 14.12.2009.
1. The judgment creditor (J.C.) had obtained summary judgment against the borrower and the guarantors. And one of the guarantors is the appellant in these proceedings. The judgment debtor (J.D.) complains: (i) the J.C. holds security in respect of the banking facilities (ii) the J.C. has offered to settle the amount stated in Bankruptcy Notice (B.N.) amounting to RM 481,200.76 as set out in B.N. by way of 20 installments and is stated in enclosures 27 and 32 (iii) with leave of court on 13.5.2010 have filed an application to set out the ‘without prejudice’ offer to settle amount of RM 481,200.76 inclusive of costs of RM 26,000.00 by way of an initial payment of RM 100,000.00 followed by 20 monthly installments (iv) the offer has been rejected by the J.C. Learned counsel for the J.D. in essence says that the J.D. is able to pay the debt within the meaning of section 6(3) of Bankruptcy
Act 1967 (BA 1967) and in consequence says the creditor’s petition must be dismissed.
2. The learned counsel for the J.C. argues that I should not have granted leave to introduce the ‘without prejudice’ conversation at the appeal stage and relies on the case of Oh Kuang Liang v. Associated Wood Industries Sdn Bhd  2 CLJ 961 which in the first instance I will say have nothing to do with bankruptcy proceedings.
3. In addition the learned counsel says the granting of leave was in breach of RHC order 56 r 1(3A)(a)(b) of 1980. The J.C. complains (i) the J.D. only wants to settle RM 481,200.76 which does not include the statutory interest of 6% which the judgment creditor is entitled to (ii) the proposed settlement needs the approval of Director General of Insolvency (iii) the bankrupt’s ability to settle debt is to be considered at the time before the expiry of 7 days after service of B.N. and not at the hearing of creditor’s petition or appeal thereof.
4. I have read the relevant application, affidavits and submission of the parties in detail. I take the view that appeal must be allowed with directions. My reasons inter alia are as follows:
(a) It is trite that court is given wide discretion and latitude to deal with the question whether a person should be made a bankrupt, pursuant to Bankruptcy Act and Rules. No creditor
can insist as a matter of right a person must be made a bankrupt when the proposed bankrupt can show for other sufficient cause no order ought to be made against him. I have dealt with this area of jurisprudence in a number of cases. To name a few are as follows: (i) Re Siow Ah Moi; Ex P United Leasing Company Bhd  8 CLJ 104; (ii) PT Bank Mandiri (Persero) TBK v. Karambunai Corp Bhd  10 CLJ 636; (iii) Re Naspu Daud; Ex P Affin Bank Bhd  1 CLJ 723; (iv) Re Haji Khalid Abdullah; Ex Parte Danaharta Urus Sdn Bhd  1 LNS 279; (v) Re Teoh Heng Han; Ex Parte OCBC Bank (Malaysia) Berhad, Bankruptcy No: D3-29-1523-2007, Hamid Sultan Bin Abu Backer, J Kuala Lumpur High Court, 21 April 2010.
(b) Section 6(3) sets out some instances where the court may
dismiss the petition. That section reads as follows:
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.
(c) The court may make any suitable orders or give directions as the justice of the case may require to balance the right of the J.C. as well as the right of J.D. to attain a just solution to ensure the civil liberty of the J.D. as enshrined in article 5(1)
of the Federal Constitution is not ordinarily deprived of.
Article 5(1) of the Federal Constitution reads as follows:
No person shall be deprived of his life or personal liberty save in accordance with law.
(d) To provide suitable relief section 6(3) must be read with section 93 and in particular section 93(2) of BA 1967 which reads as follows:
The court may at any time adjourn any proceedings before it upon such terms, if any, as it thinks fit to impose.
And also section 92(1) which reads as follows:
The court may review, rescind or vary any order made by it under its bankruptcy jurisdiction.
(e) In the instant case the A.O. and R.O. granted by the senior assistant registrar in law is automatically stayed when there is an appeal before the judge by virtue of section 90(1) which reads as follows:
The Registrar shall have the powers and jurisdiction in this section mentioned, and any order made or act done by him in the exercise of the said powers and jurisdiction shall, subject to an appeal, be deemed the order or act of the court.
In consequence once the appeal is filed against the decision the Director General of Insolvency has very little role to play until the disposal of the appeal in favour of the judgment creditor. This is the scheme of the Bankruptcy Act and all
parties are obliged to follow the provisions of the Act in view of the dominant constitutional protection afforded in article 5(1) of Federal Constitution.
(f) The complaint by the J.C. that the court ought not to have granted leave to introduce the mode of payment in my view is a non issue as it was only meant for a limited purpose to decide as provided for in section 6(3) of BA 1967. And the court may do so in the wider interest of justice as set out in section 93 in particular section 93(5) of BA 1967 which reads as follows:
Subject to general rules, the court may in any matter take the whole or any part of the evidence, either viva voce or by interrogatories or upon affidavit or by commission abroad.
No rules in Bankruptcy proceeding prohibits the court from receiving further affidavits confined to a particular issue such as that which has been raised before the senior assistant registrar (SAR) and still continuing with better terms for the benefit of the J.C. I do not see how it prejudices the J.C. when the issue relating to the mode of payment was already before the SAR.
(g) The judgment creditor is only entitled to the sum stated in the B.N. which the J.D. is prepared to pay by installments. The issue of interest must be dealt with separately, and
cannot form part of the complaint. Support for the proposition is found in the case of Perwira Affin Bank Bhd v. Mohan Arunasalam Arulgnanam and another action  1 MLJ 732 where the court held:
“The judgment creditors are entitled to payment of the amount which has been stated in the petition which is based on the bankruptcy notice. The continuing interest on the judgment debt which accrued after the date of the bankruptcy notice constitutes a debt provable in bankruptcy under s 40(3) of the Bankruptcy Act 1967 after the judgment debtors are declared bankrupt. These are debts to be proved before the official assignee after the receiving and adjudication orders are pronounced. In the instant case, the debtors are prepared to pay the amount as stated in the bankruptcy notice and in the petition. ”
(h) The courts have in the past allowed the sum stated in the B.N. to be paid in installment if the justice of the case warrants. SAR must take note to exercise the powers according to the justice of the case and provided the settlement proposal is a realistic and/or reasonable and can be complied with within a reasonable time frame. This point was well articulated in Re Latifah Bte Hussaina, Ex Parte Perbadanan Pembangunan Pulau Pinang  2 MLJ 290. On my part I will say that a nation with too many bankrupts is not good for the economic development of the country and SAR must exercise the discretion wisely and according to the justice of the case.
(i) In the instant case the A.O. and R.O. has been stayed pursuant to section 90(1) until the appeal is allowed. The J.D. appeal enclosure 40 is adjourned to another date, to be fixed by SAR with the following directions:
(i) the J.D. is at liberty to pay as proposed by him in his affidavit dated 13.5.2010 to commence from 1.6.2010 of this order;
(ii) enclosure 40 is to be adjourned to another date to ensure the J.D. pays the J.C. as per the proposal, and thereafter the A.O. and R.O. will be set aside;
(iii) the file to be monitored by the SAR every 3 months and in the event of any default of the proposed payment, the matter to be brought before the judge to affirm the A.O. and R.O. made by the SAR.
(iv) I make no order as to costs.
I hereby order so.
(Y.A. DR.HAJI HAMID SULTAN BIN ABU BACKER)
High Court (Commercial Division)
Date: 27th May 2010
For the Appellant: Mahathir; M/s Athi Seelan Mahathir & Partners For the Respondent: C.S.Mong; M/s Lee Hishamuddin Allen &