An absolute assignment of a judgment debt provides the assignee with the legal right to substitute the assignor as the judgment creditor in bankruptcy proceedings once proper notice is given.

[1] The present appeal is against the decision of the learned judicial commissioner dated 5 August 2010 dismissing the appellant's appeal against the decision of the learned Senior Assistant Registrar given on 28 January 2010, dismissing the preliminary objection of the appellant and allowing the respondent's application (vide encl 16) to substitute the 2nd respondent (HLG Capital Market Sdn Bhd) as the judgment creditor in place of the 1st respondent (HLG Credit Sdn Bhd) in the pending bankruptcy proceeding.

Brief Facts

[2] On 26 February 1999, the 1st respondent obtained a judgment against the appellant at the Kuala Lumpur High Court vide Civil Suit No D2-22-476-1998. On 11 October 2004, the 1st respondent filed a bankruptcy notice (BN) against the appellant at the Johor Bahru High Court vide Bankruptcy Suit No 29-3033-2004 based on the above judgment. On 17 March 2005, the 1st respondent filed a creditor's petition (CP).

[3] In the meantime, while the CP was still pending in Court, all rights of the 1st respondent in respect of the appellant's indebtedness under the judgment were assigned to the 2nd respondent; vide a deed of assignment dated 24 September 2005. Notices of the assignment dated 23 September 2005 and 11 October 2005 were given to the appellant.

[4] On 1 December 2005, the 1st respondent filed an ex parte application (Encl 16) seeking an order to substitute the 2nd respondent as the judgment creditor in the said bankruptcy proceedings. The saidex parte application was allowed on 26 July 2006.

[5] The appellant then filed an application to set aside the ex parte order dated 26 July 2006. The said application was allowed by the learned SAR on 16 May 2007. On 24 May 2007, the 1st respondent filed an appeal to the judge in chambers against the SAR order dated 16 May 2007. The learned judge allowed the said appeal that the said order dated 16 May 2007 made by the learned SAR was set aside and directed the 1st respondent's application dated 1 December 2005 (Encl 16) be reheard inter partes.

[6] Upon rehearing encl 16, the learned SAR had, on 28 January 2010, allowed the application with costs and further ordered that the 2nd respondent be substituted as the judgment creditor in the pending bankruptcy proceedings. The appellant's appeal to the judge in chambers against the decision of the learned SAR dated 28 January 2010 was dismissed with costs on 5 August 2010. Hence the present appeal before this Court.

[7] The application in encl 16 was a straight forward application by the 1st respondent on the ground that as the judgment debt, which is the basis of the bankruptcy proceedings, had been absolutely assigned by the 1st respondent to the 2nd respondent, therefore the 2nd respondent should be cited as the judgment creditor in the said proceedings.

The Issue

[8] The main issue before the Court is whether upon absolute assignment of the judgment debt which forms the basis of the bankruptcy proceedings, the 2nd respondent (the assignee) can be substituted for the 1st respondent (the assignor) as the judgment creditor in the pending bankruptcy proceedings.

[9] The appellant strongly contended that such substitution cannot be done in the present proceedings on the following main grounds:

(a) the High Court in purporting to exercise bankr