Judgment in default entered against an undischarged bankrupt without required statutory leave is irregular and must be set aside ex debito justitiae.

Azimah Omar J:

GROUNDS OF JUDGMENT

A. INTRODUCTION

[1]The Appeal before us is the Appellant’s complaint against the Learned Judicial Commissioner’s decision on 9.3.2022 to dismiss the Appellant’s Appeal (effectively confirming the Senior Assistant Registrar’s (“SAR”) earlier decision dated 14.12.2021 to dismiss the Appellant’s application to set aside a judgment in default entered against the Appellant on 23.11.2016) (“JID”).

[2]The Appellant contended that when the JID was entered on 23.11.2016 the Appellant was an undischarged bankrupt and in entering the JID against the Appellant (being a bankrupt), the Respondent did not first, obtain the required leave of Court under section 8(1) Bankruptcy Act 1967

[3]Therefore, it is the Appellant’s position that in the absence of leave of Court prescribed under section 8(1)ex debito justitiae.

B. FACTS OF THE CASE

[4]For a better understanding of the matter at hand, it is necessary for us to set out the facts of the case that has led to the present Appeal:

a.Sunhor Builders Sdn Bhd (1st Defendant) was granted banking facilities by the Respondent (Maybank Islamic Berhad). As security, the Appellant (Lim Chee Tat - 2^nd Defendant) and the 3^rd Defendant (Teh Lai Hoon) had guaranteed the repayment of the banking facilities.

b.The Appellant and the 3^rd Defendant were directors of the 1^st Defendant. The 2^nd and 3^rd Defendants were not a party in the Appeal.

c.The 1^st Defendant had defaulted in the repayments of the facilities which had pressed the Respondent to issue demands for payments of the outstanding sums from all three Defendants.

d.The demand made by the Respondent was however neglected by the three Defendants. Thereafter, on 21.10.2016, the Respondent had commenced a Writ action (Civil Suit No: WA-22M-198-10/2019) (“Suit 198”) against all three Defendants to recover the outstanding sums.

e.When the three Defendants failed to enter appearance to the Writ action, judgment in default were entered against all three Defendants on 23.11.2016.

f.Unbeknownst to the Respondent, prior to the commencement of the Writ action against the three Defendants, the Appellant had been adjudicated to become a bankrupt vide a bankruptcy petition presented by another creditor by the name OTM Group Sdn Bhd in the High Court of Malaya in Shah Alam via Bankruptcy No. BA-29NCC-173-01/2016 (“the 2016 Bankruptcy”).

g.On 13.06.2019, the Appellant had successfully obtained an Annulment Order against the 2016 Bankruptcy under section 105

h.Meanwhile, premised on the JID that the Respondent had obtained, the Respondent had commenced a bankruptcy proceeding against the Appellant in July 2019.

i.On 05.02.2020, the Respondent obtained an Adjudication and Receiving Orders (“AORO”) against the Appellant (2nd Defendant) (“the 2019 Bankruptcy”).

j.The Appellant thereafter had applied to set aside the 2019 Bankruptcy wherein his application to set aside the AORO was allowed on 22.09.2021.

k.Subsequent to successfully setting aside the 2019 Bankruptcy, the Appellant on 14.12.2021 filed an application in Suit 198 (the subject matter of the Appeal before us) for inter alia the following orders:

(i)an extension of time to file the application to set aside the JID;

(ii)to set aside the JID dated 23.11.2016; and

(iii)leave to defend the action in Suit 198.

C. BEFORE THE HIGH COURT

[5]In his application to set aside the JID, the Appellant had solely relied on one ground, namely, the JID is an irregular judgment and therefore ought to be set aside ex debito justitiae. In asserting that the JID was an irregular