Lecture 2: Insolvency: Individual:

Bankruptcy Notice (BN)

LEARNING OUTCOME:
Evaluate the law of bankruptcy and companies winding up

Cognitive: Level 4
 Post
judgment
process
*Creditor who has obtained a Final Judgment
Example of the case study:

Maria had obtained a housing loan from Bank Kaya Bhd.

and had defaulted on her monthly payments. She ignored
their several demands of payment. On 15 March 2022,
Bank Kaya Bhd. obtained judgement in default (‘JID’)
against Maria for a sum of RM200,000-00. On 25 March
2022, Bank Kaya Bhd. applied for a Request to issue Notice
of Bankruptcy and on 15 April 2022 served the Bankruptcy
Notice (‘BN’) to someone at her last known address as
given in her records.

*The dates given here are to cater the recent new amendment to the Insolvency Act 1967.
In real practice, the date for each events will not be so closed with each others.
Stages in Bankruptcy:
There are 4 stages to a bankruptcy
action

1. Pre- bankruptcy - new voluntary arrangement

introduced under the Insolvency Act 1967 and
the Insolvency Voluntary Arrangement Rules
2017
2. The bankruptcy notice - commencement of
bankruptcy proceedings
3. The bankruptcy petition
4. Discharge from bankruptcy
 2.1 The Bankruptcy Notice & Setting Aside
• s.5(1)(a) IA 1967 The amount claimed in the bankruptcy notice
must not be less than RM100,000/- with interest quantified up
to date of issue of bankruptcy notice.
• Form 34 (Rule 89) IR 2017 – bankruptcy notice is issued by the
Court (Rule 89) and served by the Creditor who has obtained final
judgment against the debtor. Notice must carry an endorsement
that if the debtor has any set-off/ counter claim he must file an
affidavit within 7 days.
• Form 35 (R90) IR 2017 the bankruptcy notice must be
accompanied by a request to the registrar to issue a bankruptcy
notice.
• S.3(1)(i) and (2) IA 1967 specifies the requirement for a
bankruptcy notice.
• Final Judgment - A bankruptcy notice can only be issued
on a debtor against whom a final judgment has been
obtained or order of a court designated under the
Subordinate Courts Act 1948 (Act 92) or the Court of
Judicature Act 1964 (Act 91) against the debtor.

• Types of judgment:
• final judgment
• interlocutory judgment
• judgment in default
• Summary judgment and etc…
2.1 The Bankruptcy Notice & Setting Aside
Requirements for a Bankruptcy Notice & Setting
Aside the Notice

•What is a final judgment?

• Case: Re Udos ak Rigging exp Seabanc Kredit S/B [1994] 3 MLJ
383 – judgment in default (JID) is not a final judgment in the
event that the JD filed the application to set aside the default
judgment within the time period, ie. 30 days.

• Cross refer: A final JID entered against a Defendant will

essentially crystalize into a final judgment enforceable against
said Defendant, this is if it is not set aside within 30 days of it
being served on the Defendant (O42 r13 of the ROC 2012). A
final JID may be entered (via Form 75) for claims of liquidated
demand) (O13 r1 ROC 2012) or claims of possession of
immovable property (O13 r4 ROC 2012).
2.1 The Bankruptcy Notice & Setting Aside
Requirements for a Bankruptcy Notice & Setting
Aside the Notice

•What is a final judgment?

• Case: Re Lim Chan Kwang, exparte Public Bank Bhd. [2007] 9 CLJ
353
• The debtor appealed against the HC decision. Pending the appeal
the bank served the bankruptcy notice.
• CA Held:- The ex parte judgment given in an application for
summary judgment became a judgment given on merits after the
judge in chambers allowed the appeal against the deputy
registrar's decision and ordered judgment to be entered against
the debtor. The HC judgment was a final judgment.
2.1 The Bankruptcy Notice & Setting Aside
Requirements for a Bankruptcy Notice & Setting
Aside the Notice

•What is a final judgment?

• Case: Khoo Kay Hoe v Chor Phairk Har & Anor. [2002] 1CLJ 317
• The issue was whether a bankruptcy notice founded on an
allocatur was valid.
• FC Held: the allocatur was a final order within the meaning of s.
3(1)(i), and it followed that the bankruptcy notice which was
founded on the allocatur was a valid notice.
• Allocatur is a petition to an appellate court for permission to be
allowed to file an appeal.
• Allocatur Fee: A fee paid by the party filing the order or
judgment for court approval.
• Case: Re Sashidaran a/l K V Nair [2006] 6 AMR 439
• HC: A judgment in default that is not set aside becomes a final
judgment.
2.1 The Bankruptcy Notice & Setting Aside
• What is a final judgment?
• Case: Sri Jeluda S/B v Pentalink S/B [2008] 4CLJ 359
• CA: Summary judgment remained a good judgment until
set aside on appeal. Mere fact of appeal does not establish
that the debt was bona fide disputed.

