Ambank Islamic Berhad v Yong Thien Wieo (MA-29NCC-247-08/2024)

This is an appeal by the Judgment Debtor (JD) against the Senior Assistant Registrar's decision delivered on 24.04.2025 which allowed the Judgment Creditor's (JC) Summons In Chambers dated 24.01.2025 in Enclosure 18 (SIC).

The said SIC was an application by the JC pursuant to Section 5(3)(b) of the Insolvency Act 1967 for leave to commence bankruptcy proceedings against the JD by presenting a creditor's petition.

The leave was granted on 24.04.2025,hence this appeal against the said decision. Brief Facts

The JD was a guarantor in respect of banking facilities granted by the JC to one LTB Power Performance (M) Sdn Bhd (LTB). A Guarantee and Indemnity dated 25.01.20218 was executed by the JD in favour of the JC for the indebtedness of LTB.

On 21.06.2024, a summary judgment was obtained in the Malacca High Court vide Civil Suit No. MA-22M-67-10/2023 by the JC against the JD and LTB for the recovery of sums outstanding and owing under the said banking facilities. The judgment sum amounted to, inter alia, RM9,167,077.66 as at 30.09.2023 with continuing late payment charges and costs till full realisation ("the said Judgment").

LTB has since been wound up pursuant thereto vide Kuala Lumpur High Court (Companies Winding Up) Petition No.WA- 28NCC-236-03/2023 on 05.12.2023. The Judgment sum still remained to be unsatisfied.

The JC had exhausted all modes and enforcement to recover the said judgment sum from LTB in accordance with Sections 5(4) and 5(6) of the Insolvency Act 1967.

The JC now is seeking recovery against the JD by way of an action upon the said judgment, i.e through the current bankruptcy proceedings. In order to do that, the JC had rightly applied for leave pursuant to Section 5(3) of the Insolvency Act 1967 by way of an application heard before the Senior Assistant Registrar.

The Senior Assistant Registrar granted leave on 24.04.2025, having been satisfied that the requirements as laid down in Section 5(4) of the Insolvency Act 1967 have been met. Issues

In this appeal, the JD raised the following issues:- i. That the JD never agreed to the terms and conditions of the banking facilities granted by the JC to LTB, and that terms and conditions therein were unreasonable; ii. That the JC should have realised all securities in the form of lands charged to the JC by way of foreclosure actions; iii. That the JD has an appeal pending in the Court of Appeal against the said Judgment; iv. The interpretation and construction of the provisions of Section 5 of the Insolvency Act.

Issues (i) to (ii) are issues in relation to the merits of the case which had been presented, deliberated and considered in the said Judgment. This was not disputed by the parties, and both addressed the same in their submissions before this Court.

For the record, an application to stay the execution of the said Judgment was also dismissed by the High Court on 16.04.2025, and no subsequent appeal or further application for a stay at the Court of Appeal was made.

It is trite that a bankruptcy court, in the absence of fraud, collusion or miscarriage of justice, should not go beyond the judgment to ascertain the validity or merits of the said order or judgment. The cases of Sovereign General Insurance Sdn Bhd v Koh Tian Bee [1988] 1 MLJ 304 and restated in Affin Bank Berhad v Tan Sri Kishu Tirathrai [2008] 3 MLJ 72 are referred.

Notwithstanding the fact that this Court ought not go beyond the judgment in matters of this nature, it is evidently clear that the issues raised are untenable in law. A cursory glance would garner the following response: - i. To now raise the issue of unreasonableness of the terms and conditions in relation to the grant of the banking facility (after it had been utilised) is clearly an afterthought; ii. The realisation of the securities by way of foreclosure of lands charged is an action in rem and does not in any way affect the proceedings where the said Judgment was obtained; iii. That an appeal does not in any way operate as an automatic stay against the said Judgment. It is trite that in matters of this nature, an application for stay must be made. And that despite having made the said application, it had been dismissed. The interpretation and construction of the provisions of Section 5 of the Insolvency Act

The only issue that was submitted at length by learned counsel for the JD was in relation to the construction and interpretation of Sections 5(4) to 5(6) of the Insolvency Act.

