Discharge from bankruptcy requires strict adherence to statutory provisions, including proof of serious illness and compliance with reporting duties.

Background Facts

[2] The two (husband and wife) became bankrupt after being guarantors for a corporate loan. They applied pursuant to s 33(1) of the Insolvency Act 1967 ("the Act") to be discharged from bankruptcy. Age and their serious illness were cited as reasons for the discharge. Both bankrupts are 66 years old. The other reason given is because the loan taken is not for personal use but for the business of a company. The business had collapsed because of economic crisis.

[3] Debt still owed by the two to the judgment creditor ("JC") at the time of applications for discharge was RM 228,258.05 according to the reports prepared by the Director of Insolvency ("DGI") pursuant to s 33(3) of the Act. The reports explained the two bankrupt do not have any realizable assets anymore and indicated that the dividend that can be paid to creditors is less than 10%. After the decisions of the SAR and before the hearing of the appeals, another High court judge had ordered for the two bankrupts to file medical reports supporting their contention that they have serious illness to support the discharge. There were no medical reports before the SAR when the applications were argued. It was only when the appeals were before the other High court judge that the medical reports were ordered to be filed. Despite ordering the filing of the medical reports, the learned High court judge however did not thereafter hear the appeals.

Summary Of The Learned SAR's Decisions

[4] As indicated the learned SAR refused both applications for discharge.

[5] It is most relevant to note that the medical reports for the discharge were never before the SAR.

[6] The bankrupts could not be discharged without paying 50% of the dividend. The divided available was only 4.4% and 1.74 respectively for the two bankrupts, thus way short of the 50%.

[7] The bankrupts took several years in order to file the statement of affairs. This is contrary to the provision of the relevant law.

The Summary Of The Bankrupts' Cum JDs' Arguments

[8] There can be no objection against their applications as it is based on serious illness.

[9] The DGI's reports confirmed that both have not been charged with any offence under the Act and there is no longer any realizable assets held by both the bankrupts.

[10] The medical reports are not fresh evidence introduced after the decisions of the SAR. It is public document produced as support for the discharge. The medical reports were ordered by the previous High court judge.

The Summary Of The JC's Arguments

[11] Resisting this consolidated appeals, the JC objected to the medical reports because the same were never before the SAR. The reports cannot be filed at this late stage for the appeal.

[12] In any event, the medical reports did not reflect the sickness as asserted in the affidavit.

[13] Both bankrupts cum judgment debtors were wrong to pursue their appeals on the mistaken belief that this is premised on the DGI's power to discharge instead of the court's own power for the same.

[14] There is no reason to disturb the decisions of the learned SAR not to discharge the two bankrupts. The SAR gave sound reasons not to order a discharge.

[15] The bankrupts failed to make good their promise of settling the debt to the JC.

[16] Discharging the two bankrupts is injustice to the JC as the JC will not be able to recover the debt.

Issues

[17] Taking note of the submissions of both parties, the issues before the court are as follows:

(a) Whether the JC could raise an objection since the ground for discharge is serious illness;

(b) Whether the medical reports could be introduced at the appellate stage;

(c) Whether the bankru