Tutorial 3

1. Advice the following debtors on the period to comply with the bankruptcy notice:
(i) The bankruptcy notice was served on Mr Lembab at 2.30 pm on 5.1.2021.
 s 3(1)(i)1 provides that the time period to comply a BN is within 7 days after the
service of the BN.
 After service” means the date of service of the BN itself is excluded for the time limit
for the compliance with the BN. (i.e. if your date of service is 11 March, then time
starts to run on 12 March)

s 54(1) of the Interpretations Act : Computation of time

In computing time for the purposes of any written law:
(a) a period of days from the happening of an event or the doing of any act or
thing shall be deemed to be exclusive of the day on which the event
happens or the act or thing is done;

[Re Fadzil b Othman v Malayan Building Ltd [1994] 2 MLJ 474]

Facts:
o BN was served on the JD on 8.6.1992
o In the bankruptcy petition, it was stated that the act of bankruptcy was
committed on 15.6.1992
o The official assignee argued that this was incorrect as the BN stated
that the time of compliance with the JD was within 7 days after the
service of the notice, excluding the say of such service.
Held:
o The time for compliance of the BN is exclusive of the day of service.
This is consistent with s 54(1)(a) of the Interpretation Acts 1968
and 1967 wherein it is provided that in computing time for the
purpose of any written law, a period of days from the happening
of an event or the doing of any act or thing shall be deemed to
be exclusive of the day on which the event happens or the act or
thing is done.
o Thus, the calculation of time for compliance should be from 9 June to
15 June. The act of bankruptcy would only be committed on 16
June.
 Since computation of the date for compliance with a BN excludes the day of
service, thus, R 64 of the Insolvency Rules has provided on what time such
BN should be served on the day of service.
R 64 : Effect of service after certain hours
(1) Service shall be effected before 3.30pm, except on days preceding weekly
holidays where it shall be effected before 12pm.

1
s 3(1)(i): “…and he does not within seven days after service of the notice in case the service is effected in
Malaysia”
 (2) If service is effected after 3.30pm on any weekday (except for the day
preceding a weekly holiday), the service will be deemed to have been
effected on the following day.
(3) If service is effected after 12pm on a day preceding a weekly holiday, the
service will be deemed to have been effected on the day following the weekly
holiday.

p/s: S 66 of the Interpretations Act 1948 & s 2 of the Holidays Act 1951 :
“weekly holiday” refers to Sunday or, in States where Friday is observed as the
weekly holiday, Friday (such as Kelantan and Johor)

[Re Dato Loh Fook Yen, Ex Parte Malayan United Finance Bhd [1988] 3 MLJ 499]- The
7 days period to cpmply with BN under s3(1)(i) IA is inclusive of weekly holiday and
public holiday

According to R64 IR the service of BN that was issued against Mr Lembab should be
effected on 5th January 2021, Tuesday. The 7 day period starts from 5.1-12.1. Mr Lembab
should comply by midnight the following Tuesday which is on 12.1. If he does not comply, an
act of bankruptcy is committed on 13.1.2021, Wednesday.

(ii) The bankruptcy notice was served on Mr Cepat who was residing in Kuala Lumpur at
3pm on 25.1.2021..
According to R64 IR the service of BN that was issued against Mr Cepat should be effected
on 25th January 2021, Monday. The 7 day period starts from 25-. Mr Lembab should comply
by midnight the following Monday which is on 1.2.2021.
However, since last day of compliance is a public holiday at Kuala Lumpur, the last day of
compliance is on 2.2.2021, Tuesday. If Mr Cepat does not comply an act of banckruptcy has
been committed on 3.2.2021, wednesday
[Re Dato Loh Fook Yen, Ex Parte Malayan United Finance Bhd [1988] 3
MLJ 499]
Held : s 54(1)(b) of the Interpretations Act provides that if the last day of the
period is a weekly holiday or a public holiday, the period shall include
the next following day which is not a weekly holiday or a public
holiday.

