Chen Khai Voon v LIM Beng Guan (WA-29NCC-749-06/2022)

(a) satu perintah bahawa Notis Kebankrapan bertarikh 20.6.2022 diketepikan;

(b) satu deklarasi bahawa tiada perbuatan kebankrapan dikomitkan di bawah Notis Kebankrapan sehingga permohonan ini didengarkan dan ditentukan;

(c) kos; dan

(d) perintah-perintah dan / atau relif-relif yang lain dan / atau selanjutnya sepertimana Mahkamah yang Mulia ini anggap sesuai. Issues [5] After perusing the parties’ written submissions, affidavits and the JD’s application in Encl. 5 cautiously, there are 2 issues which require this Court’s determination and deliberation–

(a) whether the BN can be set aside; and

(b) whether the present bankruptcy proceedings ought to be stayed. Findings of this Court Issue (a): Whether the BN can be set aside? [6] As can been deduced from the JD’s written submissions, affidavits and the application in Encl. 5, briefly the JD’s grounds for setting aside of the BN are that–

(a) the JD is challenging the BN on the grounds other than a counterclaim, set-off or cross demand in accordance with rule 17 of the Insolvency Rules 2017 (“IR”);

(b) relying on section 6(4) Insolvency Act 1967 (“IA”), the issuance of the BN is premature and should be set aside since there is an appeal pending before the Court of Appeal (“COA”); and

(c) the JD is not insolvent, as the JD had proposed 15% shares of the JD, Choong Khoong Liang and Zhuojian Associates Sdn Bhd in Mighty Symphony Sdn Bhd be charged to the JC pending disposal of the appeal at COA. [7] Upon due consideration of the parties’ written submissions and affidavits, this Court finds that there are no valid grounds advanced by the JD to show that the BN is liable to be set aside for the reasons as follows:

(a) the JD’s application in Encl. 5 has not cited any enabling provisions either under the IA or IR for the setting of the BN;

(b) simply put, there is no provision of law under which this Court is being moved for the application in Encl. 5;

(c) the Bankruptcy Court is distinctly and specifically governed by the powers and jurisdiction exercisable only in strict compliance with the provisions of the IA and IR – see section 24 Courts of Judicature Act 1964, Badiaddin bin Mohd Mahidin & Anor v. Arab Malaysian Finance Bhd [1997] 1 LNS 353; [1998] 1 MLJ 393; Sobri bin Arshad v. Associated Tractors Sdn Bhd [1991] 3 CLJ Rep 756; [1991] 3 MLJ 32;

(d) the affidavits and the submissions of the JD have not provided any explanation as to why the JD has not cited any provision in Encl. 5 to set aside the BN and / or provide any reason for this Court to exercise its discretion to cure the defect and / or the irregularity;

(e) there is no amendment application and/or any attempt on the part of the JD to regularise the defective application in Encl. 5;

(f) notwithstanding the fact there is no enabling provision cited by the JD for the setting aside of the BN, still, the application in Encl. 5 is severely flawed as the provision, section 6(4) IA relied on heavily by the JD as part of the grounds for setting aside of the BN is a wrong provision of law – see TN Metal Industries Sdn Bhd v. Ng Pyak Yeow [1995] 1 LNS 320; [1996] 4 MLJ 567; Cheow Chew Khoon (t/a Cathay Hotel) v. Abdul Johari bin Abdul Rahman [1995] 4 CLJ 127; [1995] 1 MLJ 457;

(g) the submissions of the JD submit that the JD is challenging the BN on the grounds other than a counterclaim, set-off or cross demand in accordance with rule 17 IR and by relying on section 6(4) IA, the JD contends that the issuance of the BN is premature and should be set aside since there is a pending appeal before the COA against the Amended Judgment dated 17.12.2021 (the “HC Judgment”);

(h) however, section 6(4) IA is a provision of law in relation to proceedings and order on creditor’s petition, and by reading the provisions in section 6 as a whole, section 6(4) provides no power and jurisdiction for this Court to set aside the present BN;

