Christopher Martin Boyd v Deb Brata Das Gupta (WA-29NCC-1076-06/2024)

These Grounds are in respect of the appeals in the Court of Appeal filed by Deb Brata Das Gupta, the Judgment Debtor’s (“JD”), in:

Encl 67, appealing against my decision dismissing Encl 32, which is an appeal against the Order of the Learned Senior Assistant Registrar (“SAR”) dismissing an application to set aside the Judgment Creditor’s (“JC”) Creditor’s Petition dated 5.9.2024 (“the CP”);

Encl 68, appealing against my decision dismissing Encl 33, which is an appeal against the Order of the SAR dismissing the application to set aside the Bankruptcy Notice dated 24.06.2024 (“the BN”);

naturally, the appeals include my award of costs of RM1,500.00 in each appeal from the decisions of the SAR, subject to allocatur.

There are two (2) main grounds upon which JD contends that the Petition and/or the BN are invalid, comprising one main substantial issue and one procedural issue.

First, it is said that the BN should be premised on the Settlement Agreement dated 19.2.2019 between the JD and the JC (“Settlement”) and not the Judgment dated 8.10.2018 (“the Judgment”). This is because, it is said, that the Judgment had purportedly merged with the Settlement Agreement. Further, and as a result, the Judgment Sum also had been varied.

Secondly, the JD also contended that the Affidavit Verifying the Petition was affirmed a day before the Petition, thus invalidating the Petition itself.

As the JC had succeeded in these appeal, I will not deal with the other grounds raised by the JC challenging the JD’s other alleged non-compliance with procedural rules.

The main ground raised by the JD is based on the merger argument. It is this.

In respect of the Judgment dated 8.10.2018 (“the Judgment”), upon which the BN is predicated, the JD and JC entered into the Settlement which provided that the JD would pay the JC RM2,500.00 per month, see Exhibit “CMB-1” of Encl 18.

In short, the JD submits that the JC’s rights under the Judgment had merged with the Settlement, whereby:

in effect, the JC was only left with the rights available under the Settlement and not those under the Judgment;

any claim could only be brought pursuant to the Settlement and could not be based on the Judgment, as the Judgment had merged with, and was extinguished by the Settlement.

the amount claimed is inaccurate as the JC’s BN is predicated on the Judgment, which had in any event, been varied. 4 9. Thus, it is said that the BN and the CP, ought to be set aside. The JD relied on, inter alia, these propositions supported by the cases set about below:

where the terms of the Judgment were controlled by an outside agreement (the Settlement), the Judgment could not be relied on as a basis for the BN. In Datuk Mohd Sari Bin Datuk Haji Nuar v Norwich Winterthur Insurance (M) Sdn Bhd [1992] 2 MLJ 344 the Supreme Court held (see headnote) at: “(2) The terms of the consent judgment were controlled by an outside agreement between the judgment debtor and creditor through their solicitors, and non-compliance with the judgment is not an act of bankruptcy so long as the terms of the judgment are controlled by that outside agreement.”

where a settlement agreement superseded the judgment. In Pacific Sanctuary Holdings Sdn Bhd (formerly known as Ideal Prestige Sdn Bhd) v Masaland Construction Sdn Bhd [2020] 3 MLJ 692: At the headnote: “(3) Even if the defendant had defaulted in the payments under the settlement agreement which was denied by the defendant, the plaintiff’s remedy was confined to taking a fresh action to enforce the settlement agreement and not by way to execute the judgments and/or order which was rendered otiose by the settlement agreement (see para 26).” At para 30: “[30] In Sambu (M) Sdn Bhd v Stone World Sdn Bhd & Anor [1996] 2 CLJ 523, Abdul Malik Ishak J (later as JCA) held that where the parties had settled or compromised pending proceedings, the settlement would put an end to the proceedings, preclude the parties from taking further steps in the action and supersede the original cause of action.”

From the above cases, it was submitted that the BN and CP are invalid and void, as the Judgment was superseded and now controlled by the Settlement. The submission must therefore be based on the proposition that the parties had intended and contracted that the Settlement extinguishes the Judgment. In my judgment, the result suggested by this submission was not the intention of the parties and consequently, cannot be the effect of the Settlement.

In my judgment, those cases can be distinguished as in those cases, there was no clause reviving the underlying judgment. In contradistinction, the parties here did intend to preserve and revive the Judgment by including a default clause in the Settlement.