Let’s think: Is ‘pending appeal’ a ground for setting

aside a bankruptcy notice?- There is no stay of
execution of final judgment. Lodgment on an appeal does
not operate as a stay of execution unless the court so
orders.
2.1 The Bankruptcy Notice & Setting Aside
• What is a final judgment?
• A final judgment only happens when there has been a full
consideration of the merits of the case and an interlocutory
judgment is where the merits of the case have not been considered.
This means that if the court judgment was obtained through a
concealment of facts or wilful falsehood, then the judgment
wouldn’t be valid.
• A judgment in default is not a final judgment. This is because
judgments in default are issued when you fail to attend court. When
you fail to attend the court, the court would not be able to consider
the merits of your case and therefore, they would pass judgment on
the basis that you weren’t present in court. Hence the name,
judgment in default of attendance.
2.1 The Bankruptcy Notice & Setting Aside
• A judgment or order is final if it disposes of the rights of the
parties finally or no further step is necessary to perfect it.
• Case: Peninsular Land Development Sdn Bhd v K Ahmad
(No.2) [1970] 1 MLJ 253 at page 254 (FC)
• The FC applied the Bozson’s test and held that the
judgment was a final judgment.
• The Bozson’s test as laid down by Lord Alverstone in
Bozson v Altrincham Urban District Council [1903] 1 KB
547:
• “Does the judgment or order as made, finally dispose of
the rights of the parties? If it does then I think it should be
treated as a final order, but if it does not, it is then in my
opinion, an interlocutory order.”
2.1 The Bankruptcy Notice & Setting Aside
• A judgment or order is final if it disposes of the rights of the
parties finally or no further step is necessary to perfect it.
• Case: Re Lo Kon Wah; Ex P Jupiter Securities Sdn Bhd [2000] 5 MLJ
180
• Held:
• 1. The judgment was obtained after the Court heard arguments
from both sides based on affidavit evidence.
• 2. The summary judgment is a final judgment that falls under
s.3(1)(i) of the BA 1967.
2.1 The Bankruptcy Notice & Setting Aside
• A judgment after a full trial or the decision of the appellate
court is a final judgment even if it is being appealed against.
• Case: Re Tan Ah Poi [1999] 2 MLJ 555
• Issue: whether the HC judgment which was pending appeal before
the COA was a final judgment.
• The word ‘final judgment” in s.3(1)(i) of the BA 1967 must be
construed as:
• (i) a final and conclusive judgment notwithstanding the fact that
the judgment is subject to an appeal or under appeal;
• (ii) it is a final judgment even though that judgment is appealable;
• (iii) it is a final judgment, and the JC is entitled to issue the BN
against the JD notwithstanding the fact that the JD has filed an
appeal.
• Read also: Jacob Rabindranath a/l M Krishnan v GP Autobat Sdn
Bhd [2009] MLJU 106
2.1 The Bankruptcy Notice & Setting Aside
• A JID on a liquidated amount is a final judgment.
• Re Tan Hwee Earn; Ex P The People’s Insurance Co (M) Sdn Bhd
(HC)[1999] 4 MLJ 248 See page 253 paragraphs A-F
HC held:
Referring to Orders 13 r.1(1) and 13 r.2 RHC (now O13 r.1(1) and O13 r.2
ROC) and following the FC case of Adzmi bin Ali & anor, the court held
the creditor’s claim against the debtor was for a liquidated amount …the
JID would constitute a final judgment for the sum claimed by the creditor
against the debtor in this case.
•.
2.1 The Bankruptcy Notice & Setting Aside
• A JID on a liquidated amount is a final judgment.

Adzmi bin Ali & Anor v Mohamed Isa bin Kasad [1987] 2
MLJ 199 per Seah SCJ at p200:
“Now, when a defendant fails to enter an appearance to a
writ for an unliquidated sum, the plaintiff may enter
interlocutory judgment against him for damages to be
assessed (see O13 r2 of the Rules of the High Court 1980).
On the other hand, if the claim of the plaintiff is for a
liquidated amount and the defendant defaults in entering an
appearance within the specific time, final judgment for the
sum claimed may be entered against him (see O13 r1(1)). The
court may, on such terms as it thinks just, set aside or vary
any judgment entered in pursuance of this Order (see O13
r8)..”
2.1 The Bankruptcy Notice & Setting Aside
• See also:
• Perwira Habib Bank Berhad v Samuel Pakianathan [1993] 2 MLJ 423
at page 429
• Re MSA Zachariah [1993] MLJU 479 at 5
• Lee Bak Soon@ Lee Pak Choon v RHB Bank Bhd [2008] 1 MLJ 762
(COA)
• Vijendran Ponniah v MBF Country Homes & Anor [2002] 1 MLJ 535
• Re Rusli AB Ghani; Ex Parte: CIMB Bank Berhad [2018] 1 LNS 1528
HC
• P Mukundan PK Kunchu Kurup & Ors v Daniel Anthony & Another
Appeal [2018] 3 CLJ 496
2.1 The Bankruptcy Notice & Setting Aside
• (a) Date - Formal bankruptcy proceedings commence upon
issue of the bankruptcy notice.
• Case: Fadzil b Othman v Malayan Building Ltd. [1994] 3
MLJ 474: For the purposes of calculating the date of
commission of the act of bankruptcy, the date of service of
the bankruptcy notice is excluded.
• Eg. Notice dated 7 November 2017 served on debtor on 15
November 2017. Time starts running from 16 November
2017.
• s.3(1)(i) – Form 36 (R93) IR2017– content – most common
section for applications to set aside.
Compare: case: Re Dato Loh Fook Yen, Ex Parte Malayan
United Finance Bhd [1988] 3 MLJ 499 – The seven days
period to comply with BN under s3(1)(i) BA is inclusive of
weekly holiday and public holiday.
2.1 The Bankruptcy Notice & Setting Aside
• (a) Date - Formal bankruptcy proceedings commence upon
issue of the bankruptcy notice.
• Case: Bank Islam Malaysia Berhad v. Gnasegar G.
Vengadasamy (COA)-[2022] 1 LNS 2784. The Insolvency
Rules 2017 (formerly the Bankruptcy Rules 1969) or the
Insolvency Act 1967 does not provide for the method of
calculation of the seven-day period in section 3(1)(i) of the
Insolvency Act 1967. However, rule 284 of the Insolvency
Rules (formerly rule 276 of the Bankruptcy Rules) allows
resort to the Rules of Court 2012 in the event of lacunae.
Order 3 rule 2 of the Rules of Court 2012.
2.1 The Bankruptcy Notice & Setting Aside
2.1 The Bankruptcy Notice & Setting Aside

• Case: Dalam Perkara Ahmad Shukri Ismail; Ex. P.