(i) as for the contention that the JD is not insolvent and had proposed 15% shares to be charged to the JC pending disposal of the appeal against the HC Judgment at the COA, this Court is of the view that this is not a valid ground to set aside the present BN because– i. by virtue of section 3(1)(i) IA, the judgment debt as claimed by the JC in the BN is in the sum of RM9,526,113.84 and such is the amount claimed in the BN, and therefore this amount shall be paid by the JD in compliance with the terms in the BN, failing which the JD will be deemed to have committed an act of bankruptcy; ii. it is apparent that, the terms of the BN provide that the amount so claimed has to be paid in monetary term / payment-in-cash, and it has really not stipulated anything to the contrary that the amount so claimed can be paid in any other forms of payment and / or payment in-kind; iii. this is not a case whereby the JD has tendered any payment and / or attempted to pay the JC and that the JC is not willing to accept the payment; iv. the JD here had only proposed to offer the shares to be ‘charged’ to the JC pending the disposal of the appeal at the COA as opposed to making any payment for the amount claimed in the BN to the JC; v. the Black’s Law Dictionary, 2nd Ed., defines ‘solvency’ as a solvent person is one who is able to pay all his just debts in full out of his own present means; vi. here, it is clear that the JD has not fulfilled his debt obligation as required by the BN. The JD may have considerable assets in certain classes or fomrs, but the JD can be insolvent at the same time when the JD has a lack and/or no liquidity / cash to satisfy his debt obligations and more particularly the amount so claimed by the JC; vii. if the JD is willing to pay the JC for the amount so claimed in the BN, by using the 15% shares, the 15% shares can be liquidated and thereafter payment can be made to the JC to satisfy the amount so claimed in the BN,

(j) the JD has provided no explanation and/or justification to dispute, challenge and/or to prove that no act of bankruptcy has been committed by the JD;

(k) no provision in the IA and IR that expressly bars the issuance of a BN when there is a pending appeal against the judgment on which the BN is founded;

(l) even so, the JD has not provided any ground and / or is not challenging / disputing the validity and / or finality of the HC Judgment dated 17.12.2021 in the present application to set aside the BN;

(m) finally, pending the disposal of the appeal against the HC Judgement at the COA does not ipso facto justifies the setting aside of the present BN. Issue (b): Whether the present bankruptcy proceedings ought to be stayed. [8] It bears reiterating that strict compliance to the provisions of the IA and IR are mandatory. [9] After careful consideration of the parties’ written submissions and affidavits, this Court finds that the present bankruptcy proceedings and/or the BN ought not to be stayed on the grounds as follows:

(a) JD’s application in Encl. 5 is for the setting aside of BN as opposed to an application for stay of proceedings;

(b) JD’s application in Encl. 5 has not prayed for any stay of proceedings;

(c) no provisions of IA and IR have been cited in support of the application in Encl. 5 that concerns stay of proceedings;

(d) section 6(4) IA cited by the JD in the affidavit and submissions is a provision prescribed for stay of proceedings of a creditor’s petition provided if this Court thinks fit, at the creditor’s petition’s stage of proceedings, not the present BN-stage;

(e) pending the disposal of the appeal against the HC Judgment at the COA does not ipso facto justifies the stay of proceedings of the present BN;

(f) even though the JD’s affidavits and submissions have discussed and submitted on the need for a stay relying on section 97 IA, however, it is apparent that, no such application for a stay of proceedings has been made/filed by the JD in compliance with the provisions in the IA and IR; and

(g) as such an application for stay of proceedings is not so made by the JD properly, therefore this Court is constraint to allow and / or order any stay of proceedings. Conclusion [10] Based on the aforesaid reasons, and after careful scrutiny and judicious consideration of the affidavits and written submissions of the parties, the application via Summons in Chambers in Encl. 5 is dismissed with costs subject to allocatur. Dated: 2.9.2022 t.t (CHAI GUAN HOCK) Senior Assistant Registrar High Court of Malaya Kuala Lumpur Counsel/Solicitors For the Judgment Creditor: S Sivaneindiren & Yvonne Lee Yi Wen Messrs. Cheah Teh & Su L-3-1, No.2, Jalan Solaris, Solaris Mont' Kiara 50480 Kuala Lumpur For the Judgment Debtor: Wendy Yeong Messrs. Michael Chow 58a, Jalan Bukit Raja Off, Jalan Taman Seputeh Taman Seputeh, 58000 Kuala Lumpur