Lee Geok Thye (Holdings) Sdn Bhd v Ng Geok Hwa (NA-29NCC-452-08/2025)

The decision dated 14.11.2025 which the Bankruptcy Notice was premised on is not a final order nor conclusive;

(ii) The Bankruptcy Notice is invalid and void in limine;

(iii) The Bankruptcy Notice is misleading, embarrassing and perplexing;

(iv) No bankruptcy act or conduct has been committed. Factual Matrix [2] Gleaning from all the cause papers in this suit, the following states the chronology of events for this case:

24.4.2009 The Judgment Debtor initiated proceedings against Lee Tiow Kee and the Judgment Creditor at the Seremban High Court Civil Suit No. 22-78- 2008 (Suit 78)

11.1.2023 The Seremban High Court ordered for damages in the sum of RM750,000.00 to be paid by Lee Tiow Kee and Judgment Creditor jointly and/or severally 19.1.2023 The Judgment Creditor, through its solicitors Messrs. Cecil Abrahan & Partners (CAP), issued a letter for Lee Tiow Kee and the Judgment Creditor to Messrs. Gan Partnership (GP) on the net to pay the judgment sum as there were some costs not settled by the Judgment Debtor - the end amount came up to RM665,533.90 which the Judgment Creditor was prepared to pay to GP in its capacity as the solicitors for the Judgment Debtor as full and final settlement. The condition was that the moneys were to be returned should the appeal against the said High Court was allowed 22.2.2023 GP for the Judgment Debtor responded declining the said condition imposed 3.3.2023 CAP informed further deductions to be made to the net amount of judgment sum to be paid. The net amount was reduced to RM660,101.05. CAP then issued a cheque for the said amount as full and final settlement of the High Court order Again, the same condition for the return of the moneys in the event of success on their part at the Court of Appeal was stated 21.3.2024 GP replied that the said payment was for settlement of only part of the High Court order and disagreed to the obligation stated in the letter of CAP

14.11.2024 The Court of Appeal decided that the Judgment Creditor was only obligated to pay RM250,000.00 to the Judgment Debtor 2.12.2024 CAP, for the Judgment Creditor, wrote to GP and also to Lee Tiow Kee to state that the Judgment Creditor had overpaid the judgment sum of RM750,000.00 as it now is only obligated to pay RM250,000.00 22.1.2025 CAP, for the Judgment Creditor, issued a letter to GP and to Lee Tiow Kee’s solicitors to claim the return of RM547,260.27 7.2.2025 GP informed CAP that the Judgment Debtor instructed it to release the payment CAP made to GP to the Judgment Debtor, thus GP was pressed to file interpleader proceedings as there was a divergence of views between the Judgment

Defendan Pertama hendaklah membayar kepada Plaintif sejumlah RM500,000; dan

Defendan Kedua hendaklah membayar kepada Plaintif sejumlah RM250,000,Beserta dengan faedah pada kadar 5% setahun daripada 12 January 2023 sehingga penyelesaian penuh dan muktamad.” [8] In light of the said decision by the Court of Appeal, the Judgment Creditor's obligation under the judgment stood reduced to RM250,000.00. The legal consequence of that appellate determination is that any sum received by the Judgment Debtor in excess of RM250,000.00 ceased to have any juridical basis for retention. Put differently, the payment made by the Judgment Creditor, insofar as it exceeded the sum ultimately adjudged to be payable by the Court of Appeal, constituted an overpayment. [9] In other words, the Judgment Debtor cannot retain the benefit of the overpayment. The parties must be restored, as far as practicable, to the position mandated by the appellate court's decision. Put simply, once the Court of Appeal reduced the award to RM250,000.00, the parties' rights and liabilities fell to be determined in accordance with that appellate judgment. The Judgment Debtor could not continue to assert an entitlement to retain monies beyond the amount ultimately awarded by the Court of Appeal. The Bankruptcy Proceedings [10] The bankruptcy proceedings initiated by the Judgment Creditor was premised on the Court of Appeal’s decision. To convince this Court that the bankruptcy proceedings were wrongfully instituted, it was argued for the Judgment Debtor that the Court of Appeal’s Decision did not order for the return for the payment by the Judgment Creditor, further it did not order for interest to be paid on the amount overpaid which was to be returned to the Judgment Creditor by the Judgment Debtor. The Supreme Court case of Sovereign General Insurance Sdn Bhd v Koh Tian Bee [1988] 1 CLJ Rep 77; [1988] 1 MLJ 304; [1987] 1 MLRA 326 was cited to implore this Court not to go behind the judgment. The Court of Appeal case of Nur Illiani Chai Abdullah v Wong Yee Boon [2022] CLJU 3251; [2022] 1 LNS 3251 was also referred to. [11] The Judgment Debtor’s position is that by the cheque payment issued by CAP (vide letter on 3.3.2023), the full judgment had been paid. And that it was paid by both under the letterhead of CAP. This position is erroneous. The Judgment Debtor is not at liberty to interpret such as it does not address the two issues; (1) that the Judgment Creditor has indeed paid his portion of the judgment sum as per the Court of Appeal’s decision which is RM250,000.00 and

