ISSUE 7/2023 – MALAYAN HIGH COURT REFUSES TO GIVE A BANKRUPT FREE PASS.

MOHD SOFI ABDUL GHAFAR v. KETUA PENGARAH INSOLVENSI & ANOR

The plaintiff, who had been discharged from bankruptcy, sought the return of the monies in his estate in bankruptcy after payment in full by the Director General of Insolvency (DGI) of the income tax owed by him.

The novel question of law that was before the High Court was whether, upon the certificate of discharge under s 33A of the Insolvency Act 1967 (IA 1967) being issued, a discharged bankrupt’s property in his estate in bankruptcy must be returned to him without the proceeds from the property being distributed to creditors who had filed proofs of debt.

The High Court held that the plaintiff’s discharge was subject to s 35 of the IA 1967 and that the plaintiff was not released from all debts provable in bankruptcy upon the certificate of discharge being issued, and therefore the debts owed to creditors who had filed proofs of debts had not been wiped out.

The High Court also held that the DGI’s intention to distribute the plaintiff’s property by paying dividends to the said creditors from the plaintiff’s estate did not amount to an abuse of process and that the DGI had committed no misfeasance in public office.