The court established that a bankruptcy petition filed outside the statutory six-month period post act of bankruptcy is invalid, emphasizing strict compliance with insolvency laws.

Saheran Suhendran JC:

[1] These Grounds concern the Judgment Debtor's ("JD") appeal [Enclosure 128] against the Registrar's decision on 26 April 2024 dismissing the JD's Application to Set Aside the Creditor's Petition ("the CP") dated 28 November 2023 [Enclosure 97].

Introduction

[2] The Contents of these submissions are as out below.

[3] The cause papers filed herein are as follows.

Enclosure 89 the CP dated 28 November 2023;

Enclosure 90 the JC's Affidavit of Nizam Bin Mohamed Nadzri and Marlina Binti Sabtu affirmed on 28 November 2023;

Enclosure 97 the JD's Summons in Chambers before the Registrar dated 10 January 2024 to set aside the CP;

Enclosure 98 the JD's Affidavit in Support affirmed by the JD on 10 January 2024;

Enclosure 99 the JD's Notice of Intention to Oppose the CP in Form 45 dated 10 January 2024;

Enclosure 103 the JC's Affidavit affirmed by Julinah binti Abd Hamid n 8 February 2024;

Enclosure 104 the JD's Affidavit affirmed by the JD on 4 March 2024;

Enclosure 128 the JD's appeal to the Judge in Chambers dated 7 May 2024 against the Registrar's decision on 26 April 2024.

[4] The following chronology was primarily extracted from the JC's written submissions, which I accept.

Enclosures 97 & 128

[5] On 10 January 2024, the JD filed encl 97 to set aside the CP dated 28 November 2023. The Registrar dismissed encl 97. The JD appealed by way of encl 128. The JD relied on the following grounds.

(a) The CP should have been dismissed by the Registrar as it was presented in breach of s 5(1)(c) of the Insolvency Act 1967 (" IA "), having been presented after six (6) months from the act of bankruptcy.

(b) The postponement of the act of bankruptcy prescribed under r 93 of the Insolvency Rules 2017 ("IR") does not apply to save the CP filed in breach of s 5(1)(c).

Section 5 (1)(C) & The Time For Filing CP

[6] By section 3(1)(i) IA , the JD will commit an act of bankruptcy when, upon being served with the BN, he did not within seven (7) days from the date of the service of the BN, either:

(a) comply with the BN by paying the sums demanded, or

(b) satisfy the Court that the JD had a cross-claim which exceeds the sums demanded.

[7] The BN was served on the JD on 14 March 2022. The seven (7) days prescribed in s 3(1) expired on 21 March 2022 when by that date, the JD failed to settle the sum demanded and/or failed to satisfy the Court of a cross-claim in excess of the said sum.

[8] Hence (subject to any postponement as discussed below in paras 13 et seq), I agree that the JD committed an act of bankruptcy on 22 March 2022.

[9] I also agree that the Court has no jurisdiction to extend the seven (7) day period so as to defer the occurrence of an act of bankruptcy. In Low Mun v. Chung Khiaw Bank Ltd ; [1988] 1 MLJ 263; [1987] CLJ (Rep) 172 at p 48, the Supreme Court held:

"It should be observed that once the seven days have expired without the debtor having satisfied the debt or having satisfied the Court that he has a valid counter claim, an act of bankruptcy occurs by operation of law, and the Court has no jurisdiction under s 93(4) to extend the period prescribed (see Re ADebtorv. Slater Walker Ltd [1981] 2 All ER 987)."

[Emphasis Mine]

[10] Hence, it follows that by ss 5(1)(c) and 5(7) IA , the CP ought to have been filed before 21 September 2022, being within six (6) months from the act of bankruptcy committed on 22 March 2022, failing which the CP must be dismissed.

Section 5 (1)(c) of the IA provides:

"5(1) A creditor shall not be entitled to present a bankruptcy petition against a debtor unless:

(a)...;

(b)...;

(c) the act of bankruptcy on which the petition is grounded has occurred within six months before the presentation of the petition".

Section 5 (7) the IA provides:

"(7) If the petitioning creditor fails to comply with the requirements of this section, the Court shall dismiss the petition"

[Emphasis Mine]

[11] Therefore, the CP was invalid having been presented on 28 November 2023 being outside the six (6) months prescribed under s 5(1)