(iii) The bankruptcy notice was served on Mr Tak Sure at 4pm on 15.2.2021.
According to R64 IR the service of BN that was issued against Mr Lembab should be
effected on 16th February 2021, Tuesday since the BN was served after 4pm. The 7 day
period starts from 16.2-23.2. Mr Tak Sure should comply by midnight the following Tuesday
which is on 23.2. If he does not comply, an act of bankruptcy is committed on 24.2.2021,
Wednesday.
Discuss the following cases on the issue of setting aside the bankruptcy notice:
(i) Perwira Habib Bank Malaysia Bhd v Samuel Pakianathan [1993] 2 MLJ 423 (FC)

Summary of the facts: *The BN was issued against the JD and it was based on a Summary
Judgment of RM 11.2 million. The Debtor filed a counterclaim against the Creditor for
the sum of RM 6.25 million as special damages and an unspecified sum in general
damages.

The appellant bank (perwira habib bank) gave credit facilities to San Hong Brick Sdn Bhd ('the
principal borrower') and pursuant to the loan agreement, a contract of guarantee was executed by
the respondent together with three other directors of the principal borrower, in their personal
capacity. The principal borrower failed to make repayment of the banking facilities given by the
appellant bank in breach of the loan agreement and the appellant bank had taken action to recover
the loan by winding-up proceedings against the principal borrower. It had also obtained a summary
judgment of RM11,272,312.43 against the respondent under the contract of guarantee and the
summary judgment was upheld by the High Court and was accepted as a final judgment in which no
stay of execution had been granted, despite the fact that a statement of defence and a counterclaim
had been filed by the respondent against the bank for the sum of RM6.25m as special damages and
unspecified sum in general damages. The appellant bank took out a bankruptcy petition against the
respondent but the High Court judge held that the respondent's counterclaim exceeded or equalled
the judgment sum of RM11.2m the bankruptcy notice Perwira habib bank then appealed.

Decision:

Appeal was allowed

There are 3 ingredients that must be satisfied before the existence of a counterclaim by the
debtor can be a defence to a judgment creditor’s petition:
 the debtor must quantify the cross-demand. the burden of proof is on the
debtor to show in his affidavit that the counterclaim must be capable of being
quantified in terms of money and the affidavit must quantify it
 the counterclaim must be put forward in good faith and must have reasonable
probabilities of success
 Lastly, 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.

Here, the counterclaim was not quantified in terms of money and further, the probability of success
of the counterclaim had not been mentioned or shown in the affidavit. Having failed to satisfy all the
three ingredients in his affidavits, it was clear that the respondent had not proved that he had a
counterclaim which equalled or exceeded the appellant bank's claim within the meaning of s 3(1)(i)
of the Act.

(ii) Datuk Lim Kheng Kim v Malayan Banking Bhd [1993] 2 MLJ 298 (SC)
 [Datuk Lim Kheng Kim v Malayan Banking Bhd [1993] 2 MLJ
298]
Fact : The JC issued a BN against the JD requiring him to
pay RM2,603,913.28 being the amount due on a final
judgment including interest, professional charges and
costs. JD filed an affidavit to set aside the BN.
: In the affidavit, the JD state: “I deny and further
dispute that I am indebted to the JCs in the sum of
RM2,603,913.28 as stated therein. In this respect, I state
that the figure was based on an erroneous calculation
and grossly exaggerated.”
Held :The affidavit merely denies and disputes that the JD
was indebted to the JC in the sum of RM2,603,913.28,
but fails to disclose that he has a counterclaim, set-off
or cross demand, etc against the JC, which he is
required to depose under s 3(1)(i) of the Bankruptcy Act
('the Act') and provided for in Form 7.
: Because of that, the application to set aside was
dismissed. the affidavit cannot operate as an application
to set aside the BN under s 3(1)(i) of the Bankruptcy
Act 1967.

Facts
On 27 April 1989, Malayan Banking Bhd ('the respondent') issued a bankruptcy notice
against the appellant requiring him to pay the sum of RM2,603,913.28, being the amount
due on a final judgment including interests, professional charges and costs. The notice was
served on the appellant on 2 May 1989. On 6 May 1989, he filed an affidavit (encl 3)
purportedly to be an affidavit to set aside the bankruptcy notice under r 95 of the Bankruptcy
Rules 1969 ('the Rules'). About five and a half months later, ie on 20 October 1989, the
respondent filed the creditor's petition against the appellant, which was served on him on 29
November 1989 and one month thereafter, on 29 December 1989, the appellant filed
another affidavit, described as an 'affidavit in opposition' (encl 15). This was a lengthy
affidavit which contained several grounds, including the two grounds which he had deposed
in the earlier affidavit (encl 3).

