Research

[80]  Paragraph 3(2)(ii) of the Bankruptcy Act 1967 [Act 360] provides that if a Judgment

Debtor intends to dispute the validity or the sum specified in a bankruptcy notice, he or she
must do so within seven days after the service of the bankruptcy notice. If the Judgment
Debtor fails to do so, it has been held that Judgment Debtor has abandoned his/her right to
dispute (see Re Gerald Giam Seng Teck, ex p Prime Credit Leasing Sdn Bhd [2000] 3 CLJ 460, Re Woo Yoke
San, ex p OCBC Bank (M) Bhd [2006] 2 CLJ 589).
[81]  In this case, the Appellant did not give any such notice within the stipulated seven days
(23.04.2013), to dispute the said Bankruptcy Notice pursuant to Paragraph 3(2)(ii) of the
Bankruptcy Act 1967 [Act 360] but merely argues that the Creditor's Petition was prematurely
filed without instituting any bankruptcy proceedings against the other Defendants named in
the 27 March 2007's judgment.

Bankruptcy – 6 months in the insolvency rules

Cannot file

Ng Yen Kok v AmFinance Bhd (formerly

known as MBf Finance Bhd and prior to that
was known as Arab-Malaysian Finance
Bhd) [2013] 4 MLJ 225
Copy Citation

[37]  In the appeal before us, the alleged act of bankruptcy forming the basis of the creditor's
petition occurred, according to the respondent/judgment creditor, more than six months before the
petition was presented. That delay has disentitled the respondent from presenting the petition.
That is abundantly clear from the provisions of para 5(1)(c) of the Bankruptcy Act 1967 and
the case of Re a Debtor referred to above.

[38]  Having become no longer entitled to present a creditor's petition by 8 March 2004, (the date
on which the period of six months from 8 September 2003 expired), the respondent's
creditor's petition presented on 9 May 2005 is clearly an invalid creditor's petition. A receiving
order and adjudication order granted on the basis of an invalid creditor's petition are invalid.
The RO and AO against the appellant must therefore be set aside.

DECISION

[39]  Based on our findings on the two issues analysed above, we allowed the appeal and set
aside the receiving order and adjudication order against the appellant.
 Re Joseph Lee Hen Shenn; ex parte Shearn
Delamore & Co and Drew and Napier [2012]
9 MLJ 866
[3]  The act of bankruptcy was allegedly committed on 12 December 2009 and the petition was
presented on 24 May 2010. It was contended that the judgment creditor must wait until after
the expiry of the six months period before the petition could be presented. Reliance was
placed on my judgment in Re Wong Kin Nyuk Ex Parte Alliance Bank Malaysia Bhd [2011] 1 LNS 786
where I held, inter alia, that the earliest date a bankruptcy petition can be presented is six
months after the alleged act of bankruptcy. This is what I said in that case:

In my view the effect of s 5(1)(c) of the Act is to allow a moratorium of six months before the creditor’s petition can be
presented, which means the earliest date the petition can be presented is the day after the expiry of the six months
period. It makes no sense to argue that the petition must be presented within six months from the date of the act of
bankruptcy because to present the petition at any point of time within that period would be to go against the prohibition
imposed by s 5(1)(c) itself.

Per: Zamri Naim Bin Ismail v Ex- Parte: Bank

Muamalat Malaysia Bhd [2014] MLJU 1337

Eot under Winding Up Rules

Kilo Asset Sdn Bhd v Hew Tai Hong [2015]

MLJU 1270
[2]  Enclosure 17 arose from the winding-up petition where the Respondent, pursuant
to rule 193 and rule 194 of the Companies (Winding-Up) Rules 1972 (Winding-Up Rules) applied
for an extension of time to file and serve his affidavit in reply to the Appellant’s affidavits in
opposition to the winding-up petition and to file and serve other affidavits.

[29]  We are of the view that although the wordings of rule 30(2) of the Winding-Up Rules of
the Winding-Up Rules seem to be mandatory in nature, one must not lose sight of the general
powers of the court to abridge time as envisaged under rules 193 and 194(1) of the same.
Those rules which provide as follows:

193. Enlargement or abridgment of time.

The Court may, in any case in which it shall see fit extend or abridge the time appointed by these Rules or fixed by any
order of the Court for doing any act or taking any proceeding.
194. Formal defect not to invalidate proceedings.

(1) No proceedings under the Act or the Rules shall be invalidated by any formal defect or any irregularity, unless the
Court is of the opinion that substantial injustice has been caused by the defect or irregularity, and that the injustice
cannot be remedied by any order of the Court.

Further, section 221(2)(b) of the Companies Act 1965 is also a saving provision as it provides

for the following:

[30]  Bearing the above provisions in mind, we find that the powers of the Court to extend or
abridge time are not restricted by the words employed in rule 30(2) of the Winding-Up Rules.
Rules 193 and 194 of the Winding-Up Rules, together with section 221(2) of the Companies Act
1965clearly give the court power to exercise its discretion to abridge the time prescribed in
rule 30(2). In our considered view, the Winding-Up Rules have to be read harmoniously, and the
rigours of rule 30(2) must be tampered by rules 193 and 194 of the Winding-Up Rules and section
221(2) of the Companies Act 1965.

