JUDGMENT

This is an appeal from the decision of the Senior Assistant Registrar (SAR) to set aside the bankruptcy petition presented by the creditor on 4^th January 2008.

Background Facts

The creditor obtained judgment against the debtor in the Sessions Court on 28^th October 2005 for the sum of RM129,200.00. The appeal by the debtor against the said decision and an appeal for stay of execution failed. An appeal to the Court of Appeal is still pending at present time. On 29^th June 2007, the creditor served a bankruptcy notice on the debtor. The debtor filed an affidavit (enclosure 9) that purported to dispute the bankruptcy notice on 4^th July 2007. Subsequently on 19^th July 2007 and 8^th August, 2007, two further affidavits in opposition were filed by the debtor. The SAR did not rule on enclosure (9) and there was no letter from the debtor requesting for a hearing date either. On 4^th January 2008, the creditor filed a bankruptcy petition and served it on the debtor on 15^th February 2008. The debtor then sprung into action to challenge the bankruptcy proceedings by filing a summons in chambers (enclosure 31) under r 18 to set aside the petition. He also filed a Notice by Debtor of Intention to oppose Petition under r 117.

The learned SAR heard the summons in chambers and set aside the creditor's petition. Only one reason was given by the learned SAR in her brief written ruling. It is as follows. Counsel for debtor submitted that the affidavit dated 4^th July 2007 operated as an application to set aside the bankruptcy notice but as it was never heard by the then SAR, he argued that no act of bankruptcy was committed. This argument found favour with the learned SAR who ruled the bankruptcy petition was prematurely presented. The instant appeal is against this decision.

When A Creditor May Present A Petition?

Section 5 of the Bankruptcy Act 1967 provides that four conditions must be satisfied before a creditor may present a bankruptcy petition, ie, the debt must amount to RM30,000, it must be a liquidated debt payable immediately or a some certain future time, the act of bankruptcy must have occurred within six months before the presentation of the petition and that the debtor is domiciled in Malaysia or has resided there or carried on business within a year.

In this instant appeal, the counsel for debtor argued that no act of bankruptcy upon which the petition is grounded was committed within six months of the presentation of the petition. He repeated the same argument that he made before the SAR.

Whether the affidavit (end 9) amounted to an application to challenge the bankruptcy notice?

Case law is settled on the point when an affidavit may operate as an application to challenge a bankruptcy notice. For sake of convenience, I shall first reproduce the relevant statutory provisions. Section 3(1) (i) of the Bankruptcy Act provides that a debtor would have committed an act of bankruptcy if he cannot:

".... satisfy the Court that he has a counter-claim, 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".

Rule 95 of the Bankruptcy Rules 1969 reads as follows:

"95 Application to set aside

(1) The filing of an affidavit shall operate as an application to set aside the bankruptcy notice, and thereupon the Registrar shall fix a day for hearing the application, and shall give not less than three clear days' notice thereof to the debtor, the creditor and their respective solicitors, if known.

(2) If the application cannot be heard before the time specified in the notice for compliance with its requirements, the Registrar shall extend the time, and no act of bankruptcy shall be deemed to have been committed under the notice until the application has been heard and determined."

Rule 94 reads as follows:

"94 Particulars to be endorsed on notice

(1) Every bankruptcy notice shall