Lembaga Kumpulan Wang Simpanan Pekerja [2023] 5 CLJ
461 (HC)
• This is an appeal to the judge in chambers against the
decision of the Deputy Registrar who has rejected the
summons in chambers of the appellant. The appellant
through the summons in the chamber appealed that the
bankruptcy notice dated 30 October 2019 be set aside, the
bankruptcy order on the appellant on 28 October 2021
also be canceled and the creditor's petition dated 19 June
2020 be set aside.
2.1 The Bankruptcy Notice & Setting Aside
• Dalam Perkara Ahmad Shukri Ismail; Ex. P. Lembaga
Kumpulan Wang Simpanan Pekerja [2023] 5 CLJ 461 (HC)
• Issue: The bankruptcy notice dated 30 October 2019 and
served to the judgment debtor on 17 December 2019. The
issue that arises in this case is whether the seven days
date end on 25 December 2019 or 26 December 2019 due
to 25 December 2019 being a public holiday- Christmas
holiday.
• In s. 54(1)(d) of the Interpretation Act 1948 and 1967
(Consolidated and Revised 1989) Act 388 (the
Interpretation Act), a similar provision is made for
exclusion of a day if the last day of the period is a weekly
holiday or a public holiday (the so-called excluded days).
• Appeal allowed.
2.1 The Bankruptcy Notice & Setting Aside
• (b) Amount claimed –
• 1). Accurate - The bankruptcy Notice should particularize the
amount including the interest which should be accurately
quantified. – Exact sum.
• Case: UOBB v Loke Lai Ying & Anor. [2003] MCCLR 248
• Case: Fawzia b Osman v Bank Bumiputra Malaysia Bhd. & Anor.
[1991] 1MLJ 426,
• continuous interest - Ghazali Mat Noor v Southern Bank Ltd.[1989]
2MLJ 142 - A bankruptcy notice should not be issued on a
continuous interest .
• Case: Re Ismail b Daud and Haja Qameriah [1989] 2CLJ 1043 –
interest cannot be stated to be ‘continuing’ and left unquantified.
This would render the notice uncertain and invalidate it.
2.1 The Bankruptcy Notice & Setting Aside
• (c) Subsequent Agreement:
• Subsequent agreement - The bankruptcy Notice should be
based on the terms of the final judgment and should not be
based on any mutual agreement arrived at by the parties
subsequently.
• Case: Datuk Md. Sari v Norwich Winterthur Insurance
[1992] 2 MLJ 344
2.1 The Bankruptcy Notice & Setting Aside
• Case: Mohd Kamal Bin Omar v United Overseas Bank (M)
Bhd And Other Appeals [2018] MLJU 600
• FC Held:
• (i) the making of the JDS Order had resulted in the modification of
the Original Judgment; and
• (ii) it follows that the BN which was based on the Original Judgment
was not valid and ought to be set aside.
2.1 The Bankruptcy Notice & Setting Aside
• (d) Part payment
• Case: Soo Kok Loong v Hong Kong Bank Bhd [2009] 6 CLJ 62
• S.3(2)(ii)BA notice invalid only if amount in Bankruptcy Notice
exceeds judgment sum. On the facts the sum was less than
RM30,000/- therefore not entitled to issue Bankruptcy notice.
• Case: Loh Kok Huah v Bann Hin Lee Bank exp.[1992] 1 MLJ 687– JD
can carry on making payments on the judgment sum even where
bankruptcy has commenced so long as sum is not less than
statutory minimum at date of AO & RO.

