Ajaib Singh SCJ:

This was an appeal by Mr. Chinn Swee Onn a senior member of the Bar practising in Ipoh. He had applied to the High Court at Ipoh to set aside a bankruptcy notice dated 16 March 1987. The bankruptcy notice was based on a judgment obtained by the respondents - Puchong Realty Sdn. Bhd. against the appellant by default of appearance in the sum of RM82,392.50. With accumulated interest thereon and cost this sum had increased to RM136,114.29 when the bankruptcy notice was issued.

The appellant's application to set aside the bankruptcy notice came up for hearing before the learned Judge on 14 June 1988. After hearing submissions from Counsel for the parties the learned Judge deferred his decision for a few days and on 21 June 1988 he dismissed the appellant's applications to set aside the bankruptcy notice. Meanwhile the appellant had also been served with a bankruptcy petition dated 6 August 1987. After dismissing the appellant's application on 21 June 1988 the learned Judge made receiving and adjudication orders against the appellant pursuant to the bankruptcy petition.

In his affidavit in support of his application to set aside the bankruptcy notice Mr. Chinn Swee Onn states inter alia as follows:

I crave leave to refer to the bankruptcy notice dated 16 March 1987 and the creditors petition dated 6 August 1987. The creditors have alleged in both these documents that I am indebted to them in the sum of RM136,114.29. I deny that I am indebted to them in the said sum or any other sum.

I further say that the creditors took judgment in default against me in Ipoh High Court civil suit no. 344 of 1983 and Ipoh Sessions Court civil action no. 701 of 1983 for a total of RM102,392.50 on the mutual understanding and on the judgments creditors' undertaking that they will forbear to levy execution against me and in return I will instruct Hock Hin Leong Sdn. Bhd. of No. 73 Jalan Leong Sin Nam, Ipoh to take over the judgments debt and forward to the judgment creditors the sum of RM2000 per month.

Relying on their aforesaid agreement and undertaking of the judgment creditors I then authorised Hock Hin Leong Sdn. Bhd. to forward to the creditors the said sum RM2000 per month. A copy of my letter dated 27 May 1985 addressed to Hock Hin Leong Sdn. Bhd. is now shown to me and marked "CSO-1". Since then the judgment creditors have accepted payment from the said Hock Hin Leong Sdn. Bhd. but the total amount received by them is not known to me.

As the judgment creditors have agreed to accept the repayment of the debt from a 3rd party they have lost all their rights of execution of the judgments against me and are therefore not entitled to enforce the judgment against me. If payment had not been made by Hock Hin Leong Sdn. Bhd. then they should obtain judgment against the said company.

The letter dated 27 May 1985 exhibited as "CSO-1" in Mr. Chinn Swee Onn's affidavit reads as follows:

Puchong Realty Sdn. Bhd.

1B1-A, 1st Floor

Raayat Building

Jalan Sultan Yussuf

Ipoh

In consideration of your forbearing to levy execution on the decretal amount totalling RM102,392.50 (Ringgit One Hundred and Two Thousand Three Hundred and Ninety Two and Cents Fifty) only in respect of judgments against me in Ipoh High Court civil suit no. 244 of 1983 and in Ipoh Sessions Court No. 701 of 1983 I do hereby instruct Messrs Hock Hin Leong Sdn. Bhd. of No. 73 Jalan Leong Sin Nam, Ipoh to forward to you monthly commencing from May 1985 a sum of RM2000 (Ringgit Two Thousand) only towards payment of the principal sums owing to you under the above suits until the whole of the decretal sums shall have been settled.

Dated this 27 May 1985.

Sgd.

...

Chinn Swee Onn

We agree to the above and undertake to forward to Puchong Realty Sdn. Bhd. the sum of RM2000 monthly until the decretal amounts have been thus paid off.

Sgd

...

Hock Hin Leong Sdn. Bhd.

73 Jalan Leong Sin Nam

Ipoh

Two main grounds were advanced by the appellant before the learned Judge as well as b