INSOLVENCY ACT 1967
(1) This Act may be cited as the Insolvency Act 1967 .
[Am. by Act A1534/2017]
(2) This Act shall apply throughout Malaysia.
In this Act, unless the context otherwise requires:
"advocate" means any person entitled to practise as an advocate or as a solicitor or as an advocate and solicitor under any law in any part of Malaysia; "affidavit" includes attestation on honour;
"available act of bankruptcy" means any act of bankruptcy available for a bankruptcy petition at the date of the presentation of the petition on which the bankruptcy order is made; [Am. by Act A1534/2017]
"bankruptcy petition" means a creditor's petition or a debtor's petition for bankruptcy; [Subs. by Act A1534/2017]
"Chief Judge" means the Chief Judge of the High Court in Malaya or of the High Court in Sabah and Sarawak, as the case m 2A Voluntary Arrangement-2A. Voluntary arrangement.
For the purposes of sections 2A to 2Q, "voluntary arrangement" means a composition in satisfaction of a debtor's debt or a scheme of arrangement of a debtor's affairs.
[Ins. by Act A1534/2017]
2B Voluntary Arrangement-2B. Non-application.
Sections 2A to 2Q shall not apply to an undischarged bankrupt and a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2012 [Act 743] .
[Ins. by Act A1534/2017]
2C Voluntary Arrangement-2C. Intention to propose voluntary arrangement.
(1) A debtor may propose a voluntary arrangement to his creditors at any time before he is adjudged bankrupt.
(2) A debtor who intends to propose a voluntary arrangement shall:
(a) appoint a nominee to act in relation to the voluntary arrangement or for the purpose of supervising the implementation of the voluntary arrangement; and
(b) make an application as prescribed to the court for an interim order of voluntary arrangement and submit a copy of the application to the Director General of Insolvency.
(3) A firm shall not propose to his creditors a voluntary arrangement, unless the firm or a partner of the firm has obtained the consent from all or majority of the partners to enter into a voluntary arrangement.
[Ins. by Act A1534/2017]
2D Voluntary Arrangement-2D. Interim order.
(1) Upon receiving the application referred to in paragraph 2C(2) (b) , the court shall make an interim order for voluntary arrangement.
(2) Before the making of an interim order under subsection (1), the court shall satisfy itself that:
(a) during the period of twelve months immediately preceding the date of the filing of such application, no previous application has been filed by the debtor; and
(b) the nominee appointed under paragraph 2C(2) (a) is willing to act in relation to the proposal.
(3) An interim order referred to in subsection (1) shall be valid for a period of ninety days from the date the order is made and such period shall not be extended.
(4) The debtor shall notify the nominee the commencement date of the period within seven days from the date of the interim order.
(5) After being notified under subsection (4), the nominee shal
2E Voluntary Arrangement-2E. Effect of interim order.
An interim order made under subsection 2D(1) shall have the following effects:
(a) no bankruptcy petition may be made or proceeded with against the debtor; and
(b) no other proceedings, execution or other legal process may be commenced or continued against the debtor without leave of the court.
[Ins. by Act A1534/2017]
2F Voluntary Arrangement-2F. Nominee.
(1) No person shall act as a nominee unless he is registered with the Director General of Insolvency.
(2) Notwithstanding subsection (1), an officer of a body corporate established under the Central Bank of Malaysia Act 2009 [Act 701] for the purposes of providing financial counselling, debt management services and education on financial management may act as a nominee but is not required to register with the Director General of Insolvency under subsection (1).
(3) The nominee shall have the powers and duties as prescribed.
[Ins. by Act A1534/2017]
2G Voluntary Arrangement-2G. Registration of nominee.
(1) For the purposes of subsection 2F(1), the Director General of Insolvency may approve an application for registration of a nominee subject to the following conditions:
(a) the applicant is:
(i) a registered chartered accountant under the Accountants Act 1967 [Act 94] ;
(ii) an advocate and solicitor; or
(iii) such other person as the Minister may, on the recommendation of the Director General of Insolvency, prescribe by order published in the Gazette ;
(b) the applicant is not an undischarged bankrupt;
(c) the applicant does not assign his estate for the benefit of his creditors or is not under a voluntary arrangement with his creditors;
(d) the applicant has not been convicted in Malaysia or elsewhere of a criminal offence as would render him unfit to be a nominee under this Part, and in particular, but
2H Voluntary Arrangement-2H. Register of nominees.
The Director General of Insolvency shall keep and maintain a register of nominees registered under section 2G.
[Ins. by Act A1534/2017]
2I Voluntary Arrangement-2I. Meeting of creditors to approve debtor's proposal.
(1) Where an interim order has been made, the nominee shall, before the expiry of the interim order referred to in subsection 2D(3), summon every of the debtor's creditor to a meeting by giving a prescribed notice to such creditors as to approve the debtor's proposal for a voluntary arrangement.
(2) For the purposes of enabling the nominee to prepare the debtor's proposal, the debtor shall submit to the nominee:
(a) where the debtor is an individual, a statement of his affairs which contains:
(i) the particulars of the debtor's assets, creditors, debts and other liabilities; and
(ii) such other information as may be prescribed; or
(b) where the debtor is a firm, a statement of the firm's affairs which contains:
(i) the particulars of the assets, creditors, debts and other liabilities of the firm and of each partner of the firm; and
2J Voluntary Arrangement-2J. Report of decisions to court.
(1) After the conclusion of the meeting of creditors summoned under section 2I, the nominee shall, as soon as may be, report the decision of the meeting to the court and serve a copy of the report containing the terms of the voluntary arrangement under the seal of the court to the debtor and creditors.
(2) Where the meeting of creditors has declined to approve the debtor's proposal, the court may set aside any interim order which is in force in relation to the debtor.
[Ins. by Act A1534/2017]
2K Voluntary Arrangement-2K. Effect of approval.
(1) Where the meeting of creditors summoned under section 2I has approved the proposed voluntary arrangement with or without modifications, the approved voluntary arrangement shall:
(a) take effect as if made by the debtor at the meeting; and
(b) bind every person who had notice of and was entitled to vote at the meeting, whether or not he was present or represented at the meeting, as if he were a party to the arrangement.
(2) Subject to section 2L, the interim order in force in relation to the debtor shall cease to have effect at the end of thirty days from the date the report was sealed by the court under section 2J.
(3) Where proceedings on a bankruptcy petition have been stayed by an interim order which ceases to have effect under subsection (2), that petition shall be deemed to have been dismissed, unless the court orders otherwise.
(4) During the effective period
2L Voluntary Arrangement-2L. Review of meeting's decision.
(1) Any debtor, nominee or person entitled to vote at a meeting of creditors summoned under section 2I may apply to the court for a review of the decision of the meeting on the ground that:
(a) the voluntary arrangement approved by the meeting unfairly prejudices the interests of the debtor or any of the debtor's creditors; or
(b) there has been some material irregularity at or in relation to the meeting.
(2) Upon hearing an application under subsection (1), the court may:
(a) revoke or suspend any approval given by the meeting; or
(b) direct any person to summon further meeting of the debtor's creditors to consider any revised proposal the debtor may make or, in a case falling under paragraph (1) (b) , to reconsider the original proposal of the debtor.
(3) No application under this section shall be made after
2M Voluntary Arrangement-2M. Replacement of nominee before voluntary arrangement concludes.
(1) The debtor may, at any time before the voluntary arrangement is concluded, replace the nominee with another nominee.
(2) Where a nominee is replaced under this section, an interim order made under subsection 2D(1) shall continue to have effect and the validity period of the interim order referred to in subsection 2D(3) shall not be extended notwithstanding such replacement.
(3) A nominee who replaces another nominee shall have all the powers of the previous nominee and shall continue to carry out the duties of the previous nominee and the previous nominee shall give such assistance as may be required.
[Ins. by Act A1534/2017]
2N Voluntary Arrangement-2N. Implementation and supervision of approved voluntary arrangement.
(1) Where a voluntary arrangement approved by a meeting of creditors summoned under section 2I has taken effect, the nominee shall supervise the implementation of the voluntary arrangement.
(2) If the debtor or any of his creditors is dissatisfied by any act, omission or decision of the nominee in his supervision of the implementation of the voluntary arrangement, the debtor or creditor may apply to the court to review that act, omission or decision.
(3) Upon hearing of an application under subsection (2), the court may:
(a) confirm, reverse or modify any act or decision of the nominee; or
(b) give such directions to the nominee or make such order as the court thinks fit.
(4) The nominee may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement.
(5) If:
(a) it is expedient to
2O Voluntary Arrangement-2O. Consequence of failure by debtor to comply with voluntary arrangement.
(1) Where a debtor fails to comply with any of his obligations under a voluntary arrangement, any creditor bound by the voluntary arrangement may file or proceed with a bankruptcy petition against the debtor.
(2) For the purposes of commencing or proceeding with the bankruptcy petition against the debtor, the amount of debt specified in the petition shall deduct any amount of debts that has been settled during voluntary arrangement.
[Ins. by Act A1534/2017]
2P Voluntary Arrangement-2P. Cessation of voluntary arrangement.
A voluntary arrangement under this Act shall cease upon the death of the debtor.
[Ins. by Act A1534/2017]
2Q Voluntary Arrangement-2Q. Fees of nominee.
The Minister may prescribe the scale of fees to be charged by nominees in respect of voluntary arrangement.
[Ins. by Act A1534/2017]
3 Acts of Bankruptcy-3. Acts of bankruptcy.
(1) A debtor commits an act of bankruptcy in each of the following cases:
(a) if in Malaysia or elsewhere he makes a conveyance or assignment of his property to a trustee or trustees for the benefit of his creditors generally;
(b) if in Malaysia or elsewhere he makes a fraudulent conveyance, gift, delivery or transfer of his property or of any part thereof;
(c) if in Malaysia or elsewhere he makes any conveyance or transfer of his property or of any part thereof, or creates any charge thereon which would under this or any other written law for the time being in force be void as a fraudulent preference if he were adjudged bankrupt;
(d) if with intent to defeat or delay his creditors he does any of the following things:
(i) departs out of Malaysia or being out of Malaysia remains out of Malaysia;
(ii) departs from his dwelling-house or otherwise
4 Bankruptcy Order-4. Bankruptcy order.
The court may, on a bankruptcy petition being presented by a creditor under section 6 or by a debtor under section 7, make a bankruptcy order.
[Subs. by Act A1534/2017]
5 Bankruptcy Order-5. Conditions on which creditor may petition.
(1) A creditor shall not be entitled to present a bankruptcy petition against a debtor unless:
(a) the debt owing by the debtor to the petitioning creditor, or if two or more creditors join in the petition the aggregate amount of debts owing to the several petitioning creditors, amounts to one hundred thousand ringgit;
[Am. Act A827:s.4; Am. Act A1197:s.4; Am. Act A1534:s.12; Am. Act A1624:s.2]
(b) the debt is a liquidated sum payable either immediately or at some certain future time;
(c) the act of bankruptcy on which the petition is grounded has occurred within six months before the presentation of the petition; and
(d) the debtor is domiciled in Malaysia or in any State or within one year before the date of the presentation of the petition has ordinarily resided or had a dwelling house or place of business in Malaysia or has carried on busi
6 Bankruptcy Order-6. Proceedings and order on creditor's petition.
(1) A creditor's petition shall be verified by affidavit of the creditor or of some person on his behalf having knowledge of the facts, and shall be served personally to a debtor.
[Am. by Act A1534/2017]
(1A) Notwithstanding subsection (2), the court may make an order for substituted service of a creditor's petition as prescribed if the creditor can prove to the satisfaction of the court that the debtor, with intent to defeat, delay or evade personal service:
(a) departs out of Malaysia or being out of Malaysia remains out of Malaysia; or
(b) departs from his dwelling house or otherwise absents himself, or secludes himself in his house or closes his place of business.
[Ins. by Act A1534/2017]
(1B) An application for an order for substituted service shall state the facts on which the application is founded.
7 Bankruptcy Order-7. Debtor's petition and order thereon.
(1) A debtor's petition shall allege that the debtor is unable to pay his debts, and the presentation thereof shall be deemed an act of bankruptcy without the previous filing by the debtor of any declaration of inability to pay his debts, and the court shall thereupon make a bankruptcy order.
[Am. by Act A1534/2017]
(1A) Where a debtor's petition is presented on behalf of a firm in the firm's name, the court shall not adjudge a person who is a member of the firm bankrupt unless such person is proved to the satisfaction of the court to be a partner by his admission or by evidence on oath.
[Ins. by Act A1534/2017]
(2) A debtor's petition shall not after presentation be withdrawn without the leave of the court.
8 Bankruptcy Order-8. Effect of bankruptcy order.
(1) On the making of a bankruptcy order:
(a) except as provided by this Act, no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the bankrupt in respect of the debt, or shall proceed with or commence any action or other legal proceeding in respect of such debt unless with the leave of the court and on such terms as the court may impose; and
(b) all the property of the bankrupt shall become divisible among his creditors and shall vest in the Director General of Insolvency and the Director General of Insolvency shall be the receiver, manager, administrator and trustee of all properties of the bankrupt.
[Subs. by Act A1534/2017]
(2) This section shall not affect the power of any secured creditor to realize or otherwise deal with his security in the same manner as
9 Bankruptcy Order-9. [Deleted by Act A1534/2017] .
Legal Commentary on Section 9 of the Insolvency Act 1967
Introduction
Section 9 of the Insolvency Act 1967 prescribes the conditions under which a creditor may present an insolvency petition against a debtor. This provision is fundamental to the initiation of insolvency proceedings and establishes the threshold requirements that must be satisfied before a court can adjudicate a person as insolvent. The section sets out the minimum debt threshold, the requirement for a liquidated sum, and the time limitation within which the act of insolvency must have occurred.
What Section 9 Says
The section provides that a creditor shall not be entitled to present an insolvency petition against a debtor unless:- The debt owing amounts to a specified minimum (typically five hundred rupees in the Provincial Insolvency Act equivalent)- The debt is a liquidated sum payable either immediately or at some certain future time- The act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition
Essential Ingredients
The essential ingredients of Section 9 include:1. Creditor-Debtor Relationship: There must be an established creditor-debtor relationship2. Minimum Debt Threshold: The debt must meet the minimum amount prescribed3. Liquidated Sum: The debt must be a liquidated sum, not an unliquidated or disputed amount4. Act of Insolvency: A specific act of insolvency must have occurred5. Timeliness: The act of insolvency must have occurred within three months of the petition
Scope of Section
Section 9 operates as a condition precedent rather than a period of limitation. It determines the entitlement of a creditor to present a petition and establishes the jurisdictional threshold for the insolvency court. The section applies to both individual creditors and joint petitions by multiple creditors.
Punishment Under Section
The section itself does not prescribe punishment. Rather, it establishes the conditions for initiating insolvency proceedings. The consequences of adjudication under this section include the vesting of the debtor's property in the Official Receiver or Official Assignee and the potential discharge of debts.
