THIYAGARAJAN A/L MPL YEGAPPAN v 1. ) KETUA PENGARAH JABATAN INSOLVENSI MALAYSIA 2. ) DATO ROBERT TEO KHENG TUAN 3. ) CIMB BANK BERHAD

Case Significance

Illustrates how the sanction requirement under section 38(1)(a) of the Insolvency Act 1967, reinforced by res judicata, prevents an undischarged bankrupt from relitigating settled questions through successive suits, including one against the Director General of Insolvency for alleged breach of duty.

This High Court decision concerns an originating summons brought by an undischarged bankrupt, acting in person, against the Director General of Insolvency, a liquidator, and a bank, heard together with his other related actions. As with the companion summonses, the governing question was whether the plaintiff could maintain the action without the sanction of the Director General of Insolvency required by section 38(1)(a) of the Insolvency Act 1967, but this action raised additional issues. The plaintiff contended that sanction was not required where the Director General was sued for an alleged failure to discharge his duties as Official Assignee in relation to the company whose land secured the loans, and the defendants contended that the action was in any event caught by res judicata, the sanction issue having been raised and decided in earlier originating summonses between the parties. The court held that no incantation or formula could, on its face, bring the plaintiff within the exception to the sanction requirement, and that the real focus of his actions remained the preservation of the land from being sold at auction — a property right, not an injury to his person. It found that the plaintiff had not secured the sanction of the Director General of Insolvency before commencing the originating summons, so that he was incompetent in law and the action was not maintainable. The court declined to allow the process to be manipulated by repetitive proceedings raising matters already determined, noting that the sanction issue had been ventilated and decided in earlier originating summonses between the same parties and could not be reopened. It reiterated that the court must determine, as a matter of both fact and law, whether an action truly involves injury to the person before the exception can apply, and that no clever use of words could supply what the facts did not. The preliminary objection was upheld and the originating summons struck out. The judgment illustrates how the sanction requirement, reinforced by res judicata, operates to prevent an undischarged bankrupt from relitigating settled questions through successive suits.