In this respect, I only need to refer to the case of Hong Leong Bank Berhad v Ong Moon Huat [2018] 1 LNS 1612. This was a Court of Appeal decision, of which not only is this Court bound to follow on the principle of stare decisis, but this Court considers the same to be a true reflection and interpretation of the law in relation hereto.

One of the issues posed to the Court of Appeal in that case, is similar, in that: - Whether the word "debtor" in "to recover the debts owed to him by the debtor" in section 5(4) of the Insolvency Act 1967 refers to the guarantor or the principal debtor?

In coming to its decision, the Court of Appeal referred to the wording of Section 5(6) therein, which reads: - "For the purposes of subsection (4), the modes of execution and enforcement include seizure and sale, judgment debtor summon, garnishment and bankruptcy or winding up proceedings against the borrower...”

And the Court of Appeal's commentary, (at paragraphs 3 to 7) in the most lucid manner possible, stated the following: - [3] A purposive construction of the section as a whole discloses that the section seeks to introduce protection for the guarantor against whom bankruptcy proceedings are to be brought. The protection comes in the form of ensuring that enforcement has been exhausted in respect of the principal debtor prior to proceeding against the guarantor. It is to remedy the mischief of judgment creditors proceeding against the guarantors directly in bankruptcy rather than executing and enforcing against the principal debtor. We are borne out in our conclusion by section 5(6) of the Insolvency Act 1967 that provides: "...For the purposes of subsection (4), modes of execution and enforcement include seizure and sale, judgment debtor summons, garnishment and bankruptcy or winding up proceedings against the borrower." [4] It follows therefore that in construing section 5(4) regard must be given to section 5(6). And section 5(6) provides that the modes of execution and enforcement that must be exhausted include seizure and sale, judgment debtor summons, garnishment and bankruptcy against the borrower. It does not make sense that the reference to debtor in section 5(4) refers to the guarantor because section 5(6) specifies bankruptcy as one of the modes of enforcement that must be exhausted. As bankruptcy has not been commenced against the guarantor, it makes the entire construction that "debtor" includes the guarantor, wholly untenable and incomprehensible. [5] The only reasonable construction that can be accorded is that "debtor" in section 5(4) refers to the principal debtor or the borrower. The fact that the word "borrower" was not used does not preclude the construction we have adopted. On the contrary such a construction is fully in accord with the purposive approach to be adopted in construing the section as outlined above. [6] We are further supported by the decision of the Federal Court in Khairulnizam's case (Hong Leong Bank Bhd v. Khairulnizam bin Jamaludin [2016] 7 CLJ 335; [2016] 4 MLJ 302) which in paragraph 35 stipulates that: "In the instant case the High Court, as mentioned earlier, was satisfied from the affidavit evidence that the appellant had proved that it had exhausted all avenues to recover debts owed to him by the hirer. As such the appellant had satisfied the requirement of section 5(3) of the Act to commence the bankruptcy action against the respondent." [7] In that case the hirer was the principal debtor. In other words the Federal Court construed the section on social guarantors (which is identical in terms to the new section 5(4) ) such that it was incumbent upon a judgment creditor to exhaust all avenues of execution and enforcement against a principal debtor and not the guarantor himself." Conclusion

Having considered all the authorities and submissions of the respected counsels, this Court is of the considered view that there is no reason to disturb the decision of the learned Senior Assistant Registrar.

Clearly, the JC had exhausted all avenues pursuant to Section 5(4) of the Insolvency Act 1967 against the principal debtor, LTB before commencing proceedings against the JD. The grant of leave pursuant to Section 5(3) was correct in law and justified.

The appeal is therefore dismissed with costs of RM5,000.00 subject to allocatur. Dated 16th June 2026 For the JC : Bryan Chen Liang Yi Tan Min Er M/s Shook Lin & Bok For the JD : Hida Yazlin Binti Mazlan Hargopal Singh R.Karnan M/s Boon & Partners