The observations of Gunn Chit Tuan SCJ in delivering the judgment of the Supreme Court In Datuk Mohd Sari (supra), are of great persuasion: “Consent judgment was recorded in the High Court at Kuala Lumpur against one Datuk Mohd Sari bin Datuk Haji Nuar (hereinafter referred to as ‘the appellant’) on 27 November 1987, for a sum of $530,000 together with interest thereon at the rate of 8%pa from 5 June 1986 to the date of realization and $350 as costs (p 43 of the appeal records). On 27 December 1988, the appellant, by a letter through his solicitor Messrs Lee & Associates, offered to pay the said judgment sum by way of monthly instalments of $25,000 each commencing on 31 January 1989 (p 22 of the appeal records). Norwich Winterthur Insurance (M) Sdn Bhd (hereinafter referred to as ‘the respondent’), through its solicitors Messrs Jagjit Singh, accepted the appellant’s offer and in fact issued receipts for seven instalment payments thereafter. No terms or conditions were stipulated by either party through their solicitors to provide for the eventuality of a default in the payment of any instalment. The appellant could not pay the instalments for the months of August to December 1989 inclusive for a sum totalling $125,000. The respondent therefore on 27 March 1990 issued a bankruptcy notice in Bankruptcy No D2-29-2598 of 1990 demanding payment of the sum of $505,603.87 being the balance of the amount due on the final judgment obtained by the respondent against the appellant on 27 November 1987 (see p 13 of the appeal records). …” And further: “On appeal to us, learned counsel for the appellant, Encik Idrus bin Ibrahim, contended that it was not the intention of the parties or the terms of their agreement that if any instalment was not paid, the respondent was at liberty to issue a bankruptcy notice for the balance of the judgment sum. He contended that the learned judge failed to consider that the respondent could not issue the bankruptcy notice for the balance sum outstanding on 27 March 1990 because it was estopped from denying that it had agreed to allow the appellant to pay the judgment sum by way of instalments and that there was no ‘default provision’ in their agreement. … With respect to the learned judge, we cannot find in the correspondence between the solicitors for both parties that there was any term in their agreement that if there was a default in the payment of any instalment, then the judgment creditor was entitled to proceed to issue a bankruptcy notice in respect of the balance due on the judgment debt …”

As such, a default clause would therefore revive the judgment compromised by a settlement agreement. Further, in Pacific Sanctuary Holdings (supra), it was stated: “[29] The principles laid down in the Indian Overseas Bank (supra) was applied by the Singapore Court of Appeal in Turf Club Auto Emporium Pte Ltd and others v. Yeo Boong Hua and others and another appeal and other matters [2017 2 SLR 12 where the Court held inter alia, that a settlement agreement which had been entered into for good consideration had the following effects: (a) it would put an end to the proceedings, which would thereby be spent and exhausted; (b) it would preclude the parties from taking any further steps in the action, except where they had provided in the settlement agreement for liberty to apply, in the same action, for the purpose of enforcing the agreed terms; and (c) it would supersede the original cause of action altogether.”

In other words, if there were a default clause reviving the judgment on failure to pay, then a bankruptcy notice could have been issued based on the judgment.

Here, the critical factor is the Default Clause in clause 5 of the Settlement. On default in payment of the instalments under the Settlement (which is not disputed in this case), the balance outstanding under the Judgment and interest payable thereunder will become immediately due and payable by the JD. Clause 5 of the Settlement (Encl 18, p 16) provides:

In my mind, the true effect of clause 5 if this. On default of payment by the JD, the Judgment is revived. Accordingly, it cannot be said that the Judgment had been extinguished or superseded. A fortiori, the Judgment having been revived, there could not have been a variation of the same. Indeed, Datuk Mohd Sari (supra), supports the revival of the Judgment by reason of a default clause. I venture to add that had a default provision existed in the relevant agreement in Datuk Mohd Sari, the BN would have been held to be valid.

Consequently, the BN and CP issued based on the Judgment are perfectly valid as the Judgment was preserved by the Default Clause. The objection based on the merger ground fails.

There is allegedly a defect in the CP, as the Affidavit Verifying the Truth of the Petition affirmed by the JC (on 04.09.2024), which is the day before the Creditor's Petition was filed in Court (on 05.09.2024). The JD submitted that the Creditor's Petition filed in this case was therefore null and void.