that CAP did not pay the said sum of RM660,101.05 as for Lee Tiow Kee jointly. [12] It is this Court’s finding that CAP had issued the payment specifically for the Judgment Creditor. Thus, by virtue of the Court of Appeal’s decision, the Judgment Creditor is seeking for the return of the overpayment. Failing to do so resulted in the Judgment Creditor having undertaken the bankruptcy proceedings. This Court is unable to accept the Judgment Debtor’s argument that the bankruptcy proceedings were unlawful to render the Bankruptcy Notice invalid and void. It may be timely here that the Judgment Debtor did not address the fact that Lee Tiow Kee had affirmed in his affidavit in the interpleader proceedings that the cheque payment vide CAP was made by and for the Judgment Creditor alone. That evidence forms part of the contemporaneous factual matrix and has not been satisfactorily displaced before this Court. [13] Although it may be true that the Court of Appeal’s decision did not order a return of any excess to the Judgment Creditor, but the essence is that the Judgment Creditor is only legally responsible to pay RM250,000.00 to the Judgment Debtor. As a consequence of that appellate decision, the legal basis upon which the Judgment Debtor had received any amount exceeding RM250,000.00 from the Judgment Creditor no longer subsisted. The effect of the Court of Appeal's order was therefore that the Judgment Debtor became entitled to retain only RM250,000.00 of the monies paid pursuant to the High Court judgment. Any amount received in excess thereof constituted an overpayment which, absent any other legal justification, was liable to be restored to the Judgment Creditor. [14] The Judgment Creditor raised the objection that this application to set aside the Bankruptcy Notice is defective in law as it failed to state the statutory provisions under which this Court is being moved. Rules 93 and 96 Insolvency Rules 2017 cited are not substantive legal grounds, they are merely procedure for such application. As it failed to disclose proper enabling provision, the Judgment Creditor submitted that it rendered the application incompetent, the Court of Appeal’s decision in Cheow Chew Khoon (t/a Cathay Hotel) v Abdul Johari bin Abdul Rahman [1995] 1 MLJ 457; [1995] 1 MLRA 679; [1995] 4 CLJ 127; [1995] 1 AMR 759 and the High Court’s decision in Poney Garments Sdn Bhd v Bambika Sdn Bhd [2024] MLJU 645; [2024] MLRHU 468; [2024] CLJU 603 referred. [15] This Court notes that the statute or rule under which the court is moved must be clearly stated as otherwise it offends the principle against surprise. However, this Court proceeds to determine the substantive issues instead of just dismissing this application on the grounds of technicality. This Court considers that it is most just to do so as the parties have been engaged in litigation for a considerable period of time and the matter must come to some finality. [16] Nevertheless, the Judgment Creditor’s second argument carries weight. The Judgment Debtor had in fact failed to dispute the Bankruptcy Notice pursuant to section 3(1)(i) of the Insolvency Act 1967 (IA). The provision is herein reproduced: “A debtor commits an Act of bankruptcy in each of the following cases:

if a creditor has obtained a final judgment or final order against him for any amount and execution thereon not having been stayed has served on him in Malaysia, or by leave of the court elsewhere, a bankruptcy notice under this Act requiring him to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order with interest quantified up to the date of issue of the bankruptcy notice, or to secure or compound for it to the satisfaction of the creditor of the court; and if he does not within seven days after service of the notice in case the service is effected in Malaysia, and in case the service is effected elsewhere then with the time limited in that behalf by the order giving leave to effect the service, either comply with the requirements of the notice or satisfy the court that he has a counter-claim, set off or cross demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid and which he could not set up in the action in which the judgment was obtained or in the proceedings in which the order was obtained” [17] The Judgment Debtor indeed had not asserted any counterclaim, set-off or cross-demand (see Order 96 Insolvency Rules 2017, Datuk Lim Kheng Kim v Malayan Banking Berhad [1993] 2 MLJ 298; [1993] 3 CLJ 324; [1993] 1 MLRA 288). No notice to dispute the sum under section 3(2) IA was filed either (see Kuala Excel Sdn Bhd v Chua Liang Hong [2022] MLJU 1350; [2022] MLRHU 1179; [2022] CLJU 1336). [18] Based on the following facts :-

the Court of Appeal ordered the Judgment Creditor to pay the Judgment Debtor RM250,000.00

