A bankrupt lacks standing to contest debt admissions by the Director General of Insolvency unless fraud or a payment scheme exists; prior applications under res judicata bar re-litigation.

[1] On 6 October 1995 the appellant granted two loan facilities to the borrower Rangkaian Beringin Sdn Bhd namely, an Islamic loan and a Conventional loan. The respondent was the guarantor.

[2] Upon default in the repayment of the loans, the appellant filed recovery action against the respondent and on 15 June 1999 obtained summary judgment for the sum of RM709,999.59 together with interest and costs.

[3] The respondent did not appeal against the order of 15 June 1999.

[4] As the respondent failed to pay the judgment sum, the appellant on 31 May 2011 issued a Bankruptcy Notice to the respondent. Upon the respondent committing an act of bankruptcy, the respondent proceeded to file the Creditor's Petition.

[5] On 20 December 2011, the appellant obtained the Adjudication Order and Receiving Order (AO/RO) against the respondent.

[6] On 9 January 2012 vide encl 12A, the respondent filed a Summons in Chambers in the High Court to rescind the AO/RO on the ground that the loans had been fully settled.

[7] Ten days later on 19 January 2012 the appellant filed its proof of debt for RM1,075,665.72, being the sum of RM141,606.98 owing under the Islamic loan and the sum of RM934,058.74 owing under the conventional loan.

[8] The respondent's application in encl 12A was dismissed by the learned Registrar on 26 January 2012.

[9] On 2 February 2012 the respondent appealed to the learned judge in Chambers against the learned Registrar's decision.

[10] On 6 March 2012 the learned judge ordered the Director General of Insolvency to confirm the total sum owing by the estate of the respondent.

[11] On 8 March 2012 the Director General of Insolvency rejected the sum of RM323,479.55 from the appellant's proof of debt and only admitted the sum of RM141,606.98 under the Islamic loan and the sum of RM610,579.19 under the conventional loan thereby totalling RM752,186.17.

[12] On 10 May 2012, upon the Director General of Insolvency's confirmation of the sum owing by the estate of the respondent, the respondent withdrew his appeal to the learned judge in Chambers.

[13] However, on 20 December 2012 vide encl 22A, the respondent applied again to the High Court for an order to annul and rescind the AO/RO made exactly a year earlier on 20 December 2011 and to expunge the admission of the proof of debt under the conventional loan by the Director General of Insolvency made on 8 March 2012.

[14] On 26 June 2013 the respondent's application was dismissed by the learned Registrar. On appeal to the learned Judge in Chambers, the appeal was allowed and the order of the learned Registrar was reversed.

[15] Being dissatisfied with the decision of the learned judge the appellant filed its appeal on 2 October 2013.

[16] On 22 January 2014, this Court unanimously decided to allow the appeal.

[17] Being dissatisfied with the said order, the respondent has filed his appeal.

The Appeal

[18] At the hearing of the appeal, learned counsel for the appellant raised the following grounds in support of her argument namely:

(i) that the respondent had no locus standi to apply to reverse the decision of the Director General of Insolvency made on 8 March 2012 to admit the proof of debt under the conventional loan in the sum of RM610,579.19;

(ii) that the application of the respondent to annul and rescind the AO/RO is prevented by the principle of res judicata in view of a previous Summons in Chambers filed on 9 January 2012 by the respondent to rescind the AO/RO;

(iii) that the recovery of the debt under the conventional loan is not time barred; and

(iv) that the requirements under s 105(1) of the Bankruptcy Act 1967 (the A