{"id":7837,"date":"2020-10-20T15:38:26","date_gmt":"2020-10-20T07:38:26","guid":{"rendered":"http:\/\/alexchanglaw.com\/?p=7837"},"modified":"2025-03-27T18:27:09","modified_gmt":"2025-03-27T10:27:09","slug":"discharge-discretion-dgi-s33a-33b-insolvency-act-ting-bee-ren","status":"publish","type":"post","link":"https:\/\/alexchanglaw.com\/index.php\/discharge-discretion-dgi-s33a-33b-insolvency-act-ting-bee-ren\/","title":{"rendered":"Discharge of Bankruptcy at the Discretion of DGI S33A and 33B Insolvency Act and Case Study"},"content":{"rendered":"\n

The Act in brief<\/strong><\/p>\n\n\n\n

[1]<\/strong>\nS33A of Insolvency Act confers the power of discharge of bankrupt to Director\nGeneral of Insolvency (DGI). The section says that as the DGI may, in his\ndiscretion but subject to section 33B, issue a certificate discharging a\nbankrupt from bankruptcy after five years of the adjudgment of bankruptcy\norder. <\/p>\n\n\n\n

[2]<\/strong>\nA notice of his intention to issue the certificate should be served to each\ncreditor who has filed a proof of debt and the creditors will have chance to\nreply with a notice of objection stating the grounds of his objection within 21\ndays (ss 33B (1) & (2) Insolvency Act<\/strong>).  If a creditor fails to do so, he is deemed to\nhave no objection to the discharge (s33B (3) Insolvency Act<\/strong>).<\/p>\n\n\n\n

[3]<\/strong> There are 4 situations where the creditors cannot make objections to the notice, where:<\/p>\n\n\n\n

(a) the bankrupt was adjudged bankrupt by reason of him being a social guarantor;<\/p>\n\n\n\n

(b) the bankrupt is registered as a person with disability under the Persons with Disabilities Act 2008 [Act 685];<\/p>\n\n\n\n

(c) the bankrupt has died; and<\/p>\n\n\n\n

(d) the bankrupt suffers from a serious illness certified by a Government Medical Officer.<\/p>\n\n\n\n

[4]<\/strong>\nIf the creditor\u2019s objection was rejected by the DGI, then he may make\napplication to court. The court may dismiss the application or make an order\nthat for a period not exceeding two years a certificate of discharge shall not\nbe issued by the DGI. It is not sure what will happen after two years if the\ncreditor is still not happy with the discharge. The court in Asia\nCommercial Finance (M) Berhad v Bassanio Teo Yang [2009] MLJU 313<\/em><\/strong><\/a> <\/strong>confirmed that it could certainly delay\nthe issuance of certificate of the DGI by two years as this is clearly provided\nin section 33B. In another word, the delay cannot be longer than 2 years.<\/p>\n\n\n\n

Power of Director\nGeneral of Insolvency<\/strong><\/strong><\/p>\n\n\n\n

[5]<\/strong> Since the DGI has discretionary power to\ndecide whether to issue the discharge under S33A, he does not need to state the\nreasons of him doing so and the courts are not under any statutory obligation\nto question the DGI on this issue (Asia\nCommercial Finance (M) Berhad v Bassanio Teo Yang [2009] MLJU 313<\/em><\/strong><\/a>). However, in the cases where a matter of\nissuing a certificate to discharge was brought to courts, the DGI may and is\nlikely to give the grounds why he intends to discharge the respondent by way of\naffidavit. <\/p>\n\n\n\n

[6]<\/strong> In Asia\nCommercial Finance (M) Berhad v Bassanio Teo Yang [2009] MLJU 313<\/em><\/strong><\/a>, the counsel for creditors claimed that\nthe DGI did not prepared an updated report on the bankrupt. However, this point\nwas rebutted by the DGI representative that the DGI cannot be faulted for not\npreparing an updated report, because he alone is the decision maker, therefore\nit is common sense that he need not \u201creport\u201d to himself about the status of the\nbankrupt. It must be assumed that all the relevant information that is in the\nfile of the bankrupt has been considered by the proper officer of the DGI and\nthis point of argument was accepted by the court and affirmed in the judgment\nof JC Ravinthran Paramaguru. <\/p>\n\n\n\n