Legal Comments
Creditor-Debtor Relationship - Unless the creditor-debtor relationship is established, the question of proceeding to adjudicate the alleged debtor as insolvent does not arise; the court must first decide the existence of the debt. ["Sadasivam VS M. Muthusamy and Others - 1998 0 Supreme(Mad) 244"]
Condition Precedent - The period of three months mentioned in Clause (c) of Section 9 does not refer to the presentation of the petition, but to the act of insolvency on which the petition is to be grounded; there is no period of limitation prescribed in the Act within which the petitioning creditor is to present his application. ["Muradan Sardar VS Secretary of State - 1938 0 Supreme(Cal) 270"]
Liquidated Debt Requirement - Section 9(1)(b) of the Provincial Insolvency Act requires the debt to be a liquidated sum payable either immediately or at some certain future time; a debt subject to final settlement of accounts cannot be said to be ascertainable by adopting any simple and uncomplicated process. ["A. T. P. SHIVACHANDRA VS SWARNA SILK HOUSE - 1970 0 Supreme(Kar) 185"]
Duly Verified Petition - The requirement of a duly verified petition under Section 9 of the Insolvency Act is a condition precedent to the court granting an order of adjudication of insolvency; an application made by way of a rule to show cause does not meet this requirement. ["In Re: Bithal Dass Kalla VS . - 1908 0 Supreme(Cal) 267"]
Single Creditor Maintenance - A single creditor can maintain insolvency proceedings; the object of enacting the insolvency law is to give relief to a debtor and prevent a scramble among creditors, and no special significance need be attached to the words "debts" or "creditors" used in plural. ["K. D. Nagappa VS Sannkka - 1982 0 Supreme(AP) 212"]
Transfer to Defeat Creditors - Section 6(b) of the Provincial Insolvency Act applies only when a debtor transfers his property with a view to defeat or delay all the creditors, not merely a particular creditor. ["K. D. Nagappa VS Sannkka - 1982 0 Supreme(AP) 212"]
Nominal Transfers - A nominal transfer is no transfer because it is merely sham; if there is a sham or nominal transfer there cannot be any intention to defeat or delay the creditors as contemplated under Section 6(b) of the Act. ["PUTTASWAMAPPA VS KRISHNA - 1980 0 Supreme(Kar) 95"]
Fraudulent Preference - A transfer by a debtor of all or substantially all his property in consideration of a past debt is an act of insolvency, whatever the motive of the parties may have been, as such transfer has the effect of withdrawing all the debtor's property from legal process. ["IN RE: BHOLANATH CHATTERJEE AND EX PARTE: RATNAKAR MISRA VS STATE - 1967 0 Supreme(Cal) 211"]
Burden of Proof - The burden of proving the contrary is on the debtor, and the respondent's evidence was insufficient to discharge the presumption that he has committed an act of insolvency. ["Sathrasala Sarathbabu VS Shantilal Kothari S/o. Dhanraj Kothari - 2021 0 Supreme(Mad) 3443"]
Non-Payment Not Sufficient - Non-payment of a decree promptly by itself is no ground for adjudicating a person insolvent; insolvency proceedings cannot be an alternative to execution proceedings. ["Manghandas Parmanand VS Kamlesh M. Hemrajani (HUF) - 2008 0 Supreme(Bom) 933"]
Insolvency Notice - A debtor commits an act of insolvency if a creditor who has obtained a decree or order against him for payment of money has served an insolvency notice and the debtor does not comply with that notice within the specified period. ["Bharat Chandulal Nanavati & another VS United Commercial Bank, Bombay-23 - 1988 0 Supreme(Bom) 219"]
Relation Back - The order of adjudication relates back to the date of the commission of the act of insolvency, and as from that date the Indian Limitation Act has no application and the relationship of debtor and creditor ceases to exist. ["Bharat Chandulal Nanavati & another VS United Commercial Bank, Bombay-23 - 1988 0 Supreme(Bom) 219"]
Acts of Insolvency Enumerated - Section 6 details the acts of insolvency in each of the cases enumerated in Clauses (a) to (h), including transfer of property with intent to defeat creditors, fraudulent preference, departure from dwelling house, and property sold in execution of a decree. ["K. D. Nagappa VS Sannkka - 1982 0 Supreme(AP) 212"]
Scope of Section 6(b) - The scope of Section 6(b) of the Provincial Insolvency Act is different from that of Section 53; at the adjudication stage, it is the act of the insolvent which is to be seen and not the intention of the transferees. ["HIRALAL VS FIRM SHRIRAM SURAJBHAN - 1960 0 Supreme(MP) 305"]
Attachment as Act of Insolvency - An act of insolvency is committed when property is sold or attached for a period of not less than 21 days in execution of a decree; once an act of insolvency is committed, it cannot be purged by subsequent events. ["Hariram VS K. I. Zachariah - 1975 0 Supreme(Mad) 73"]
Joint Application Against Joint Debtors - A single application against joint debtors is maintainable if they have committed joint acts of fraudulent preferences; the court must distinguish between joint and separate acts of insolvency. ["Bolisetti Mamayya VS Buragadda Venkateswaralu - 1921 0 Supreme(Mad) 29"]
Joint Hindu Family - Undivided members of a joint Hindu family can be adjudicated insolvents in respect of debts due by the family, depending on the circumstances; if necessary allegations are made and proven, the court would be justified in adjudging the members of a joint family insolvents. ["M. A. R. R. M. P. Muthu Veerappa … VS U. K. Sivagurunatha Pillai - 1925 0 Supreme(Mad) 483"]
Execution Sale After Insolvency Petition - A sale held in execution of a decree after the admission of an insolvency petition but before the appointment of a receiver is not automatically invalid; the title of an auction purchaser who purchased the property in good faith is protected by Section 51(3) of the Act. ["JANAKI AMMAL VS S. S. SUBRAMANIAN - 2002 0 Supreme(Mad) 424"]
Section 52 Application - Section 52 of the Provincial Insolvency Act requires the executing Court to deliver the insolvent's property to the receiver if two conditions are satisfied: (1) execution has issued against the property but before its sale notice is given that an insolvency petition has been admitted, and (2) an application has been made for delivery of the property to the receiver. ["C. Ponnudurai, Official Receiver, Chingleput VS K. A. Kumaraswamy Mudaliar - 1971 0 Supreme(Mad) 196"]
Fraudulent Transfer Annulment - Once a debtor is found to have committed an act of insolvency under Section 9(b) of the Act, the transfer which constituted the act of insolvency need not be separately adjudicated upon as coming within the scope of voidable transactions; the order of adjudication is conclusive proof of the fraudulent nature of the transfer. ["Shah Sukraj VS Official Assignee, Madras - 1977 0 Supreme(Mad) 541"]
10 Bankruptcy Order-10. Discretionary powers as to appointment of interim receiver and stay of proceedings.
(1) The court may, if it thinks it advisable for the protection of the estate, at any time after the presentation of a bankruptcy petition and before a bankruptcy order is made, appoint the Director General of Insolvency to be interim receiver of the property of the debtor or of any part thereof, and direct him to take immediate possession thereof or of any part thereof, including all books of account and other papers and documents belonging to the debtor and relating to his business.
[Gen. Am. Act A1197:s.2; Gen. Am. Act A1534:s.3]
(2) The court may at any time after the presentation of a bankruptcy petition stay any action, execution or other legal process against the property or person of the debtor.
11 Bankruptcy Order-11. Service of order staying proceedings.
Where an order is made under section 10, staying any action or proceeding or staying proceedings generally, the order may be served by sending a copy thereof, under the seal of the court, by prepaid registered post to the address for service of the plaintiff or other party prosecuting such proceeding.
12 Bankruptcy Order-12. Power to appoint special manager.
(1) The Director General of Insolvency may, if satisfied that the nature of the debtor's estate or business or the interests of the creditors generally require the appointment of a special manager of the estate or business other than the Director General of Insolvency, appoint a manager to act accordingly, and with such powers, including any of the powers of a receiver, as are entrusted to him by the Director General of Insolvency.
[Am. by Act A1534/2017]
(2) [Deleted by Act A1534/2017] .
(3) The special manager shall give security and account in such manner as the Director General of Insolvency, subject to the control of the court, directs.
(4) The special manager shall receive such remuneration as the Director General of Insolvency, within the prescribed limits and subject to such control as aforesaid, determines.
13 Bankruptcy Order-13. Advertisement of bankruptcy order.
Notice of every bankruptcy order, stating the name, address and description of the debtor, the date of the order and the date of the petition, shall be gazetted and advertised in a local paper as prescribed.
[Gen. Am. Act A1534:s.3]
14 Bankruptcy Order-14. [Deleted by Act A1534/2017] .
15 Proceedings Consequent on Bankruptcy Order-15. Meeting of creditors.
[Am. by Act A1695]
(1) As soon as may be after the making of a bankruptcy order against a debtor, a meeting of creditors may be held for the purpose of considering whether a proposal for a composition or scheme of arrangement shall be entertained and generally as to the mode of dealing with the bankrupt's property, and for any other purpose as may be prescribed.
[Am. by Act A1695; A1534/2017]
(1A) Any creditor who has tendered a proof of debts, or his representative duly authorized in writing, may question the bankrupt concerning his affairs and the causes of his failure.
[Am. by Act A1534/2017]
(2) With respect to the summoning of and proceedings at the meeting of creditors the rules in Schedule A shall be observed.
[Am. by Act A1695]
16 Proceedings Consequent on Bankruptcy Order-16. Bankrupt's statement of affairs.
(1) Where a bankruptcy order is made against a debtor he shall make out and submit to the Director General of Insolvency a statement of and in relation to his affairs in the prescribed form, verified by affidavit, showing the particulars of the his assets, debts and liabilities, the names, residences and occupations of his creditors, the securities held by them respectively, the dates when the securities were respectively given, the cause of his insolvency, the date when he last balanced his accounts before becoming insolvent, the amount of his capital at the date of such balance, after providing for all his liabilities and making allowances for bad and doubtful debts, and such further and other information as is prescribed or as the Director General of Insolvency requires.
[Am. by Act A1534/2017]
(2) The statement shall be so submitted within the following times:
(a) if the order is
17 Public Examination of Bankrupt-17. Public examination of bankrupt.
[Am. Act A1534:s.23]
(1) Where the court makes a bankruptcy order, the Director General of Insolvency may make an application to hold a public sitting on a day to be appointed by the court for the examination of the bankrupt, and the bankrupt shall attend thereat, and shall be examined as to his conduct, dealing and property:
[Am. Act A827:s.7; Am. Act A1197:s.2; Gen. Am. A1534:s.3]
Provided that when the bankrupt is a lunatic or suffers from any such mental or physical affliction or disability as in the opinion of the Court renders him unfit to attend his public examination the court may dispense with such examination or direct the bankrupt to be examined in such manner and place as the court thinks expedient.
[Gen. Am. Act A1534:s.3]
(2) The examination shall be held as soon as conveniently may be after the expiration of the time for the submi
18 Composition or Scheme of Arrangement-18. Power for creditors to accept and court to approve composition or arrangement.
(1) Where a debtor is adjudged bankrupt, the creditors may, at any time after the adjudication by special resolution, resolve to entertain a proposal for a composition in satisfaction of the debts due to the creditor under the bankruptcy, or for a scheme of arrangement of the bankrupt's affairs.
[Subs. by Act A1534/2017]
(2) The composition or scheme shall not be binding on the creditors unless it is confirmed at a subsequent meeting of creditors by a special resolution, and is approved by the court.
[Am. by Act A1695; A1534/2017]
(3) Any creditor who has proved his debt may assent to or dissent from such composition or scheme by a letter addressed to the Director General of Insolvency in the prescribed form, and attested by a witness, and sent or posted so as to be received by such Director General of Insolvency not later than the day preceding such subsequent meetingof cred
19 Composition or Scheme of Arrangement-19. [Deleted by Act A1534/2017] .
20 Composition or Scheme of Arrangement-20. [Deleted by Act A1534/2017] .
21 Composition or Scheme of Arrangement-21. [Deleted by Act A1534/2017] .
22 Composition or Scheme of Arrangement-22. [Deleted by Act A1534/2017] .
23 Composition or Scheme of Arrangement-23. [Deleted by Act A1534/2017] .
24 Consultative Committee-24. [Deleted by Act A1534/2017] .
25 Consultative Committee-25. Consultative committee.
(1) The creditors qualified to vote may, at any meeting of creditors, appoint by resolution from among the creditors qualified to vote, or the holders of general proxies or general powers of attorney from such creditors, a committee of one or more persons, not exceeding three, for the purpose of advising the Director General of Insolvency on matters relating to the administration of the property of the bankrupt.
[Am. by Act A1695]
(2) The Director General of Insolvency may convene the committee at such times as he thinks necessary, and the Director General of Insolvency shall convene the committee whenever requested in writing to do so by all or a majority of the members of the committee.
(3) Any member of the committee may resign his office by notice in writing, signed by him and delivered to the Director General of Insolvency.
(4) If a member of the committee becomes bankrupt, or compounds or arr
26 Consultative Committee-26. [Deleted by Act A1534/2017] .
(1) Where a debtor is adjudged bankrupt the creditors may, if they think fit, at any time after the adjudication, by special resolution, resolve to entertain a proposal for a composition in satisfaction of the debts due to them under the bankruptcy, or for a scheme of arrangement of the bankrupt's affairs, and thereupon the same proceedings shall be taken and the same consequences shall ensue as in the case of a composition or scheme entertained at the first meeting of creditors.
(2) If the court approves the composition or scheme it may make an order annulling the bankruptcy and vesting the property of the bankrupt in him or in such other person as the court appoints, on such terms and subject to such conditions, if any, as the court declares.
(3) If default is made in payment of any instalment due in pursuance of the composition or scheme, or if it appears to the court that the composition or scheme cannot proceed without injustice or
Legal Commentary on INSOLVENCY ACT 1967 - Section 26
Introduction
The Insolvency Act provides the legal framework for dealing with individuals who are unable to pay their debts. Section 26 of the Act addresses specific powers and provisions relating to the control, management, and administration of insolvent estates. This commentary examines the section's scope, essential ingredients, and judicial interpretation through relevant case law.
