Nor Azah Binti Awin v Taiping Recovery Sdn Bhd (W-03(IM)-63-11/2024)

KETUA PENGARAH INSOLVENSI ...RESPONDENT (Rayuan 63)

KETUA PENGARAH INSOLVENSI ...RESPONDENT CORAM AZIZUL AZMI BIN ADNAN, HMR AHMAD FAIRUZ BIN ZAINOL ABIDIN, HMR EVROL MARIETTE PETERS, HMR GROUNDS OF JUDGMENT A. Introduction [1] These are two appeals, Civil Appeal No. W-03(IM)-62-11/2024 ("Appeal 62") and Civil Appeal No. W-03(IM)-63-11/2024 ("Appeal 63"), brought by the same appellant, Nor Azah binti Awin ("the Appellant"), against separate but related decisions of the learned High Court Judge, made on 22 October 2024. The appeals were fixed to be heard together before this Court given the substantial overlap in facts, parties and the legal issues arising therefrom. [2] In Appeal 62, the Appellant challenges the decision of the learned High Court Judge allowing the creditor-respondent, Small Medium Enterprise Development Bank Malaysia Berhad ("SME Bank"), to successfully object to the certificate of discharge issued in the Appellant's favour by the Director General of Insolvency ("DGI") under section 33A of the Insolvency Act 1967 ("the Act"). The High Court not only upheld SME Bank's objection but went further and made an order prohibiting the DGI from issuing any certificate of discharge to the Appellant indefinitely - a prohibition without temporal limit. [3] In Appeal 63, the Appellant similarly challenges the High Court's affirmation of the Senior Assistant Registrar's ("SAR") order prohibiting the DGI from issuing a certificate of discharge to the Appellant for a period of two (2) years, on the application of the creditor-respondent, Taiping Recovery Sdn Bhd (In Liquidation) ("Taiping Recovery"), under section 33B(6) of the Act. [4] The second respondent in both appeals is the Ketua Pengarah Insolvensi ("DGI"), the officer who had issued the certificate of discharge in favour of the Appellant pursuant to section 33A of the Act. The DGI did not file any appeal against the High Court's decision. However, through its written submission in this Court, the DGI has supported the Appellant's position that the discharge was properly issued and that the High Court erred in law. [5] Having heard the submissions of learned counsel for all parties and having carefully considered the written submissions filed, we unanimously allow both appeals for the reasons set out hereunder. B. Background facts [6] The Appellant, Nor Azah binti Awin, is currently 72 years of age. She was adjudicated bankrupt on 12 June 2012 and has since been an undischarged bankrupt for a period exceeding 12 years. Her bankruptcy was placed under the administration of the DGI. The Court was informed that she is in poor health and has been receiving continuous medical treatment. The medical evidence before the Court establishes that she has been unable to work since the commencement of her bankruptcy and remains so. [7] The bankruptcy arose from debts owed to, among others, SME Bank (formerly known as Bank Perusahaan Kecil & Sederhana Malaysia Berhad, itself formerly Bank Industri & Teknologi Malaysia Berhad, which had, pursuant to a Court Order dated 27.9.2005, taken over certain assets previously owned by Bank Pembangunan dan Infrastruktur Malaysia Berhad) and Taiping Recovery Sdn Bhd (in liquidation). The Appellant's bankruptcy estate included parcels of Malay Reserved Land situated in the State of Terengganu, which, by reason of section 15 of the Malay Reservation Enactment No.17 of 1360 (Government of Terengganu), could not be vested in or disposed of by the DGI being a non-Malay. [8] On 16 November 2022, the DGI issued a Notice of Intention to Issue a Certificate of Discharge in favour of the Appellant pursuant to section 33A of the Act. In exercising its discretion to issue the certificate, the DGI took into account the relevant factors, namely the Appellant's age, her health condition and her inability to work, the duration of the bankruptcy administration, the Appellant's cooperation with the DGI throughout the administration period, and the fact that the Malay Reserved Land, which could not be realised by the DGI, did not preclude discharge. [9] SME Bank filed a summons in chambers before the High Court registry (Post-Bankruptcy No. WA-29PB-87-02/2023) objecting to the issuance of the certificate, pursuant to section 33B of the Act. Taiping Recovery filed a separate summons in chambers (Post-Bankruptcy No. WA-29PB-141-02/2023) similarly objecting to the discharge under section 33B of the Act. The Appellant was named as a respondent in both summonses. [10] The two summonses were heard before different Registrars. The learned Registrar hearing SME Bank's summons dismissed SME Bank's application. However, the learned SAR allowed Taiping Recovery's summons and made an order prohibiting the DGI from issuing a certificate of discharge to the Appellant for a period of two (2) years pursuant to section 33B(6) of the Act. [11] Both SME Bank and the Appellant filed appeals to the High Court Judge in Chambers. SME Bank appealed against the Registrar's dismissal of its summons. The Appellant appealed against the SAR's order in Taiping Recovery's matter. Both appeals were consolidated and heard before the learned High Court Judge. [12] On 22 October 2024, the learned High Court Judge allowed the creditors' respective summonses. Critically, in the matter concerning SME Bank (Appeal 62), the High Court went beyond the scope of section 33B(6) by making an order prohibiting the DGI from issuing any certificate of discharge without any temporal limit whatsoever. The High Court reasoned that the DGI's decision to discharge the Appellant was contrary to public policy and against the interests of the creditors, primarily on the basis that the Appellant remained the registered owner of Malay Reserved Land which had yet to be realised. [13] Aggrieved by the decisions of the High Court, the Appellant filed the present appeals. C. Preliminary points

