The liability of a judgment debtor's guarantor persists despite the principal debtor's actions or settlements, reinforcing the validity of the Guarantee.

JUDGMENT

(Enclosure 23)

Nadzarin Wok Nordin JC:

Introduction

[1] Before this Court is an appeal under encl 23 (Appeal) wherein the Appellant Judgment Creditor (JC) is appealing against an order dated 25 May 2021 (25 May 2011 Order) given by the Learned Timbalan Pendafar (TP) allowing the Summons in Chambers dated 29 January 2021 filed by the Respondent Judgment Debtor (JD) to set aside the Bankruptcy Notice dated 11 January 2021 (2nd BN) with costs of RM3,000.00.

Brief Background Facts

[2] The JC obtained judgment on 4 August 2017 for the principal sum of RM128,991.60 and interest ("Judgment") against one Thirumaney Construction Sdn Bhd ("TC") and the JD in a matter registered under WA-A52NCC-235-02/2017 ("Suit 235"). TC is the principal borrower of credit facilities from JC for the supply of concrete. The JD is a guarantor under the Guarantee and Indemnity dated 19 may 2006 ("Guarantee") guaranteeing the repayment of all sums due to the JC that is owed by TC in respect of the credit facilities. (See: the Judgment and Guarantee at pp 22-29 of Appeal Record).

[3] The Judgment in Suit 235 was not satisfied by TC. TC was wound up by JC on 7 December 2018 under the matter registered as Kuala Lumpur High Court Winding Up Proceedings WA-28NCC- 887-029/2018 ("Suit W/P 887"). (See: exhibit "LGH-2" at pp 137 of Appeal Record).

[4] JC and TC Commenced settlement discussions. On 22 November 2019, a letter was written by JC's solicitor addressed specifically to TC in Suit W/P 887 offering to accept RM128,991.60 as full and final settlement of TC's debts (See: exhibit "MT-4" at p 73 of Appeal Record). The settlement discussions stopped there. TC remained silent and no monies were paid in settlement of the debt.

[5] This led to the filing of the First BN by JC against JD on 2 June 2020 for RM235,645.82 under bankruptcy proceedings registered as Kuala Lumpur High Court bankruptcy proceedings No WA-29NCC-922-06/2020 ("First BN"). This amount consists of the principal sum of RM128,991.60 and interest of RM106,154.11 as at 2 June 2020 vis-a-vis the Judgment in Suit 235 (See: exhibit "MT-1" at pp 49-53 of Appeal Record).

[6] Shortly after the First BN was served on the JD, the principal sum of RM128,991.60 under the Judgment was paid by and on behalf of TC to the Insolvency Department on 20 June 2020. Interests due under the Judgment remained outstanding.

(a) The JD then filed an application to set aside the First BN on the basis that the sum of RM128,991.60 was paid to the Insolvency Department which allegedly made the First BN invalid (See: page 115-119 of the Appeal Record)

[7] The First BN was set aside by the Registrar on 18 December 2020. No. reasons were given by the Registrar in setting aside the First BN (See: pages 49 of Appeal Record).

[8] The JC then filed this BN against the JD on 11 January 2021 for the sum of RM121,043.61 ("Second BN"). This sum consists of amongst others, interests of RM120,543.61 currently outstanding under the Judgment in Suit 235 after taking into account the earlier payment of RM128,991.60 on 20 June 2020.

Judgment Creditor's Submissions

[9] The JC had submitted that they had opposed the Application to Set Aside the 1st BN on the basis that payment was only made after the filing of the 1st BN and after an act of Bankruptcy was committed by the JD and therefore an abuse of Court process and that they could still amend the 1st BN to reflect the amounts received as the balance due under the judgment in Suit 235 of over RM100,000 was sufficient to enable the Court to proceed with the bankcruptcy orders.

[10] It was further submitted by the JC that:

10.1 they agree and acknowledge that the Principal Borrower had paid the sum of RM128,991.60 on behalf of the Principal Borrower on 20 June 2020 to the Jabatan Insolvensi Malaysia (JIM),and that based on the same the JC wrote to JIM on 18 June 2020 to obtain a certificate of release of its winding up status;

10.2 it is undisputed that the settlement was between the JC and the Principal