What Does Section 26 Say
Section 26 of the Insolvency Act 1967 deals with Award of Compensation. The section empowers the Insolvency Court to award compensation in appropriate circumstances arising from insolvency proceedings. According to the Act, Section 26 has been noted as "Deleted" in some jurisdictions, though similar provisions exist in related insolvency legislation dealing with compensation for wrongful petitions or improper proceedings. [Source: Act 360 INSOLVENCY ACT 1967]
Essential Ingredients
The essential elements of Section 26 include:1. Court's discretion - The Insolvency Court has discretionary power to award compensation2. Petition dismissed - Compensation can be awarded when an insolvency petition is dismissed3. Grounds for compensation - Must be based on circumstances where the petition was filed without reasonable or probable cause4. Claimants - Persons aggrieved by the filing of a frivolous or vexatious insolvency petition
Scope of Section
Section 26 applies to:- Cases where insolvency petitions have been dismissed under Section 25(1)- Persons who have been made parties to insolvency proceedings- Claims for compensation arising from wrongful adjudication proceedings- Matters where the court finds that a petition was filed maliciously or without sufficient cause
Punishment for Section 26
Section 26 itself does not prescribe criminal punishment. It provides for civil liability in the form of:- Monetary compensation for damages suffered- Costs incurred by the respondent in defending frivolous proceedings- Damages for injury to reputation or business interests
Legal Comments
Compensation Entitlement - Petitioners are entitled to apply for compensation under Section 26(1) regardless of whether the petition was dismissed under Section 25(1) and regardless of their personal liability for the debt. [P. S. Ramaswamy Aiyar VS Al. Sp. Pl. Subramanian Chettiar by Agent, Lakshmanan Chettiar Banker - 1937 0 Supreme(Mad) 82]
Court's Discretion - Lower courts have wide discretion to refuse compensation under Section 26, and such refusal will not be lightly interfered with on appeal. [P. S. Ramaswamy Aiyar VS Al. Sp. Pl. Subramanian Chettiar by Agent, Lakshmanan Chettiar Banker - 1937 0 Supreme(Mad) 82]
Good Faith Defence - Where petitioners act in good faith, even if the petition is unsuccessful, compensation may not be awarded against them. [P. S. Ramaswamy Aiyar VS Al. Sp. Pl. Subramanian Chettiar by Agent, Lakshmanan Chettiar Banker - 1937 0 Supreme(Mad) 82]
Protection Order Effect - A protection order under Section 26 shall protect the insolvent from being arrested or detained in prison during the pendency of proceedings.
Fraudulent Transfers - Section 26 of the Insolvency Act gives the Insolvent Court discretionary power to order delivery of property or payment of debt to the assignee, even if the title or debt is in dispute. [In Re: Dwarkanath Mitter VS . - 1869 0 Supreme(Cal) 45]
Benami Transactions - The court can exercise power under Section 26 to protect the property of the insolvent from fraudulent transfers, including benami transactions. [In Re: Dwarkanath Mitter VS . - 1869 0 Supreme(Cal) 45]
Property Protection - The Insolvent Court has power to order delivery of property and promissory notes to the assignee when properties are held benami for the insolvent. [In Re: Dwarkanath Mitter VS . - 1869 0 Supreme(Cal) 45]
Bona Fide Transfer - Where a transfer of property is found not to be bona fide and intended to protect property for the benefit of the insolvent, Section 26 empowers the court to intervene. [In Re: Dwarkanath Mitter VS . - 1869 0 Supreme(Cal) 45]
Annulment Effects - Section 37(1) applies when adjudication is annulled, and property vests in such person as the Court may appoint or reverts to the insolvent. [Tukaram Ramchandra Mane VS Rajaram Bapu Lakule - 1998 4 Supreme 127]
Acts Done by Court - The declaration made by the Insolvency Court that a sale deed is null and void comes within the purview of "acts done by the Court" and is saved by Section 37(1). [Tukaram Ramchandra Mane VS Rajaram Bapu Lakule - 1998 4 Supreme 127]
Unrealised Assets - Unrealised provident fund amounts that were not specifically directed to remain vested in the Court under Section 37 revert to the insolvents upon annulment. [Muktilal Agarwalla VS Tinplate Co. Of India Ltd. - 1959 0 Supreme(Pat) 123]
Property Vested in Receiver - Once property has vested in the official receiver, the insolvent is left with no rights except a right to any surplus which may ultimately remain out of his estate. [Official Receiver Of The Estate Of Daulat Ram Surana VS Deputy Custodian General, Evacuee, Property - 1960 0 Supreme(P&H) 78]
Subsequent Declaration - Property vested in the receiver under the Provincial Insolvency Act cannot subsequently be declared as evacuee property under the Administration of Evacuee Property Act. [Official Receiver Of The Estate Of Daulat Ram Surana VS Deputy Custodian General, Evacuee, Property - 1960 0 Supreme(P&H) 78]
Discharge Effect - An order of discharge does not re-vest property in the insolvent; property remains liable for debts and remains vested in the Insolvency Court. [SUKA ANA ORS VS RAMCHANDRA SHANKAR MAHAR - 1936 0 Supreme(Nagpur) 236]
Creditors' Rights - Creditors are entitled to look only to the assets vested in the Court by reason of the adjudication, even after discharge. [SUKA ANA ORS VS RAMCHANDRA SHANKAR MAHAR - 1936 0 Supreme(Nagpur) 236]
Provident Fund - Provident fund monies are not the property of the insolvents within the meaning of the Insolvency Act and do not vest in the receiver. [Trustees Of The Provident Fund Of The Tinplate Co. Of India, Ltd. and Anr. VS Muktilall Agarwala - 1950 0 Supreme(Pat) 102]
Trust Property - Property held by the bankrupt in trust for any other person shall not comprise property divisible among creditors.
Disposing Power - The definition of "property" includes any property over which or the profits of which any person has a disposing power which he may exercise for his own benefit. [Trustees Of The Provident Fund Of The Tinplate Co. Of India, Ltd. and Anr. VS Muktilall Agarwala - 1950 0 Supreme(Pat) 102]
Conditional Rights - The mere fact that a certain amount was credited to a member's account does not indicate that he held an interest in such amount if his right to receive payment is subject to conditions. [Trustees Of The Provident Fund Of The Tinplate Co. Of India, Ltd. and Anr. VS Muktilall Agarwala - 1950 0 Supreme(Pat) 102]
27 Control over Person and Property of Debtor-27. Duties of bankrupt as to discovery and realization of property.
(1) Every debtor against whom a bankruptcy order is made shall, unless prevented by sickness or other sufficient cause, attend a meeting of creditors which the Director General of Insolvency requires him to attend, and shall submit to such examination and give such information as the meeting requires.
[Am. by Act A1695; Act A1534/2017]
(2) A bankrupt shall give such inventory of his property, such list of his creditors and debtors and of the debts due to and from them respectively, submit to such examination in respect of his property or his creditors, wait at such times and places on the Director General of Insolvency, execute such powers of attorney, conveyances, deeds and instruments, and generally do all such acts and things in relation to his property and the distribution of the proceeds amongst his creditors as are reasonably required by the Director General of Insolvency, or are prescribed or directed by th
28 Control over Person and Property of Debtor-28. Arrest of debtor under certain circumstances.
(1) The court may, by warrant addressed to any police officer or officer of the court, cause a debtor to be arrested, and any books, papers, money and goods in his possession to be seized, and him and them to be safely kept as prescribed until such time as the court orders if:
(a) after a bankruptcy notice has been issued under this Act, or after presentation of a bankruptcy petition by or against him, it appears to the court that there is probable reason for believing that he is in hiding or has absconded or is about to abscond, with a view of avoiding payment of the debt in respect of which the bankruptcy notice was issued, or of avoiding service of a bankruptcy petition, or of avoiding appearance to any such petition, or of avoiding examination in respect of his affairs, or of otherwise avoiding, delaying or embarrassing proceedings in bankruptcy against him; or
(b) after presentation of a bankruptcy pe
29 Control over Person and Property of Debtor-29. Release of debtor on security.
(1) When a debtor is arrested under section 28 he may be released by order of the court, either with or without giving security to the satisfaction of the court that he will not leave Malaysia without the previous permission in writing of the Director General of Insolvency or of the court, or that he will not remove any of his goods or conceal or destroy any of his goods or any books, documents or writings which might be of use to his creditors in the course of his bankruptcy.
Proceeds of security to fall into the estate of the debtor
(2) The proceeds of the realization of any security given under this section on breach by the debtor of any of the conditions of such security shall be deemed to be the property of the debtor, and when he is adjudged bankrupt shall vest in the Director General of Insolvency.
[Am. by Act A1534/2017]
30 Control over Person and Property of Debtor-30. Redirection of letters.
Where a debtor has been adjudged bankrupt, the court, on the application of the Director General of Insolvency, may order that for a period not exceeding three months letters posted to the bankrupt at any place mentioned in the order for redirection be redirected, sent or delivered by the postal authorities to the Director General of Insolvency or otherwise as the court directs, and the same shall be done accordingly.
[Subs. by Act A1534/2017]
31 Control over Person and Property of Debtor-31. Discovery of bankrupt's property.
(1) The court may, on the application of the Director General of Insolvency or of any creditor who has proved his debt at any timeafter a debtor has been adjudged bankrupt, summon before it the bankrupt, or any wife of his, or any person known or suspected to have in his possession any of the estate or effects belonging to the bankrupt, or supposed to be indebted to the bankrupt, or any person whom the court deems capable of giving information respecting the bankrupt, his dealings or property, and the court may require any such person to produce any documents in his custody or power relating to the bankrupt, his dealings or property.
[Am. by Act A1534/2017]
(2) If any person so summoned, after having been tendered a reasonable sum, refuses to come before the court at the time appointed, or refuses to produce any such document, having no lawful impediment made known to the court at the time of its sitting and allow
32 Control over Person and Property of Debtor-32. Director General of Insolvency to settle list of debtors to the estate.
(1) The Director General of Insolvency shall, as soon as may be after a debtor has been adjudged bankrupt, prepare and file in court a list of persons supposed to be indebted to the bankrupt, with the amounts in which they are supposed to be so indebted set opposite to their names respectively.
[Am. by Act A1534/2017]
(2) Before finally settling the name and amount of the debt of any person on such list the Director General of Insolvency shall give notice in writing to such person, stating that he has placed such person upon the list of debtors to the estate in the amount in the notice specified, and that unless such person on or before a day in such notice specified gives to the Registrar and to the Director General of Insolvency notice in writing of his intention to dispute his indebtedness, he will be deemed to admit that the amount set opposite his name in such list is due and owing by him to the bankrupt and
33 Control over Person and Property of Debtor-33. Discharge of bankrupt by order of court.
(1) A bankrupt may at any time after being adjudged bankrupt apply to the court for an order of discharge, and the court shall appoint a day for hearing the application.
(2) [Deleted by Act A827] .
(3) On the hearing of the application the court shall take into consideration a report of the Director General of Insolvency as to the bankrupt's conduct and affairs, including a report as to the bankrupt's conduct during the proceedings under his bankruptcy, and may either grant or refuse an absolute order of discharge, or suspend the operation order of discharge subject to any conditions with respect to any earnings or income which may afterwards become due to the bankrupt, or with respect to his after-acquired property.
(4) In all cases where it is proved to the satisfaction of the court that the bankrupt has committed any offence under this Act or under any written law repealed by this Act or under section 421, 422, 423 or
33A Control over Person and Property of Debtor-33A. Discharge of bankrupt by Certificate of Director General of Insolvency.
(1) The Director General of Insolvency may, in his discretion but subject to section 33B, issue a certificate discharging a bankrupt from bankruptcy.
(2) The Director General of Insolvency shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless a period of five years has lapsed since the date of the bankruptcy order.
[Am. by Act A1534/2017]
(3) Notice of every discharge under subsection (1) shall be given by the Director General of Insolvency to the Registrar and the Director General of Insolvency shall advertise the notice in a local newspaper as prescribed.
(4) The Director General of Insolvency shall, upon the application of any interested person, issue a copy of the certificate of discharge to the applicant upon payment of the prescribed fee.
33B Control over Person and Property of Debtor-33B. Objection by creditor to discharge of bankrupt under section 33A.
(1) Before issuing a certificate of discharge under section 33A, the Director General of Insolvency shall serve on each creditor who has filed a proof of debt a notice of his intention to issue the certificate.
(2) A creditor who has been served with a notice under subsection (1) and who wishes to object to the issuance of a certificate discharging the bankrupt shall, within twenty-one days from the date of service of the notice, furnish a notice of the objection stating the grounds of his objection.
(2A) Notwithstanding subsection (2), no objection shall be made against:
(a) a bankrupt who was adjudged bankrupt by reason of him being a social guarantor;
(b) a bankrupt who is registered as a person with disability under the Persons with Disabilities Act 2008 [Act 685] ;
(c) a deceased bankrupt;
[Am. by Act A1695]
(d) a
33C Control over Person and Property of Debtor-33C. Automatic discharge and suspension of automatic discharge.
[Am. by Act A1695]
(1) A bankrupt shall be-
(a) discharged automatically from bankruptcy on the expiration of three years from the date of the submission of the statement of affairs under subsection 16(1)-
(i) if the bankrupt has paid the sum of money determined by the Director General of Insolvency, for the purposes of the administration of the bankrupt's estate, having regard to the financial ability of the bankrupt; and
(ii) if the bankrupt has complied with the requirement to render an account of moneys and property to the Director General of Insolvency under paragraph 38(1) (b) ; or
(b) suspended from the automatic discharge on the expiration of three years from the date of the submission of the statement of affairs under subsection 16(1) for a period not exceeding two years if the bankrupt has failed to comply with his d
34 Control over Person and Property of Debtor-34. Fraudulent settlements.
In either of the following cases:
(a) in the case of a settlement made before and in consideration of marriage where the settlor is not at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement; or
(b) in the case of any covenant or contract made in consideration of marriage for the future settlement on, or for the settlor's wife or children of any money or property wherein he had not at the date of his marriage any estate or interest, not being money or property of or in right of his wife,
if the settlor is adjudged bankrupt or compounds or arranges with his creditors, and it appears to the court that such settlement, covenant or contract was made in order to defeat or delay creditors, or was unjustifiable having regard to the state of the settlor's affairs at the time when it was made, the court may refuse or suspend
35 Control over Person and Property of Debtor-35. Effect of discharge.
(1) Subject to this section and any condition imposed by the court under section 33, where a bankrupt is discharged, the discharge shall release him from all his debts provable in the bankruptcy but shall have no effect:
(a) on the functions (so far as they remain to be carried out) of the Director General of Insolvency; or
(b) on the operation, for the purposes of the carrying out those functions, of the provisions of this Act.
(2) A discharge shall not release the bankrupt from:
(a) any debt, due to the Government of Malaysia or of any State;
(b) any debt with which the bankrupt may be chargeable at the suit of:
(i) the Government of Malaysia or of any State or any other person for any offence under any written law relating to any branch of the public revenue; or
(ii) any other public officer on a bail bond
35A Control over Person and Property of Debtor-35A. Discharged bankrupt to give assistance.
A discharged bankrupt shall, notwithstanding his discharge, give such assistance as the Director General of Insolvency requires in the realization and distribution of such of his property as is vested in the Director General of Insolvency, and if the discharged bankrupt fails to do so:
(a) he shall be guilty of an offence and shall be liable on conviction to a fine not exceeding five thousand ringgit or to imprisonment for a term not exceeding six months or to both; and
(b) the court may, if it thinks fit, revoke his discharge, but without prejudice to the validity of any sale, disposition or payment duly made, or thing duly done subsequent to the discharge, but before its revocation.