• Case: Azlin Azrai bin Lan Hawari v United Overseas Bank (M) Bhd.
[2017]10 CLJ 18
• Any part payment towards the debt whether before or after the
bankruptcy notice should be taken into account. It does not nullify
the bankruptcy proceedings so long as the amount outstanding is
not below the statutory limit.
2.1 The Bankruptcy Notice & Setting Aside
• (e) Liquidated
• If the amount is not calculated it will not be deemed to be
‘liquidated’ and cannot be cured – Case: Low Mun v Chung
Khiaw Bank Ltd.[1988] 1 MLJ 263
• Case: J Raju M Kerpaya v Commerce International
Merchant Bankers Bhd.[2000] 3 CLJ 104 – there was no
mention of a penalty, interest or stamp duty in the
judgment, but this was included in the bankruptcy notice.
Court adopts a ‘strict construction’. Therefore where a
bankruptcy notice is contrary to the judgment it is null and
void.
2.1 The Bankruptcy Notice & Setting Aside
• Case: Re Wong Su Tiung exp Yeo Hiap Seng Trading S/B
[1989] 2MLJ 435 – not enough to stipulate the rate of
interest on the basis that it can be translated to an exactly
quantifiable sum at any given time – must be quantified
exactly.
• Exact sum as at the date of issue of the bankruptcy notice –
Case: Ghazali
2.1 The Bankruptcy Notice & Setting Aside
• (f) Limitation s. 6(3) LA 1953
• Interest claimed cannot exceed 6 years – Case: UMBC v
Ernest Cheong Yong Yin [2001] 1MLJ 561
• See also P Mukundan PK Kunchu Kurup & Ors v Daniel
Anthony & Another Appeal [2018] 3 CLJ 496
2.1 The Bankruptcy Notice & Setting Aside
• (f) Limitation s. 6(3) LA 1953
• See also P Mukundan PK Kunchu Kurup & Ors v Daniel Anthony
& Another Appeal [2018] 3 CLJ 496
• Hence, the present appeal. The issues that arose for the court's
determination were (i) whether the 19 September judgment was a final
judgment; (ii) whether the JDs' application to set aside the BN by way of
affidavit complied with the Bankruptcy Act 1967 ('the BA') and the
Bankruptcy Rules 1969 ('the BR'); and (iii) whether the HCJ erred in relying
on Tan Tem Som as the case had been overruled by the Federal Court in
Dr Shamsul Bahar Abdul Kadir v. RHB Bank Bhd.
• Whilst it is true that the learned judge had cited the case of Tan Tem Son
which essentially concerns the issue whether a judgment creditor requires
leave of court under O. 46 r. 2(1)(a) of the Rules of Court 2012 prior to
initiating a bankruptcy proceeding based on a final judgment which has
been obtained more than six years, and that Tan Tem Son is no longer good
law, we nevertheless found that nothing turns on this point.
2.1 The Bankruptcy Notice & Setting Aside
• Case: Moscow Norodny Bank Ltd. v Ngan Chin Wen[2004] 2 CLJ
241 –FC Held:
• (i) date on which interest becomes due is the judgment date as per
UMBC v Ernest [Interest claimed cannot exceed 6 years]
• (ii) no evidence that there was any accord or satisfaction. Continuing
with the bankruptcy proceedings despite the payments could not,
therefore, be held to be an act of oppression on the part of the
appellant.
• (iii) Creditor’s appeal allowed.
2.1 The Bankruptcy Notice & Setting Aside
• Acceptance of part payment – Case: Loh Kok Huah v Bann
Hin Lee Bank exp.[1992] – JD can carry on making
payments on the judgment sum even where bankruptcy
has commenced so long as sum is not less than statutory
minimum at date of RO & AO.
• Case: Fawzia b Osman v Bank Bumiputra Malaysia Bhd. &
Anor. [1991] 1MLJ 426
• – these defects are not mere irregularities that could be
curable under s.131 BA or r. 274 B Rules.
2.1 The Bankruptcy Notice & Setting Aside
• (g) Rate of conversion of currency
• Case: Re Chan Teik Huat, ex p Oversea-Chinese Banking
Corporation Ltd [2008] 7 CLJ 617
• Where foreign currency is involved – exchange rate as on the day of
judgement is to be adopted for judgment debt in foreign currency.
• See also:
• Wong Li Fatt William (an infant) v Haidawati bte Bolhen & Anor [1994] 2
MLJ 497
• Re Kang Chong Yeow; ex p Mivan Far East Sdn Bhd [2001] 3 MLJ 98
• See Hua Daily News Bhd v. Tan Thien Chin & 35 Ors [1986] 2 MLJ 107
• Kay Hian Pte Ltd. v Ma Boon Lan [2014] 1 CLJ 464 CA: the defendant must
know the exact amount due at the date of the bankruptcy notice and the
defendant does not have to make calculation or enquiries on what is the
actual exchange rate from Singapore Dollars to Malaysian Ringgit as at the
date of judgment as this duty is in the hands of the plaintiff. In this case the
plaintiff had failed to quantify the exact amount owing in the bankruptcy
notice as the wrong exchange rate was applied which rendered the
bankruptcy notice invalid and void ab initio and ought to be set aside as
being a nullity.
2.1 The Bankruptcy Notice & Setting Aside
• (h) Two or more judgments cannot be combined in one notice
• R 89(2) IR: 2 or more judgments cannot be combined in one notice
to satisfy the statutory minimum of RM100,000/-.
• Case: Re Chan Chong Fatt Willy exparte Hitachi Lease [1987] 1 MLJ
94
• Held:- (1) a bankruptcy petition cannot be founded on two separate
judgments even though it may be obtained in the same suit. In this
case there were two judgments although they were in the same
suit, one a consent judgment and the other a contested judgment.
Execution on these two judgments would have to be levied
separately;
• (2) leave to amend the bankruptcy notice must be refused. Petition
withdrawn.
2.1 The Bankruptcy Notice & Setting Aside
• Case: Haroun Al Rashid b Md. Yusop exp Daya Leasing S/B [1996]
5MLJ 317
• HC Held inter alia- there was one final judgment dated 28 June 1988
and an order dated 27 July 1988 was in respect of costs pursuant to
the judgment on 28 June 1988 ordering costs to be paid by the
appellant. Therefore, in the case of costs, the effective judgment
was the decree of the court on 28 June 1988 itself, and not the
order dated 27 July 1988 quantifying the amount.
• Appeal allowed with costs.
• c/f Chan Chong Fatt. What was the difference?
2.1 The Bankruptcy Notice & Setting Aside
• Case: Dr. R Ramachandran Exp Ganeshwary A/P Ponnudurai [2003]
5 MLJ 84