Enclosure 3 This affidavit was filed on 6 May 1989 which reads as follows:
“I deny and further dispute that I am indebted to the judgment creditors in the sum of
RM2,603,913.28 as stated therein. In this respect, I state that the figure was based on an
erroneous calculation and grossly exaggerated.”
It merely denies and disputes that the appellant was indebted to the respondent in the sum
of RM2,603,913.28, but fails to disclose that he has a counterclaim, set-off or cross demand,
etc against the respondent, which he is required to depose under s 3(1)(i) of the Bankruptcy
Act ('the Act') and provided for in Form 7. Following the above decision and in the face of the
above affidavit, we are of the opinion that the said affidavit cannot operate as an application
to set aside the bankruptcy notice within the contemplation of s 3(1)(i) of the Act, and the
case should have been treated as if no affidavit under r 95 had in fact been filed. Similarly,
as para 3 of the enclosure merely disputes his indebtedness in the said sum to the
respondent 'based on an erroneous calculation and grossly exaggerated' without
condescending to particulars of the amount actually due, we say that the said affidavit does
not attract proviso 2(ii) of s 3 which states that a bankruptcy notice shall not be invalidated
by reason only that the sum specified in the notice as the amount due exceeds the actual
amount due.

3. On 1.6.2019 Coldplay Bank Bhd obtained a summary judgment against Ms Debt arising
from default in payment by Ms Debt on a personal loan Coldplay Bank Bhd granted to Ms
Debt upon her request. The summary judgment was for Ms Debt to pay Coldplay Bank Bhd
the sum of RM170,000 as at date of judgment with interest at the rate of 5% per annum from
date of judgment until full and final realization. Ms Debt did not make payment of the
judgment sum to Coldplay Bank Bhd.

A BN was issued on 1.1.2020 and was served on Ms Debt on Wednesday, 10.2.2020 at

3pm. The BN demanded Ms Debt to pay Coldplay Bank Berhad the total sum of
RM175,935.75The BN under particulars of claim detailed the calculation as follows:

Judgment sum as at 1.6.2019

RM170,000.00 Interest calculated at the rate of 5% per annum from 1.6.2019 until 10.2.2020
RM 5935.75
Total RM175,935.75

Ms Debt came to see you on 14.2.2020 to seek advice on whether she can set aside the BN.
Advice Ms Debt
Date duration calculatior
Jangan round of masa kira round of masa akhir je
1) Whether Ms Debt can set aside the BN?

 Generally, the grounds to set aside BN are:

1. Debtor has a counterclaim, set-off, and cross-demand (s 3(1)(i) IA)
2. Amount specified in the BN exceeds the amount actually due (proviso to s. 3(2))
3. Where BN demands for sums not provided by the judgment or order
4. Formal defect or irregularity which has caused substantial injustice which cannot
be remedied by any order of the court, (s 131 IA)

 2ND Ground
 o Ms Debt's case falls under the 2 nd Ground, namely the amount specified in
the BN exceeds the amount actually due.
o S. 3(1)(i) IA states that: “…..a bankruptcy notice…requiring him to pay the
judgment debt or sum ordered to be paid in accordance with terms of the
judgment, or order with interest quantified up to the date of issue of the
bankruptcy notice… ”

o In the BN, interest was calculated from the judgment date (01.06.2019) to the
date of service (10.02.2020).
o Interest is supposed to be calculated until the date of issuance of BN
(01.01.2020).
o The correct calculation should be:
 RM 170,000 + interest 5% from 1.6.2019 until 1.1.2020 = RM170,000
+ (5% x 215/365 days x 170,000) = RM 175,006.85
o The amount of interest specified in the BN i.e. RM 5935.75 is therefore in
excess of RM 928.90 (from 02.01.2020 to 10.02.2020).

 Notice to dispute the amount due

o Proviso (ii) to s. 3(2): A bankruptcy notice “shall not be invalidated by reason
only that the sum specified in the notice as the amount due exceeds the
amount actually due, unless the debtor within the time allowed for
payment gives notice to creditor that he disputes the validity of the
notice on the ground of such mistake...”
o Re Arunachalam, ex parte Indian Overseas Bank Ltd,
 “where an excess is claimed in the BN and no such notice of dispute
of the validity of the notice by reason of such excess is given, then the
BN is not invalid merely by reason of the excess. Where the amount
claimed in the BN is in excess, and notice is given within 7 days
after the service of the BN, then the excess becomes relevant,
and on the authorities the bankruptcy notice is invalid, since it
referred to a sum in respect of which the judgment creditor could
not have issued execution.”