[7]<\/strong> Same approach was then adopted in Re Benny Ong\nSwee Siang, ex parte United Overseas Bank (M) Bhd [2016] 8 MLJ 805<\/em><\/strong> by the High\nCourt where the judge is in the opinion that it is perfectly within the DGI\ndiscretion to give reasons and he is equally entitled to exercise his\ndiscretion to issue the certificate of discharge. The DGI can also issue the\ncertificate of discharge even the debts are not paid off yet (Public Bank Bhd v Kok Lee Wah <\/em><\/strong>[2004] 4 MLJ 433<\/em><\/strong><\/a> and Re Siow Ah<\/em><\/strong> Moi @ Seow Yin Fong; ex p United\nOrient Leasing Co Bhd <\/em><\/strong>[2007] 3 MLJ 713<\/em><\/strong><\/a>).\n<\/em><\/strong><\/p>\n\n\n\n

Purpose of s33A <\/strong><\/p>\n\n\n\n

[8]<\/strong>\nIn order to find out purpose of certain law, we can make reference to the\nparliamentary debate in relation to the Act. In the Hansard of 29 July 1998,\nthe honorable Deputy Minister said that: <\/p>\n\n\n\n

\u201cPurpose of inserting section\n33A<\/strong> is to make it easier for the bankrupt who were adjudged bankruptcy by\nthe reason of involving himself in business and company\u2019s affairs to get\nrelief. In addition, this section is also to dispose cases that are\ninadmissible.\u201d<\/em><\/p>\n\n\n\n

[9]<\/strong>\nIn the bill of relevant law. The bill of Insolvency Act<\/strong> mentions that\nthe purpose of section 33A<\/strong> is to confer power to DGI to further their\noriginal intention to afford a bankrupt some relief. The Minister in the\nPrime Minister\u2019s Department Datuk Liew Vui Keong also said in an interview that\ns33A of Insolvency Act<\/strong> is a provision which can assist a bankrupt to get\nout of bankruptcy by way of obtaining a discharge certificate from the\nDirector-General of Insolvency.<\/p>\n\n\n\n

[10]<\/strong>\nFrom the wordings of the bill, we know that the Act was designed to meet two\nmajor conflicting concerns. One stemmed from the fact that many individual\nbusinessmen become insolvent not through any fault, moral or otherwise, but\nthrough just being caught at the wrong turning of the economic cycle. It would\nbe in the interests of society that people who had become bankrupt in such\ncircumstances should be given a second chance in life. The other concern was\nthat without proper safeguards, people who have used dishonest and fraudulent\nmethods in conducting their business affairs to the detriment of their\ncreditors might get an undeserved advantage from their own wrong doings. <\/p>\n\n\n\n

[11]<\/strong>\nTherefore, the DGI is a key character under this section to differentiate those\nwho deserve a relief and those who should not be forgiven until they have\nrepaid all debts. Bearing in mind the purpose of this section, the creditors\nwho are dissent to the decision of DGI should prove to the court that the\nbankruptcy was adjudged due to the respondent\u2019s fraudulent acts.<\/p>\n\n\n\n

[12]<\/strong>\nThe power of the court to prohibit the DGI from issuing the certificate to\ndischarge the respondent for a period of two years should only be exercised in\nclear cut cases of abuse of section 33A.<\/strong> Clear cut cases of abuse would\nbe where the bankrupt had obtained huge loans with no intention of paying them\nback or where the bankrupt is maintaining an extravagant lifestyle beyond his\nreported income or where he has continued to be reckless in his financial\naffairs. <\/p>\n\n\n\n