The JD relies on Sobri bin Arshad v Associated Tractors Sdn Bhd [1991] 3 MLJ 32. However, it seems clear enough that Sobri bin Arshad (supra) has been departed from. In Re: Abdul Razak Senin; Ex-Parte: Aziz Afandy Mohamad Arrif [2021] MLRHU 1575 it was held: “[10] After considering Sobri Arshad (supra), this Court is more inclined to adopt the string of cases referred to in Malaysia Building Society Bhd v. Univein Sdn Bhd [2002] 1 MLRH 303; [2002] 7 MLJ 501, where Low Hop Bing J (as he then was) had referred to Sobri Arshad (supra) and stated that the said case had not been followed or has been distinguished (see Re Mohd Sharif bin Sapie, ex p Malayan Banking Bhd [1991] 4 MLRH 531; [1992] 2 MLJ 102 per VC George J (later JCA); Re Lee Boon Hooi Ex Parte Tan Ket Huat [1992] 2 MLRH 28; [1992] 2 CLJ Rep 699; [1992] 1 AMR 214 (pp 303-307 of PBA 2) per Mahadev Shankar J (later JCA); Teoh Thean Peng v. D & C Leasing Sdn Bhd [1993] 1 MLRH 616; [1993] 2 MLJ 1; [1993] 2 CLJ 665 per KC Vohrah J now JCA) and Re Koh Kim Kuay, Ex Parte: MBf Finance Bhd [1994] 4 MLRH 29; [1995] 1 MLJ 792; [1995] 2 CLJ 145 per VC George J (later JCA).”

As explained by Nadzarin Wok Nordin JC (as he them was) in Abdul Razak Senin, Sobri bin Arshad (supra) had been considered in a number of subsequent cases, all of which had declined to follow it and instead preferred to hold that an affidavit affirmed prior to the presentation of petition is permissible. I, with respect, agree with the same finding.

I also agree that the Insolvency Act 1967 (“the IA”) and the Insolvency Rules 2017 only provide that the Petition is to be verified by an Affidavit Verifying Petition. And that has been done. There is no time limit nor timeline prescribed for the affirmation of the said Affidavit.

Even if the affirmation of the Affidavit Verifying Petition before the filing of the Petition is considered a defect or irregularity, s. 131 Insolvency Act 1967 provides that such defects or irregularities will not invalidate the present proceedings so long as no substantial injustice is proven. In short, there is no evidence to show that the affirmation of the said Affidavit one day prior to the filing of the Petition has caused any prejudice to the JD. Nor can I see how such prejudice could be shown.

As such, the Petition dated 5.9.2024 and JC’s Affidavit Verifying Petition dated 4.9.2024 are valid and effective.

In conclusion, both the substantive and procedural grounds raised by the JD, fail.

First, by the very terms of the Settlement, the Judgment is not extinguished or superseded but is revived upon default under clause 5.

Secondly, the affirmation of the Affidavit verifying Petition one day before the Petition has, on the evidence, caused no prejudice to the JD. As such, section 131 of the IA preserves the Petition even if there was a defect in the affirmation.

In the circumstances, I dismissed Encls 33 and 34 with costs. Dated the 11th day of October 2025 ........................t.t.............................. YA TUAN SAHERAN SUHENDRAN JUDICIAL COMMISIONER OF THE HIGH COURT HIGH COURT (COMMERCIAL 11) (INSOLVENCY 2) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA Case References: • Datuk Mohd Sari Bin Datuk Haji Nuar v Norwich Winterthur Insurance (M) Sdn Bhd [1992] 2 MLJ 344 • Pacific Sanctuary Holdings Sdn Bhd (formerly known as Ideal Prestige Sdn Bhd) v Masaland Construction Sdn Bhd [2020] 3 MLJ 692 • Re: Abdul Razak Senin; Ex-Parte: Aziz Afandy Mohamad Arrif [2021] MLRHU 1575 • Sobri bin Arshad v Associated Tractors Sdn Bhd [1991] 3 MLJ 32 Legislation References: • Insolvency Act 1967 • Insolvency Rules 2017 Decision Date: 10th September 2025 Counsel for the Judgment Debtor: Solicitors: Keshrinjeet Singh Messrs. Gunaseelan & Associates (Kuala Lumpur) Counsel for the