 Particulars of notice
o IA 1967 does not prescribe a specific form of notice.
o However, it must be clearly directed to the attention of the creditor that the
amount is wrong for it is greater than it actually is.
o In Re Arunachalam, a notice by way of a letter was sent to the judgment
creditor to dispute the amount in the BN. It was held that although the letter
could have been more accurately worded, it was a sufficient notice to comply
with the proviso to s 3(2). The judgment debtor did not deny that the
existence of a debt, but clearly said in the letter that that he disputed the
amount which contained a mistake in the sum claimed as actually due.
o Further, the notice must not merely allege that the sum is excessive or
erroneous. Particulars as to the alleged actual sum must be given.
 o In Datuk Lim Kheng Lim v. Malayan Banking Bhd, the SC declined the
application to set aside the BN and held that:
 “[the affidavit] merely disputes his indebtedness in the said sum
to the respondent 'based on an erroneous calculation and
grossly exaggerated' without condescending to particulars of the
amount actually due, we say that the said affidavit does not attract
proviso 2(ii) of s 3 which states that a bankruptcy notice shall not be
invalidated by reason only that the sum specified in the notice as the
amount due exceeds the actual amount due.”

 Application
o BN was served on 10.02.2020. Ms Debt comes to see us at 14.02.2020.
o Only 4 days have lapsed since the service of the BN, Ms Debt is still within
time to dispute the validity of the BN.
o A notice must be immediately sent to Coldplay Bank Sdn. Bhd.
o The notice can be in any forms, as long as it brings to the attention of
Coldplay Sdn Bhd regarding the excessive amount in the BN.
o The correct amount (RM 175,006.85) must be stated in the notice.
o However, if she does not serve the notice within 7 days, she is deemed to
accept the amount as stated in the BN and has until 17.2.2020 to comply. If
she does not comply by 17.2.2020, she will have committed an act of
bankruptcy on 18.2.2020.

 How to set aside of the BN

o Law
 Proviso to S. 3(2)(ii): The JD has to send a notice to the JC
 R.17: "...every application to the court shall...be made by summons in
chambers supported by affidavit"
 R.93(1): "The filing of an affidavit shall operate as an application to set
aside the bankruptcy notice... Registrar shall fix a day for the hearing
of the application, and shall give not less than three clear days notice
to the debtor, the creditor and their respective solicitors..."
 R.93(2): "If the application cannot be heard before the time specified
in the notice for compliance with its requirements, the Registrar shall
extend the time, and no act of bankruptcy shall be deemed to have
been committed under the notice until the application has been heard
and determined."

o Application
 Ms Debt must apply to court to set aside the BN by summons in
chambers supported by affidavit,
 By virtue of r.93(1), the affidavit = an application to set aside the BN.
The Registrar will fix a day for the hearing of the application.
 By virtue of r.93(2), if the hearing date is later than the date for
compliance of the BN, the Registrar shall extend the time. No act of
 bankruptcy shall be deemed to have been committed under the BN
until the application has been heard.
 So even though under s. 3(1)(i), Ms Debt has 7 days to comply with
the BN, no act of bankruptcy shall be deemed to have committed until
the application to set aside has been heard.

 Conclusion
o Ms Debt can set aside the BN since the sum is excessive.
o Steps to be taken:
1. Step 1: Give notice within 7 days of the service of BN to dispute the
validity of BN on the grounds of excessive sum – must state the
correct amount in the notice
2. Step 2: Apply to set aside the BN by way of summons in chambers
supported by affidavit.
3. Step 3: After affidavit is filed, the Registrar will fix a hearing date. If the
hearing date would be later than the date prescribed in the BN, the
Registrar should extend the time.