[13]<\/strong>\nHowever, as noted in the judgment of Asia\nCommercial Finance (M) Berhad v Bassanio Teo Yang [2009] MLJU 313<\/em><\/strong><\/a>, even if the above facts were proven by\nthe creditor, the court can only delay the discharge of the bankrupt by two\nyears as Parliament in its wisdom had granted the power to discharge a bankrupt\nto the DGI. <\/p>\n\n\n\n

Rights to travel<\/strong><\/p>\n\n\n\n

[14]<\/strong> The rights to travel overseas of the bankrupt is deprived by s38(1)(c) of Insolvency Act<\/strong>. A bankrupt who has not obtained a discharge shall not leave Malaysia unless he has got the permission from DGI or the court. If the bankrupt also owes tax to the Inland Revenue Board (IRB), or in a case where the IRB has filed a claim against the bankrupt, then the bankrupt has to obtain permission from the director general of IRB under s104(1) of the Income Tax Act (ITA<\/strong>) as well as from the DGI under s38(1)(c) of Insolvency Act<\/strong>.<\/p>\n\n\n\n

[15]<\/strong>\nThe issuance of certificate under s104(1) of ITA is one of the authorized modes\nto recover the tax due as was held by Supreme Court in the case of Tai\nChoi Yu v Government of Malaysia & Ors <\/em><\/strong>[1994] 1 MLJ 677<\/em><\/strong><\/a> that:<\/p>\n\n\n\n

\u2018One\nof the primary functions of the Director General of IRB under the Act is to\ncollect and recover assessed tax effectively, and to do that, he must employ\nall the modes of recovery authorized in Pt VII (ss 103-111) of the Act\u2019<\/strong><\/p>\n\n\n\n

[16]<\/strong> Hence, the Insolvency Act does not take\nprecedent over ITA and one should not be read as rule out another as they both\nhave their own function.<\/p>\n\n\n\n

[17]<\/strong>\nInsolvency Act and ITA have their distinct applications. The ITA was enacted to\nregulate the collection of revenue of the country; and the Insolvency Act to\nprotect the creditors\u2019 interests. It is not wrong to say that these two Acts\nare both complementary and yet independent of each other. Therefore, it is only\nprudent for these two bodies to give due regard to their respective roles and\nresponsibilities and to coordinate their decisions in order to avoid any\nunpleasant situations.<\/p>\n\n\n\n

[18]<\/strong> An example of parallel application of these two acts can be found in the case LIM MOON HENG v THE GOVERNMENT OF MALAYSIA & ANOR [2002] 2 MLJ 499<\/em><\/strong><\/a>. <\/em><\/strong>The plaintiff was an adjudged bankrupt and was granted a leave to travel by the DGI. However, his application to travel was rejected by the IRB under s104 of the Income Tax Act<\/strong>, unless certain conditions were fulfilled. The court held that the Director General of IRB still retains the power to stop the plaintiff from leaving even if he was a bankrupt and have got the permission from the DGI.<\/p>\n\n\n\n

Ting Bee Ren
University of Leeds <\/p>\n\n\n\n

\"\"
Ting Bee Ren<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"

The Act in brief [1] S33A of Insolvency Act confers the power of discharge of bankrupt to Director General of Insolvency (DGI). The section says that as the DGI may, in his discretion but subject to section 33B, issue a certificate discharging a bankrupt from bankruptcy after five years of the adjudgment of bankruptcy order. […]<\/p>\n","protected":false},"author":1805,"featured_media":11864,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[52,67,69],"tags":[84,106],"_links":{"self":[{"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/posts\/7837"}],"collection":[{"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/users\/1805"}],"replies":[{"embeddable":true,"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/comments?post=7837"}],"version-history":[{"count":7,"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/posts\/7837\/revisions"}],"predecessor-version":[{"id":8234,"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/posts\/7837\/revisions\/8234"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/media\/11864"}],"wp:attachment":[{"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/media?parent=7837"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/categories?post=7837"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alexchanglaw.com\/index.php\/wp-json\/wp\/v2\/tags?post=7837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}