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Bankruptcy Case

In the case of Mohamed Supardi bin Mohd Noor, the debtor failed to pay for a car purchased through a hire-purchase agreement, leading the creditor to seek a judgment. The court ruled that the creditor was not a secured creditor under the Bankruptcy Act 1967 because the car was not owned by the debtor until the hire purchase price was fully paid. Consequently, the debtor's appeal to set aside the creditor's petition was dismissed, as the creditor could not claim their own property as security.

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21 views2 pages

Bankruptcy Case

In the case of Mohamed Supardi bin Mohd Noor, the debtor failed to pay for a car purchased through a hire-purchase agreement, leading the creditor to seek a judgment. The court ruled that the creditor was not a secured creditor under the Bankruptcy Act 1967 because the car was not owned by the debtor until the hire purchase price was fully paid. Consequently, the debtor's appeal to set aside the creditor's petition was dismissed, as the creditor could not claim their own property as security.

Uploaded by

tharehnee27
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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iii) Mohamed Supardi bin Mohd Noor, ex parte Public Finance Bhd [2004] 1 LNS 237

Facts :
Judgement Creditor (Creditor) – A finance company that owns the car bought by the debtor

Judgement Debtor (Debtor) – purchased a car by way of loan financing

The debtor has purchased a car by the way of loan financing which was given by the creditor
through a Hire-purchase agreement. The debtor has failed to pay the monthly installment and the
creditor although made an attempt to repossess the car had failed to do so. The creditor has
instituted an action against the debtor and obtained a judgment in default that resulted in a
creditor’s petition against the JD.

The debtor has applied for the petition to be set aside but was dismissed. And the debtor had
appealed raising an issue that the creditor is a secured creditor ad its failure to state the car as
security and its value was fatal to its petition as Section 5(2) of the Bankruptcy Act 1967 was not
complied with.

ISSUE : The debtor raised an issue stating that the creditor here is a secured creditor under the
Bankruptcy Act 1967.

Judgment:

The court in this case looked into the Bankruptcy Act and also the Hire Purchaser Act.

As per the court referring to Section 2 of the Bankruptcy Act 1967 a petitioning creditor is a
secured creditor if he holds either mortgage, charge, or lien over the property of the debtor. It
was emphasized that the property must be owned by the debtor. The Hire Purchaser Act states
under Section 2 that the property shall not be debtor’s until the hire purchase price has been fully
settled.

Thus, as the car is not the property of the debtor but is the creditor’s therefore there is no
mortgage, charge, or lien by the creditor over it. In this case, the court came to the conclusion
that the creditor is not a secured creditor for the purpose of Section 5(2) of the Bankruptcy Act.

Section 5(2) :
If the petitioning creditor is a secured creditor he must in his petition either state that he is
willing to give up his security for the benefit of the creditors in the event of the debtor being
adjudged bankrupt or give an estimate of the value of his security. In the latter case, he may to
the extent of the balance of the debt due to him, after deducting the value so estimated, be
admitted as a petitioning creditor in the same manner as if he were an unsecured creditor.

The court highlighted that the creditor cannot take their own property as a security and it is the
creditor’s right to repossess the car. The debtor’s appeal was dismissed.

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