4. Corona Sdn Bhd had entered into an agreement with Mr Lockdown for the supply of a
special flour for his cakes on 1.10.2019. On 15 January 2020 Corona Sdn Bhd obtained
judgment in default against Mr Lockdown for the amount of RM50,000 with interest at the
rate of 4% per annum from date of judgment until full and final realisation arising from the
supply of a special flour to Mr Lockdown under the agreement. Mr Lockdown did not make
any application to set aside the judgment in default and did not pay the judgment sum to
Corona Sdn Bhd.
A BN was issued on 15 March 2020 and served to Mr Lockdown by Corona Sdn Bhd.
Subsequently Mr Lockdown filed a claim for damages against Corona Sdn Bhd because the
special flour supplied to him by Corona Sdn Bhd made his cakes taste bitter and could not
be sold. Mr Lockdown comes to you seeking advice on whether he can set aside the BN on
the basis that he has a counterclaim against Corona Sdn Bhd.
(i) Advice Mr Lockdown on the procedure to set aside the BN on the grounds that the debtor
has a counterclaim.
Definition of Counterclaim:
• Case: Permodalan Plantations Sdn Bhd v Rachuta Sdn Bhd
• A cross-claim which a defendant has against a plaintiff but in respect of which the
defendant can bring a separate action against the plaintiff if he wishes to do so.
• Separate and independent action by the defendant, which the law allows to be joined to the
plaintiff’s action in order to avoid multiplicity or circuity of suits
• Also the creation of Statutes - governed by the provisions of 0.15 r.2 RO
Order 18, rule 17 (Defence of set-off)
17. Where a claim by a defendant to a sum of money (whether of an ascertained amount or
not) is relied on as a defence to the whole or part of a claim made by the plaintiff, it may be
included in the defence and set-off against the plaintiff's claim, whether or not it is also
added as a counterclaim.
• Order 15, rule 2 (Counterclaim against plaintiff):
2.(1) Subject to rule 5(2), a defendant in any action who alleges that he has any claim or is
entitled to any relief or remedy against a plaintiff in the action in respect of any matter
(whenever and however arising) may, instead of bringing a separate action, make a
counterclaim in respect of that matter; and where he does so he must add the counterclaim
to his defence.
(2) Rule 1 shall apply in relation to a counterclaim as if the counterclaim were a separate
action and as if the person making the counterclaim were the plaintiff and the person against
whom it is made a defendant."
Sub-issue 1: What are the requirements of setting aside the BN?
• A debtor commits an act of bankruptcy if a creditor has obtained a final judgment for any
amount and has served on him a bankruptcy notice requiring him to pay the judgment debt
or sum ordered to be paid in accordance with the terms of the judgment.
• The counterclaim must either equal or exceeds the amount of the judgement S.3(1)(i) of
the Bankruptcy Act 1967:
(a) The law requires you to:
• Quantify the amount;
• Must be done in good faith and has a reasonable probability of success; and
• Counterclaim could not have been set up in the action in which the judgment relied on
Case: Perwira Habib Bank Malaysia Bhd v Samuel Pakianathan Jabanickam
Held: Before the existence of a counterclaim could be a defence to a judgment creditors
petition, three ingredients had to be satisfied, namely, the burden was on the respondent to
show, by affidavit, that the (1) counterclaim must be capable of being quantified in terms of
money and the affidavit must quantify it, the (2) counterclaim must be put forward in good
faith and must have reasonable probabilities of success and the affidavit must show that the
(3) counterclaim could not have been set up in the action in which the judgment relied on by
the creditor was obtained.