The Appellant Has No Locus Standi to Bring These Appeals [14] Both SME Bank and Taiping Recovery raised a common preliminary objection challenging the locus standi of the Appellant to bring these appeals. It was submitted that the Appellant, as the judgment debtor and bankrupt, is not the proper party to challenge the creditors' successful applications under section 33B of the Act, and that the proper party to appeal, if at all, would be the DGI who issued the certificate of discharge. [15] We reject this objection with little hesitation. The proposition advanced by the creditors would, if accepted, produce an unjust and absurd result - the very person whose legal status and financial future is directly determined by these proceedings is denied the right to challenge the outcome. Such a construction is wholly inconsistent with the scheme and spirit of the Act. [16] The Appellant was at all material times a named party to the proceedings at every level. When SME Bank filed its summons in chambers under section 33B, the Appellant was named as a respondent. When SME Bank appealed to the High Court, the Appellant was similarly named. [17] Structurally, the provision of section 33B itself envisages the Appellant as party to the proceedings. The said provision reads as follows: Section 33B ...

A creditor who has furnished a notice of his objection and the grounds of his objection in accordance with subsection (2) may, within twenty-one days of being informed by the Director General of Insolvency that his objection has been rejected, make an application to the court for an order prohibiting the Director General of Insolvency from issuing a certificate of discharge.

Every application under subsection (4) shall be served on the Director General of Insolvency and on the bankrupt and the court shall hear the Director General of Insolvency and the bankrupt before making an order on the application. (emphasis added) Thus, service on the bankrupt is mandatory. This is evident form the words used in section 33B(5) itself. The bankrupt apart from the DGI must be made a party to the proceedings. A fortiori both parties must be given the right to be heard. [18] There was no dispute that the Appellant actively participated in the proceedings before both the Registrar and the High Court. It would be extraordinary to now hold that she is a stranger to proceedings to which she was explicitly made a party. Her locus standi before us is not determinant on whether the DGI appeals or otherwise against the High Court decision. The Appellant on her own has the right to appeal. [19] This view is not inconsistent with the trend of decisions by the courts. In Dalam Perkara Lim Chai Oi; Ex P Affin Bank Bhd [2020] 1 CLJ 518, the court held unequivocally that a judgment debtor is not a 'stranger' to proceedings involving his own bankruptcy. Sections 33B(4) and (5) of the Act themselves contemplate that the bankrupt shall be notified of the creditor's objection and given the opportunity to be heard. The bankrupt is therefore an integral participant in the proceedings, not an outsider. [20] Recently, in upholding the rights of a Judgement Debtor to appeal and is not a stranger, the High Court in Chan Chee Chiu & Anor v Director General of Insolvency & Anor [2025] 9 MLJ 886, in interpreting section 33b(4) and (5) held: "[16] I agree that the JD has the locus to bring this appeal. In Ber: Lim Chai Oi v Ex-Parte: Affin Bank Berhad [2019] MLJU 1639; [2020] 1 CLJ 518, it was made clear that a judgment debtor is not a 'stranger' to proceedings involving his own bankruptcy, particularly where the judgment creditor seeks to challenge a discharge under s 33A. [17] I also agree that ss 33B(4) and (5) confirm the JD's right to be notified and to participate in his discharge proceedings. Furthermore, s 38(1)(a) confirms that no sanction of the DGI is required for the JD to take action related to his own bankruptcy proceedings. [18] These proceedings directly affect the JD's legal and financial interests. I do not believe that the JC can seriously dispute the locus of the JD." (emphasis added) We fully agree with the approach taken by the court on the interpretation of section 33B(4) and (5). [21] Additionally, in the matter involving Taiping Recovery, no objection as to locus standi was raised before the SAR when the Appellant lodged her appeal to the Judge in Chambers. Taiping Recovery raised this objection for the first time before this Court. In these circumstances, Taiping Recovery is estopped from raising the point at this late stage: Cosway (M) Sdn Bhd v Gan Poh Im [2006] 1 MLJ 568. [22] We accordingly hold that the Appellant has full locus standi to bring both these appeals. The preliminary objection on locus standi is dismissed.

(ii) Taiping Recovery's Objection on Failure to Include Registrar's Order and Notice of Appeal [23] Taiping Recovery raised a further preliminary objection in Appeal 63, namely that the Appellant had failed to include in the appeal records the sealed order of the Senior Assistant Registrar dated 6 October 2023 and the Notice of Appeal to the Judge in Chambers. Taiping Recovery submitted that these omissions rendered the appeal defective and ought to be struck out. [24] The Appellant acknowledged the omissions and tendered an apology to the Court, attributing them to inadvertent error. The Appellant filed a motion on 2 January 2026 seeking leave of Court to file supplementary appeal records to regularise the position. [25] We are satisfied that the omissions were inadvertent and procedural in nature, and that no prejudice accrues to Taiping Recovery that cannot be adequately compensated in costs. The documents in question were cause papers generated during the registrar proceedings and are fully known to all parties. We therefore grant leave to file the supplementary appeal records and dismiss this preliminary objection. It is trite that any prejudice suffered by Taiping Recovery by reason of the irregularity is compensable by costs.

