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2000 MarsdenLR 1513
GOPAL SRI RAM, AHMAD FAIRUZ, HAIDAR MOHD NOOR
BBMB FACTORING BHD – Appellant
Versus
MARIAM SASIMAN – Respondent
Bankruptcy courts have jurisdiction to reinstate dismissed petitions based on section 92(1) of the Bankruptcy Act 1967.
Headnote:This judgment addresses the jurisdiction of bankruptcy courts in reinstating creditors' petitions dismissed due to absence at hearings. The court examined rule 120 of the Bankruptcy Rules 1969 and section 92(1) of the Bankruptcy Act 1967, concluding that bankruptcy courts possess the authority to reinstate petitions on discretion. The key issue discussed was whether a bankruptcy court has jurisdiction to restore dismissed petitions, framed as a crucial question of law. The court ultimately determined the registrar had the jurisdiction to restore the petitions and allowed the appeals, ordering the reinstatement of the petition with costs as per the findings made.
Key Points: - The judgment analyzes whether a bankruptcy court has jurisdiction to reinstate a creditor's petition that was dismissed or struck out for absence at the hearing. (!) (!) - It concludes that under s. 92(1) of the Bankruptcy Act 1967, the court may review, rescind or vary any order made in bankruptcy jurisdiction, and applies to orders dismissing or striking out petitions. (!) (!) - The court holds that a creditor whose petition was dismissed/struck out for absence has two options: apply under s. 92(1) to reinstate, or present a fresh petition (with leave if relying on the same act of bankruptcy). (!) (!) - Rule 120 discusses consequences when a creditor neglects to appear, but does not specify reinstatement; the judgment discusses its impact in conjunction with s. 92(1). (!) (!) (!) - The court emphasizes the discretionary nature of the power to reinstate, citing equipollent UK authorities (s. 375(1) of the Insolvency Act 1986) and the need for cautious exercise of discretion. (!) (!) (!) - In Appeal No B-03-78-98, the registrar had jurisdiction to order reinstatement, and the appeal was allowed. (!) (!) (!) - In Appeal No W-03-2000, the registrar had ample jurisdiction to reinstate; the court affirmed reinstatement and addressed application of r. 276. (!) (!)
What is the jurisdiction of bankruptcy courts to reinstate a creditor's petition dismissed for absence at a hearing?
What is the scope of the court's discretionary power under s. 92(1) of the Bankruptcy Act 1967 to review, rescind or vary orders in bankruptcy matters?
What is the effect of Rule 120 and Rule 276 of the Bankruptcy Rules 1969 on reinstating dismissed or struck-out creditor's petitions?
Gopal Sri Ram JCA:
There are two appeals before us. They are not connected with each other. But they do raise a common question. It has to do with the jurisdiction and powers of a court in bankruptcy. The question is whether a bankruptcy court has jurisdiction to restore a creditor's petition which has been either dismissed or struck out because of the creditor's failure to appear at the hearing. It is an important question. This is the first time we are being called upon to give our views upon it.
The relevant provision is r. 120 of the Bankruptcy Rules 1969 ("the Rules"). It reads as follows:
If any creditor neglects to appear on his petition no subsequent petition against the same debtor or debtors or any of them either alone or jointly with any other person shall be presented by the same creditor in respect of the same act of bankruptcy without the leave of the court.
Now, there is nothing in r. 120 to say what is to happen if the creditor does not appear on his petition when it is called on for hearing. This may be contrasted with a case where a debtor fails to appear on his own petition. Such an event is expressly provided for by r. 119 which empowers the court to dismiss the petition. But it is common practice; no doubt following the procedure under the Rules of the High Court 1980; for a court to either dismiss or to strike out a creditor's petition if the creditor or his counsel is absent when the petition is called on for hearing.
Now it has been argued on behalf of the debtor in each of the appeals before us that once a creditor's petition is struck out or dismissed for want of the creditor's presence, then the only recourse open to the creditor is to seek the court's leave to present a fresh petition in accordance with r. 120. They say that there is no power in the court to entertain an application by the creditor to restore or to reinstate the original petition.
Counsel for the creditor in each case, however, argues that that is not the true position. It was submitted that a bankruptcy court has ample power and jurisdiction to reinstate a creditor's petition that has been dismissed for want of presence at the hearing. Counsel suggested two alternative bases for this jurisdiction. First, s. 92(1) of the Bankruptcy Act 1967 ("the Act"). The alternative argument is that based on r. 276 of the Rules.
We will consider the primary argument first. As we said, it is based on s. 92(1) of the Act. That section reads:
92(1) The court may review, rescind or vary any order made by it under its bankruptcy jurisdiction.
Although this provision appears under the heading "appeals" in the Act, it does not, strictly speaking, deal with appellate procedure. That is because of the true nature of an appeal which is a continuation of the original proceeding by way of re-hearing (Rohana bte Ariffin & Anor v. Universiti Sains Malaysia ). In the context of the justice system, it is a process by which the decision of one court is reviewed for correctness by a higher court in the judicial hierarchy. An appeal does not involve the review by a court of its own decision. Section 92(1) on the other hand enables a court to review its own decision.
Counsel in both appeals informed us that they were unable to find any authority that would assist us in construing s. 92(1). However, our own limited researches have revealed three cases upon the similar provision in the equipollent United Kingdom statute. That provision is s. 375(1) of the Insolvency Act 1986. It is in these terms:
Every court having jurisdiction for the purposes of the Parts in this Group may review, rescind or vary any order made by it in the exercise of that jurisdiction.
The UK provision was first considered in Re a Debtor (No. 32/SD/91) [1993] 2 All ER 991 in the context of an application to review an order dismissing an application to set aside a statutory demand. Millett J, (now Lord Millett) held that he had jurisdiction to review the earlier order. He said:
