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1 DALAM MAHKAMAH TINGGI MALAYA DI JOHOR BAHRU DALAM NEGERI JOHOR DARUL TAKZIM BAHAGIAN DAGANG DALAM PERKARA KEBANKRAPAN: JA-29NCC-562-09/2022 ANTARA Berkenaan: S MURUGAN A/L SUPPURAYAN ...Penghutang Penghakiman Ex-Parte: Pyramid Media International Sdn Bhd ... Pemiutang Penghakiman GROUNDS OF JUDGMENT (Enclosure 32) Introduction [1] This is an appeal filed by the Judgment Debtor (“JD”) (in Enclosure 32) against the decision of the Senior Assistant Registrar (“SAR”) on 29.5.2023 dismissing the JD’s application (in Enclosure 9) for the extension of time in filing the application and for the setting aside the bankruptcy petition dated 16.11.2022. [2] As a brief background, in Mac 2016, vide a series of agreements entered into between the Judgment Creditor (“JC”) and a company S/N uti0wrDYiEODoN3Dcqa7w known as KPI Cinemas Sdn Bhd. (“KPI Cinemas”), the JC granted friendly loans (“Friendly Loans”) which the accumulative amount was RM990,000.00 to the company. The JD and his wife, to wit, Rajakumari Boominathan (“Rajakumari”) who are the shareholders of KPI Cinemas undertook to give their personal guarantees to the repayment of the Friendly Loans. [3] As at July 2016, KPI Cinemas only managed to repay a total of RM290,000.00 out of the whole amount borrowed by the company. [4] Since KPI Cinemas failed to repay the outstanding sum, in May 2018, the JC filed a civil suit at the Shah Alam Sessions Court against KPI Cinemas, the JD and Rajakumari to recover the sum of RM700,000.00 from them. On 7.6.2018, the JC entered a judgment in default of appearance (“2018 JID”) against the trio. [5] The JD only filed the application to set aside the 2018 JID on 22.3.2023 but it was dismissed by the Sessions Court on 23.6.2023. There was no appeal filed by the JD on the dismissal. [6] In June 2019, the JC filed a bankruptcy petition against the JD and Rajakumari at the Johor Bahru High Court. Later, the duo were adjudged bankrupts on 18.6.2020 and 27.2.2020, respectively. [7] On 6.10.2020, the JD filed an application at the High Court to annul the bankruptcy order entered against him (“2020 Bankruptcy Order”). Accordingly, a meeting was held on 30.7.2020 between the JC and the JD which end up that the latter agreed to enter the scheme of settlement proposed by the JC. In return, the JC’s solicitors issued a S/N uti0wrDYiEODoN3Dcqa7w letter dated 14.9.2020 to the JD mentioning the non-objection of the latter’s application. Subsequently, on 5.5.2021, the 2020 Bankruptcy Order was annulled and the JD was granted an order of discharge. [8] After the annulment, the JC averred that the JD only repaid RM207,300.00 and not the full sum as promised. As such, on 14.9.2022, the JC filed another application for the issuance of bankruptcy notice against the JD. On 17.11.2022, the bankruptcy notice (“2022 Bankruptcy Notice”) in Enclosure 5 was issued and the hearing of the notice was set on 2.1.2023. [9] Upon receipt of the 2022 Bankruptcy Notice, on 23.12.2022 the JD filed the application in Enclosure 9 to set aside the notice on the following grounds: S/N uti0wrDYiEODoN3Dcqa7w [10] On 29.5.2023 the learned SAR dismissed the JD’s application with costs. Whether the 2018 JID is valid [11] The JD averred that the 2022 Bankruptcy Notice was based on the 2018 JID which was irregularly entered by the JC as the civil suit was filed in the Shah Alam Sessions Court despite the address of KPI Cinemas, the JD and Rajakumari is at Johor Bahru. [12] To deal with this issue, namely whether the 2018 JID was validly entered or otherwise, the basic question is whether this court being the bankruptcy court has the jurisdiction to examine or go behind the said order. [13] It is trite that in an application to set aside any bankruptcy notice which is based on a final judgment, the bankruptcy court hearing the application has no jurisdiction to go behind the judgment. My view is fortified by the case of Re Khoo Chee Tong, ex parte Unik (Malaysia) Sdn Bhd [1996] 2 BLJ 475; [1996] 5 MLJ 39 where Haidar Mohd Noor J (as the Lordship then was) held that – S/N uti0wrDYiEODoN3Dcqa7w In any event there are ample authorities to show that the Court hearing an application to set aside the bankruptcy notice cannot go behind the judgment (see Sovereign General Insurance Sdn. Bhd. v. Koh Tian Bee [1988] 1 CLJ 277, Re Beenchamp [1904] 1 KB 572 and Re Howell [1915] 84 LJKB 1399). However, the validity of the judgment debt will only be inquired into when there is evidence of fraud or collusion or miscarriage of justice. (Re Flatau [1889] 22 QBD 83). Regrettably there is none of such evidence before me except that the learned Counsel for the debtor whilst admitting that the judgment was regular but alleged that it was tainted with illegality. This she tried to do by trying to persuade that Court to admit the two affidavits (encls. 37 & 39) which were rejected by the learned Deputy Registrar by urging the Court to invoke its discretion under r. 44. No reasons were advanced by the debtor for the Court to exercise its discretion and accordingly I would decline to do so as otherwise parties would be allowed or encouraged to flout the rules. [14] Likewise in Re: Azmer Idris: Ex Parte: Malaysia Debt Venture Berhad [2017] CLJU 448 [2017] 1 LNS 448, Azizah Nawawi J (now JCA) held that – [17] On this issue, I agree with the JC that this bankruptcy Court cannot question the validity of the summary judgment, upon which these bankruptcy proceedings were premised upon. In Sovereign General Insurance Sdn Bhd v. Koh Tian Bee [1988] 1 CLJ Rep 277; [1988] 1 MLJ 304, the Supreme Court held at page 305: "In the exercise of his jurisdiction in bankruptcy proceedings, the learned judge cannot go behind the judgment. Thus on an application to set aside a bankruptcy notice, it was laid down as early as 1893 that the court could not go behind the judgment (see In Re Easton [1893] 10 Mor 111; 9 TLR 409). Even if there has been an irregularity in the service of the notice of sale, it is not open to the respondent in this case to challenge the execution proceedings. " S/N uti0wrDYiEODoN3Dcqa7w [15] It is no doubt that there was an attempt by the JD to set aside the 2018 JID, but it failed. As such the 2018 JID is still valid and enforceable. In Re Chan Wai Fong; ex-parte Everest Web Sdn Bhd [2022] CLJU 1277; [2022] 1 LNS 1277; [2022] MLJU 1253, it was held that once the judgment remains valid and binding and the judgment debtor must obey the said judgment. The court held – [7] As the said Judgment has not been stayed or overturned, the Judgment remains valid and binding and the JD must obey the said Judgment. I refer to Re Tioh Ngee Heng [2000] CLJU 197; [2000] 1 LNS 197 where Steve Shim J (as His Lordship then was) held: "It is trite law that an order, even if irregular, is valid and enforceable until set aside. This principle is particularly relevant in bankruptcy proceedings where the court generally will not look behind the judgments or order save in very limited circumstances of fraud or illegality, etc. In Isaacs v. Robertson [1985] AC 97, Lord Diplock speaking for the Privy Council approved the proposition advanced by Romer LJ in Hadkinson v. Hadkinson [1952] 2 All ER 567 who said at p. 569:- It is the plain and unqualified obligation of every person against, or in respect of, whom an order is made by a court of competent jurisdiction to obey it unless and until that order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by an order believes it to be irregular or even void. Lord Cottenham, LC, said in Chuck v. Cremer [1846] 1 Coop temp Cott 338 at p 342, 47 ER 884 at p. 885): 'A party, who knows of an order, whether null or valid, regular or irregular, cannot be permitted to disobey it. It would be most dangerous to hold that the suitors, or their solicitors, could themselves judge whether an order was null or valid-whether it was S/N uti0wrDYiEODoN3Dcqa7w regular or irregular. That they should come to the court and not take upon themselves to determine such a question. That the course of a party knowing of an order, which was null or irregular, and who might be affected by it, was plain. He should apply to the court that it might be discharged. As long as it existed it must not be disobeyed.' Such being the nature of this obligation, two consequences will, in general, follow from its breach. The first is that anyone who disobeys an order of the court is in contempt and may be punished by committal or attachment or otherwise. This principle has been followed by our Supreme Court in Sovereign General Insurance Sdn Bhd v. Koh Tian Bee [1988] 1 CLJ 277 (Rep); [1988] 1 CLJ 155; [1988] 1 MLJ 304." [16] In similar veins, in an earlier case of Re Yong Tet On Paul, ex p Chung Khiaw Bank Ltd [1996] 1 CLJ 836; [1996] 1 MLJ 721, the court held that – Obedience to Court Order It is established law that a person whom an order of Court has been issued is duty bound to obey that order until it is set aside. It is not open for him to decide for himself whether the order was wrongly issued and therefore does not require obedience. His duty is one of obedience until such time as the order may be set aside or varied. [17] In light of the above, undoubtedly that it is not the business of this court to delve with the question on the validity of the 2018 JID. Hence, the JD’s argument on the issue of validity of the judgment is untenable. Whether the JC can refile another bankruptcy notice once annulled [18] The JD submitted that when he applied to the court for the annulment of the 2020 Bankruptcy Order, there was an agreement S/N uti0wrDYiEODoN3Dcqa7w between the JC and the JD which led the JC issuing a letter dated 26.8.2020 (August Letter) to the Department of Insolvency (“DI”). The JD averred that the August Letter is not only mentioning the JC has no objection to the JD’s application to annul the 2020 Bankruptcy Order but more importantly that the JC admits that there is a settlement of the JD’s debt. Hence, as there is no more sum due to the JC, the JD submitted that the JC is estopped from filing another bankruptcy notice against him. [19] For ease of reference, I reproduce below the August Letter – S/N uti0wrDYiEODoN3Dcqa7w [20] In refuting the JD’s argument, the JC narrated the background on how the August Letter was issued. The JC revealed that when the JD was adjudged a bankrupt, the latter approached the JC’s solicitors stating that there is a dispute involving an Indian temple where the JD is a party in a suit. The JD strenuously wanted the 2020 Bankruptcy Order be annulled as to maintain the suit. Thus, on the JD’s request, the JC agreed not to object the JD’s application to annul the 2020 Bankruptcy Order provided that a scheme of settlement must be agreed between the JC and the JD. [21] Subsequently, a meeting was held on 30.7.2020 between the JC and the JD whereby an agreement had been reached which the terms were as follows, inter alia: