Discharge from bankruptcy does not eliminate all debts, especially those owed to the Government.

Introduction

[1] The Plaintiff is a discharged bankrupt. He was discharged from his bankruptcy with effect from 30 November 2018 through a Certificate of Discharge issued by the Director General of Insolvency ("DGI") under s 33A of the Insolvency Act 1967 ("the Insolvency Act"). He wants the DGI to pay him the monies in his estate in bankruptcy after the DGI had paid the sum of RM277,913.08 to the Lembaga Hasil Dalam Negeri ("LHDN") being income tax owing by the Plaintiff to the LHDN.

[2] The DGI plans to pay the LHDN the sum of RM76,211.52 only and not the full sum of RM277,913.08 owed by the Plaintiff. After payment of the sum of RM76,211.52 to the LHDN, the DGI intends to distribute the balance of the Plaintiff's estate in bankruptcy for the remaining amount owing to the LHDN plus the debt owing to his other creditors as dividends in pari passu.

[3] The Plaintiff disagrees with the DGI's plan. He alleges that the DGI had mismanaged his estate in bankruptcy and has committed misfeasance in public office. He has filed this writ action against the DGI for the tort of misfeasance in public office and against the Government of Malaysia for vicarious liability for the DGI's alleged misfeasance.

[4] The Plaintiff's action poses a novel question of law, namely whether upon the issuance of a Certificate of Discharge under s 33A of the Insolvency Act, the DGI must return a discharged bankrupt's property in his estate of bankruptcy without distribution of the proceeds of the property to the bankrupt's creditors who had filed proofs of debt?

Brief Facts

[5] The Plaintiff was adjudged a bankrupt twice: first, by the Order of the Shah Alam High Court on 11 November 1998 ("Bankruptcy No 1") and second, by the Order of the Kuala Lumpur High Court on 16 March 1999 ("Bankruptcy No 2"). The 1st Defendant, the DGI, was appointed to administer the Plaintiff's estate in bankruptcy.

[6] After the Plaintiff was adjudged bankrupt in the Bankruptcy No 1 and Bankruptcy No 2, a total of 14 creditors filed their proofs of debt, including the LHDN.

[7] On 11 June 2015, the Plaintiff applied to the DGI for a discharge from bankruptcy under s 33A of the Bankruptcy Act 1967 (Act 360). His application was rejected by the DGI on 13 April 2016.

[8] On 16 May 2016, the Plaintiff applied again to the DGI for a discharge from bankruptcy under s 33A of the Bankruptcy Act. The DGI allowed the application and issued notices in Form 51B to all the creditors who had filed a proof of debt.

[9] In his letter dated 7 August 2017 to the creditors, the DGI informed the creditors of his intention to issue to the Plaintiff a Certificate of Discharge from bankruptcy under s 33A of the Insolvency Act. Six of the creditors objected to the discharge. One of the six creditors later withdrew its objection.

[10] In his letter dated 2 July 2018, the DGI informed the creditors that he had rejected all their objections. Under s 33B(4) of the Insolvency Act, the creditors may apply to the High Court within 21 days of the DGI's letter to restrain the DGI from issuing the Certificate of Discharge to the Plaintiff. However, none of the creditors made such application to Court.

[11] The DGI approved the Plaintiff's discharge from bankruptcy with effect from 30 November 2018. The Certificate of Discharge under s 33A of the Insolvency Act was issued by the DGI on 11 February 2020 upon the Plaintiff's payment of the fee of RM10.00.

[12] Notwithstanding the Plaintiff's discharge from bankruptcy by the DGI under s 33A of the Insolvency Act, there remains debts owing by the Plaintiff to his creditors who had filed proofs of debt. As stated above, the