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2025 MarsdenLR 2232
HIGH COURT MALAYA KUALA LUMPUR
CHAN CHEE CHIU & ANOR – Appellant
Versus
DIRECTOR GENERAL OF INSOLVENCY & ANOR – Respondent
[Post-Bankruptcy No: WA-29PB-359-03-2024]
The court affirmed that the DGI's discretion in discharging a bankrupt is not absolute and must prioritize creditor interests, especially when significant debts remain unpaid.
Headnote:(A) Insolvency Act 1967 - Sections 33A and 33B - Application to prevent discharge of bankruptcy - The court upheld the Registrar's Decision to suspend the discharge of the judgment debtor for two years, emphasizing the need to protect creditors' interests and the DGI's discretion in discharge matters. (Paras 10, 13, 44, 66)
(B) Locus Standi - The judgment debtor has the right to appeal against decisions affecting his bankruptcy, confirming that he is not a stranger to the proceedings. (Paras 14, 16)
(C) Discretion of DGI - The DGI's discretion to issue a discharge certificate is not absolute and must be exercised judiciously, considering the circumstances of each case. (Paras 28, 30)
Facts of the case:
The judgment debtor was declared bankrupt in 2011, and the joint trustees of the estate filed a Proof of Debt. The DGI intended to discharge the judgment debtor, but the joint trustees objected, leading to the Registrar's Decision to suspend the discharge for two years.
Findings of Court:
The court found that the bankruptcy was not spent, as there were still dividends to be received by the estate, and the DGI's discretion was not abused.
Issues: The main issues included the validity of the DGI's decision to discharge the judgment debtor and the rights of the joint trustees to object.
Ratio Decidendi: The court ruled that the DGI's discretion must be exercised reasonably and that the interests of creditors must be prioritized, especially when significant debts remain unpaid.
Result: The appeal was dismissed.
JUDGMENT
[1] These grounds of judgment deal with an application under s 33B(4) of the Insolvency Act 1967 (" IA ") to prevent the Director General of Insolvency ("the DGI") from discharging the bankruptcy of a judgment debtor under s 33A(1).
Introduction
[2] Chan Wing is the late father of the 2nd Respondent, Dr. Mubarak Chan Chin Cheung ("the JD"). The estate of Chan Wing ("Estate") is one of the creditors of the JD. The Plaintiffs ("JC") are the joint trustees of the Estate. On 27 June 2013, the JC submitted a Proof of Debt in the JD's estate for RM147,461.95 ("POD").
[3] Pursuant to encl 1 (filed by the JC), the learned Deputy Registrar ("Registrar") delivered a decision on 25 July 2024 ("Registrar's Decision" in encl 20). The Registrar's Decision prohibited the DGI from issuing a certificate discharging the JD from bankruptcy for a period of two (2) years from 5 July 2024.
[4] On 19 July 2024, the JD appealed (Encl 19) the Registrar's Decision. Clearly, the JD supports the decision of the DGI to discharge but wanted the condition of the two (2) year suspension lifted.
[5] The DGI did not appeal the Registrar's Decision.
[6] References to sections of an Act are with reference to the IA , save where the context provides otherwise. The cause papers filed herein leading to the appeal before me (encl 19) are as follows.
Document Encl No. Notice of Application dated 26.3.2024 ("NOA") 1 Affidavit in Support affirmed by the JC on 19.3.2024 ("AIS") 2 The DGI Affidavit in Reply affirmed by Zulmazlinawati binti Hussin on 4.4.2024 3 Affidavit in Support affirmed by the JC on 16.4.2024 4 Affidavit in Reply affirmed by the JD on 2.5.2024 5 Affidavit in Reply (2) affirmed by the JC on 9.5.2024 6 The JC' Written Submissions dated 24.5.2024 7 The JC' Bundle of Authorities 8 The DGI's Written Submissions dated 10.6.2024 9 The DGI's Bundle of Authorities 10 The JD's Written Submissions dated 11.6.2024 11 The JD's Bundle of Authorities 12 The JD's Written Submissions in Reply dated 25.6.2024 13 The JC' Written Submissions in Reply (to DGI's Written Submissions) dated 25.6.2024 14 The JC' Written Submissions in Reply (to JD's Written Submissions) dated 25.6.2024 15 The JC' Bundle of Authorities (2) (to DGI's Written Submissions) 16 The JC' Bundle of Authorities (3) (to JD's Written Submissions) 17 The Order dated 25.7.2024 reflcting the Registrar's Decision 20 The Notice of Appeal by the JD against the Registrar's Decision dated 18.7.2024 19
Background Facts
[7] The background facts are set out in paras 5 to 12 of the JC's affidavit (encl 2) in support of the JC's encl 1. Briefly, they are as follows.
[8] The JD was declared bankrupt on an Adjudication and Receiving Order dated 11 February 2011 made by the KL High Court .
[9] Since then, the administration of JD's bankruptcy and the JD's Estate was managed by the DGI.
The DGI Decides To Discharge
[10] In compliance with s 33B, the DGI on 18 May 2023, issued a Notice to all creditors including the JC. The Notice notified the JC that the DGI intended to issue a Certificate of Discharge under s 33A, discharging the JD from bankruptcy.
[11] On 21 August 2023, the JC issued a notice of objection contesting the DGI's decision to discharge the JD. By a letter dated 27 February 2024, JC's solicitors were informed by the DGI that its Notice of Objection was rejected.
[12] On 26 March 2024, the JC then filed (encl 1) under s 33B(4).
[13] After hearing the parties, the Deputy Registrar made the Registrar's Decision, allowing encl 1 and ordering that the issuance of any Certificate of Discharge of the JD's Bankruptcy by the DGI be suspended for a period of two (2) years from 5 July 2024.
[14] Hence, the JD filed an appeal (encl 19), which came before me.
Locus Standi
[15] At the outset, I should deal with an issue dealt with by the JD. It was the locus standi of the JD.
[16] I agree that the JD has the locus to bring this appeal. In Ber: Lim Chai Oi; Ex-Parte: Affin Bank Berhad ; [2020] 1 CLJ 518 , it was made clear that a judgment debtor is