Application:
• In this present case, the facts are silent as to whether Mr Lockdown has quantified the
amount of the counter claim for the damages of the flour.
• Considering that he wants to claim for the loss he suffered, it can also be deduced that it is
done in good faith and has a reasonable probability of success.
3rd element
Counterclaim could not have been set up in the action in which the judgment relied on
Tractors Malaysia Bhd v Charles Au Yong [1982] 1 MLJ 320]
 Facts:
There were 2 suits.
 1st suit (by the creditor)
 The appellants (creditors) brought an action against the
respondent (debtor for a sum of $211,800 being the balance of
tractors sold and delivered to the debtor (KL Suit). No defence
was filed , so JID was entered against the debtor.
 Debtor did not satisfy the judgment sum – the creditors served a
BN to the debtor since the debtor did not satisfy the judgment sum
from the KL Suit.
 2nd suit (by the debtor)
 the debtor filed an action against the creditors for damages
incurred on the debtor over the repossession of a tractor in
Melaka High Court (Melaka Suit). However, the BN was set aside
at the HC under s3(1)(i) of the Bankruptcy Act 1967 on the basis
that the debtor had a counterclaim (against him) which exceeds or
equals the amount of the judgment debt which he could not have
set up in the action in which the judgment was obtained.
Held
: the action by the debtor (2nd suit) against the creditor could have been
filed as a counterclaim in the 1st suit in which judgment was obtained.
: The tractor which was repossessed by the creditor was one of the
tractors which the 2 parties had business dealings. The 2nd suit for the
claim founded on the damage that the debtor incurred as a result of the
creditors repossession of the tractor.
: Thus, the debtor’s action does not amount to a counterclaim which “he
could not have set up in the 1st suit.” Thus, the creditor could issue a BN
against the debtor.
Application
In this case, the first action which JID is obtained by Corona Sdn. Bhd against is Mr
Lockdown is for the supply of a special flour under the agreement between the parties.
Based on the facts, Mr Lockdown planned to raise a counterclaim, which can be a potential
second suit. This is because he has suffered loss for the supplied special flour made his
cakes taste bitter and could not be sold. It can also be assumed that for this reason, Mr
Lockdown didn’t pay the sum of flour supply to Corona Sdn. Bhd in the first action as a form
of objection or protest to the flawed of the special flour. Hence, it is observed that the first
action and the potential second action are connected to each other. Mr Lockdown should
have raised the counter claim in the first action, as it could have been set up in the first
action. Therefore 3rd element is not fulfilled.
Conclusion: If Mr Lockdown wants to set aside the BN on the grounds of counterclaim, he
needs to ensure that his counterclaims falls within the definition in Section 3(1)(I) and fulfils
the three requirements mentioned before. In this case, Mr Lockdown did not fulfill the
requirement 3 - "Counterclaim could not have been set up in the action in which the
judgment relied on" where in this case, the claim in potential second suit could have been
raised in the first suit. Therefore, bankruptcy notice cannot be set aside.
Issue 2 Q2(I): What are the procedures to set aside the BN?
Assuming that the counterclaim can be used to set aside the BN, Mr Lockdown then needs
to follow certain steps to set aside the BN .
Procedures that must be followed by Mr Lockdown :
1 . Mr Lockdown may file an application to set the BN by way of affidavit claiming that he has
a counterclaim against the creditor which equals or exceeds the claim made by the creditor.
• R.93 Insolvency Rules 2017: Application to set aside
• R.93(1): The filing of an affidavit shall operate as an application to set aside the bankruptcy
notice, and the Registrar shall fix a day for the hearing of the application, and shall give not
less than three clear days notice to the debtor, the creditor, and their respective solicitors, if
known
• The affidavit must conform to the Form 36 of the Insolvency Rules 2017 in which para 2 in
Form 36 MUST be filled.
2. After filling Form 36, the affidavit must be filed by the JD within 7 days after the service of
the BN on him
• S.3(1)(i) Insolvency Act: the affidavit must be filed within 7 days after the service of the BN.
• Malayan Banking Bhd v Datuk Lim Kheng Kim [1992] 2 MLJ 540
• The JD filed an application in opposition 7 months after the service of the BN to set aside
the BN.
• Held: If a JD intends to satisfy the court that there is a counterclaim, set-off or cross-
demand, he must file an affidavit within 7 days of the service of the BN on him- s.3(1)(i) and
r.95.
Application
● Mr Lockdown must file an affidavit to set aside the BN as according to Rule 93 IR
○ Mr Lockdown must make sure that he conforms to the Form 36 for the
application to set aside the BN to succeed.

● The affidavit must be filed by the JD within 7 days after the service of the BN on him
following S.3(1)(i) IA.
○ Here, the BN was issued to him on 15.03.2020
○ Therefore, Mr Lockdown must file the affidavit before 22.03.2020.

(ii) How would your advice differ if instead of setting aside the BN on the grounds that he has
a counter-claim, Mr Lockdown comes to you and informs you that the BN which was served
on him had claimed for RM150,000. This amount in the BN was calculated based on interest
at the rate of 4% per annum from 15.1.2020 until 15.3.2020, penalty interest of 8% per
annum from 1.10.2019 to date of judgment and stamp duty of RM100.
• Yes, my advice to Mr Lockdown would differ because this situation would require a
different set of procedures to set aside the bankruptcy notice, in contrast to the above
situation.
• In the present case, the issue is whether the bankruptcy notice that was served on Mr
Lockdown may be set aside and what are the procedures to do so.