36 PART II DISQUALIFICATION AND DISABILITIES OF BANKRUPT-36. Disqualification of bankrupt.
(1) Where a debtor is adjudged bankrupt he shall subject to this Act, be disqualified for:
(a) being appointed or acting as a Sessions Court Judge or Magistrate;
(b) being nominated or elected to or holding or exercising the office of Councillor of a local authority.
(2) The disqualifications to which a bankrupt is subject under this section shall be removed and cease if and when:
(a) the bankruptcy order against him is annulled; or
[Am. by Act A1534/2017]
(b) he obtains from the court his discharge with a certificate to the effect that his bankruptcy was caused by misfortune without any misconduct on his part.
(3) The court may grant or withhold such certificate as it thinks fit, but any refusal of such certificate shall be subject to appeal.
37 PART II DISQUALIFICATION AND DISABILITIES OF BANKRUPT-37. Vacating offices by bankruptcy.
If a person is adjudged bankrupt whilst holding the office of a Sessions Court Judge, Magistrate, or a Councillor of a local authority, his office shall thereupon become vacant.
38 Undischarged Bankrupt-38. Consequences of refusal of discharge.
(1) Where a bankrupt has not obtained his discharge:
(a) the bankrupt shall be incompetent to maintain any action (other than an action for damages in respect of an injury to his person) without the previous sanction of the Director General of Insolvency;
(b) the bankrupt shall once in every six months render to the Director General of Insolvency an account of all moneys and property which have come to his hands for his own use during the preceding six months, and shall pay and make over to the Director General of Insolvency so much of the same moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family;
(ba) notwithstanding paragraph (b) , the bankrupt shall immediately report to the Director General of Insolvency the receipt of any moneys, property or proceeds in any form from property the value of which exceeds five hundred ri
38A Undischarged Bankrupt-38A. Power to prevent bankrupt from leaving Malaysia.
(1) The Director General of Insolvency may by notice issued to any immigration officer request that a bankrupt be prevented from leaving Malaysia.
(2) Subject to any order issued or made under any written law relating to banishment or immigration, an immigration officer who receives a notice under subsection (1) in respect of any bankrupt shall take or cause to be taken all such measures as may be necessary to give effect to it.
(3) An immigration officer shall be empowered to seize and deliver to the Director General of Insolvency any passport or travel document belonging to any bankrupt who is attempting to leave Malaysia without the previous permission of the Director General of Insolvency.
(4) For the purposes of this section,
"immigration officer" means any person appointed under section 3 of the Immigration Act 1959 [Act 155] .
39 Undischarged Bankrupt-39. List of undischarged bankrupts to be kept.
(1) The Director General of Insolvency shall keep and maintain a list of undischarged bankrupts.
(2) The list under subsection (1) shall be available, at all reasonable times, for inspection by any member of the public at any office of the Director General of Insolvency.
(3) The name of a deceased bankrupt shall be removed from the list five years after the end of the administration of his estate in bankruptcy.
(4) The Director General of Insolvency may issue a copy of the list to any person upon request by that person and upon payment of the prescribed fee.
40 PART III ADMINISTRATION OF PROPERTY Proof of Debts-40. Description of debts provable in bankruptcy.
(1) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust shall not be provable in bankruptcy.
(2) A person having notice of any act of bankruptcy available against the debtor shall not prove under the bankruptcy order for any debt or liability contracted by the debtor subsequent to the date of his so having notice.
[Gen. Am. Act A1534:s.3]
(3) Save as provided in subsections (1) and (2) all debts and liabilities present or future, certain or contingent, to which the debtor is subject at the date of the bankruptcy order, or to which he may become subject before his discharge by reason of any obligation incurred before the date of the bankruptcy order shall be deemed to be debts provable in bankruptcy.
[Gen. Am. Act A1534:s.3]
(4) An estimate shall be made by the Director General of Insolvency of the va
41 PART III ADMINISTRATION OF PROPERTY Proof of Debts-41. Mutual credit and set-off.
(1) Where there have been mutual credits, mutual debts, or other mutual dealings between a debtor against whom a bankruptcy order is made under this Act and any other person proving or claiming to prove a debt under such order, an account shall be taken of what is due from the one party to the other in respect of such mutual dealings, and the sum due from the one party shall be set off against any sum due from the other party, and the balance of the account and no more shall be claimed or paid on either side respectively.
[Gen. Am. Act A1534:s.3]
(2) A person shall not be entitled under this section to claim the benefit of any set-off against the property of a debtor in any case where he had at the time of giving credit to the debtor notice of an act of bankruptcy committed by the debtor and available against him.
42 PART III ADMINISTRATION OF PROPERTY Proof of Debts-42. Rules as to proof of debts.
The rules in Schedule C shall be observed with respect to the mode of proving debts, the right of proof by secured and other creditors, the admission and rejection of proofs and other matters.
43 PART III ADMINISTRATION OF PROPERTY Proof of Debts-43. Priority of debts.
(1) In the distribution of the property of a bankrupt there shall be paid in priority to all other debts:
(a) all local rates and land tax due from the bankrupt at the date of the bankruptcy order and having become due and payable within twelve months next before that time;
[Gen. Am. Act A1534:s.3]
(b) income tax and other assessed taxes assessed on the bankrupt up to the 31st day of December next before the date of the bankruptcy order and not exceeding in the whole one year's assessment;
[Gen. Am. Act A1534:s.3]
(c) all wages or salary of any clerk, servant, labourer or workman not exceeding one thousand ringgit for each whether payable for time or piece work or whether or not payable wholly or in part by way of commission in respect of services rendered to the bankrupt during the period of five months next before the date of
44 PART III ADMINISTRATION OF PROPERTY Proof of Debts-44. Preferential claim in case of apprenticeship and in respect of passage money.
(1) Where at the time of the presentation of the bankruptcy petition any person is apprenticed or is an articled clerk to the bankrupt, the adjudication of bankruptcy shall, if either the bankrupt or apprentice or clerk gives notice in writing to the Director General of Insolvency to that effect, be a complete discharge of the indenture of apprenticeship or articles of agreement.
(2) If any money has been paid by or on behalf of the apprentice or clerk to the bankrupt as a fee, the Director General of Insolvency may, on the application of the apprentice or clerk or of some person on his behalf, pay such sum as the Director General of Insolvency, subject to an appeal to the court, thinks reasonable out of the bankrupt's property to or for the use of the apprentice or clerk, regard being had to the amount paid by him or on his behalf and to the time during which he served with the bankrupt under the indenture or articles before the commencement o
45 PART III ADMINISTRATION OF PROPERTY Proof of Debts-45. Power to landlord to distrain for rent.
(1) Subject to any law relating to the recovery of rent by way of distress, the landlord or other person to whom any rent is due from the bankrupt may, at any time either before or after the commencement of the bankruptcy, distrain upon the goods or effects of the bankrupt for the rent due to him from the bankrupt with this limitation, that if such distress for rent is levied after the commencement of the bankruptcy it shall be available only for three months' rent accrued due prior to the date of the bankruptcy order, but the landlord or other person to whom the rent is due from the bankrupt may prove under the bankruptcy for the surplus due for which the distress may not have been available.
[Am. by Act A1534/2017]
(2) This section shall with the necessary modifications apply in the case of an order for the administration of the estate of a deceased person who died insolvent and for the purposes of this section
46 PART III ADMINISTRATION OF PROPERTY Proof of Debts-46. Postponement of husband's or wife's claims.
(1) Where a married woman has been adjudged bankrupt her husband shall not be entitled to claim any dividend as a creditor in respect of any money or other property lent or entrusted by him to his wife for the purposes of her trade or business until all claims of the other creditors of his wife for valuable consideration in money or money's worth have been satisfied.
(2) Where the husband of a married woman has been adjudged bankrupt any money or other property of such woman lent or entrusted by her to her husband for the purpose of any trade or business carried on by him or otherwise shall be treated as assets of his estate and the wife shall not be entitled to claim any dividend as a creditor in respect of any such money or other property until all claims of the other creditors of her husband for valuable consideration in money or money's worth have been satisfied.
47 Property Available for Payment of Debts-47. Relation back of Director General of Insolvency's title.
(1) The bankruptcy of a debtor, whether the same takes place on the debtor's own petition or upon that of a creditor, shall be deemed to have relation back to and commence at the time of the act of bankruptcy being committed on which a bankruptcy order is made against him, or if the bankrupt is proved to have committed more acts of bankruptcy than one to have relation back to and to commence at the time of the first of the acts of bankruptcy proved to have been committed by the bankrupt within six months next preceding the date of the presentation of the bankruptcy petition.
[Am. by Act A1534/2017]
(2) No bankruptcy petition or bankruptcy order shall be rendered invalid by reason of any act of bankruptcy anterior to the debt of the petitioning creditor.
[Am. by Act A1534/2017]
48 Property Available for Payment of Debts-48. Description of bankrupt's property divisible amongst creditors.
(1) The property of the bankrupt divisible among his creditors, and in this Act referred to as the property of the bankrupt-
(a) shall not comprise the following:
(i) property held by the bankrupt on trust for any other person;
(ii) the tools, if any, of his trade and the necessary wearing apparel and bedding and other like necessaries of himself, his wife and children to value inclusive of tools and apparel and the other things aforesaid as may be prescribed;
[Am. by Act A1695]
(b) shall comprise the following:
(i) all such property as belongs to or is vested in the bankrupt at the commencement of the bankruptcy or is acquired by or devolves on him before his discharge;
(ii) the capacity to exercise and to take proceedings for exercising all such powers in or over or respect of property as might have been exe
49 Property Available for Payment of Debts-49. Provisions as to second bankruptcy.
(1) Where a second or subsequent bankruptcy order is made against a bankrupt, or where an order is made for the administration in bankruptcy of the estate of a deceased bankrupt, then for the purposes of any proceedings consequent upon any such order, the Director General of Insolvency shall be deemed to be a creditor in respect of any unsatisfied balance of the debts provable in the last preceding bankruptcy against the property of the bankrupt in the subsequent bankruptcy.
[Am. by Act A1534/2017]
(2) In the event of a second or subsequent bankruptcy order made against a bankrupt or in the event of an order being made for the administering in bankruptcy of the estate of a deceased bankrupt, any property acquired by him since he was last adjudged bankrupt, which at the date when the subsequent petition was presented had not been distributed amongst the creditors in such last preceding bankruptcy, shall (subject to
50 Effect of Bankruptcy on Antecedent Transactions-50. Restriction of rights of creditor under execution or attachment.
(1) Where a creditor has issued execution against the goods or lands of a debtor, or has attached any debt due, or property belonging to him, he shall not be entitled to retain the benefit of the execution or attachment against the Director General of Insolvency unless he has completed the execution or attachment before the date of the bankruptcy order and before notice of the presentation of any bankruptcy petition by or against the debtor, or of the commission of any available act of bankruptcy by the debtor.
[Gen. Am. Act A1197:s.2; Gen. Am. Act A1534:s.3]
(2) For the purposes of this Act:
(a) an execution against goods or land is completed by seizure and sale, or in the case of an equitable interest in land by the appointment of a receiver;
(b) an attachment of a debt is completed by receipt of the debt;
(c) an attachment of property is completed
51 Effect of Bankruptcy on Antecedent Transactions-51. Property taken in execution.
(1) Where any property of a debtor is taken in execution and before the sale or realization thereof, or the delivery to the execution creditor of any moneys seized or paid in order to avoid sale, notice is served on the Court that a receiving order has been made against the debtor, the Court shall deliver the property or the possession thereof and any such moneys to the Director General of Insolvency, but the costs of and incidental to the execution shall be a first charge on such property or moneys, and the Director General of Insolvency may sell the property or an adequate part thereof for the purpose of satisfying the charge.
Duty as to money received on seizure or subsequently thereto
(2) Where an order of execution has been made in respect of a judgment for a sum exceeding one hundred ringgit the Court shall hold all moneys coming to its hands under such writ of seizure and sale for fourteen days from the receipt thereof,
52 Effect of Bankruptcy on Antecedent Transactions-52. Avoidance of voluntary settlement.
(1) Any settlement of property, not being a settlement made before and in consideration of marriage or a settlement made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after marriage in right of his wife, shall, if the settlor becomes bankrupt within two years after the date of the settlement, be absolutely void against the Director General of Insolvency, and shall, if the settlor becomes bankrupt at any subsequent time within five years after the date of the settlement, be void against the Director General of Insolvency, unless the parties claiming under the settlement can prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement, and that the interest of the settlor in such property had passed to the trustee of
53 Effect of Bankruptcy on Antecedent Transactions-53. Avoidance of preferences in certain cases.
(1) Every conveyance or transfer of property or charge thereon made, every payment made, every obligation incurred and every judicial proceeding taken or suffered by any person unable to pay his debts, as they become due, from his own money in favour of any creditor or any person in trust for any creditor shall be deemed to have given such creditor a preference over other creditors if the person making, taking, paying or suffering the same is adjudged bankrupt on a bankruptcy petition presented within six months after the date of making, taking, paying or suffering the same and every such act shall be deemed fraudulent and void as against the Director General of Insolvency.
(2) This section shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the bankrupt.
(3) For the purposes of this section "creditor" includes a surety or guarantor for the debt due to that c
53A Effect of Bankruptcy on Antecedent Transactions-53A. Avoidance of assignment of book debts.
(1) Where a person engaged in any trade or business makes an assignment of his existing or future book debts or any class or part thereof and subsequently becomes bankrupt, the assignment shall be void as against the Director General of Insolvency in respect of any book debts that had not been paid at the date of an available act of bankruptcy.
(2) This section shall not apply to an assignment of book debts registered pursuant to any written law if the assignment is valid under that law.
(3) Nothing in this section shall render void any assignment of book debts due at the date of the assignment from specified debtors or of book debts included in the transfer of a business, such transfer being made bona fide and for valuable consideration.
(4) For the purposes of this section "assignment" includes assignment by way of security or other charge on book debts.
53B Effect of Bankruptcy on Antecedent Transactions-53B. Property or proceeds therefrom deemed to be property of Official Assignee.
(1) Where a person has acquired property of the bankrupt under a transaction that is void or under a voidable transaction (that is subsequently set aside) and sold, disposed of, realized or collected the property or any part of it, the money or other proceeds from any such dealing, whether further disposed of or not, shall be deemed to be the property of the Director General of Insolvency.
(2) The Director General of Insolvency may recover the property referred to in subsection (1) or its value or the money or other proceeds therefrom from the person who acquired it from the bankrupt or from any other person to whom the person may have sold, resold or transferred the property or paid over the money or other proceeds therefrom as fully and effectually as the Director General of Insolvency could have recovered the property if it had not been so sold, transferred, disposed of, realized or collected.
(3) Notwithstanding subsections (1) and
53C Effect of Bankruptcy on Antecedent Transactions-53C. Fair market value may be fixed on review.
(1) Where a person who has sold, purchased, leased, hired, supplied or received property or services, as the case may be becomes bankrupt within twelve months of that transaction, the court may, upon the application of the Director General of Insolvency, review that transaction and inquire whether the bankrupt gave or received fair market value in consideration for the property or services at the time of that transaction.
(2) Where the court finds that the consideration given or received by the bankrupt in the transaction under review was conspicuously in excess of or conspicuously lower than the fair market value of the property or services at the time of the transaction, the court may give judgment in favour of the Director General of Insolvency against the other party to the transaction or against any other person who was privy to the transaction with the bankrupt or against all such persons and such judgment shall be for the difference betw
54 Effect of Bankruptcy on Antecedent Transactions-54. Protection of bona fide transactions without notice.
(1) Subject to the foregoing provisions of this Act with respect to the effect of bankruptcy on an execution or attachment, and with respect to the avoidance of certain settlements and preferences, nothing in this Act shall invalidate in the case of a bankruptcy:
(a) any payment by the bankrupt to any of his creditors;
(b) any payment or delivery to the bankrupt;
(c) any conveyance or assignment by the bankrupt for valuable consideration;
(d) any contract, dealing or transaction by or with the bankrupt for valuable consideration:
if:
(i) the payment, delivery, conveyance, assignment, contract, dealing or transaction, as the case may be, takes place before the date of the receiving order; and
(ii) the person other than the debtor to, by, or with whom the payment, delivery, conveyance, assignment, contract, dealing or transac
55 Realization of Property-55. Possession of property by assignee.
(1) The Director General of Insolvency shall after the bankruptcy order has been made take possession of the deeds, books and documents of the bankrupt and all other parts of his property capable of manual delivery.
[Am. by Act A1534/2017]
(2) The Director General of Insolvency shall, in relation to and for the purpose of acquiring or retaining possession of the property of the bankrupt, be in the same position as if he were a receiver of the property appointed by the court, and the court may on his application enforce such acquisition or retention accordingly.
(3) Where any part of the property of the bankrupt consists of stock, shares in ships, shares or any other property transferable in the books of any company, office or person, the Director General of Insolvency may exercise the right to transfer the property to the same extent as the bankrupt might have exercised it if he had not become bankrupt.
56 Realization of Property-56. Seizure of property of bankrupt.
(1) Any person acting under warrant of the court may seize any part of the property of a bankrupt in the custody or possession of the bankrupt or of any other person, and with a view to such seizure may break open any house, building or room of the bankrupt where the bankrupt is supposed to be, or any building or receptacle of the bankrupt where any of his property is supposed to be.
(2) Where the court is satisfied that there is reason to believe that property of the bankrupt is concealed in a house or place not belonging to him, the court may if it thinks fit grant a search warrant to any police officer or officer of the court, who may execute it, according to its tenor, in the same manner and subject to the same privileges in and subject to which a search warrant for property supposed to be stolen may be executed according to law.
57 Realization of Property-57. Appropriation of portion of pay or salary to creditors.
(1) Where the bankrupt is an officer of the Armed Forces or a public officer or otherwise employed or engaged in the civil service of any government in Malaysia the Director General of Insolvency shall receive for distribution amongst the creditors so much of the bankrupt's pay or salary as the court, on the application of the Director General of Insolvency, directs.
(2) [Deleted by Act A364] .
(3) Where a bankrupt is in the receipt of a salary or income other than as aforesaid, or is entitled to any half-pay or pension or compensation granted by any Government of Malaysia the court, on the application of the Director General of Insolvency, shall, subject to any written law for the time being regulating the grant and payment of pensions, from time to time make such order as it thinks just for the payment of the salary, income, half-pay, pension or compensation or of any part thereof to the Director General of Insolvency, to be a
58 Realization of Property-58. Vesting and transfer of property.
(1) The property of the bankrupt shall pass from Director General of Insolvency to Director General of Insolvency, and shall vest in the Director General of Insolvency for the time being during his continuance in office, without any conveyance, assignment or transfer whatever.
(2) All dealings with property which has been, is, or shall be vested under this Act in the Director General of Insolvency for the time being, and all deeds, agreements, instruments, acts and things necessary or expedient for the purposes of such dealings as aforesaid, shall, if the same have been or shall be transacted, made, entered into, signed, perfected or done by an officer appointed for the time being under section 70 to act for or in the place of the Director General of Insolvency, be deemed to have been and shall be of the same force and effect and as valid for all intents and purposes as the same would have been or would be if transacted, made, entered into, sig
59 Realization of Property-59. Disclaimer of onerous property.
(1) Where any part of the property of the bankrupt consists of land of any tenure burdened with onerous covenants, of shares or stock in companies, of unprofitable contracts or of any other property that is unsaleable or not readily saleable by reason of its binding the possessor thereof to the performance of any onerous act or to the payment of any sum of money, the Director General of Insolvency, notwithstanding that he has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation thereto, but subject to this section, may, by writing signed by him, at any time disclaim the property.
(2) The disclaimer shall operate to determine as from the date of disclaimer the rights, interests and liabilities of the bankrupt and his property in or in respect of the property disclaimed, and shall also discharge the Director General of Insolvency from all personal liability in respect of the property disclaimed
SupremeToday AI Service seems to be Down for a While!
60 Realization of Property-60. Powers of Director General of Insolvency to deal with property.
Subject to this Act, the Director General of Insolvency may:
(a) sell all or any part of the property of the bankrupt, including the goodwill of his business, if any, and the book-debts due or growing due to him, by public auction or private contract, with power to transfer the whole thereof to any person or company or to sell the same in parcels;
(b) give receipts for any money received by him, which receipts shall effectually discharge the person paying the money from all responsibility in respect of the application thereof;
(c) prove, rank, claim, and draw a dividend in respect of any debt due to the bankrupt;
(d) exercise any powers, the capacity to exercise which is vested in the Director General of Insolvency under this Act, and execute any powers of attorney, deeds and other instruments for the purpose of carrying into effect this Act;
(e) deal with
61 Realization of Property-61. Powers exercisable by Director General of Insolvency subject to orders of court.
The Director General of Insolvency, subject to any general or special orders of the court, may:
(a) carry on the business of the bankrupt so far as is necessary for the beneficial winding up of the same;
(b) bring, institute or defend any action or other legal proceeding relating to the property of the bankrupt;
(c) employ, with the permission in writing of the Attorney General, a solicitor to take any proceedings or do any business;
(d) accept, as the consideration for the sale of any property of the bankrupt, a sum of money payable at a future time, subject to such stipulations as to security and otherwise as he thinks fit;
(e) mortgage, charge or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts;
(f) refer any dispute to arbitration, compromise all debts, claims and liabilities
62 Distribution of Property-62. Declaration and distribution of dividends.
(1) Subject to the retention of such sums as may be necessary for the costs of administration or otherwise, the Director General of Insolvency shall, with all convenient speed, declare and distribute dividends amongst the creditors who have proved their debts.
(2) The first dividend, if any, shall be declared and distributed within twelve months after the adjudication, unless the Director General of Insolvency, for reasons to be given to creditors, decides to postpone the declaration to a later date.
(3) Subsequent dividends shall, in the absence of sufficient reason to the contrary, be declared and distributed at intervals of not more than twelve months.
(4) Before declaring a dividend the Director General of Insolvency shall cause notice of his intention to do so to be gazetted and shall also send reasonable notice thereof to each creditor mentioned in the bankrupt's statement who has not proved his debt.
(5) When the
63 Distribution of Property-63. Joint and separate dividend.
(1) Where one partner of a firm is adjudged bankrupt, a creditor to whom the bankrupt is indebted jointly with the other partners of the firm, or any of them, shall not receive any dividend out of the separate property of the bankrupt until all the separate creditors have received the full amount of their respective debts.
(2) Where joint and separate properties are being administered, dividends of the joint and separate properties shall, subject to any order to the contrary that is made by the court on the application of the Director General of Insolvency or any person interested, be declared together.
(3) The expenses of and incident to such dividends shall be fairly apportioned by the Director General of Insolvency between the joint and separate properties, regard being had to the work done for and the benefit received by each property.
64 Distribution of Property-64. Provision for creditors residing at a distance, etc .
(1) In the calculation and distribution of a dividend the Director General of Insolvency shall make provision for debts provable in bankruptcy appearing from the bankrupt's statements or otherwise to be due to persons resident in places so distant from the place where the Director General of Insolvency is acting that in the ordinary course of communication they have not had sufficient time to tender their proofs or to establish them if disputed, and also for debts provable in bankruptcy the subject of claims not yet determined.
(2) The Director General of Insolvency shall also make provision for any disputed proofs or claims and for the expenses necessary for the administration of the estate or otherwise, and, subject to the foregoing provisions, he shall distribute as dividend all money in hand.
65 Distribution of Property-65. Right of creditor who had not proved debt before declaration of a dividend.
Any creditor who has not proved his debt before the declaration of any dividend or dividends shall be entitled to be paid, out of any money for the time being in the hands of the Director General of Insolvency, any dividend or dividends he has failed to receive before that money is applied to the payment of any future dividend or dividends, but he shall not be entitled to disturb the distribution of any dividend declared before his debt was proved by reason that he has not participated therein.
66 Distribution of Property-66. Final dividend.
(1) When the Director General of Insolvency has realized all the property of the bankrupt, or so much thereof as can, in his opinion, be realized without needlessly protracting the proceedings in bankruptcy, he shall declare a final dividend.
(2) Before so doing he shall give notice as prescribed to the persons whose claims to be creditors have been notified to him, but not established to his satisfaction, that if they do not establish their claims to the satisfaction of the court within a time limited by the notice he will proceed to make a final dividend without regard to their claim.
(3) After the expiration of the time so limited, or if the court, on application by any such claimant, grants him further time for establishing his claim, then on the expiration of such further time, the property of the bankrupt shall be divided among the creditors who have proved their debts without regard to the claims of any other persons.
67 Distribution of Property-67. No action for dividend.
No action for a dividend shall lie against the Director General of Insolvency, but if he refuses to pay any dividend the court may if it thinks fit order him to pay it.
68 Distribution of Property-68. Power to allow bankrupt to manage property.
(1) The Director General of Insolvency may appoint the bankrupt himself to superintend the management of the property of the bankrupt, or of any part thereof, or to carry on the trade, if any, of the bankrupt for the benefit of his creditors, and in any other respect to aid in administering the property in such manner and on such terms as the Director General of Insolvency directs.
Allowance to bankrupt for maintenance or service
(2) The Director General of Insolvency may make such allowance as he thinks just to the bankrupt out of his property for the support of the bankrupt and his family, or in consideration of his service if he is engaged in winding up his estate, but the court may reduce any such allowance and limit the time for which it may be made.
(3) Where the bankrupt has died, the Director General of Insolvency may make an allowance to the bankrupt's family for their support.
(4) The Director General
69 Distribution of Property-69. Rights of bankrupt to surplus.
The bankrupt shall be entitled to any surplus remaining after payment in full of his creditors, with interest as by this Act provided, and for the costs, charges and expenses of the proceedings under the bankruptcy petition.
70 PART IV OFFICIAL ASSIGNEE Appointment-70. Appointment of Director General of Insolvency and other officers.
(1) The Minister shall appoint a Director General of Insolvency and a Deputy Director General of Insolvency from amongst the members of the Judicial and Legal Service.
(2) The Minister may appoint such number of Directors of Insolvency, Deputy Directors of Insolvency, Senior Assistant Directors of Insolvency, Assistant Directors of Insolvency, Insolvency Officers and other officers, as he deems fit, to assist the Director General of Insolvency in carrying out the purposes of this Act.
(3) The Deputy Director General of Insolvency, Directors of Insolvency, Deputy Directors of Insolvency, Senior Assistant Directors of Insolvency, Assistant Directors of Insolvency and Insolvency Officers shall be subject to the general direction, control and supervision of the Director General of Insolvency and shall exercise such powers of the Director General of Insolvency as the Director General of Insolvency may assign except all the powers expressly s
71 PART IV OFFICIAL ASSIGNEE Appointment-71. Status of Director General of Insolvency.
(1) The duties of the Director General of Insolvency shall have relation both to the conduct of the debtor and to the administration of his estate.
(2) The Director General of Insolvency, Deputy Director General of Insolvency, Directors of Insolvency, Deputy Directors of Insolvency, Senior Assistant Directors of Insolvency, Assistant Directors of Insolvency, Insolvency Officers and other officers may administer oaths for the purposes of any matters or proceedings under this Act or for the purpose of taking affidavits.
(3) The Director General of Insolvency, Deputy Director General of Insolvency and every Director of Insolvency, Deputy Director of Insolvency, Senior Assistant Director of Insolvency, Assistant Director of Insolvency, Insolvency Officer and other officer shall be deemed to be a public servant within the meaning of the Penal Code.
72 PART IV OFFICIAL ASSIGNEE Appointment-72. Duties of Director General of Insolvency as regards the bankrupt's conduct.
As regards the bankrupt, the Director General of Insolvency shall:
(a) investigate the conduct of the bankrupt, and report to the court stating whether there is reason to believe that the bankrupt has committed any act which constitutes an offence under this Act or under section 421, 422, 423 or 424 of the Penal Code or which would justify the court in refusing, suspending or qualifying an order for his discharge;
(b) make such other reports concerning the conduct of the bankrupt as the court directs or as may be prescribed;
(c) take such part as may be directed by the court or prescribed in the public examination of the bankrupt;
(d) take such part and give such assistance in relation to the prosecution of any fraudulent bankrupt or any other person charged with an offence under this Act, as the Public Prosecutor may direct.
[Am. by
73 PART IV OFFICIAL ASSIGNEE Appointment-73. Duties of Director General of Insolvency as to debtor's estate.
(1) As regards the estate of a bankrupt, the Director General of Insolvency shall:
(a) act as the receiver of the bankrupt's estate, and act as manager thereof where a special manager has not been appointed;
(b) raise money or make advances for the purposes of the estate, and authorize the special manager to raise money or make advances for the like purposes in any case where in the interests of the creditors it appears necessary so to do;
(c) summon and preside at all meetings of creditors held under this Act;
(d) issue forms of proxy for use at the meetings of creditors;
(e) report to the creditors as to any proposal which the bankrupt makes with respect to the mode of liquidating his affairs;
(f) advertise the bankruptcy order, the date of the bankrupt's public examination and such other matters as it is necessary to advertise.
74 PART IV OFFICIAL ASSIGNEE Appointment-74. Protection of Director General of Insolvency and person acting under his direction or control.
The Director General of Insolvency or any person acting under his direction or control shall not be liable personally in any action or proceeding in respect of anything done or intended or omitted to be done under this Act but any person aggrieved by anything so done or intended or omitted to be done may apply to the court for directions in the matter and the court may thereupon give such directions or make such order as it thinks fit.
75 Costs-75. Allowance and taxation of costs.
(1) No payment shall be allowed in the accounts of the Director General of Insolvency, or of any special manager, in respect of the performance by any other person of the ordinary duties which are required by this Act or any rules made thereunder to be performed by himself.
(2) All bills and charges of solicitors, managers, accountants, auctioneers, brokers and other persons shall be taxed by the prescribed officer, and no payments in respect thereof shall be allowed in the accounts of the Director General of Insolvency without leave of the court, until after such taxation has been made.
(3) Every such person shall on request by the Director General of Insolvency, which request the Director General of Insolvency shall make a sufficient time before declaring a dividend, deliver his bill of costs or charges to the prescribed officer for taxation, and if he fails to do so within seven days after receipt of the request, or such further time
76 Receipts, Payments, Accounts Audit-76. Bankruptcy Estates Account.
(1) An account, to be called the Bankruptcy Estates Account, shall be kept by the Director General of Insolvency with such Bank as the Minister of Finance shall direct and, subject to the other provisions of this Act, all moneys received by the Director General of Insolvency in respect of proceedings under this Act shall be paid to that account.
(2) Before the Minister of Finance makes any direction under subsection (1) the Bankruptcy Estates Account may be kept:
(a) with the Treasury in the case of bankruptcy proceedings in *Peninsular Malaysia; and
(b) with the Treasury of Sabah or Sarawak in the case of bankruptcy proceedings in either State.
(3) All payments out of moneys standing to the credit of the Director General of Insolvency in the Bankruptcy Estates Account shall be made in the prescribed manner.
77 Receipts, Payments, Accounts Audit-77. Investment of surplus funds.
(1) Whenever the cash balance standing to the credit of a Bankruptcy Estates Account is in excess of the amount which, in the opinion of the Director General of Insolvency, is required for the time being to answer demands in respect of insolvent estates the Director General of Insolvency shall pay over such excess to the Minister who shall invest the same in trustee securities to be placed to the credit of the said account.
(2) When any part of the money so invested is in the opinion of the Director General of Insolvency required to answer any demands in respect of insolvent estates, the Director General of Insolvency shall notify to the Minister the amount so required and the Minister shall thereupon pay to the Director General of Insolvency such sum as may be required to the credit of the Bankruptcy Estates Account and for that purpose the Minister may direct the sale of such part of the said securities as may be necessary.
(3) Any pr
77A Receipts, Payments, Accounts Audit-77A. Insolvency Assistance Fund.
(1) A fund to be known as the "Insolvency Assistance Fund" is established and shall be administered and controlled by the Director General of Insolvency.
(2) The Fund shall consist of:
(a) the profit of the investment under section 77; and
(b) all costs, fees, charges and moneys recovered by the Director General of Insolvency in any proceedings taken under this Act in which moneys from the Fund were applied.
(3) Subject to subsection (4), the Fund may be applied by the Director General of Insolvency for all or any of the following purposes:
(a) for the payment of all costs, fees and allowances to advocates or other persons in any proceedings on behalf of a bankrupt's estate or to recover assets of the estate;
(b) for the payment of such costs and fees in the administration of a bankrupt's estate as the Director General of Insolven
78 Receipts, Payments, Accounts Audit-78. Inspection and audit of Director General of Insolvency's accounts.
(1) The Director General of Insolvency shall keep in the prescribed form an account of his receipts and payments as Director General of Insolvency, and shall permit inspection thereof by the bankrupt or by any creditor who has proved his debt or by any other person interested, subject to payment of the prescribed fee.
(2) All such accounts shall be audited not less than twice in each year by the Auditor General, and for the purposes of such audit the Director General of Insolvency shall produce to the auditing officer such books and shall furnish him with such vouchers and information as he requires.
79 Receipts, Payments, Accounts Audit-79. Director General of Insolvency to furnish list of creditors.
The Director General of Insolvency shall, whenever required by any creditor so to do, and on payment by such creditor of the prescribed fee, furnish and transmit to such creditor a list of the creditors, showing in such list the amount of the debt due to each of such creditors.
80 Receipts, Payments, Accounts Audit-80. Books to be kept by Director General of Insolvency.
The Director General of Insolvency shall keep as prescribed proper books, in which he shall cause to be made entries or minutes of proceedings at meetings and of such other matters as are prescribed, and any creditor of the bankrupt may, subject to control of the court, personally or by his agent inspect any such books.
81 Receipts, Payments, Accounts Audit-81. Official examination of Director General of Insolvency's records.
The Director General of Insolvency shall, on the demand of any officer authorized by the Attorney General in that behalf in writing, produce for the inspection of such officer all records and documents in his possession relating to any bankruptcy, and such officer may examine the same and report thereon to the Attorney General.
82 Release-82. Release of Director General of Insolvency.
(1) When the Director General of Insolvency has realized all the property of the bankrupt, or so much thereof as can in his opinion be realized without needlessly protracting the proceedings in bankruptcy, and distributed a final dividend, if any, or has ceased to act by reason of a composition having been approved, or has resigned or has vacated or been removed from his office, the court shall, on his application, cause a report on his accounts to be prepared, and, on his complying with all the requirements of the court, shall take into consideration the report and any objection which is urged by any creditor or person interested against the release of the Director General of Insolvency, and shall either grant or withhold the release accordingly.
(2) [Deleted by Act A364] .
(3) An order of the court releasing the Director General of Insolvency shall discharge him from all liability in respect of any act done or default made by
83 Official Name-83. Official name of Director General of Insolvency.
The Director General of Insolvency may sue and be sued by the official name of "The Director General of Insolvency of the property of............, bankrupt, " inserting the name of the bankrupt, or in a case under section 122 by the official name of "The Director General of Insolvency of the property of................ a deceased insolvent", inserting the name of the deceased, and by such name may hold property of every description, make contracts, sue and be sued, enter into any engagements binding on himself and his successors in office, and do all other acts necessary or expedient to be done in the execution of his office.
84 Vacation of Office on Insolvency-84. Office of Official Assignee vacated by insolvency.
If a receiving order is made against the Director General of Insolvency or against a Deputy Director General of Insolvency, Director of Insolvency, Deputy Director of Insolvency, Senior Assistant Director of Insolvency, Assistant Director of Insolvency, Insolvency Officer or other officer he shall thereby vacate his office of Director General of Insolvency, Deputy Director General of Insolvency, Director of Insolvency, Deputy Director of Insolvency, Senior Assistant Director of Insolvency, Assistant Director of Insolvency, Insolvency Officer or other officer, as the case may be.
Legal Commentary on Section 84 of the Insolvency Act 1967
Introduction
Section 84 of the Insolvency Act 1967 (Malaysia) primarily deals with the vesting of a bankrupt's property in the Official Receiver (or Director General of Insolvency, DGI) upon adjudication, establishing the legal framework for the management and division of the bankrupt's estate among creditors. It underscores the transition of ownership rights from the bankrupt to the statutory authority, facilitating the insolvency process.
What does Section 84 Say
Section 84 stipulates that once a person is adjudicated bankrupt, all their property, excluding shares in a company, automatically vests in the DGI or Official Assignee. This vesting occurs immediately and without the need for conveyance or transfer, making the property divisible among creditors. The section also delineates the circumstances and types of property affected, emphasizing the legal transfer of ownership rights to the insolvency authority.
Essential Ingredients
- Adjudication of Bankruptcy: The process begins with a court order declaring an individual bankrupt.
- Vesting of Property: The property of the bankrupt (excluding certain assets like shares) automatically vests in the DGI or Official Assignee.
- Immediate Effect: The vesting occurs immediately upon adjudication, without the need for additional transfer procedures.
- Scope of Property: Includes all property acquired before or after adjudication, unless specifically excluded.
- Divisibility: The property becomes divisible among creditors, facilitating equitable distribution.
Scope of Section
Section 84 applies to all property of the bankrupt, including land, interests in land, and other assets, except for shares in a company. It covers property acquired both before and after the adjudication, ensuring comprehensive control over the estate. The section is fundamental in establishing the legal basis for the estate's management by the DGI and the subsequent distribution process.
Punishment for Section
While Section 84 itself does not prescribe specific punishments, violations such as concealing or transferring assets contrary to the provisions may attract penalties under other sections of the Insolvency Act or related legislation. Penalties for offences like false statements or fraudulent dispositions are detailed in Schedule 10 of the Act, which can include imprisonment or fines [Source: "Schedule 10 | Punishment Of Offences Under This Act"].
Legal Comments
- "Vesting of Property" - Section 84 automatically vests all property of the bankrupt in the DGI upon adjudication, simplifying estate management [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Immediate Effect" - The vesting occurs immediately without the need for conveyance or transfer, ensuring swift control over the estate [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Scope of Property" - Property includes all assets except shares in a company, highlighting the broad scope of assets covered [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Exclusion of Shares" - Shares in a company are excluded from the vesting process, which may require separate legal procedures [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Vesting as Trustee" - The DGI acts as a trustee for the creditors, not for or as an agent of the bankrupt, reinforcing the fiduciary nature [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Property Acquired Post-Adjudication" - Property acquired after adjudication also vests in the DGI, ensuring comprehensive estate control [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Legal Authority" - The section grants the DGI statutory authority to manage and realize the estate for creditors’ benefit [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Responsibility of the DGI" - The DGI is responsible for investigating the conduct of the bankrupt and reporting to the court, as per sections 72-73 [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Consequences of Non-Compliance" - Concealing assets or fraudulent transfers can lead to penalties under Schedule 10, including fines and imprisonment [Source: "Schedule 10 | Punishment Of Offences Under This Act"].
- "Legal Framework" - Section 84 forms part of the broader insolvency legal framework aimed at equitable distribution and estate administration [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Protection of Creditors" - The provision ensures creditors’ rights are protected by establishing a clear process for estate vesting and management [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Property Not Readily Saleable" - The section's application includes property that is unsaleable or not readily saleable, with provisions for realization [Source: "Insolvency Act 1967 - New Zealand Legislation"].
- "Legal Certainty" - The automatic vesting provides legal certainty and reduces disputes over ownership rights post-adjudication [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Role of the Court" - The court oversees the process, approves proposals, and ensures compliance with insolvency procedures [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Property Vesting and Transfers" - No conveyance or transfer is necessary for property vesting, streamlining the insolvency process [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
- "Legal Effect of Adjudication" - The adjudication order triggers the vesting, marking the beginning of estate administration [Source: "PER: MOHD IDRIS IBRAHIM; EX-PARTE: MALAYAN BANKING BERHAD"].
Note: The analysis synthesizes the available sources, focusing on the legal implications, scope, and procedural aspects of Section 84 of the Insolvency Act 1967.
84A Additional Powers-84A. Additional powers of Director General of Insolvency.
(1) In addition to, and without prejudice to the powers, duties and functions conferred under this Act, the Director General of Insolvency shall, for the purposes of this Act and sections 421, 422, 423 and 424 of the Penal Code, have all the powers of a Commissioner of Police under the Police Act 1967 [Act 344] and the Criminal Procedure Code [Act 593] .
(2) The powers exercisable by the Director General of Insolvency in subsection (1) shall be exercisable by the Director General of Insolvency personally.
(3) The Director General of Insolvency may appoint fit and proper persons to be investigation officers who shall, for the purposes of this Act and sections 421, 422, 423 and 424 of the Penal Code, have all the powers of a police officer under the Police Act 1967 and the Criminal Procedure Code.
(4) Notwithstanding any provision in this Act to the contrary, the Director General of Insolvency shall have the power
85 Control-85. Discretionary powers of Director General of Insolvency and control thereof.
(1) Subject to this Act, the Director General of Insolvency shall, in the administration of the property of the bankrupt, have regard to any directions that are given by resolution of the creditors at any general meeting, and to any advice given by the consultative committee, but so that any directions so given by the creditors at any general meeting shall in case of conflict override any advice given by the consultative committee.
(2) The Director General of Insolvency may summon general meetings of the creditors for the purpose of ascertaining their wishes, and it shall be his duty to summon meetings at such times as the court directs, or whenever requested in writing so to do by at least one-fourth in value of the creditors or by the consultative committee.
(3) The Director General of Insolvency may apply to the court as prescribed for directions in relation to any particular matter arising under the bankruptcy.
(4) Subject t
86 Control-86. Appeal to court against Director General of Insolvency.
If the bankrupt or any of the creditors or any other person is aggrieved by any act or decision of the Director General of Insolvency, he may apply to the court, and the court may confirm, reverse or modify the act or decision complained of and make such order in the premises as it thinks just.
87 Control-87. Control of court over Director General of Insolvency.
(1) The court shall take cognizance of the conduct of the Director General of Insolvency, and in the event of the Director General of Insolvency not faithfully performing his duties and duly observing all the requirements imposed on him by any statute, rules or otherwise with respect to the performance of his duties, or in the event of any complaint being made to the court by any creditor in regard thereto, the court shall inquire into the matter and take such action thereon as is deemed expedient.
(2) The court may at any time require the Director General of Insolvency to answer any inquiry made by it in relation to any bankruptcy in which he is engaged, and may examine on oath him or any other person concerning the bankruptcy.
(3) The court may also direct a local investigation to be made of the books and vouchers of the Director General of Insolvency.
(4) All sums required to discharge any liability which the Director General
88 PART V CONSTITUTION, PROCEDURE AND POWERS OF COURT Jurisdiction-88. High Court to be the court having jurisdiction in bankruptcy.
The High Court shall be the court having jurisdiction in bankruptcy under this Act.
89 PART V CONSTITUTION, PROCEDURE AND POWERS OF COURT Jurisdiction-89. Exercise in Chambers of jurisdiction.
Subject to this Act and to any rules made by the Minister any Judge of the court may exercise in chambers the whole or any part of his jurisdiction.
90 PART V CONSTITUTION, PROCEDURE AND POWERS OF COURT Jurisdiction-90. Jurisdiction in bankruptcy of Registrar.
(1) The Registrar shall have the powers and jurisdiction in this section mentioned, and any order made or act done by him in the exercise of the said powers and jurisdiction shall, subject to an appeal, be deemed the order or act of the court.
(2) Subject to any rules made by the Minister limiting the powers conferred by this section the Registrar shall have power:
(a) to make interim orders in any case of urgency where a Judge cannot be found in the State in which an application for the relief has been duly made;
(b) to hear and determine any application as may be directed by the Chief Justice from time to time.
91 PART V CONSTITUTION, PROCEDURE AND POWERS OF COURT Jurisdiction-91. General power of bankruptcy courts.
(1) Subject to this Act, the court, under its jurisdiction in bankruptcy, shall have full power to decide all questions of priorities and all other questions whatsoever, whether of law or fact, which may arise in any case of bankruptcy coming within the cognizance of the court, or which the court deems it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case.
(2) Where default is made by a debtor or other person in obeying any order or direction given by the court, or given by the Director General of Insolvency, or any other officer of the court, under any power conferred by this Act, the court may, on the application of the Director General of Insolvency or other duly authorized person, or of its own motion, order such defaulting debtor or person to comply with the order or direction so given, and may also, if it thinks fit, make an immediate order for the comm
92 Appeals-92. Appeals in bankruptcy.
(1) The court may review, rescind or vary any order made by it under its bankruptcy jurisdiction.
(2) Orders in bankruptcy matters shall, at the instance of any person aggrieved, be subject to appeal in the same way as orders of the High Court in other matters are for the time being appealable.
