Jabatan Insolvensi Malaysia Negeri Kedah

On the court record

The office's record illustrates the defence of the sanction requirement under section 38(1)(a) of the Insolvency Act 1967, which vests the conduct of a bankrupt's litigation in the Director General of Insolvency to protect the creditors' collective interest.

Jabatan Insolvensi Malaysia Negeri Kedah, the Kedah branch of the Malaysian Department of Insolvency, appears in the corpus as the legal office representing the Director General of Insolvency in insolvency litigation before the High Court (Mahkamah Tinggi).

Its reported work concerns a connected group of originating summonses brought by an undischarged bankrupt against various parties, including the Government, the Director General of Insolvency and a bank. Appearing for the defendant side, the office was engaged where the central and recurring question was whether the bankrupt could institute the proceedings without first obtaining the sanction of the Director General of Insolvency under section 38(1)(a) of the Insolvency Act 1967, and whether the absence of that sanction barred the action. That provision vests the conduct of a bankrupt's litigation in the Director General for the benefit of the creditors and restricts the bankrupt's capacity to sue in his own name.

The proceedings raised several refinements of the rule. One was whether naming the Director General of Insolvency as a party to the action thereby dispensed with the requirement of obtaining his sanction. Another was whether sanction was required where the Director General was himself sued for an alleged failure in the discharge of his duties while acting as Official Assignee of a resort. A third was whether the present action was in any event caught by the doctrine of res judicata, the question of sanction having been raised and decided in earlier originating summonses between the same parties.

The office's record, as an institutional legal representative of the insolvency authority, is concentrated on the defence of the sanction requirement under section 38(1)(a) of the Insolvency Act 1967 and the protection of the orderly administration of a bankrupt's estate against unsanctioned and repetitive litigation. Its appearance on the defence side of these connected summonses reflects the distinctive position of a state insolvency office, which must both answer allegations made against the Director General in the discharge of his statutory functions and uphold the procedural safeguards that channel a bankrupt's grievances through the sanction regime rather than through a multiplicity of individual suits.