Question 3

On 17.2.2019, Bank Kaya Bhd. (BKB) obtained judgment against Tom at the Melaka High Court for
RM350,000/- together with interest and costs. On 14.6.2019 the Bankruptcy Order was made against
Tom on the Creditor’s Petition filed by BKB.

Subsequently, Tom’s uncle Brian approached BKB and made a payment of RM300,000/- in full and final
settlement of its claim against Tom. Tom subsequently filed an application under s.105(1) IA 1967 to
have the Bankruptcy Order annulled on the grounds that the debt had been fully settled. The SAR of the
HC allowed the application although it was objected to by BKB.

BKB intends to appeal to the judge in Chambers. Advise BKB on the viability of the appeal.

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The first issue here is whether the Bankruptcy Order can be annulled under S.105 (1) of IA 1967?

S.105 of IA laid out three limbs. First limb stated a debtor ought not to have been adjudged bankrupt in
the opinion of court. Second limb stated debts are paid in full and third limb stated there are
proceedings pending in Singapore.

In the case of Kwong Yik Bank Bhd v Hah Chiew Yin, the court held that respondent failed to satisfy that
the proved debt lawfully due to the appellant had been paid in full in cash and therefore the order of
Learned Judge in annulling the adjudication order must be set aside.

In the case of Ting Nguk Yong v Bank Utama (M) Bhd, it discussed the issue of whether the third party
has made a full payment of the bankrupt’s debts. The court held that a creditor cannot accept payment
from a third party. All payments must be made through the Director General of Insolvency.

Applying to the fact, as per stated in second limb of S.105 IA, bankruptcy order can be annulled when
the debts are paid in full. In this case, Tom only made a payment of RM 300,000 out of RM 350,000 debt
which is not full payment. As per the case of Kwong Yik Bank Bhd, Tom does not satisfy the court with
the payment of RM 300k as it is not full payment. Meanwhile as per the case of Ting Nguk Yong, BKB
cannot accept payment from a third party, in this case, Tom’s Uncle Brian. Therefore, these are the
grounds for DGI to oppose Tom’s application to annul the bankruptcy order.

In conclusion, the Bankruptcy Order cannot be annulled under S.105 (1) of IA.

The next issue is whether BKB can appeal to reinstate the Bankruptcy Order Under S.92(1) of IA?

S.92 (1) of IA laid out that the court may review, rescind or vary any order made by it under its
jurisdiction.

S.92 (2) of IA stated that the person aggrieved is required to appeal within 14 days from the date of
decision of the Registrar. The appeal will not operate as a stay of bankruptcy unless there is a stay in
execution.
In the case of Re Gan Wee Kuan, Ex P Bank Bumiputra Malaysia Bhd, the court ruled that for the
judgment creditor to succeed in the appeal against annulment of adjudication order, it had to convince
the court that SAR was either wrong in law or fact in exercising his discretion in making the order.

In the case of Mariam b Sasiman v BBMB Factoring Bhd, JC applied to SAR by way of summons in
chambers for reinstatement of Creditor’s Petition. The court allowed the reinstatement as the registrar
had ample jurisdiction under S. 92 (1) of the Act to order reinstatement.

O.56 R.1(1) of ROC stated that an appeal shall lie to a Judge in Chambers from any judgement, order or
decision of the Registrar of the High Court.

O.56 R.1 (3) of ROC stated that unless the Court otherwise orders, the notice shall be filed within 14
days after judgment, order or decision appealed against was given or made, and shall be served not less
than 5 days before the date fixed for the hearing of the appeal.

From our facts, it was stated that a bankruptcy order was made against Tom for his debt of RM 350,000
but only RM 300,000 paid to BKB. As there is balance of RM 50,000 debt unpaid, BKB may appeal for
reinstatement of the Bankruptcy Order that has been annulled by SAR of HC within 14 days from the
date the annulment order was granted which is as per S. 92 (2) of IA and precedence of the case of
Mariam b Sasiman.. In virtue of Re Gan Wee Kuan, BKB will need to prove that the decision was either
wrong in law or fact to the court who has jurisdiction to order reinstatement of the said Bankruptcy
Order.

In conclusion, BKB may appeal to reinstate the Bankruptcy Order under S.92 (1) of IA within 14 days
from the annulment order.