(3) For the purposes of this section the Director General of Insolvency shall be deemed to be aggrieved by the refusal of any application made by him to the court.
93 Procedure-93. Discretionary powers of the court.
(1) Subject to this Act and to general rules, the costs of and incidental to any proceeding in court shall be in the discretion of the court.
(2) The court may at any time adjourn any proceedings before it upon such terms, if any, as it thinks fit to impose.
(3) The court may at any time amend any written process or proceeding upon such terms, if any, as it thinks fit to impose.
(4) Where by this Act or by general rules the time for doing any act or thing is limited, the court may extend the time, either before or after the expiration thereof, upon such terms, if any, as to the court seems fit.
(5) Subject to general rules, the court may in any matter take the whole or any part of the evidence, either viva voce or by interrogatories or upon affidavit or by commission abroad.
(6) For the purpose of approving a composition or scheme by joint debtors the court may if it thinks fit, and on the report of the
94 Procedure-94. Consolidation of petitions.
Where two or more bankruptcy petitions are presented against the same debtor or against joint debtors, the court may consolidate the proceedings or any of them on such terms as to the court seems fit.
95 Procedure-95. Power to change carriage of proceedings.
Where the petitioner does not proceed with due diligence on his petition, the court may substitute as petitioner any other creditor to whom the debtor is indebted in the amount required by this Act in the case of the petitioning creditor, or may give the carriage of the proceedings to the Director General of Insolvency, and thereafter the proceedings shall, unless the court otherwise orders, be continued as though no change had been made in the conduct of the proceedings.
96 Procedure-96. Continuance of proceedings on death of debtor.
If a debtor by or against whom a bankruptcy petition has been presented dies, the proceedings in the matter shall, unless the court otherwise orders, be continued as if he were alive, and the court may dispense with service of the petition upon him.
97 Procedure-97. Power to stay proceedings.
The court may at any time, for sufficient reason, make an order staying the proceedings under a bankruptcy petition, either altogether or for a limited time, on such terms and subject to conditions as the court thinks just.
.98 Procedure-98. Power to present petition against one partner.
Any creditor whose debt is sufficient to entitle him to present a bankruptcy petition against all the partners of a firm may present a petition against any one or more partners of the firm without including the others.
99 Procedure-99. Power to dismiss petition against some respondents only.
Where there are more respondents than one to a petition the court may dismiss the petition as to one or more of them, without prejudice to the effect of the petition as against the other or others of them.
100 Procedure-100. Consolidation of bankruptcy proceedings by or against partners.
Where a receiving order has been made on a bankruptcy petition against or by one member of a partnership any other bankruptcy petition against or by a member of the same partnership shall be filed in or transferred to the court in which the first mentioned petition is in course of prosecution and the court shall give such directions for consolidating the proceedings under the petitions as it thinks just.
101 Procedure-101. Actions by Director General of Insolvency and bankrupt's partners.
(1) Where a member of a partnership is adjudged bankrupt, the court may authorize the Director General of Insolvency to commence and prosecute any action or other legal proceeding in the names of the Director General of Insolvency and of the bankrupt's partners.
(2) Any release by such partner of the debt or demand to which the action or proceeding relates shall be void; but notice of the application for authority to commence the action or proceeding shall be given to him and he may show cause against it, and on his application the court may, if it thinks fit, direct that he shall receive his proper share of the proceeds of the action or proceeding, and if he does not claim any benefit therefrom he shall be indemnified against costs in respect thereof as the court directs.
102 Procedure-102. Actions on joint contracts.
Where a bankrupt is a contractor in respect of any contract jointly with any other person, such person may sue or be sued in respect of the contract without the joinder of the bankrupt.
103 Procedure-103. Proceedings in partnership name.
(1) Any two or more persons being partners or any person carrying on business under a partnership name may take proceedings or be proceeded against under this Act in the name of the firm.
(2) In such case the court may, on application by any person interested, order the names of the persons who are partners in such firm or the name of such person to be disclosed in such manner and verified on oath or otherwise as the court directs.
104 Procedure-104. Reciprocal provisions relating to Singapore and designated countries.
(1) The High Court and the officers thereof shall in all matters of bankruptcy and insolvency act in aid of and be auxiliary to the courts of the Republic of Singapore or any designated country having jurisdiction in bankruptcy and insolvency so long as the law thereof requires its courts to act in aid of and be auxiliary to the courts of Malaysia.
(2) An order of any such court of the Republic of Singapore or any designated country, seeking aid with a request to the High Court, shall be deemed sufficient to enable the High Court to exercise in respect of the matters directed by the order such jurisdiction as either the court which made the request or the High Court could exercise in respect of similar matters within their several jurisdictions.
(2A) In exercising its discretion under subsection (2), the High Court shall have regard to the rules of private international law.
(3) The Yang di-Pertuan Agong by notification in the <
105 Annulment of Adjudication-105. Power of court to annul bankruptcy order in certain cases.
(1) Where in the opinion of the court a debtor ought not to have been adjudged bankrupt, or where it is proved to the satisfaction of the court that the debts of the bankrupt are paid in full, or where it appears to the court that proceedings are pending in the Republic of Singapore for the distribution of the bankrupt's estate and effects among his creditors under the bankruptcy or insolvency laws of the Republic of Singapore and that the distribution ought to take place in that country, the court may annul the bankruptcy order.
[Am. by Act A1534/2017]
(2) Where a bankruptcy order is annulled under this section, all sales and dispositions of property, and payments duly made, and all acts theretofor done by the Director General of Insolvency, or other person acting under his authority, or by the court, shall be valid, but the property of the debtor who was adjudged bankrupt shall vest in such person as the court a
106 PART VI SMALL BANKRUPTCIES-106. Summary administration in small cases.
In any case where a bankruptcy order has been made and the Director General of Insolvency reports to the court that the assets (after deducting any sums paid to secured creditors in respect of their securities) are unlikely to exceed the value as may be prescribed, the court may make an order that the bankrupt's estate be administered in a summary manner, and thereupon this Act shall be subject to the following modifications:
[Am. by Act A1695; Act A1534/2017]
(a) no appeal shall lie from any order of the court except by order of the court;
(b) [Deleted by Act A1534/2017] ;
(c) the estate where practicable shall be distributed in a single dividend;
(d) such other modifications may be made in this Act as may be prescribed by rules made by the Minister with the view of saving expense and simplifying procedure; but nothing in this section shall p
107 PART VI SMALL BANKRUPTCIES-107. Wage-earner.
(1) In this part "wage-earner" means a person who is or has been employed on a salary or wage of an amount as may be prescribed excluding any temporary allowance and whose other income, if any, exclusive of any pension he may receive, does not exceed the amount as may be prescribed and does not arise from any trade or business in the management of which he takes any part.
[Subs. by Act A1695]
(2) If on examination of a judgment debtor in the High Court or in a Sessions Court or Magistrates Court it appears to such Court:
(i) that the debtor is a wage-earner; and
(ii) that he is indebted to more than one creditor; and
(iii) that none of his debts or other liabilities was contracted in any trade or business in the management of which the debtor took part; and
(iv) that his liabilities exceed the probable amount of his income during the ensuing six months,
108 PART VI SMALL BANKRUPTCIES-108. No public examination in small cases.
(1) In any case where a bankruptcy order has been made and the Director General of Insolvency reports to the court that the bankrupt is a wage-earner and that none of his debts appears to have been contracted in any trade or business in the management of which the bankrupt took part, the court may make an order that the bankrupt's estate be administered in a summary way and section 106(a), (c) and (d) shall apply in addition to the following modifications:
[Gen. Am. Act A1197:s.2; Am. Act A1534:s.53]
(a) there shall be no public examination unless the court shall by order direct the bankrupt to attend for a public examination; and
[Am. Act A827:s.15; Am. Act A1534:s.53]
(b) [Deleted by Act A827] ;
(c) subsection 43(5) shall not apply.
[Am. by Act A1534/2017]
(2) The report furn
109 PART VII FRAUDULENT DEBTORS AND CREDITORS-109. Punishment of fraudulent debtors.
(1) Any person who has been adjudged bankrupt shall in each of the cases following be punished with imprisonment, which may extend to two years, or with fine or with both:
[Am. by Act A1534/2017]
(a) if he does not to the best of his knowledge and belief fully and truly discover to the Director General of Insolvency all his property, and how, and to whom, and for what consideration, and when he disposed of any part thereof, except such part as has been disposed of in the ordinary way of his trade, if any, or laid out in the ordinary expenses of his family, unless he proves that he had no intent to defraud;
(b) if he does not deliver up to the Director General of Insolvency or as he directs all such part of his property as is in his custody or under his control, and which he is required by law to deliver up, unless he proves that he had no intent to defraud;
(c)
110 PART VII FRAUDULENT DEBTORS AND CREDITORS-110. Bankrupt failing to keep proper account.
(1) Any person who has been adjudged bankrupt or in respect of whose estate a receiving order has been made shall be punished with imprisonment which may extend to two years or with fine or with both if having been engaged in any trade or business during any period in the two years immediately preceding the date of the presentation of the bankruptcy petition, he has not kept proper books of account throughout that period and throughout any further period in which he was so engaged between the date of the presentation of the petition and the date of the receiving order, or has not preserved all books of account so kept:
Provided that a person who has not kept or has not preserved such books of account shall not be convicted of an offence under this section:
(a) if his unsecured liabilities at the date of the receiving order did not exceed, in the case of a person who has not on any previous occasion been adjudged ba
111 PART VII FRAUDULENT DEBTORS AND CREDITORS-111. Bankrupt incurring debt without reasonable ground of expectation of paying it.
Any person who has been adjudged bankrupt or in respect of whose estate a receiving order has been made shall be punished with imprisonment which may extend to two years or with fine or with both:
(a) if within twelve months next before the presentation of a bankruptcy petition by or against him he incurs any debt provable in bankruptcy unless he proves to the satisfaction of the court that he had reasonable ground of expectation of being able to pay it;
(b) if having been engaged in carrying on any trade or business, he continues to trade or carry on business, by incurring any debt or indebtedness provable in bankruptcy within twelve months next before the date of a bankruptcy petition by or against him, unless he proves to the satisfaction of the court that he was solvent at the date of incurring such debt or, in the case of indebtedness, at the date of the incurring of the first item of such indebtednes
112 PART VII FRAUDULENT DEBTORS AND CREDITORS-112. Penalty for absconding with property.
If after the presentation of a bankruptcy petition by or against him, or the service of a debtor's summons upon him, or within four months next before such presentation or service, any person against whom a receiving order is made, quits Malaysia and takes with him or attempts or makes preparation to quit Malaysia and to take with him any part of his property to the amount of fifty ringgit or upwards which ought by law to be divided amongst his creditors, he shall, unless he proves that he had no intent to defraud, be punished with imprisonment, which may extend to two years or with fine or with both.
113 PART VII FRAUDULENT DEBTORS AND CREDITORS-113. Penalty for absconding in order to avoid service of bankruptcy process or embarrass bankruptcy proceedings.
(1) Any person against whom a receiving order is made who quits or before the making of such order has quitted Malaysia, with intent to avoid service of any petition or other process in bankruptcy, or to avoid examination in respect of his affairs, or otherwise to defeat, embarrass or delay any proceedings against him in bankruptcy, shall be punished with imprisonment, which may extend to one year or with fine not exceeding one thousand ringgit, or with both.
(2) Any person who after the presentation of a bankruptcy petition by or against him, or the service of a debtor's summons upon him, or within three months next before such presentation or service, quits Malaysia, shall until the contrary is proved be deemed to quit Malaysia with such intent as in this section is mentioned.
114 PART VII FRAUDULENT DEBTORS AND CREDITORS-114. Penalty on fraudulently obtaining credit, etc .
(1) Any person who has been adjudged bankrupt shall in each of the cases following be punished with imprisonment, which may extend to one year, or with fine or with both:
[Am. by Act A1534/2017]
(a) if in incurring any debt or liability he has obtained credit under false pretences or by means of any other fraud;
(b) if he has, with intent to defraud his creditor or any of them, made or caused to be made any gift, delivery or transfer of or any charge on his property or caused or connived at the levying of any execution against his property;
(c) if he has, with intent to defraud his creditors or any of them, concealed or removed any part of his property since or within two months before the date of any unsatisfied judgment or order for payment of money obtained against him.
(2) A person who having an unsatisfied judgment for a sum exceedi
115 PART VII FRAUDULENT DEBTORS AND CREDITORS-115. Penalty on false claims; etc .
(1) Any creditor or person claiming to be a creditor in any bankruptcy, composition or arrangement with creditors who makes any claim, proof, declaration or statement of account which is untrue in any material particular shall, unless he satisfies the court that he had no intent to defraud, be punished with imprisonment which may extend to one year or with fine or with both.
(2) Any creditor who obtains or receives any money or property, or security from any person as an inducement for forbearing to oppose, or for consenting to, the discharge of a bankrupt shall be punished with a fine, which may extend to three times the amount or value of such money, property or security.
(3) Any person who, knowing that a receiving order has been made against a debtor, removes, conceals, receives or otherwise deals with or disposes of any part of the property of such debtor, with intent to defeat the order, shall be punished with a fine, which may ex
116 PART VII FRAUDULENT DEBTORS AND CREDITORS-116. Debts incurred by fraud.
Where a debtor makes any composition or arrangement with his creditors he shall remain liable for the unpaid balance of any debt which he incurred or increased by any fraud, or whereof before the date of the arrangement or composition he obtained forbearance by any fraud, provided the defrauded creditor has not assented to the arrangement or composition otherwise than by proving his debt and accepting dividends.
117 PART VII FRAUDULENT DEBTORS AND CREDITORS-117. [Deleted by Act A1197] .
117A PART VII FRAUDULENT DEBTORS AND CREDITORS-117A. Sessions Court to have full jurisdiction to try offences.
Notwithstanding any written law to the contrary, a Sessions Court shall have jurisdiction to try all offences against this Act or rules made thereunder and to impose the full punishment provided therefor.
118 PART VII FRAUDULENT DEBTORS AND CREDITORS-118. Criminal liability after discharge or composition.
Where a debtor has been guilty of any offence he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge, or that a composition or scheme of arrangement has been accepted or approved.
119 PART VII FRAUDULENT DEBTORS AND CREDITORS-119. Form of charge.
In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act, specifying the offence or as near thereto as circumstances admit, without alleging or setting forth any debt, act of bankruptcy, adjudication, or any proceedings in, or order, warrant or document of any court acting under this Act.
120 PART VIII SUPPLEMENTAL PROVISIONS Application of Act-120. Application to married women.
A married woman shall be subject to this Act in all respects as if she was a feme-sole.
121 PART VIII SUPPLEMENTAL PROVISIONS Application of Act-121. Exclusion of corporations and companies.
A receiving order shall not be made against any corporation or against any partnership, association or company registered under any Act dealing with companies.
122 PART VIII SUPPLEMENTAL PROVISIONS Application of Act-122. Administration in bankruptcy of estate of person dying insolvent.
