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2022 MarsdenLR 964
HIGH COURT MALAYA KUALA LUMPUR
RE: INDRAN KANAVAJI KANAWAGI; EX-PARTE: PUBLIC ISLAMIC BANK BERHAD
[Bankruptcy No: WA-29NCC-66-01/2020]
The court affirmed that mutual agreements can supersede original judgments in bankruptcy matters, especially under exceptional circumstances like a pandemic.
Headnote:(A) Insolvency Act 1967 – Sections 3(1)(i) and 93(4) – This appeal arises from the decision allowing the JD's application for an extension of time to challenge the BN. The court noted the exceptional circumstances due to the COVID-19 pandemic which impacted the JD's ability to seek legal advice timely. (Paras 12, 14, 16)
(B)
Hire Purchase Act 1967 – The court determined that the HP Agreement was reinstated through mutual conduct between the parties, invalidating the original judgment as the basis for the BN. (Paras 18, 21, 29)
(C)
This court upheld that the delays in payment did not constitute acts of bankruptcy under the prevailing agreement terms. (Paras 27, 30)
Facts of the case:
The JC appealed against a decision allowing the JD extra time to dispute a Bankruptcy Notice, emphasizing non-compliance with the Insolvency Act. Key evidence included payment patterns and a claim that the HP Agreement was reinstated.
Findings of Court:
The court found that the JD had satisfactorily shown cause for the extension of time and acknowledged the legal implications of the COVID-19 pandemic.
Issues
: Whether the JD's late filing constituted an act of bankruptcy and if the sums in the BN were excessive.
Ratio Decidendi:
The court relied on prior decisions affirming that payment agreements modify original judgments, thereby invalidating subsequent bankruptcy claims based on those judgments.
Result:
Appeal dismissed with costs awarded to the JD.
(Enclosure 62)
[1] The Judgment Creditor (JC) has by way of a Notice of Appeal dated 9 September 2021 in encl 62 (Appeal) appealed against the decision of the Learned Senior Assistant Registrar (SAR) given on 27 August 2021 allowing the Judgment Debtor's (JD) Summon in Chambers dated 18 January 2021 in encl 45 (encl 45) with costs of RM1,500.
[2] Enclosure 45 was filed by the JD to inter alia apply for an extension of time to allow the JD to apply to let aside the Bankruptcy Notice dated 31 January 2020 (BN) and/or the Bankruptcy proceedings issued by the JC.
Background Facts
[3] This is the Chronology of Events:
Submissions Of The JC
[4] The JC had in its submissions inter alia argued that:
4.1 the HP Agreement remains terminated and there has been no Supplemental Agreement or documents executed to reinstate the said HP Agreement
4.2 they have obtained the Judgment against the JD on 12 December 2014 which has not been disputed by the JD and which is a final judgment
4.3 Enclosure 45 did not comply with the requirements of s 3(2) of the Insolvency Act 1967
4.4 the JD had not filed any application to challenge the BN in accordance with s 3(1)(i) of the Insolvency Act 1967
4.5 the JC had on the basis of their own goodwill allowed the JD to make payments for the Judgment in instalments and these payments were not made towards the HP Agreement
4.6 as a result of the above contentions, the JD should be estopped from contending that the amount in the BN is erroneous
4.7 the sums in the BN are not excessive
4.8 there has been an unjustifiable delay in filing encl 45
The JD's Submissions
[5] In opposing the Appeal, the JD had contended amongst others that
5.1 the failure of the JD to act within the time stipulated under s 3(1)(i) of the Insolvency Act 1967 was through no fault of his own
5.2 the Movement Control Order (MCO) caused the JD to be unable to gain access to legal advice from a practitioner of his choice
5.3 since service was effected during the MCO period, the JD was unable to act through no fault of his own
5.4 there was a deferral of the effective date of service of the BN and the alleged act of bankruptcy therefore took place only on 12 May 2020
5.5 the JC had not complied with s 3(1)(i) of the Insolvency Act 1967
5.6 the BN is based on an Order In Default in 2014 which has been superseded by the revival of the Hire Purchase Agreement by mutual agreement of the parties
5.7 the above is further supported by the JC exercising their rights under the HP Agreement for repossession of the vehicle in 2019
5.8 the sums reflected in the BN are excessive and inaccurate
Finding's Of The Court
Extension Of Time
[6] Section 3 (1)(i) of the Insolvency Act 1967 provides:
(i) if a creditor has obtained a final judgment or final order against him for any amount and execution thereon not having been stayed has served on him in Malaysia, or by leave of the Court elsewhere, a bankruptcy notice under this act requiring him to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order with interest quantified up to the date of issue of the bankruptcy notice, or to secure or compound for it to the satisfaction of the creditor or the Court; and he does not within seven days after service of the notice in case the service is effected in Malaysia, and in case the service is effected elsewhere then within the time limited in that behalf by the order giving leave to effect the service, either comply with the requirements of the notice or satisfy the Court that he has a counterclaim, set off or cross demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid and which he could not set up in the action in which the judgment was obtained or in the proceedings in which the order was obtained:
[7] From the above section, it is clear that the JD has to dispute the BN within a period of 7 days from the date of the service of the BN on him.
[8] In the case before this Court, the B