• HC Held: The bankruptcy notice had contravened s 3(1)(i) BA1967
and O 91(2) BRules as 2 final judgments or orders had been
combined. A creditor is entitled to apply for the issuance of a
bankruptcy notice against a debtor, subject only to one final
judgment or order. Any bankruptcy notice based on more than one
final judgment or order will vitiate any bankruptcy proceeding.
Appeal allowed.
2.1 The Bankruptcy Notice & Setting Aside
• Where 2 or more persons are jointly liable to pay
the judgment debt, the notice may be issued
against one without including the others.
• However in Case: Yeo Ah Wong v UMBC [1995] 1
AMR 38 it was held that if the judgment is against
2 or more persons who are jointly liable then
notice must be issued to both.
• See also Sumathy Subramaniam v Subramaniam
Gunasegaran & Another Appeal [2018] 2 CLJ 305
CA
2.1 The Bankruptcy Notice & Setting Aside
• Case: Sumathy Subramaniam v Subramaniam
Gunasegaran & Another Appeal [2018] 2 CLJ 305 CA
• Appellant had obtained summary judgment against the
principle debtor and guarantor under a friendly loan.
He then filed two separate bankruptcy notices against
the judgment debtors.
• Issue: Whether judgment creditor entitled to enforce
full sum against both judgment debtors at same time.
• Mary Lim JCA: Appeal allowed
• Where liability is joint, each of the judgment debtor
shares that liability equally. The respondent had a right
to enforce only half the judgment sum against each
appellant in this case. The respondent was not entitled
to enforce the full sum against both of them, certainly
not at the same time.
2.2 Setting Aside the Bankruptcy Notice
• Service of the Notice – R64, R95 & R108 IR 2017, the bankruptcy
notice must be served personally and be proved by an affidavit of
service.
• S93 (4) IA 1967 court has discretion to extend time where service
could not be effected within the prescribed time the creditor may
apply for an extension of time.
• “ Where by this Act or by general rules the time for doing any act
or thing is limited, the court may extend the time ,either before or
after the expiration thereof, upon such terms, if any, as to the
court seems fit “
• Case: Koh Thuan Kuang v UMBC [1994] 3 MLJ 509 – debtor was
evading service. The fact that the debtor was able to affirm an
affidavit 2 days after the substituted service showed the efficacy of
the substituted service.
2.2 Setting Aside the Bankruptcy Notice
• Case: Dato Hj Yusuf Kamari v CIMB Bank Bhd [2009] 9 CLJ 209
• The service of the bankruptcy notice was challenged: (a) the
bankruptcy notice was served at 5.50pm on Sat. 2 February 2008,
allegedly in breach of r. 66 Bankruptcy Rules 1969; (b) that the JD
had not been personally served a copy of the judgment dated 23
Nov. 2006.
• HC: Dismissing the Appeal
• (1)Rule 66 makes no mention of the day of service, only time of
service. Where service is effected after the cut off hours of 12 noon
or half past three in the afternoon then 'for the purpose of
computing any period of time subsequent to such service' shall be
deemed to have been effected on the day following the weekly
holiday or on the following day, as the case may be. What was
critical was whether the notice and later the petition were served at
least eight days before the hearing of the petition.
2.2 Setting Aside the Bankruptcy Notice
• Case: Azizul Nizam bin Bidin v Solsis (M) Sdn Bhd [2017] MLJU 573,
the judgment debtor appealed to set aside the Bankruptcy Notice
on the grounds that: (a) The service of the Bankruptcy Notice was
invalid because it was served on the judgment debtor’s wife who
acknowledged receipt.
• HC: Appeal dismissed. The judgment debtor acknowledged the fact
that the process server visited the debtor’s premises to effect
personal service of the Bankruptcy Notice. He merely disputed the
identity of the person who signed the acknowledgment.
2.2 Setting Aside the Bankruptcy Notice
• Section 93(4) IA If personal service is not possible within time, the creditor
must apply to court for extension of time to serve:
• Case: Kamaruddin b Md. v UMW (M) S/B[1982] 1MLJ 126 -
order for substituted service required in addition to
advertisement, posting on the notice board at the HC KL and
judgment debtor’s premises within the prescribed time. The
appellant debtor claimed that though he had due knowledge, the
specified time for posting was not complied with.
• Held:- since brought to debtor’s knowledge, service was
sufficient.
• Case: Siow Fook Keong v Lim Ean Chye [2015] MLJU 931,
• HC Held: it would be ‘impractical for the law to insist that actual physical
personal service must still be made on a judgment debtor who for no good
reasons refuses to accept service despite being in the proximity of the
process server.
2.2 Setting Aside the Bankruptcy Notice
• R 94 IR 2017 a bankruptcy notice is valid for 3 months from date of issue
and shall be served within three months from the issue of the bankruptcy
notice. If unable to serve – may apply for extension of notice – Yap Heng
Cheong v Citi Bank Bhd. [1999] 4 CLJ 365 & Aris bin Massod ex p UOL
Factoring Sdn Bhd [1999] 3 MLJ 358.
• Must show special circumstances and good cause for extension- Rohani
Hamidah b Nor v Sincere Leasing S/B [1993] 1 AMR 225
• Re KV Sathasivam exp Phileoallied Bank (M) Bhd. [2004] 5 CLJ 549
• Debtor alleged several irregularities – inter alia – substituted service –
• HC Held:- Practice Note 1 of 1968 & O. 62 r.5(1) RHC 1980 must be read
together. Court has power to order substituted service of a document if it
appears impracticable for any reason to serve the document personally.
The object of substituted service is to bring the bankruptcy notice to the
knowledge of the debtor and if that object is achieved, the service must be
deemed good and sufficient. On the facts, the debtor admitted that the
bankruptcy notice was brought to his knowledge. Thus debtor’s application
disallowed.
2.2 Setting Aside the Bankruptcy Notice
• Application for an order for substituted service:
• ss 3(2A), 3(2B), 3(2C) IA 1967 -
• Rule 109 IR 2017
• Practice Note 1 of 1968