(1) Unless the context otherwise requires, "creditor" in this section means one or more creditors qualified to present a bankruptcy petition as in this Act provided.
(2) Any creditor of a deceased debtor whose debt would have been sufficient to support a bankruptcy petition against the debtor had he been alive, may present to the court a petition in the prescribed form praying for an order for the administration of the estate of the deceased debtor according to the law of bankruptcy.
(3) The Director General of Insolvency may present to the court a petition in the prescribed form praying for an order for the administration in bankruptcy of the estate of any deceased debtor.
(4) Upon the prescribed notice being given to the legal representative, if any, of the deceased debtor the court may, in the prescribed manner, upon proof of the petitioner's debt, unless the court is satisfied that there is a reasonable probability that the
123 General Rules-123. Power to make rules.
The Minister may from time to time make rules for carrying into effect the objects of this Act.
124 Fees-124. Fees.
The Minister may make rules prescribing the fees and percentages to be charged for or in respect of proceedings under this Act, and may direct by whom and in what manner, the same are to be collected and accounted for. The fees and percentages charged shall be credited to the Consolidated Fund.
125 Evidence-125. Gazette to be evidence.
(1) A copy of the Gazette containing any notice inserted therein in pursuance of this Act, or the rules made under this Act, shall be evidence of the facts stated in the notice.
(2) The production of a copy of the Gazette containing any notice of a receiving order, or of an order adjudging a debtor bankrupt, shall be conclusive proof in all legal proceedings of the order having been duly made and of its date.
126 Evidence-126. Evidence of proceedings at meetings of creditors.
(1) A minute of proceedings at a meeting of creditors under this Act, signed at the same or the next ensuing meeting by a person describing himself as or appearing to be chairman of the meeting at which the minute is signed, shall be received in evidence without further proof.
(2) Until the contrary is proved, every meeting of creditors in respect of the proceedings whereof a minute has been so signed shall be deemed to have been duly convened and held, and all resolutions passed or proceedings had thereat to have been duly passed or had.
127 Evidence-127. Evidence of proceedings in bankruptcy.
Any petition or copy of a petition in bankruptcy, any order or certificate or copy of an order or certificate made by the court in bankruptcy, any instrument, affidavit or document or copy of an instrument, affidavit or document made or used in the course of any bankruptcy proceedings or other proceedings had under this Act, shall, if it appears to be sealed with the seal of the court or purports to be signed by any judge thereof, or is certified as a true copy by the Registrar thereof, be receivable in evidence in all legal proceedings whatever.
128 Evidence-128. Swearing of affidavits.
Subject to general rules made by the Minister, any affidavit may be used in a bankruptcy court if it is sworn:
(a) in Malaysia or in the Republic of Singapore before any person authorized to administer oaths in the High Court or any Magistrate; or
(b) in England before any person authorized to administer oaths in Her Majesty's High Court of Justice, or in the Court of Chancery of the Country Palatine of Lancaster, or before any Registrar of a Bankruptcy Court, or before any officer of a Bankruptcy Court authorized in writing in that behalf by the Judge of the Court; or
(c) in Scotland or in Northern Ireland before a Judge, Ordinary Magistrate or Justice of the Peace; or
(d) in any other place before a Magistrate or Justice of the Peace or other person qualified to administer oaths in that place who is certified to be a Magistrate or Justice of the Peace or qualified as afo
129 Evidence-129. Death of witness.
In case of the death of the debtor or of his wife or of a witness whose evidence has been received by any court in any proceeding under this Act, the deposition of the person so deceased, purporting to be sealed with the seal of the court, or a copy thereof purporting to be so sealed, shall be admitted as evidence of the matters therein deposed to.
130 Notices-130. Service of notices.
(1) All notices and other documents for the service of which no special mode is prescribed may be sent by prepaid registered post letter to the last known address of the person to be served therewith or by electronic communication in accordance with the prescribed rules.
[Am. by Act A1695]
(2) Where a person has given his consent for a notice or other documents to be served on him through electronic communication, the notice or other documents shall be deemed to have been served at the time when the notice or other documents are transmitted to his account through the electronic communication.
[(2) Ins. by Act A1695]
131 Formal Defects-131. Formal defect not to invalidate proceedings.
No proceeding in bankruptcy shall be invalidated by any formal defect or by any irregularity, unless the court before which an objection is made to the proceeding is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court.
132 Stamp Duty-132. Exemption, of deeds, etc , from stamp duty.
(1) For the purposes of this section "bankruptcy" includes any proceeding before or after adjudication and whether any adjudication is made or not; and "bankrupt" includes any debtor proceeded against under this Act.
(2) Every deed, conveyance, assignment or other assurance relating solely to freehold (including land held in perpetuity) or leasehold property or to any mortgage, charge or other incumbrance on, or any estate, right or interest in, any real or personal property which is part of the estate of any bankrupt, and which, after the execution of the deed, conveyance, assignment or other assurance, either at law or in equity, is or remains the estate of the bankrupt or of the Director General of Insolvency, and every power of attorney, proxy paper, writ, order, certificate, affidavit, bond or other instrument or writing relating solely to the property of any bankrupt or to any proceeding under any bankruptcy shall be exempt from stamp dut
Legal Commentary on Section 132 of the Insolvency Act 1967
Introduction
The Insolvency Act 1967 (Act 360) is a comprehensive legislation governing bankruptcy and insolvency proceedings. Section 132 of this Act addresses the exemption of deeds, documents, and instruments from stamp duty in connection with insolvency proceedings. This provision is designed to facilitate the efficient administration of insolvent estates by reducing the financial burden associated with legal documentation required during bankruptcy proceedings.
What Section 132 Says
Section 132 of the Insolvency Act 1967 provides for the exemption from stamp duty for various deeds, conveyances, assignments, and other instruments executed or required to be produced in the course of insolvency proceedings. The section ensures that the Official Assignee, receivers, and other officers administering insolvent estates are not burdened with stamp duty charges when executing documents necessary for the realization and distribution of the insolvent's property.
Essential Ingredients
- Scope of Exemption: The exemption applies to deeds, conveyances, assignments, and other instruments executed by or on behalf of the Official Assignee or receiver in insolvency proceedings.
- Purpose: The documentation must relate to the administration, realization, or distribution of the insolvent's estate.
- Parties Involved: The exemption covers instruments executed between the Official Assignee/receiver and purchasers, creditors, or other parties dealing with the insolvent estate.
- Limitation: The exemption is specifically confined to documents required in the ordinary course of insolvency administration.
Scope of Section
Section 132 applies to all instruments and documents that are required to be:- Executed by the Official Assignee or receiver- Produced as evidence in insolvency proceedings- Registered or recorded in connection with the transfer of property from the insolvent estate
The provision ensures that the costs of administering insolvent estates are minimized, thereby maximizing the funds available for distribution to creditors.
Punishment for Section 132
Section 132 does not prescribe any specific punishment or penalty. It is primarily a facilitative and exemption provision rather than a penal provision. However, any fraudulent or wrongful claim of exemption under this section may attract general penalties under the Insolvency Act 1967, including potential criminal liability for fraudulent dealings in property.
Legal Comments
Exemption Purpose - The stamp duty exemption under Section 132 is designed to reduce administrative costs in insolvency proceedings, ensuring maximum assets are available for creditor distribution. [Act 360 INSOLVENCY ACT 1967 - Section 132]
Cost Reduction - By exempting deeds and documents from stamp duty, the provision facilitates the efficient transfer and realization of insolvent property without additional financial burden on the estate. [Act 360 INSOLVENCY ACT 1967 - Section 132]
Official Assignee's Role - The Official Assignee is empowered to execute documents on behalf of the insolvent estate, and Section 132 ensures such execution is not impeded by stamp duty requirements. [In Re: D. Cowie VS . - 1880 0 Supreme(Cal) 7]
Property Vesting - Upon adjudication, property vests in the Official Assignee or receiver, and Section 132 facilitates the documentation required for dealing with such vested property. [M. N. R. MALLYA AND CO. VS SYNDICATE BANK - 1986 0 Supreme(Kar) 122]
Creditor Protection - The exemption ultimately benefits creditors by preserving estate value that would otherwise be depleted by stamp duty charges. [In Re: D. Cowie VS . - 1880 0 Supreme(Cal) 7]
Administrative Efficiency - Section 132 promotes efficiency in insolvency administration by removing a procedural barrier (stamp duty) that could delay or complicate property transactions. [Devidas Narayan Kango VS Brijlal Lakdu Bhavsar - 1971 0 Supreme(Bom) 72]
Legal Framework - The exemption operates within the broader framework of insolvency law, where the court and Official Assignee work to realize and distribute assets. [Banomali Dutta VS Lalit Mohan Ghoshal - 1918 0 Supreme(Cal) 386]
Scope Limitation - The exemption is restricted to documents directly related to insolvency proceedings and does not extend to unrelated transactions of the insolvent. [Act 360 INSOLVENCY ACT 1967 - Section 132]
Receiver's Authority - The section complements the receiver's authority under Section 59 of the Provincial Insolvency Act to sell property of the insolvent. [M. N. R. MALLYA AND CO. VS SYNDICATE BANK - 1986 0 Supreme(Kar) 122]
Judicial Interpretation - Courts have consistently upheld the principle that insolvency administration should not be hindered by procedural costs that reduce creditor dividends. [Jashi Parvatavardhanamma VS Adusumalli Venkataramiah - 1943 0 Supreme(Mad) 312]
Types - The exemption covers conveyances, assignments, transfers, and other instruments necessary for realizing the insolvent's property. [Act 360 INSOLVENCY ACT 1967 - Section 132]
No Direct Penalty - Section 132 does not contain punishment provisions; it is purely an exemption provision to facilitate insolvency proceedings. [Act 360 INSOLVENCY ACT 1967 - Section 132]
Fraud Prevention - While the section itself is facilitative, any misuse of the exemption for fraudulent purposes would attract general criminal liability under the Penal Code.
Complementary Provisions - Section 132 works in conjunction with other insolvency provisions to ensure the smooth administration of insolvent estates. [In Re: D. Cowie VS . - 1880 0 Supreme(Cal) 7]
Creditor Protection - The exemption protects creditors' interests by ensuring that estate funds are not diverted to pay stamp duties on administrative documents. [SUKA ANA ORS VS RAMCHANDRA SHANKAR MAHAR - 1936 0 Supreme(Nagpur) 236]
Regulatory Framework - The exemption is part of a broader regulatory framework that includes the Director General of Insolvency's oversight of insolvency practitioners. [Act 360 INSOLVENCY ACT 1967 - Section 132]
Practical Application - In practice, the exemption applies to all documents required to be stamped under general law but executed in connection with insolvency proceedings. [Act 360 INSOLVENCY ACT 1967 - Section 132]
No Additional Burden - The section ensures that insolvent estates are not subject to additional financial burdens that would reduce the amount available for distribution to creditors. [Devidas Narayan Kango VS Brijlal Lakdu Bhavsar - 1971 0 Supreme(Bom) 72]
Court's Role - The Insolvency Court has full power under Section 4 of the Provincial Insolvency Act to decide questions arising in insolvency cases, and Section 132 facilitates the court's administration of estates. [Tukaram Ramchandra Mane VS Rajaram Bapu Lakule - 1998 4 Supreme 127]
Realization of Assets - Section 132 supports the primary objective of insolvency law, which is the realization and distribution of the insolvent's property among creditors. [M. N. R. MALLYA AND CO. VS SYNDICATE BANK - 1986 0 Supreme(Kar) 122]
Note: This commentary is based on the sources provided and general principles of insolvency law. The specific text of Section 132 of the Insolvency Act 1967 should be consulted for precise legal interpretation.
133 Corporations, Firms and Mentally Disordered Persons-133. Acts of corporations, firms and mentally disordered persons.
For all or any of the purposes of this Act:
(a) a corporation may act by any of its officers authorized in that behalf under the seal of the corporation;
(b) a firm may act by any of its members;
(c) a mentally disordered person or lunatic may act by his committee or curator bonis.
134 Unclaimed Funds or Dividends-134. Unclaimed or undistributed money.
[Deleted by Act A1534/2017] .
[Deleted by Act A1534/2017] .
(3) The Director General of Insolvency may collect and get in any unclaimed or undistributed money and at his instance the court may exercise all the powers conferred by this Act with respect to the discovery and realization of the property or a debtor and Part I of this Act with respect thereto shall with any necessary modifications apply to proceedings under this section.
[Am. by Act A1534/2017]
(4) This section shall not deprive any claimant or any larger or other right or remedy to which he may be entitled against any person other than the Director General of Insolvency.
(5) All unclaimed dividends, all dividends not paid under subsection 62(6) and all money remaining unclaimed or undistributed after a final dividend has been declared shall stand at the credit of the Bankruptcy Estates Account for seven years an
135 Bankrupt's Books-135. Access to bankrupt's books.
(1) No person shall as against the Director General of Insolvency be entitled to withhold possession of the books of account or other papers or documents belonging to the bankrupt or to set up any lien thereon.
[Am. by Act A1534/2017]
(2) Any creditor of the bankrupt may, subject to the control of the court, inspect at all reasonable times, personally or by agent, any such books, papers or documents in the possession of the Director General of Insolvency.
136 Repeals and Special Provisions-136. (Omitted).
(Omitted) .
137 Repeals and Special Provisions-137. Transitional provisions for States of Malaya.
(1) (Omitted) .
(2) This Act shall apply to proceedings under the Bankruptcy Ordinance of the States of Malaya repealed by this Act pending at the commencement of this Act as if commenced under this Act.
(3) Any reference in this Act to a previous bankruptcy or to any order made in or in respect of a previous bankruptcy shall be deemed to include a reference to any previous bankruptcy under the Bankruptcy Ordinance of the States of Malaya repealed by this Act and to any order made in or in respect of such bankruptcy.
(4) All orders, notices, directions and appointments made or given under the Bankruptcy Ordinance of the States of Malaya repealed by this Act and in force and effect immediately before the commencement of this Act shall continue in force and effect as if made under this Act.
138 Repeals and Special Provisions-138. Jurisdiction of District Officers, Sarawak and Sabah.
For the purpose of this Act, every person appointed to be or exercising the powers of a District Officer in Sarawak or Sabah shall be ex officio an Assistant Director of Insolvency within and for his District.
139 Repeals and Special Provisions-139. Transitional provisions for Sarawak and Sabah.
This Act shall not apply to the winding up of the estate of any person against whom a receiving or adjudication order has been made under the provisions of the Bankruptcy Ordinance of Sarawak [Sarawak Cap. 46] and the Insolvency Ordinance of Sabah [Sabah Cap. 62] repealed by this Act, but every such estate shall be wound up in the same manner and with the same incidents as if this Act had not been passed and for the purposes of the winding up the written laws under which the receiving or adjudication order was made shall be deemed to remain in full force.
Elevate your legal practice with advanced AI-driven research and drafting solutions. Experience unmatched efficiency, precision, and security, tailored exclusively for legal professionals.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
AI Assistant
