THIYAGARAJAN A/L MPL YEGAPPAN v 1. ) KERAJAAN MALAYSIA 2. ) MENTERI UNDANG-UNDANG & REFORMASI INSTITUSI KERAJAAN MALAYSIA 3. ) KETUA HAKIM NEGARA MALAYSIA 4. ) KETUA PENGARAH INSOLVENSI MALAYSIA 5. ) CIMB BANK BERHAD 6. ) DATO ROBERT TEO KHENG TUAN 7. ) PENDAFTAR HAKMILIK, PEJABAT PENGARAH TANAH DAN GALIAN NEGERI KEDAH DARULAMAN

Case Significance

Confirms the mandatory character of the sanction requirement under section 38(1)(a) of the Insolvency Act 1967, holding that a bankrupt cannot dispense with the Director General of Insolvency's sanction by naming that officer as a party, and that arguments for legislative reform do not affect the competence of the action.

This High Court decision addresses one of several originating summonses brought by an undischarged bankrupt, acting in person and heard together, this one directed against the Government, several ministers and public officers, and a bank, all connected with his long-running effort to prevent the auction of land given as security for loans. The controlling issue was again the sanction requirement in section 38(1)(a) of the Insolvency Act 1967, which bars a bankrupt from commencing proceedings without the leave of the Director General of Insolvency. In this action the plaintiff advanced arguments going beyond the facts: that section 38(1)(a) in its current form imposes undue hardship on undischarged bankrupts and warrants legislative reform, and that by naming the Director General of Insolvency as a party the requirement to obtain that officer's sanction was effectively dispensed with. The court rejected both propositions. It held that whatever the policy merits of reform, the statute as it stands governs the competence of the action, and that a bankrupt cannot dispense with the need for sanction simply by joining the Director General of Insolvency as a defendant; the sanction is a precondition to suing, not a matter satisfied by the identity of the parties named. The court reiterated that the substance of the plaintiff's actions was the preservation of a property right rather than any injury to his person, so the recognised exception did not apply. Because the plaintiff had not obtained sanction before commencing the originating summons, he was incompetent in law to bring it and the action was not maintainable. The court observed that the plaintiff, though acting in person, had instituted a series of proceedings against various parties with the single object of preventing the enforcement of the security, and that permitting the sanction requirement to be sidestepped in this way would defeat the protective statutory scheme that governs the litigation of an undischarged bankrupt. The preliminary objection was upheld and the originating summons struck out. The judgment confirms the mandatory character of the sanction requirement.