JUDGMENT

Hashim Yeop Sani FJ:

This was an appeal against the ruling of the learned Judge that based on an undertaking executed by the appellant (CBK7) the respondent bank was not precluded from recommencing bankruptcy proceeding against the appellant. At the conclusion of the hearing of the appeal we decided to confine our decision only to the point concerning what proper construction ought to be given to the provision of the said undertaking.

The facts are straightforward and may be summarised as follows. A consent judgment for RM100,244.53 was entered against one Michael C. Solle (the appellant) and two others. A bankruptcy notice was caused to issue by the respondent bank. Thereafter the appellant managed to prevail on the bank to withdraw the bankruptcy proceeding against him upon the appellant delivering to the bank a letter of undertaking as exhibited. The respondent bank later caused another bankruptcy notice to issue in another proceeding purporting to rely on the failure to comply with the undertaking. That proceeding resulted in the present appeal.

The appellant's contention was that the arrangement in the terms of the letter of undertaking was that he was to make a downpayment of RM20,000 followed by monthly instalments of RM10,000 per mensem until the whole debt was cleared and he was also to deposit with the bank his 40,000 shares in a company and to do everything necessary for the effectual transfer of those shares to the bank in the event of default with the repayment scheme. The trial Judge held that the deposit of shares was meant to be a form of security for the fulfilment of the undertaking to make the payments of RM20,000 and the monthly instalments of RM10,000 and that the respondent bank had an option in their absolute discretion to either register themselves as owners of the shares or resort to other means of recovering the debts. In other words the respondent bank is not precluded from recommencing bankruptcy proceeding.

It is useful to examine the letter of undertaking which reads as follows.

Now it is Hereby Provided as Follows:

1. In consideration of your agreeing at my request to withhold bankruptcy proceedings against me, Michael Solle (NRIC BK 00072) of No. 22, Road 12/14, Petaling Jaya, Selangor, I hereby undertake to do as follows:

(a) To pay you the sum of RM20,000 (Ringgit Twenty Thousand only) by the 31st day of July 1981.

(b) To pay promptly to you the sum of RM10,000 (Ringgit Ten Thousand only) per month, the first of such payment commencing on the 10th day of August 1981, and thereafter the succeeding month until the whole of the judgment debt plus interest has been fully satisfied.

(c) To deposit with you 40,000 shares in Mideast Development Sdn. Bhd. and to do everything necessary for the effectual transfer of such shares to you in the event of my default in compliance under this Letter of Undertaking.

2. In the event of my failure to comply with this said Letter of Undertaking, you shall forthwith revert with bankruptcy proceeding against me.

We are of the opinion that on the facts disclosed and on the language of the undertaking there has been no breach of the undertaking as a whole. There was breach in respect of the repayment scheme but there is complete compliance of Clause 1(c) of the undertaking. The language of Clause 1(c) of the undertaking is clear and that it is operative in the event of default in the repayment scheme.

The first limb of Clause 1(c) requires the appellant to deposit the 40,000 shares and the second limb of Clause 1(c) requires the appellant "to do everything necessary for the effectual transfer of such shares" in the event of default of the undertaking. Thus where there is a failure to comply with the repayment scheme the remedy provided by the undertaking is to effect the transfer of the shares to the respondent bank which was complied by the appellant.

The principles of construction to be applied to the undertaking are similar to those applied to an ordinary contract. The