(iii) The Constitutional Argument [26] SME Bank raised a constitutional argument in Appeal 62, contending that section 15 of the Malay Reservation Enactment No. 17 of 1360 (Government of Terengganu) is ultra vires Article 75 of the Federal Constitution as it is allegedly inconsistent with section 8(1)(b) of the Act. Taiping Recovery, for its part, took the position that this constitutional issue is irrelevant to Appeal 63. [27] We are of the view that this constitutional argument does not arise for determination in these appeals. The learned High Court Judge expressly declined to rule on the constitutionality of the said Enactment, and it was not taken as a ground to allow the creditors' respective applications. The constitutional point was therefore not a basis for the impugned decision of the High Court and does not form any live issue before this Court. It is accordingly a non-starter. [28] In truth, the pivotal and determinative issue before this Court is whether the High Court made a fundamental error of law in applying the wrong legal test when exercising its jurisdiction under section 33B of the Act. We now turn to address this central issue. D. The Appellant's Arguments

The Three Key Grounds [29] The Appellant advanced three principal grounds of appeal, which are common to both Appeal 62 and Appeal 63, and which we shall address together:

The High Court exceeded its jurisdiction under section 33B(6) of the Act by making an order in Appeal 62 that prohibits the DGI from issuing a certificate of discharge indefinitely, without any temporal limitation;

(ii) The High Court misconstrued sections 33A and 33B of the Act by applying the wrong legal test, that is, the test applicable to a court-ordered discharge under section 33, which is fundamentally distinct from the DGl-administered discharge mechanism under sections 33A and 33B; and

(iii) The High Court misdirected itself in law and in fact by taking into account irrelevant considerations - namely the existence of unrealised Malay Reserved Land - when deciding to suspend the certificate of discharge. [30] We agree with all three contentions of the Appellant. We will explain our reasons, commencing with the proper legislative context and intent behind sections 33A and 33B of the Act. E. The legislative intent behind sections 33A, 33B and 33C of the act

The Historical Background [31] The Bankruptcy Act 1967 (now re-titled the Insolvency Act 1967) was originally enacted to govern the administration of bankruptcies in Malaysia. In its original form, the Act centred discharge of a bankrupt exclusively upon an application to the High Court under what is now section 33. Under that provision, the court holds a plenary discretion to grant or refuse discharge, having regard to a wide range of matters including the conduct of the bankrupt, the interests of creditors, and other factors enumerated in the statute. [32] With the passage of time, a practical problem emerged. A significant number of bankruptcy cases in Malaysia became inactive cases where the bankrupt was elderly, infirm, or whose bankruptcy estate contained no realisable assets and for whom continued administration served little practical purpose. The bankruptcy mechanism was consuming administrative resources without yielding meaningful benefit to creditors. The legislature recognised the need to provide an alternative route to discharge for such cases, whilst at the same time preserving adequate safeguards for creditors. [33] Parliament accordingly introduced among others, sections 33A, 33B and 33C into the Bankruptcy Act 1967 by way of the Bankruptcy (Amendment) Act 1998, which came into force on 1 October 1998. These provisions were part of a broader package of amendments aimed at modernising the administration of insolvency in Malaysia and striking a more equitable balance between the competing interests of debtors and creditors.

(ii) The Hansard - Parliament's Declared Intention [34] The parliamentary debates (Hansard) of 29 July 1998 shed critical light on the purpose behind sections 33A, 33B and 33C and provide authoritative guidance on their proper interpretation. When tabling the Bankruptcy (Amendment) Bill 1998, the Government declared its intention in the following terms (translated from Bahasa Malaysia): "Tuan Yang di-Pertua, kerajaan berpendapat bahawa telah tiba masanya beberapa peruntukan di bawah Akta Kebankrapan 1967 dipinda bagi menyesuaikan dengan perubahan semasa dan bagi mengatasi beberapa masalah yang dihadapi oleh Kerajaan dalam mentadbirkan kes-kes kebankrapan lama yang tidak lagi aktif... Kes-kes yang tidak aktif ini sepatutnya telah pun dilepaskan tetapi Akta Kebankrapan 1967 tiada mengandungi peruntukan untuk membolehkan pelepasan bagi kes-kes seumpama ini terutamanya di mana si bankrap telah tua dan lain-lain lagi." [35] This is the clearest possible expression of parliamentary intent. Section 33A and 33C was designed to be a rehabilitative provision - a mechanism to extend relief to deserving bankrupts who have co operated with the DGI and served a sufficient period of administration, so that they may be reintegrated into society and the economy. [36] Section 33B was simultaneously introduced as a safeguard - a controlled avenue for creditors to object to the DGI's intended discharge, subject to a strictly circumscribed role for the court. The court's supervisory power under section 33B is not a general discretion to substitute its own views for those of the DGI. It is a limited jurisdiction to review the propriety of the DGI's decision, and, where it finds cause to intervene, it may only do so within the narrow confines of section 33B(6). [37] Concurrently introduced, section 35A reinforces this rehabilitative intent by imposing a continuing obligation on the discharged bankrupt to cooperate in the realisation of assets even after discharge. Section 35A reads: 35A Discharged bankrupt to give assistance A discharged bankrupt shall, notwithstanding his discharge, give such assistance as the Director General of Insolvency requires in the realization and distribution of such of his property as is vested in the Director General of Insolvency, and if the discharged bankrupt fails to do so-