[31]  As we have alluded to above, it is crystal clear from a bare reading of rule 194(1) of
the Winding-Up Rules that: "...no proceedings under the Act or the Rules shall be invalidated by
any formal defect or any irregularity, unless the court is of the opinion substantial injustice has
been caused...and that the injustice cannot be remedied by any order of court".
Rule 193 further provides that the court can on application extend time to do any act under
the Winding-Up Rules.

[32]  Further, it is clear from section 355(1) of the Companies Act 1965that technical non-

compliance can only invalidate a proceeding under the Act if the court is of the view that
substantial injustice has been or may be caused by such non¬compliance and the injustice
cannot be remedied by any court order. Section 355(1) of the Companies Act 1965 provides
that:

Irregularities in proceedings

355. (1) No proceeding under this Act shall be invalidated by any defect, irregularity or deficiency of notice or time
unless the Court is of opinion that substantial injustice has been or may be caused thereby which cannot be remedied by
any order of the Court.

[33]  As for the reliance placed on the case of Crocuses & Daffodils, we note that the judgment
in that case did not touch on the discretionary powers of the court under rules 193 and 194 of
the Winding-Up Rules. Neither did it even consider the discretionary powers of the court
under section 221(2)(b) of the Companies Act 1965which empowers the court to validate
formal defects or irregularities. Thus, we are of the view that the reasoning of the Court of
Appeal in Crocuses & Daffodils is not the conclusive authority for holding that the court has no
discretion to abridge the time prescribed in rule 30 of the Winding-Up Rules.

[34]  It follows therefore that the Court of Appeal’s decision in Crocuses & Daffodils must be
construed to apply only to the facts peculiar to that case. The facts in Crocuses & Daffodils
clearly showed that there was inordinate delay, with the court observing that the service of all
the affidavits on the Bank had clearly and blatantly contravened the mandatory time
prescribed under rule 30(1) of the Winding-Up Rules. This was also a case where the Petitioner
had a judgment in hand obtained on 4.7.1991, where the original hearing date of the Petition
was 24.9.1992. It would therefore seem that there could be no excusable reason why the
affidavits had to be filed out of time. The Court of Appeal in Crocuses & Daffodils in deciding as
it did was also swayed by the fact that the company’s indebtedness had been established as
long ago as 1984. The Court of Appeal emphasised that proceedings in the form of execution
of judgment should never be allowed to drag and more so where such proceedings concerned
the compulsory winding up of a company.

36]  In this regard, we share the sentiments expressed by Mohamad Arif Yusof J (as he then
was) in the case of Tng Hock Siang v Lady Bodyline Lingerie Sdn Bhd [2010] 1 LNS 1590 where His
Lordship held that "it would have been unduly strict and mechanistic to insist on a rigid
adherence on Rule 30(1), while ignoring Rules 193 and 194 of the Winding-Up Rules."

[37]  In the circumstances, we agree with the finding of the Court of Appeal in the instant case
in that the Judicial Commissioner was in error when he failed to direct his mind to the facts of
this case where equitable considerations invariably would come into play and it was not
advisable for the Court to adopt such a rigid approach on non-compliance. On the facts, we
are of the view that there were circumstances shown by the Petitioner that it had plausible
reason to file the Petition. Under the circumstances, we find that it would not be right to adopt
a purely mechanistic approach to the issue of time limits, and completely ignore the discretion
of the court in extending the same under rule 193 of the Winding-Up Rules.

[38]  We are of the unanimous opinion that courts when exercising its powers under
rule 193 and rule 194 of the Winding-Up Rules must be wary of all the surrounding
circumstances of each case. In exercising such discretion, courts must weigh the interest of
both parties in accordance with the facts and circumstances of the each case. In the instant
case, having considered the facts and circumstances, we find that no injustice, let alone
substantial injustice, had been caused by the defect or irregularity. Further, it had not been
shown to us that the injustice, if any, cannot be remedied by an order of the court. That being
the case, in our considered view the High Court erred as it ought to have exercised its powers
under rules 193 and 194 of the Winding-Up Rules in favour of the Petitioner and allowed
the affidavits to be used in the hearing of the petition on merits. In this case, we find that the
irregularity did not cause any injustice to the Company, and the delay by the Petitioner in
filing the affidavits was inconsequential and could be safely condoned under
rules 193 and 194 of the Winding-Up Rules and section 221(2)(b) and section 355 of
the Companies Act 1965.

[39]  In the final analysis, notwithstanding the fact that the time limit in rule 30 of the Winding
Up Rules is expressed to be mandatory in terms, in our judgment we find that under
rules 193 and 194 of the Winding-Up Rules and sections 221(2)(b) and 355 of the Companies Act
1965, the Court is empowered to abridge or extend time for the purpose of curing non-
compliance of provisions such as rule 30(2).