The Judgment Creditor had paid to the Judgment Debtor RM660,101.05

There is an overpayment by the Judgment Creditor

The Judgment Creditor has established an arguable and legally sustainable basis to seek return of the overpayment following the variation of the High Court order by the Court of Appeal the Bankruptcy Notice is valid. The Judgment Creditor was entitled to seek the return of the overpayment directly from the Judgment Debtor following the appellate court's variation of the judgment. [19] This Court accepts that the Court of Appeal’s decision altered the parties’ substantive rights in respect of damages awarded. However, this Court is unable to accept the Judgment Creditor's computation insofar as it proceeds on the footing that all sums deducted in the course of the payment process were attributable solely to the Judgment Creditor. [20] In relation to the costs awarded in the courts below, the evidence shows that a sum of RM94,866.10 had been deducted when calculating the amount ultimately paid. The Court of Appeal did not address, vary or apportion those costs in the courts below as between the Defendants. In the absence of any evidential basis upon which this Court can reliably determine how that sum ought to be allocated following the appellate decision, this Court does not consider it appropriate to undertake such an apportionment for the purposes of the present exercise. [21] The position is different in respect of the sum of RM4,000.00. CAP's letter dated 3.3.2023 expressly recorded that this amount represented costs awarded to Lee Tiow Kee. That contemporaneous document provides a clear evidential basis for concluding that the RM4,000.00 was not a cost entitlement belonging to the Judgment Creditor. Consequently, the Judgment Creditor cannot properly claim repayment of that sum as part of the alleged overpayment. [22] Accordingly, whilst the Court accepts that the Judgment Creditor is entitled to seek restitution of monies paid in excess of the amount ultimately awarded by the Court of Appeal, such entitlement does not extend to the RM4,000.00 which the evidence shows was specifically awarded to Lee Tiow Kee. To that extent, the computation advanced by the Judgment Creditor must be adjusted to reflect the parties' actual entitlements as disclosed by the contemporaneous documentary evidence. [23] Hence, as per the Court of Appeal’s decision, the Judgment Debtor is entitled to retain RM250,000.00 from the Judgment Creditor while the sum of RM4,000.00 awarded specifically to Lee Tiow Kee must be excluded for the computation. The overpayment by the Judgment Creditor is therefore RM406,101.05. Actual amount paid pursuant to the High Court order RM660,101.05 Less amount ultimately payable pursuant to the Court of Appeal’s decision (RM250,000.00) Less costs specifically awarded to Lee Tiow Kee (RM4,000.00) Amount recoverable by Judgment Creditor RM406,101.05 [24] With regards to the issue of interest which the Judgment Creditor had imposed on the amount of excess, this Court is unable to agree with the Judgment Creditor's contention that the overpayment carries interest from the date asserted. The difficulty with the Judgment Creditor's position is that it finds no support in the order of the Court of Appeal. [25] The Court of Appeal's decision was confined to varying the quantum of damages payable to the Judgment Debtor. The appellate court did not order that any overpayment subsequently found to be refundable should itself attract interest, nor did it direct that interest should continue to run on sums which, by virtue of its judgment, were no longer payable to the Judgment Debtor. This Court is therefore not at liberty to supplement or enlarge the effect of the Court of Appeal's order by introducing an entitlement to interest which the appellate court itself did not confer. [26] The Judgment Creditor's entitlement to repayment arises only because the Court of Appeal subsequently reduced the damages award to RM250,000.00. The obligation to restore the overpayment is therefore restitutionary in nature and crystallised only upon the determination of the parties' rights following the appellate decision. It cannot be said that the Judgment Debtor was wrongfully withholding a sum which had already been adjudged to be refundable prior to that point. [27] In the circumstances, this Court finds that the Judgment Creditor is not entitled to interest on the overpayment for the period preceding the judgment in the present bankruptcy proceedings. If interest is to be recoverable on the overpayment, it would in any event run only from the date of the judgment, being the date on which the amount recoverable by the Judgment Creditor is judicially determined and becomes due and payable pursuant to the order of this Court. The Bankruptcy Notice [28] The Bankruptcy Notice states the amount due as RM561,777.98. For the reasons already explained, this Court finds that the amount properly recoverable by the Judgment Creditor is RM406,101.05; and not RM561,777.98 as stated in the Bankruptcy Notice. However, that conclusion does not automatically render the Bankruptcy Notice invalid. [29] Section 3(2)(ii) of the IA expressly provides that a bankruptcy notice "shall not be invalidated" merely because the sum specified therein exceeds the amount actually due. Parliament has therefore recognised that an