J Raju M Kerpaya v Commerce International Merchant Banker Bhd [2000] 3

CLJ 104]
Facts:
On 8.9.1988 : the respondent (JC) obtained a summary judgment against the
appellant (JD) for the sum of RM2,104,78.26 together with interest
at the rate of 4% above the cost of funds with monthly rests from
15 April 1986 until the date of realization.
On 31.8.1989 : the respondent issued a BN against the appellant. The BN stated
there is a sum of RM3,013,221.07 due from appellant as at 31
October 1989. It then set out particulars of the claims which
included the principle sum due on judgment dated 8.9.1988 and
several sums of penalty interest calculated at varying rates and a
claim of RM80 as stamp duty. However, such penalty interest
or of stamp duty were not mentioned at all in the judgment
obtained by the respondent.
The appellant (JD) took out a SIC to set aside the BN under r18 of the
Bankruptcy Rule 1969 (now r.17 of the IR). It was submitted that the bankruptcy
notice was not in accordance with the judgment and was therefore null and void
ab initio.

The respondent submitted that this was merely an instance where a larger sum
had been specified in the notice. Therefore, the appellant’s case came within
s.3(2)(ii) of the Bankruptcy Act 1967 and the appellant must follow the provisions
provided under s.3(2)(ii).

Held :The complaint by the appellant was that the BN was not in accordance
with the judgment. It is not merely that the BN claimed more than what
was actually due. A complaint that the BN was not in accordance with the
judgment is a separate distinct head of challenge under s.3(1)(i) of the
Bankruptcy Act 1967. It fell outside the scope of s.3(2)(ii).
: Thus, the appellant had acted correctly in accordance with the
procedure prescribed under r.18 of the Bankruptcy Rules (now r.17 of the
IR).
: So, the BN was a nullity as at the date of its issue.

[Tan Chwee Hock v AmBank (M) Bhd (previously known as AmFinance

Bhd)]2
Facts :The debtor challenged the BN on the grounds that the BN was not in
accordance with the terms of the judgment of which the BN is based
upon. The debtor complained that the period of computation of interest
is wrong and the sum of RM350 costs mentioned in the judgment was
not claimed in the BN.

2
[2012] 4 MLJ 159
 Held :The matter that is being complained now is the calculation of the
amount due under the judgment and is not a jurisdictional challenge
under s 3(1)(i) as understood in the case of J Raju a/l M Kerpaya.
: the debtor’s challenge is really a matter under s 3(2)(ii). Therefore the
challenge must be raised within seven days of the service of the
bankruptcy notice.
: so long as the bankruptcy notice includes a date in accordance with
the judgment of the court, there is no basis for the application of the
principle of law enunciated by this court in J Raju a/l M Kerpaya

Application
This situation is similar to the case at present where the bankruptcy notice served on Mr
Lockdown contained a claim of RM 150,000 with interest rate of 4% per annum from
15.1.2020 until 15.3.2020, penalty interest of 8% per annum from 1.10.2019 to date of
judgement and stamp duty of RM 100. The claims for penalty interest and stamp duty were
not stipulated in the judgement that was obtained by Corona Sdn Bhd. The bankruptcy
notice is invalid because it does not follow the terms stipulated in the judgement. Hence, the
bankruptcy notice can be set aside

Procedures to set aside the bankruptcy notice

 Based on J Raju’s case, this situation falls within the ambit of section 3(1)(i) of the
Insolvency Act 1967 where the debtor is required to pay the judgement debt
according to the terms of the judgement obtained.
 Accordingly, the procedures to set aside the notice is as prescribed in Rule 18 of the
Bankruptcy Rules 1969 which requires an application to be made by motion
supported by affidavit.
 J Raju referred to Datuk Lim Kheng Kim, where the Supreme Court held that failure
to follow rule 18 will render an affidavit in opposition ineffective and bad in law.

Rule 17 Insolvency Rules

• except where these Rules or the Act otherwise provide, every application to
the court shall, unless the Chief Judge otherwise directs, be made by
summons in chambers supported by affidavit.
Application
Since the bankruptcy notice that was served by Corona Sdn Bhd contained sums not
awarded in the judgement, Mr Lockdown may apply to set aside the notice under rule 17 of
the Insolvency Rules 2017 (previously was rule 18 of the Bankruptcy Rules 1969). This rule
requires that such an application to the court be made by a summons in chamber supported
by an affidavit. This indirectly means that there is no need for a hearing (set by Registrar) for
the application like the one under Rule 93(1) of the Insolvency Rules 2017.