• Case: Chang Nyit Yin @ Chang Nyet Ling v Lee Nyuk Fong [2019]
MLJU 1776. The process server visited the address 3 times despite
telephoning the JD about the service. JD challenged the legality of
the substituted service.
• HC: Substituted service to be effected under R.109 IR since personal
service could not be effected.
2.3 Formal Defects & irregularities

• Formal Defects & irregularities – S.131 IA 1967 - procedural irregularities

shall not invalidate proceedings unless court is of the opinion that
substantial injustice has been caused by the defect.
• “No proceeding in bankruptcy shall be invalidated by any formal defect or
by any irregularity, unless the court before which an objection is made to
the proceeding is of opinion that substantial injustice has been caused by
the defect or irregularity and that the injustice cannot be remedied by any
order of that court.“
• Case: Re Arif b Sionggong ex p Arab Malaysian Finance Bhd. [1995] 3 MLJ
252 - there was an error in the calculation of the date of the Act of
bankruptcy. Court allowed the application under s. 131. the act of
bankruptcy is complete on the last day prescribed for the payment of the
judgment debt excluding the date of service.

• See also Case: Stephen Wong Leong Kiong v HSBC Bank Malaysia Bhd
[2009] 6 CLJ 466 CA. Issue: whether a formal defect, - a misstatement of
the date of the act of bankruptcy, would invalidate the bankruptcy
proceedings.
• CA: creditor’s petition dismissed as the date of the act of bankruptcy was
wrong.
2.3 Formal Defects & irregularities
• Case: Re Fadzil b Othman ex p MBB [1991] 2 MLJ 474
• – bankruptcy notice was served on 8 June 1992, but
petition stated 15 June 1992. The representative of the OA
argued that this was incorrect as the judgment debtor had
to comply with the notice within 7 days of service excluding
the day of service therefore this error was oppressive to the
judgment debtor.
• HC Held:- non compliance in this case was fatal. Notice set
aside.