overstatement of the debt, without more, is not sufficient to defeat bankruptcy proceedings. The statutory focus is not upon the existence of an error per se, but upon whether the circumstances justify the invalidation of the Bankruptcy Notice (see High Court’s decision in Chua Liang Hong v Kuala Excel Sdn Bhd [2020] MLJU 576). [30] That approach is reinforced by section 131 IA which provides that no proceeding in bankruptcy shall be invalidated by reason of any formal defect or irregularity unless substantial injustice has been caused and such injustice cannot be remedied by an order of the court. Likewise, section 93(3) IA empowers this Court at any time to amend any written process or proceeding upon such terms as it thinks fit. [31] There is a further consideration which weighs against the Judgment Debtor's contention that the Bankruptcy Notice ought to be set aside in its entirety. [32] Section 3(1)(i) IA provides a specific statutory mechanism by which a debtor may resist the consequences of a bankruptcy notice. Under that provision, a debtor may avoid the act of bankruptcy if he satisfies the court that he has a counterclaim, set-off or cross-demand which equals or exceeds the amount claimed and which he could not have set up in the action in which the judgment was obtained (see Federal Court’s decision in Development & Commercial Bank Sdn Bhd v Datuk Ong Kian Seng [1995] 2 MLJ 724; [1995] 3 CLJ 307 and Re Arunachalam, ex parte Indian Overseas Bank Ltd [1968] 1 MLJ 89; [1967] 1LNS 142 and Gerald Giam Seng Teck, ex parte Prime Credit Leasing Sdn Bhd [2000] 3 CLJ 460; [1999] MLJU 582). [33] The Court notes that the Judgment Debtor mounted a number of challenges to the Bankruptcy Notice. Amongst others, he contended that the underlying judgment was not final and conclusive, that the Bankruptcy Notice was invalid ab initio, that the Bankruptcy Notice was misleading, embarrassing and perplexing, and that no act of bankruptcy had been committed. Those objections were directed at the validity and enforceability of the bankruptcy process itself. [34] However, significantly, the Judgment Debtor did not invoke the statutory protection afforded under section 3(1)(i) IA. At no stage did he assert that he possessed a counterclaim, set-off or cross-demand against the Judgment Creditor which equalled or exceeded the debt claimed in the Bankruptcy Notice. Nor did he contend that there existed any independent monetary claim capable of reducing or extinguishing the indebtedness relied upon by the Judgment Creditor. [35] This distinction is material. The objections advanced by the Judgment Debtor concern the legal validity of the Bankruptcy Notice and the bankruptcy proceedings. They do not constitute a counterclaim, set-off or cross-demand within the meaning of section 3(1)(i) IA. Accordingly, this is not a case where the debtor sought to resist bankruptcy proceedings on the basis of a competing claim against the creditor. Rather, the Judgment Debtor elected to challenge the bankruptcy proceedings on other legal grounds while leaving the statutory mechanism under section 3(1)(i) IA uninvoked. [35] In those circumstances, the absence of any counterclaim, set-off or cross-demand is a relevant factor in considering whether the overstatement contained in the Bankruptcy Notice warrants the drastic consequence of invalidating the notice altogether. [36] Consequently, this is not a case where the debt was challenged on the basis of a competing monetary claim against the Judgment Creditor. Rather, the objections advanced by the Judgment Debtor were directed towards the validity of the Bankruptcy Notice and the bankruptcy proceedings themselves. That distinction is material. The absence of any asserted counterclaim, set-off or cross-demand reinforces this Court's conclusion that the overstatement identified is a curable irregularity which falls within the ambit of sections 3(2)(ii), 93(3) and 131 IA, and does not warrant the invalidation of the Bankruptcy Notice. This Court’s Orders [37] For the reasons set out above, Enclosure 16 is dismissed with costs of RM5,000.00 subject to allocatur. [38] Pursuant to sections 3(2)(ii), 93(3) and 131 IA, this Court further holds that the overstatement contained in the Bankruptcy Notice does not invalidate the Bankruptcy Notice. The error constitutes a curable irregularity which has occasioned no substantial injustice to the Judgment Debtor. [39] Whether it is the amount claimed in the Bankruptcy Notice or the amount that this Court finds, the debt remains well above the statutory minimum of RM100,000.00 prescribed by section 5(1)(a) IA. The difference between RM561,777.98 and RM406,101.05 does not affect the existence of the Judgment Creditor's right to invoke the insolvency process. This is therefore not a case where the correction of the amount claimed would bring the debt below the statutory threshold or otherwise affect the Court's bankruptcy jurisdiction. [40] Accordingly, the Bankruptcy Notice remains valid and efficacious for the purposes of the IA. The error relates only to the quantification of the debt and not to the Judgment Creditor's substantive entitlement to maintain the bankruptcy proceedings. DATED 4 JUNE 2026 ROZ MAWAR ROZAIN JUDGE HIGH COURT OF MALAYA SEREMBAN For the judgment creditor : Rishwant Singh with Chia Eng Yi Cecil Abraham & Partners For the judgment debtor :