(a)he shall be guilty of an offence and shall be liable on conviction to a fine not exceeding five thousand ringgit or to imprisonment for a term not exceeding six months or to both; and

(b)the court may, if it thinks fit, revoke his discharge, but without prejudice to the validity of any sale, disposition or payment duly made, or thing duly done subsequent to the discharge, but before its revocation. [38] This is a critical provision that directly addresses the concern that a bankrupt with unrealised assets should not be permitted to enjoy the benefits of discharge whilst shielding those assets from creditors. Section 35A ensures that discharge under section 33A does not bring the bankrupt's obligations to an end but merely transforms the nature of those obligations. A bankrupt who holds unrealised assets, including Malay Reserved Land, remains duty-bound under section 35A to assist the DGI in their realisation. [39] The cumulative picture that emerges from the Hansard and the statutory scheme introduced in 1998 is one of a carefully considered legislative compromise. Parliament sought to balance three sets of interests: (a) the interests of the bankrupt in rehabilitation and a fresh start; (b) the interests of creditors in the proper administration and realisation of the bankrupt's estate; and (c) the interests of the Government in reducing the administrative burden of managing longdormant bankruptcy estates. Sections 33A, 33B and 35A, read together, represent Parliament's considered response to this tripartite balance. F. The fundamental distinction between a proceeding under section 33 and a proceeding under sections 33A and 33B

The Nature of the Proceedings: Two Distinct Regimes [40] One of the most important aspects of this case and one which, with respect, the learned High Court Judge failed adequately to appreciate is that a proceeding under section 33 of the Act and a proceeding under sections 33A and 33B of the Act are not merely procedurally different. They are fundamentally different proceedings activated by different mechanisms, governed by different legal tests, and reflecting entirely different policy considerations. To conflate them is to commit a basic error of statutory interpretation. [41] Under section 33 of the Act, it is the bankrupt himself who takes the initiative by applying to the High Court for a discharge. The decision-maker is the Court, which exercises a wide and largely unfettered discretion. The court may have regard to the bankrupt's conduct, his assets, the interests of creditors and a broad range of other considerations set out in section 33(6). It may grant an absolute discharge, a conditional discharge, or refuse the application entirely. The process is adversarial, court-centred and flexible. [42] Under section 33A, the process is entirely different. Here, it is the person named under the Act who performs the statutory duties either by himself or by delegation through his officers, is deemed to be a person with full knowledge of the bankrupt's estate who takes the initiative. The DGI does not require an application from the bankrupt. Pursuant to section 33A(2), after the expiry of five years from the commencement of the bankruptcy, the DGI may, in the exercise of its administrative discretion, issue a certificate of discharge. The DGI is the primary decision-maker. Unlike the court under section 33, the DGI is not required to follow the detailed checklist of matters set out in section 33(6). Instead, it exercises an administrative discretion guided by the rehabilitative purpose of the provision and the relevant circumstances, including the bankrupt's age, health, earning capacity and level of cooperation. [43] This distinction was clearly articulated in Asia Commercial Finance (M) Bhd v Bassanio Teo Yang [2009] 9 CLJ 421. The court was considering a challenge by a Plaintiff creditor to challenge the issuance of a section 33A certificate issued by the DGI. Ravinthran J (now JCA) observed: [11] Very interestingly, unlike s. 33 under which a bankrupt seeks reprieve from the bankruptcy, s. 33A does not provide any guideline for the DGI to consider in granting a discharge. The only precondition is that five years must have elapsed since the commencement of the bankruptcy. Learned counsel for the creditor in this case has urged the court to prohibit the DGI from granting a discharge on the grounds that I enumerated earlier. The complaint of counsel is that the DGI had not updated his report on the respondent and had not considered his present financial circumstances, especially whether he could pay more to settle his debt in view of the fact that he is already eight years into his bankruptcy. In not so many words, counsel suggested that he could be probably be earning more than the RM1,200 per month which he earned in 2000. She did not cite any case that considered the application of s. 33A. I am not surprised that she failed to find any authority as the exercise of the discretion of the DGI is rarely objected to by the creditor. However, the court should not be strictly guided by s. 33 because that is a provision where the court is vested with the power to discharge a bankrupt. Counsel for creditor's main complaint is that the DGI did not prepare an updated report on the respondent. In my opinion the DGI cannot be faulted for not preparing a report that is required under s. 33. This is because the "report" in s. 33 is prepared by the DGI for the attention of the court for the purpose of providing sufficient information to assist the decision making process. That is the reason why the report is deemed to be prima facie evidence under s. 33(8). It goes without saying that if the report contains any adverse information that is within the contemplation of s. 33(6), the court is empowered to refuse a discharge. However, under s. 33A, the decision maker is the DGI himself and therefore it is common sense that he need not "report" to himself about the status of the bankrupt. It must be assumed all the relevant information that is in the file of the bankrupt has been considered by the proper officer of the DGI before the Notice of Intention to discharge is issued. Therefore, I cannot agree with counsel for the creditor that it is fatal for the DGI not to have prepared an updated report. However, I note that for the purpose of the objection, the representative of the DGI has responded by way of affidavit giving grounds why he intends to discharge the respondent. In my opinion, in reviewing the reasons for discharge under s.33A, the court should, save for exceptional reasons, be slow to substitute its own views as to how that discretion should be exercised as that duty has been entrusted to the DGI by Parliament. The court should be mindful that this is not an application under s.33 where the court has the sole power to determine whether a bankrupt should be discharged. The power granted under s.33B is only the power to delay the discharge of a bankrupt...” (emphasis added) [44] The court clearly noted that unlike section 33, section 33A contains no express guidelines for the DGI to consider in granting discharge. The only precondition is that the prescribed period must have elapsed since the commencement of the bankruptcy. The absence of a detailed list of criteria is itself a deliberate legislative choice it reflects Parliament's intention to vest the DGI with a broad and flexible administrative discretion to identify cases that merit discharge, rather than requiring compliance with the more onerous requirements applicable to court-ordered discharges under section 33.