• See also Re Rengasamy Pillai ex parte The Comptroller of

Income Tax Kuala Lumpur [1968] 1 MLJ 103 / [1970] 1 LNS
139
2.3 Formal Defects & irregularities
• Case: Re Abdul Rahman b Md. Ex p Public Finance Bhd. [2000] 4
MLJ 618
• Held, allowing the appeal: The omission to state the date or a wrong
date of the act of bankruptcy cited in Form 6 is a mere formal defect
or an irregularity which could be cured by an amendment at the
hearing of the petition. It does not render the petition defective.
There are no provisions in the bankruptcy law which prohibited a
technical error from being corrected. If the date of act of bankruptcy
is mistyped or otherwise, it is remediable under s 131 BA 1967); Re
Arif bin Sionggong; ex p Arab Malaysian Finance Bhd [1995]
followed and Low Mun v Chung Khiaw Bank Ltd [1988]
distinguished.
2.4 Setting Aside Bankruptcy Notice : Procedure &
Grounds
• Case: Datuk Lim Kheng Kim v Malayan Banking Bhd [1993] 2 MLJ 298 SC
• The affidavit in question raised the following:
• That the debtor was no longer trading as sole proprietor under the firm
name.
• That the sum of interest was calculated based on 560 days and not 559
days.
• That the bankruptcy notice is premature as costs had not been taxed.
• That an appeal is pending before the Court of Appeal against judgment in
question.
• SC Held: the debtor utterly failed to raise a challenge to the bankruptcy
notice that is within the contemplation of s.3(1)(i) BA 1967.
• Followed in:
• Re Tan Hwee Earn; ex p The People's Insurance Co (M) Sdn Bhd [1999] 4
MLJ 248,
• Scott & English (Malaysia) Sdn Bhd v Ling Chick Ngai [2009] 1LNS 51
2.4 Setting Aside Bankruptcy Notice : Procedure &
Grounds
• Case: Re Datuk Loh Fook Yen; Ex Parte Perwira Affin Bank
(Formerly Known As Perwira Habib Bank Malaysia Bhd) [2002] 7
MLJ 268;
• ‘Counterclaim’ is a claim presented by a defendant in opposition to
or deduction from the claim of the plaintiff. If established, such
counterclaim will defeat or diminish the claim of the plaintiff's
claim.
• Set-off’ is a claim filed by a defendant against the plaintiff when
sued and in which he seeks to cancel the amount due from him or
to recover an amount in excess of the plaintiff's claim against him.
• ‘Cross demand’ is where a person against whom a demand is made
by another, in his turn makes a demand against that other.
2.4 Setting Aside Bankruptcy Notice : Procedure &
Grounds
• Case: Perwira Habib Bank Malaysia Bhd v Samuel Pakianathan
[1993] 2 MLJ 423: three ingredients must be satisfied before the
existence of a counterclaim by the debtor can set aside the
bankruptcy notice:
• 1. The burden of proof is on the debtor to show by affidavit that the
counter claim must be capable of being quantified in terms of
money and the affidavit must quantify it.
• 2. The counterclaim must be put forward in good faith and must
have reasonable probabilities of success.
• 3. The affidavit must show that the counterclaim could not have
been set up in the action in which the judgment relied on by the
creditor was obtained. Failure to satisfy all three ingredients,- the
court may not entertain the debtor’s application to set aside the
said notice.
• Excessive sum in Bankruptcy Notice
• Bad in law. Null ab initio. All subsequent proceedings also a
nullity – Case: Ghazali b Mat Noor v Southern Bank [1989]
• Debtor must give notice within 7 days of the service of the
bankruptcy notice excluding the day of service. Failure to
do so will validate the notice even if intrinsically defective.
• R.95(1) – debtor may file an application by way of affidavit.
• Case: Re KV Sathasivam ex p Phileoallied Bank (M) Bhd.[2004] – debtor
alleged several irregularities – irregularity in substituted service
• Understatement of debt due
• Execution more than six years after judgment but within 12 years - Interest
claimed on judgment calculated exactly six years from date of judgment –
• Failure by creditor to obtain leave of court to execute
• non-compliance with rules of court- O. 46 r. 2(3) RHC 1980 - Whether court
is to have regard to the justice of the case and not only to technical non-
compliance
• HC Held- (i) O. 46 r. 2(3) had been superseded by amendments RHC O. 1A
and O. 2 r. 3
• (ii) judgment within 12 years. Interest calculated exactly for 6 years and
stated clearly.
• Understatement of judgment sum did not cause prejudice, confusion or
embarrassment to debtor.
• Notice brought to the knowledge of debtor therefore objective achieved.
• Debtor’s application disallowed.
•
• Case: Tan Thean Chooi v. Kuwait Finance House (Malaysia) Bhd & Another
Case [2013] 7 CLJ 404
• The BA 1967 did not contain any provisions specifically to Islamic financing
loans. As such the compensation for late interest payment need not be
calculated. As there was a lacuna in the law the legislature had to address
this not the courts. Consequently interest calculated up to 30 April 2012 in
the bankruptcy notice was valid.
• Serving the bankruptcy notice on a Saturday did not violate r. 66 BR 1969
(see Dato' Hj Yusuf Kamari v. CIMB Bank Bhd,). Further, under O. 13 r. 1(1)
of the Rules of the High Court 1980, the JC had obtained a final judgment in
default of appearance (see Adzmi Ali & Anor v. Mohamed Isa Kasad; Re
Tan Hwee Earn, Ex P the People's Insurance Company (M) Sdn Bhd,).
• The JD had merely claimed he had a counterclaim, set-off or cross-demand
against the JC without proving the same. Following Perwira Habib Bank
Malaysia Bhd v. Samuel Pakianathan and Sovereign General Insurance
Sdn Bhd v. Koh Tian Bee [1988] 1 CLJ 155, the JD had failed to prove that he
had a counterclaim, set-off or cross-demand.
2.1 The Bankruptcy Notice & Setting Aside
• Case: Perwira Habib Bank Malaysia Bhd v. Samuel
Pakianathan a/l Jabamanikam [1993] 3 CLJ 349
• (i)The counterclaim must be equal to or more than the debt
claimed
• (ii) have been put in good faith with reasonable
probabilities of success.
• (iii) he could not set up the counter claim in the action in
which the judgment was obtained.
Is leave of Court is required to issue a BN 6 years
after judgment?
• s. 6(3) of the Limitation Act 1953
• “An action upon any judgment shall not be brought after the
expiration of 12 years from the date on which the judgment became
enforceable and no arrears of interest in respect of any judgment
debt shall be recovered after the expiration of 6 years from the date
on which the interest became due.”

• Case: Wee Chow Yong, Ex-parte; Public Finance Bhd [1990] 3 CLJ
Rep 349
• R.276 of the Bankruptcy Rules 1969- bankruptcy proceedings
commenced more than six years after judgment would require leave
of court.
• O.46 r.2(1)(a) ROC 2012- where more than six years has passed since
the judgment, the bankruptcy proceedings shall not be issued
without leave of court.
Is leave of Court is required to issue a BN 6 years
after judgment?
• Case: Re: Mohamad Fadzimi Yaakub, Ex-parte UMBC [1998] 1 CLJ
783
• A creditor could only issue a bankruptcy notice when he had
obtained final judgment or order. If execution can only be levied
with leave of court then the creditor has to obtain leave.

