Bankruptcy proceedings require strict adherence to statutory timelines; failure to obtain requisite sanctions renders applications invalid.

Abdul Malik Ishak J:

Introduction

This was an appeal by Asia Commercial Finance (M) Berhad - the judgment creditor, against the decision of the senior assistant registrar ('SAR') dated 8 August 1998 wherein the SAR ordered that the bankruptcy proceedings against Lai Hee Sang - the judgment debtor, be stayed until 31 December 1998. The judgment creditor's appeal to the judge in chambers dated 10 August 1998 can be seen in encl. 52.

Facts

It would be germane, in order to garner and obtain a perspective of the appeal in encl. 52, to highlight certain salient facts. For this exercise, reference to an affidavit in reply affirmed by Gan Chee Poh - the manager of the judgment creditor's branch office in Johor Bahru, should be made. Gan Chee Poh's affidavit in reply was affirmed on 24 February 1997 as reflected in encl. 41. The judgment debtor too affirmed an affidavit on 3 December 1997 as seen in encl. 39A which was in support of his application for a stay of proceedings as seen in encl. 39.

The judgment debtor was declared a bankrupt by the Johor Bahru High Court on 5 December 1996 when the receiving and adjudication orders were issued against him for his failure to comply with the requirements of a bankruptcy notice no: 1131/89 dated 30 December 1989 (encl. 3) which was issued against him at the request of the judgment creditor. That bankruptcy notice was duly served on the judgment debtor on 23 January 1990 as reflected in encl. 5. Since the judgment debtor was a bankrupt and had not obtained his discharge, the judgment debtor - by virtue of the provisions of the Bankruptcy Act 1967 , had no capacity to maintain his application for a stay of proceedings as reflected in encl. 39. On perusal of the affidavit in encl. 39A, there was an absence of an averment to show that the official assignee had sanctioned the judgment debtor to make the application for a stay of proceedings in encl. 39. Thus, the only reasonable inference to arrive at would be that no sanction was ever sought nor given and that being the case the application in encl. 39 should be dismissed in limine. This meant that the appeal in encl. 52 should be allowed with costs. It would be futile for the judgment debtor to argue otherwise. In Supreme Finance (M) Bhd v. Mohamad Noor (t/a Everway Food Centre) & Ors 1993 MarsdenLR 1556 , the court had to deal with the issue of whether the bankrupt required the sanction of the official assignee under s. 38(1) of the Bankruptcy Act 1967 in order to proceed with the application to set aside the judgment in default of appearance. At p. 32 to p. 33 of the report, Zakaria Yatim J (as he then was) had this to say:

In my opinion, the only way in which a bankrupt can contest a judgment is to apply to the bankruptcy court for an order to rescind and annul the receiving and adjudication orders. In his application to the bankruptcy court, he can ask the court to annul and rescind the receiving and adjudication orders on the ground that the judgment was obtained by fraud, or collusion or there has been miscarriage of justice or on any other ground. The bankruptcy court will go behind the judgment if there is evidence that the judgment has been obtained by fraud or collusion or that there has been some miscarriage of justice (see Re Flatau, ex p Scotch Whisky Distillers Ltd [1888] 22 QBD 83).

The situation in the present case is therefore different from that in Re Sebastian, ex p Metroplex Leasing & Credit Corp Sdn Bhd 1989 MarsdenLR 1318 .

In the present case, it is my view that the words, '205 shall be incompetent to maintain any action 205' in s. 38(1)(a) of the Act refer not only to writ action or any of the proceedings under O. 5 r. 1 but also refer implicitly to an application to set aside judgment in default. While the receiving and adjudication orders stand, the third defendant cannot contest the petitioning creditors judgment in any othe