JUDGMENT

LC Vohrah J:

This was an application by way of notice of motion on the part of the judgment debtor ("the guarantor") for the bankruptcy notice and all subsequent proceedings thereto including the creditor's petition to be set aside or to be stayed under s 97 of the Bankruptcy Act 1967. It was agreed that the decision in the present application would bind similar applications in bankruptcy nos 43-639 of 1987, 43-652 of 1987 and 43-653 of 1987 as all four matters arose out of a loan transaction in which the four judgment debtors acted separately as guarantOrs

The facts in so far as they are relevant to the present application are briefly as follows. By a letter of approval of a loan dated 30 October 1985 (See encl 14, Exhibit 'A') the judgment creditor ("the lender") approved a loan of RM600,000 to the principal debtor, one Mah Kwai Ming ("the borrower") upon the conditions, inter alia , that a third party charge be executed in favour of the lender in respect of land held under Malay lease No 60 lot 2576 in the Mukim of Senai-Kulai belonging to Kulai Jaya Sdn Bhd and that its directors provide personal guarantees to the lender. In consequence Kulai Jaya Sdn Bhd as registered owner of 58889/62889 undivided share of the said executed a charge on 16 November 1985 in favour of the lender and the guarantor as one of the directors executed a guarantee agreement dated 14 November 1985 in favour of the lender (See Exhibit 'B', encl 14). The borrower failed to make the instalment repayments in respect of the loan whereupon the lender on 2 March 1987 filed an action against all the guarantors in civil suit No 313 of 1987 and on 4 April 1987 took out foreclosure proceedings against Kulai Jaya Sdn Bhd in originating summons No 388 of 1987 in respect of the said land. The lender obtained summary judgment in the civil suit for the sum of RM650,227.98 together with interest and costs against the guarantor and the other guarantors on 8 July 1987 and an order for sale of the said land in the originating summons against Kulai Jaya Sdn Bhd on 16 March 1988. As a result of the final judgment obtained against the guarantor a bankruptcy notice dated 10 September 1987 was served on the guarantor on 28 September 1987 and as no challenge was made to the bankruptcy notice, a creditor's petition dated 16 December 1987 alleging that an act of bankruptcy had been committed on 5 October 1987 was served on the guarantor on 26 February 1988. The guarantor did not file any notice disputing the truth of any of the statements in the petition three days before 6 June 1988, the date fixed for the hearing, as he was required to do if he wanted to contest. However on 6 June 1988 before the hearing of the petition the guarantor filed the present application which was taken cognisance of by the Court and fixed for hearing on 7 September 1988 to be heard at the same time as the petition.

At the hearing of the present application on 7 September 1988 Mr Sagadeva advanced three grounds on behalf of the guarantor.

First, that since the guarantee agreement by virtue of Clause 2 provided that the liability of the guarantors only arose when the proceeds of sale of the said land were insufficient to pay all monies due to the lender by the borrower, the lender was estopped from proceeding against the guarantor after foreclosure of the said land in the originating summons.

Second, that the civil suit was brought against the guarantor and the other guarantors prematurely as no proper letter of demand was sent to any of the guarantors so that the default judgment obtained therein was not proper and accordingly the bankruptcy proceedings based on that judgment should not be allowed.

Third, as the petition wrongly stated that the act of bankruptcy occurred on a day which was one day before the event the petition was bad in law, null and void and of no effect.

The first contention called for an interpretation of the relevant provisions of the guarantee agreement regulating the guaran