(ii) The Confined Role of the Court under Section 33B [45] Section 33B is the creditor's avenue for challenging the DGI's intended discharge. Upon receipt of the DGI's notice of intention to issue a certificate of discharge, a creditor may file an objection with the court. The court's role in section 33B proceedings is supervisory in nature. It is not invited to substitute its own discretion for that of the DGI or to conduct a de novo assessment of whether the bankrupt deserves to be discharged by applying the section 33 framework. [46] Critically, the court's power to intervene under section 33B is circumscribed by subsection (6), which provides that where the court upholds a creditor's objection, it may only make one of two orders: (a) dismiss the objection; or (b) order that, for a period not exceeding two years, a certificate of discharge shall not be issued. The statutory cap of two years is not discretionary. It is a hard limit imposed by Parliament. There is no residual jurisdiction in the court to extend this prohibition beyond two years or to make a perpetual prohibition. [47] This was the view taken in Re: Endon Tamseran; Ex P Parkash Singh Wasawa Singh [2009] 8 CLJ 379, where the court held that the clear wording of section 33B(6) empowers the court to only delay the issuance of the certificate by two years, and does not clothe the court with any discretion to extend the prohibition beyond that period. This reading was endorsed in Asia Commercial Finance (M) Bhd v Bassanio Teo Yang (supra). G. The Threshold Test: The Parameters for Curial Intervention In a Section 33B Proceeding The Question Posed by the Court [48] During the course of the hearing of these appeals, this Court posed a question to learned counsel for the Appellant as to what were the proper parameters that would entitle a court to allow a creditor's application under section 33B to challenge the DGI's certificate of discharge. This question goes to the heart of the appeals and touches upon a matter of some practical importance, as there appears to be a want of clear appellate guidance on the standard of review applicable to the DGI's exercise of discretion under section 33A. [49] Learned counsel for the Appellant responded that, in his submission, the proper parameters for curial intervention in a section 33B proceeding are those that are customarily associated with an application for judicial review. By his submission, we take it that if a creditor who seeks to challenge the DGl's certificate of discharge must demonstrate, as a threshold matter, that the DGl's exercise of discretion was tainted by one or more of the following grounds, namely:

illegality - that the DGI exceeded or abused the powers conferred upon him by statute;

irrationality or Wednesbury unreasonableness - that the DGI reached a decision that no reasonable decision maker, properly directing himself, could have reached; or

procedural impropriety - that the DGI acted in breach of the rules of natural justice or failed to observe some procedural requirement that is mandatory in character. [50] This Court found that submission to be persuasive and we accept it as an applicable standard. We elaborate upon our reasons below.

The DGI as a Statutory Decision-Maker: The Administrative Law Dimension [51] The DGI, when exercising the such, the general principles of administrative law that govern the exercise of statutory discretion are directly engaged. [52] It is a well-settled principle of Malaysian administrative law that every statutory discretion, however widely worded, must be exercised within legal limits. As the Federal Court observed in Pengarah Tanah dan Galian, Wilayah Persekutuan v Sri Lembah Enterprise Sdn Bhd [1979] 1 MLJ 135, unfettered discretion is a contradiction in terms. Every legal power must have legal limits, otherwise there is dictatorship. In particular, it is a stringent requirement that discretion should be exercised for a proper purpose, and that it should not be exercised unreasonably. The DGI's discretion under section 33A is not immune from this foundational principle. [53] The DGI's decision under section 33A, though administrative in character and clothed with a degree of finality, is not beyond judicial scrutiny. It is, however, a scrutiny that must be exercised within proper boundaries.