• Case: United Malayan Banking Corp Bhd v Ernest Cheong Yong Yin
[2002] 2 MLJ 385(FC)
• no arrears of interest in respect of any judgment debt shall be
recovered after the expiration of 6 years from the date of judgment.
• Pre-judgment interest is allowed.
Is leave of Court is required to issue a BN 6 years
after judgment?
• HOWEVER…
• Case: Perwira Affin Bank v Lim Ah Hee [2004] 3 MLJ 253 (FC)
• Held:
• A bankruptcy proceeding was caught by the provisions of s.6(3) of the
Limitation Act.
• Bankruptcy proceedings may be brought within 12 years of the date of
judgment, however, arrears of interest may only be claimed for a period of
6 years from the date of judgment
• In this case, the judgment was obtained on 23.10.1987. Interest was
calculated from 1.12.1985, thus it emerged into the judgment debt.
Therefore the words “the date on which the interest becomes due” under
s.(3) of the Limitation Act 1953 was the date of judgment and not on
1.12.1985.
• The BN was filed 8 years and 5 months from the date of judgment and as
such was not out of time.
• Arrears of interest was calculated until 28/3/1996. Arrears of interest may
only be claimed for a period of 6 years from the date of judgment, i.e 16.5%
pa from 23/10/1987 to 22/10/1993. Thus arrears of interest is outside the 6
year period, BN was invalid.
Is leave of Court is required to issue a BN 6 years
after judgment?
• Case: AmBank (M) Bhd. v. Tan Tem Son & Another Appeal
[2013] 3 CLJ 317 (FC)
• When bankruptcy proceedings were not commenced by
writ, it did not fall under O.46 r.2(1)(a) of ROC 2012, thus
there was no requirement to obtain leave to issue
bankruptcy notice after six years.
Is leave of Court is required to issue a BN 6 years
after judgment?
• BUT….
• Case: Dr, Shamsul Bahar Abdul Kadir & Another Appeal v. RHB
Bank Bhd. [2015] 4 CLJ 561 (FC)
• A judgment creditor who commences bankruptcy proceedings
after more than six years had lapsed from the date of judgment
must obtain the prior leave of the court pursuant to O.46 r. 2 of
ROC 2012.

• Thus, it would be prudent for a JC to commence bankruptcy

proceedings within six years from the date of judgment to avoid
the risk of leave to execute on the judgment being refused by the
courts and also to avoid unnecessary legal costs. The rationale
being that a JC should not sit on a judgment.
• See also Mohd Kamal Omar v United Overseas Bank (Malaysia)
Bhd & Other Appeals [2018] 5 CLJ 657 FC
TUTORIAL 2
Question 1:
Ms. Nanas, a member of Parliament for Petaling obtained a housing loan for
RM300,000 from Bank Kaya Bhd, for the purchase of a condominium. However,
Ms. Nanas was not able to pay the loan instalments amounting to RM200,000.
Bank Kaya Bhd. commenced a civil suit and obtained Judgment in Default
against [Link] for the amount of RM200,000 with interest at 5% per annum
from the date of judgment to full and final realisation. Ms. Nanas failed to set
aside the Judgment in Default. On 4.3.2022, Bank Kaya Bhd. wrote to you
seeking your legal advice on whether they can issue a Bankruptcy Notice to Ms.
Nanas based on the Judgment in default obtained on 1.3.2013.

(i) Advise Bank Kaya Bhd. whether a Bankruptcy Notice can be issued against
Ms. Nanas?
(ii) How will the interest be calculated for the purpose of the Bankruptcy Notice?
(iii) What is the procedure to issue a Bankruptcy Notice?
(iv) Can substituted service be effected by electronic methods?
(v) What will be your advice to Bank Kaya Bhd if the total judgment sum against
Ms. Nanas is only RM85,000?
TUTORIAL 2
Question 2:
Bank Kaya Berhad had on 2.2.2020 obtained a summary judgment against Mr.
Zahir, for an outstanding debt of RM350,000 arising from a housing loan facility
which Bank Kaya Berhad had granted to Mr. Zahir. The summary judgment was
for the principle sum of RM350,000 with 3% interest calculated on the bank’s
base rate and cost of RM5,000.

Mr. Zahir was unsatisfied with the judgment and had appealed against the
summary judgment. To date, the appeal is pending. Bank Kaya Berhad’s
solicitors had proceeded for the court to issue a bankruptcy notice based on the
summary judgment.

On 1.3.2020 the bankruptcy notice was served on Mr. Zahir which demanded Mr.
Zahir “…to pay to Bank Kaya Berhad of No 168, Plaza Bank Kaya, Melaka a
sum of RM350,000, with 3% interest calculated on the bank’s base rate and cost
of RM5,000.” Mr. Zahir argues that since his appeal is still pending Bank Kaya
Berhad should not have served the bankruptcy notice on him. He wants to know
whether he must comply with the bankruptcy notice. Advise Mr. Zahir.
TUTORIAL 2
Question 3:
Kucing bought a house for RM500,000 and obtained a loan of RM450,000 from
Bank Kaya Berhad. Kucing's mother, Kitty, stood as guarantor for the loan.
Kucing also had a credit card facility with Bank Kaya Berhad. Kucing is currently
jobless and is unable to pay Bank Kaya Berhad the balance of the loan
amounting to RM350,000. Bank Kaya Berhad sued Kucing and Kitty and
obtained Judgment in Default against both on 5.1.2022 for the sum of
"RM350,000 and interest thereon calculated from the date of judgment until the
date of full realisation."

Meanwhile, Kucing was also unable to pay the credit card balance and
Judgment in Default was then entered by Bank Kaya Berhad on 8.2.2022 for the
sum of "RM155,000 and interest thereon calculated from the date of judgment
until the date of full realisation". Bank Kaya Berhad issued a Bankruptcy Notice
dated 10.4.2022 against Kucing demanding for payment of the sum of "RM350,
000 and interest (hereon calculated from the date of judgment until the date of
full realisation and the sum of RM155,000 and interest thereon from the date of
judgment until the date of realisation.

… continued
TUTORIAL 2
Question 3:
Bank Kaya Berhad also issued a Bankruptcy Notice dated the same day,
10.4.2022 against Kitty demanding for payment of the sum of "RM350,000 and
interest thereon calculated from the date of judgment until the date of full
realization". Both Bankruptcy Notices dated 10.4.2022 were served on Kucing
and Kitty on 11.6.2022 by leaving it in their post box.

What is your advice to Kucing and Kitty to oppose the bankruptcy proceedings?