[40]  For the aforesaid reasons, we answer the question of law posed in the affirmative, in that
a Court has the discretion to extend time or to cure the non-compliance of rule 30(2) of
the Winding-Up Rules. For the above reasons that the Appellant’s appeal was dismissed with
costs.

[41]  This judgment is prepared pursuant to section 78(1) of the Courts of Judicature Act 1964,
as our learned brother Justice Apandi Hj Ali, FCJ has since resigned to assume the post of the
Attorney General of Malaysia.

HONG LEONG FINANCE BHD v DELTA DRIVE (M) SDN BHD

Based on r 193, the court in Sam Hin Timber ruled that the premature swearing or affirming of
such an affidavit verifying petition was a mere irregularity and curable thereunder. Similarly
in Sari Atlantic Sdn Bhd, the court was of the view that apart from the discretionary power given
by rr 193 and 194, the Companies Act 1965 under s 221(2) allows the court to cure the
'technical error' which does no injustice to the respondent. This was pleaded by the learned
counsel for the petitioner in her submission on 22�February 1999.

Perhaps it is necessary to respectfully note at this stage that the Court of Appeal in YPJE
Consultancy Service Sdn Bhdposed a pertinent point when the learned Ahmad Fairuz JCA at p 492
said:

'A similar issue arises concerning the verifying affidavit which contained the same date as that in the petition. Is it just
that the petition be dismissed only for the reason that the date was one which was not dated after a date stated in the
petition when it was clear from the affidavit that the affidavit refers to that petition itself?'

This fact is similar to the instant case.

This court will further add that apart from the authorities enumerated earlier, it may be
necessary to restate what VC George J (as his Lordship then was) in Re Mohd Sharif Bin Sapie at p
105, albeit obiter dictum that the very short judgment of Sir John Romly which said thus:

… the affidavit amounted to nothing, … [it] must be resworn and the order dated subsequently [meant] that clearly he
found nothing wrong with the petition itself and was of the opinion that the omission of an affidavit sworn in terms
required by the rule could be rectified by a reswearing of the affidavit and that the order sought by the petition could be
made thereafter.

It is, therefore, the view of this court that the premature swearing or affirming of the affidavit
verifying petition on 26 November 1998 was a[1999] 6 MLJ 239 at 248mere irregularity and
curable by this court as no injustice has been caused to the company.

UNISPAN FORMWORK SDN BHD v KIM CHOY TRACTOR

WORKS SDN BHD

This view was endorsed in the subsequent case of Ng Thoong Chen v Kedah Marble Sdn.
Bhd [2002] MLJU 199 and Arise Enterprise Sdn. Bhd v Feiyen Sanherk Hardware Sdn.
Bhd [2002] 5 CLJ 13. With respect to the views expressed in the abovesaid cases, rule 194 of
the Winding-Up Rules is to my mind a saving clause which seeks to preserve the validity of
winding-up proceedings in the event of any formal defect or irregularity unless the court is of
the opinion that substantial injustice has been caused by such defect or[2004] MLJU 160 at
10irregularity. As to what amounts to a formal defect or irregularity under rule 194(1) can
perhaps be gleaned from rule 194(2) which provides that no defect or irregularity in the
appointment or election of a receiver, liquidator or member of a committee of inspection shall
vitiate any done by him in good faith. Rule 194(1) thus envisages a defect or irregularity
which is technical in nature such as the premature swearing of an affidavit (see Sam Hin
Timber Co. v Perusahaan Sri Duyong Sdn. Bhd. [1983] 2 CLJ 269), imprecise details in the
petition (see Lix Industries Sdn Bhd v Greenworld Industry Sdn. Bhd [1998] 7 MLJ 403) or the
failure to state the amount claimed in the petition (see PT Anakapagan Dwitama v Far East
Food Industries Sdn. Bhd [1998] 7 MLJ 270).In all these cases the court held that the defect
or irregularity is purely formal and therefore curable under rule 194(1). Rule 194(1) does not
in my view apply to the present case. Here, the issue is whether the court has power to
extend or abridge the time for filing the affidavit in opposition as required by rule 30(1).
Although rule 193 of the Winding-up Rules (which is the relevant provision in this case)
empowers the court to grant such extension or abridgement, the Court of Appeal in ruling as it
did that r.30 is mandatory in nature has[2004] MLJU 160 at 11indirectly (in my view) ruled
that rule 193 does not admit the exercise of such discretion in the case of affidavits filed
under rule 30.

WINERICH SDN BHD v ALPHA ATLAS

MANAGEMENT SDN BHD [2003] 6 MLJ 547

Section 221(2)(b) and (f) of the Act contain sufficiently broad provisions for the exercise of
the powers of the court, when a petition comes on for hearing or in any application by the
petitioner at any stage of the proceedings, untrammelled by any limit except as the court
thinks fit, including curing irregularities which cause no injustice to the respondent. This power
or discretion is to be exercised judicially, according to the particular facts and circumstances
prevailing in each individual case (see p 551D–552A).