(ii) The Application of the Judicial Review Principles [54] We accept the proposition advanced by learned counsel for the Appellant, though we would frame it with some degree of nuance. We do not hold that a creditor who seeks to challenge the DGI's certificate under section 33B must satisfy every formal procedural requirement associated with a judicial review application. Section 33B provides its own self-contained mechanism for challenge. The creditor does not need to obtain leave, file an originating motion, or comply with the Order 53 Rules of Court 2012 procedure. The legislature has created an avenue for objection, which the creditor may invoke as of right upon receiving the DGI's notice of intention. [55] What we do hold, however, is that the substantive grounds upon which the court may intervene in the DGI's decision under section 33B must be broadly similar to those that ground judicial review. The judicial review framework - illegality, irrationality, and procedural impropriety provides a useful and principled parameter by which to assess whether the DGI has acted within the bounds of lawful and reasonable administrative discretion. It serves as a useful analytical guide aimed at achieving consistency of approach. [56] Although the development of the grounds for judicial review have expanded to also include proportionality, we do not think it is necessary to add it as a fourth limb. The judicial review grounds merely serve as a general guide for the applicable test in determining the exercise of the DGI's discretion. [57] Put simply, before a court may intervene in a section 33B proceeding and make an order under section 33B(6), there must be a threshold that is crossed. That threshold is reached only where the creditor can demonstrate that the DGI, in exercising his discretion to issue the certificate of discharge, acted outside the bounds of lawful and reasonable administrative discretion. Short of that threshold, the court has no proper basis to second guess or override the DGI's judgment, however strongly the creditor may disagree with the outcome. The Three Limbs Applied [58] To provide context, it is perhaps useful for this court to provide illustrations on how each limb of the test to challenge the DGl's decision is to be founded. [59] The first limb is illegality. The DGI acts illegally where he misunderstands or misconstrues the legal parameters of the power he is exercising, acts in excess of that power, acts for an improper purpose, or considers matters which are legally irrelevant or fails to take into account matters which are legally required to be considered. In the context of section 33A, the DGI would cross the threshold of illegality if he were, for example, to issue a certificate of discharge in favour of a bankrupt who has not served the prescribed minimum period, or where he acts on the direction of a third party rather than in the independent exercise of his own statutory discretion, or where he takes into account factors wholly unrelated to the bankruptcy administration. [60] The second limb is irrationality, or Wednesbury unreasonableness, derived from the celebrated English authority of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. A decision is Wednesbury unreasonable where it is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it. In the context of section 33A, this limb would be engaged where, for instance, the DGI issued a certificate of discharge in circumstances that were manifestly and obviously wrong for example, in favour of a bankrupt who has been consistently uncooperative, who has deliberately concealed assets, or whose estate contains substantial realisable assets that have been wilfully neglected. The irrationality threshold is a high one, and rightly so. It is not mere disagreement with the DGI's weighing of the relevant factors. [61] The third limb is procedural impropriety. The DGI would fall foul of this limb where he has breached a mandatory procedural requirement prescribed by the Act or the rules made thereunder, or where he has acted in breach of natural justice. The rules of natural justice in this context require, at a minimum, that the creditor who objects be given proper notice and a fair opportunity to be heard, and that the DGI bring an open and unprejudiced mind to the exercise of the discretion. The Act itself gives expression to this requirement through sections 33B(4) and (5), which mandate that notice of the DGI's intention be served on known creditors and that they be afforded an opportunity to object. [62] The caveat to the above illustrations is that they are always subject to the facts of each case. Base case, the decision of the DGI must be carefully examined to see if the decision was tainted by any wrongful exercise of his powers. [63] We are of the firm view that anchoring the court's supervisory jurisdiction under section 33B to these three well-established limbs serves several important purposes. First, it provides a principled and coherent standard that is consistent with the broader body of Malaysian administrative law, thereby ensuring that the section 33B jurisdiction does not develop in an arbitrary or unpredictable manner. Second, it gives appropriate respect to Parliament's deliberate choice to vest the primary discharge decision in the DGI an expert administrative officer rather than in the court. The framework prevents courts from substituting their own assessment of the merits for that of the DGI simply because they would have reached a different conclusion. Third, it adequately protects the legitimate interests of creditors by ensuring that a genuinely improper exercise of the DGI's discretion one tainted by illegality, irrationality, or procedural unfairness remains susceptible to curial correction. [64] It must be emphasised equally that this framework does not render the court's supervisory role toothless. Where the DGI's decision is genuinely tainted for instance, where it is shown that the DGI acted under a mistake of law, or was improperly influenced, or reached a conclusion so unreasonable as to defy rational justification the court not only may but should intervene under section 33B. The rehabilitative purpose of section 33A must not be allowed to become a shield for improper or capricious administrative conduct. [65] For completeness, we wish to emphasise that the above considerations would also be applicable to challenges that emanate as a result of the DGI's exercise of discretion under section 33C of the Act. H. The High Court decisions

The Indefinite Prohibition Exceeded the Court's Jurisdiction [66] In Appeal 62, the learned High Court Judge made an order prohibiting the DGI from issuing a certificate of discharge to the Appellant without any temporal limitation. This order was made purportedly under section 33B(6) of the Act. It is clear, however, that section 33B(6) does not confer upon the court any power to make an indefinite prohibition. The provision is explicit the maximum prohibition permissible is two years. An order that goes beyond this limit is one made without jurisdiction, and must be set aside. [67] The Federal Court's guidance in Tebin bin Mostapa v Hulba-Danyal bin Balia & Anor [2020] 4 MLJ 721 is instructive. The court there reiterated that in construing a statute, effect must be given to the object and intent of the Legislature, and the court is not entitled to read additional words into a statutory provision unless clear reason is to be found within the statute itself. There is no basis whatsoever in the Act for reading a power to make a perpetual prohibition into section 33B(6). Such a reading would not merely strain the language of the statute it would nullify the carefully calibrated time-limit that Parliament deliberately imposed. [68] In both Appeal 62 and Appeal 63, the learned High Court Judge committed an error of law by approaching the section 33B application as though it were an application for a court-ordered discharge under section 33. This is apparent from the reasoning in the High Court's grounds of judgment, where His Lordship placed determinative weight on the fact that there were assets namely the Malay Reserved Land that had not yet been realised, and held that it would be 'commercially immoral' to sustain the DGI's discharge in those circumstances. [69] More fundamentally, the High Court conducted what amounted to a fresh merits review, substituting his own assessment of the propriety of the discharge for that of the DGI. That is not the function of the court in section 33B proceedings. The court is not a court of appeal from the DGI's administrative judgment it is a supervisory court tasked with ensuring that the DGI remained within the bounds of lawful and reasonable administrative discretion. [70] The reasoning of the High Court is, with respect, wholly misconceived. The continued existence of unrealised assets in a bankruptcy estate does not, by itself, preclude or invalidate a discharge under section 33A. As we have explained, section 35A of the Act introduced concurrently with sections 33A,33B and 33C imposes a continuing obligation on a discharged bankrupt to cooperate in and assist the realisation of assets even after discharge. The legislative scheme therefore expressly contemplates that discharge under section 33A may and does occur before all assets are fully realised. The two are not mutually exclusive. [71] It follows that the mere fact that the Appellant's estate includes parcels of Malay Reserved Land that have not been realised cannot, of itself, constitute a basis to find that the DGI acted illegally, irrationally or in breach of procedure. [72] The DGI in his submissions explained that the reason for the discharge was primarily because the Appellant is a single mother and relies on pension money, does not own any assets for the benefit of the creditors and further administration of the case will not benefit the bankrupt's estate which will result in the wastage of public funds. [73] The DGI had taken into account the relevant considerations when determining the best way moving forward. The intent is rehabilitation. After 12 years of managing the estate of the Appellant and the prevailing conditions of the Appellant, the DGI saw it fit to issue the certificate. We see this as an exercise of discretion and do not wish to substitute with another view. Furthermore, none of the three limbs of the threshold test was met.

(ii) The Malay Reserved Land [74] The High Court's reliance on the Malay Reserved Land as the dominant and sole basis for refusing to sustain the DGI's discharge was not only legally misconceived but also factually incongruous. The Malay Reservation Enactment No. 17 of 1360 (Government of Terengganu) does not permit the alienation of Malay Reserved Land to a non-Malay. The specific prohibition is reproduced as follows: "12. No Malay holding shall vest in the Official Assignee on the bankruptcy of the proprietor thereof. Nothing in this section shall be deemed to affect the vesting of any Malay holding in the Official Assignee where the bankruptcy petition upon which the proprietor is adjudicated bankrupt was filed before the commencement of this Enactment.' [75] The Court of Appeal in the case of Bank Pembangunan & Infrastruktur Malaysia Berhad v Omar Bin Haji Ahmad T20101 MLJU 387 unequivocally recognised the prohibition of vesting any right on the Official Assignee (the term then used under the law) where Malay Reserved lands are concerned. The Court held: "IV. BANKRUPT CHARGOR Although the chargor was already a bankrupt even before he executed the chargor, that does not ipso facto affect his capacity to execute the third party charge, as he was at the material time still the registered proprietor of the land which had not become registered in the name of the Official Assignee. S.349(3) of the National Land Code 1965 provides that no land shall vest in the Official Assignee under any adjudication of bankruptcy, or order for administration in bankruptcy, until it has become registered in the name of the Official Assignee pursuant to this section. See e.g Chua Tin Hong, Re: Ex Parte Castrol (M) Sdn Bhd (1997) 2 AMR 1253 HC; and Re: Kwan Chew Shen T/A Syarikat Kaaf (Official Assignee of The Property of Kwan Chew Shen, a Bankrupt [1987] 1 CLJ 314; 319 para 20 HC. In addition, by virtue of the status of the land as Malay Reserve land, no such holding shall vest in the Official Assignee on the bankruptcy of the proprietor thereof: s.12 of the Malay Reservations Enactment (F.M.S Cap 142), as further illustrated in Kapoor Singh v Haji Ibrahim bin Haji Mohamed Noor [1948] 14 MLJ 29 HC, per Murray-Aynsley J." (emphasis added) [76] The DGI, not being a Malay, was therefore legally incapable of taking possession of, vesting, or disposing of these lands. The lands were, from the outset, effectively inalienable by the DGI as part of the bankruptcy administration. [77] To hold that the DGI's inability to realise Malay Reserved Land constitutes a reason to deny discharge would produce a result that is both arbitrary and discriminatory in effect. A Malay bankrupt who happens to own Malay Reserved Land would be indefinitely denied the right to discharge under section 33A by reason of a statutory restriction that operates completely outside his or her control. This cannot be the intention of Parliament. Such a construction of section 33B would be repugnant to the rehabilitative purpose which the legislature expressly declared when enacting sections 33A and 33B. [78] The learned High Court Judge's characterisation of the discharge as 'commercially immoral' and his concern that allowing such a discharge would 'open the floodgates' and enable bankrupt individuals to 'enjoy a luxurious life on a piece of land acquired for free at the expense of legitimate creditors are, with respect, not grounded in the facts of this case nor the proper legal framework. There is no suggestion of fraud, dishonesty or improper conduct on her part. The DGI's action certainly does not amount to a demonstration that the DGI acted outside the bounds of lawful and reasonable administrative discretion. [79] We are satisfied, having applied the threshold discussed above that the DGI's exercise of discretion under section 33A in this case was entirely within the bounds of lawful and reasonable administrative discretion. The DGI's decision was not tainted by illegality. The DGI acted squarely within the scope of the power conferred by section 33A, considered the relevant factors, and reached a conclusion that was available to him in law. There was no irrationality the decision to discharge an elderly, chronically ill, cooperative bankrupt whose estate contains assets that the DGI is legally unable to realise is, on any reasonable view, a justifiable exercise of the rehabilitative discretion Parliament conferred. There was no procedural impropriety as proper notice was given to the creditors pursuant to section 33B(4) and both creditors duly exercised their right of objection under section 33B. [80] The creditors were unable to demonstrate, and the High Court did not find, any dishonesty, fraud or misconduct on the Appellant's part which would warrant withholding the discharge. The mere fact that the DGI had, at an earlier stage, communicated to SME Bank that it would continue the administration of the bankrupt's assets does not estop the DGI from subsequently, upon further consideration, issuing a certificate of discharge. The exercise of an ongoing statutory discretion cannot be permanently fettered by communications of administrative intent, particularly where the circumstances of the bankrupt such as her age and health, have continued to evolve. [81] On a related point, the Court was informed that there are sums that will be returned to the estate of the Appellant. It was highlighted that at the time of processing the discharge, the Appellant's estate balance amounted RM 1,578,106.10. The DGI was in the midst of processing the payment of dividend in the sum of RM1,525,713.13 to creditors. The distribution would include payments made to SME Bank (RM44,622.95) and Taiping Recovery (RM1,125,304.43). This is further proof that the DGI was discharging his duties in the manner that suits the best interest of all parties. The age of the Appellant [82] The Act was amended vide Insolvency Amendment Act A1695 which introduced age as a factor to deny any challenge against the DGI issuing a certificate under section 33B. The said amendment came into force on 11.8.2023. Section 33B as amended incorporating the amendment reads as follows:

Notwithstanding subsection (2), no objection shall be made against-

a bankrupt aged seventy years and above and in the opinion of the Director General of Insolvency, is incapable of contributing to the administration of his estate. [83] The Federal Counsel representing the DGI contended that the Appellant was 72 at the time the appeal and therefore entitles her to be protected under section 33B(2A)(f). We note however, at the time of the issuance of the certificate, the law had yet to come into force. We do not think the amendment would aid the Appellant despite her being 72 years old at the time this appeal was heard. The law had yet to be introduced when the certificate was issued. Our review of this matter is only confined to what the law was when the DGI issued the certificate. We therefore cannot consider Act A1695. [84] Be that as it may, we find ample reasons to allow this appeal. The High Court Judge erred in law when he ruled that the unrealised assets namely the Malay Reservation land in the bankruptcy estate precluded the DGI from issuing a certificate of discharge under section 33A. [85] This led to the High Court Judge making an error of law when applying the legal test akin for an application to discharge with leave of Court under section 33 of the Act to an application to challenge the certificate of discharge under section 33A and 33B of the Act. Conclusion [86] In construing sections 33A, 33B and 33C of the Act, courts must give full effect to the rehabilitative and humanitarian purpose that Parliament expressly declared when enacting those provisions. Bankruptcy law is not solely punitive. The law must balance the legitimate interests of creditors with the no less legitimate interest of a deserving bankrupt in securing a second chance at life beyond the shadow of insolvency. [87] For the reasons stated above, we allow both Appeal 62 and Appeal 63. [88] In Appeal 62, the impugned order of the High Court dated 22 October 2024 is set aside in its entirety. The order of the learned SAR dismissing SME Bank's summons in chambers is restored. [89] In Appeal 63, the impugned order of the High Court dated 22 October 2024 is set aside. The two-year prohibition made by the learned SAR pursuant to section 33B(6) was made within jurisdiction. However, given that the two-year period has by now expired, the SAR's order having been made on 6 October 2023 the Appellant is no longer subject to any prohibition and the DGI is at liberty to issue the certificate of discharge in her favour forthwith. [90] We order costs of RM30,000 to be paid each by SME Bank and Taiping Recovery subject to allocator. Ahmad Fairuz bin Zainol Abidin Judge Court of Appeal of Malaysia Dated: 18 Mac 2026 For Appeal W-03(IM)-62-11/2024For the Appellant: Messrs. Wan Nurliyana & Farhanna1. Dato’ Lim Choon Khim2. Damien Chan Kay Ding3. Ian Hannibal Liang bin Danial Liang4. Carey Lee Cheah LeeFor the 1st Respondent (Small Medium Enterprise): Messrs. Adam Abdullah & Mani (Kuala Lumpur)1. Adlina Atikah binti Zainal2. Nur Syadinar Qhaleda binti Zainal AbidinFor the 2nd Respondent (DGI): Ketua Pengarah Insolvensi1. Mohd Raimi bin Mohd Ramli2. Mohamed Shah Reza bin Noor AzmanFor Appeal W-03(IM)-63-11/2024For the Appellant: Messrs. Wan Nurliyana & Farhanna1. Dato’ Lim Choon Khim2. Damien Chan Kay Ding3. Ian Hannibal Liang bin Danial Liang4. Carey Lee Cheah LeeFor the 1st Respondent (Taiping Recovery): Messrs. BELDEN (Kuala Lumpur)1. See Jooi Hong2. Lim Qing YingFor the 2nd Respondent (DGI): Ketua Pengarah Insolvensi1. Mohd Raimi bin Mohd Ramli2. Mohamed Shah Reza bin Noor Azman