KUALA LUMPUR: The High Court has fixed Nov 17 to deliver a ruling on the appeal by Datuk Seri Najib Tun Razak and his son, Datuk Mohd Nazifuddin, against its refusal to grant a stay of bankruptcy proceedings.
The proceedings were initiated by the Inland Revenue Board (LHDN) following the duo’s failure to settle tax arrears of RM1.69 billion and RM37.6 million, respectively.
Judicial Commissioner Suhendran Sockanathan @ Saheran Abdullah set the date on Wednesday (Oct 22) after hearing submissions from counsel Muhammad Farhan Muhammad Shafee, who appeared for the appellants, and senior revenue counsel Norhisham Ahmad, who represented the LHDN.
The appeal arises from a High Court decision that granted summary judgment to the LHDN in the case.
A summary judgment is a ruling made without a full trial, where the court determines that there is no valid defence to the claim.
This follows the Federal Court's dismissal of the duo's final appeal on Oct 16, 2023, which upheld the High Court's ruling and obligated them to settle the unpaid taxes.
Two separate High Courts granted the LHDN’s application for summary judgment to recover tax arrears from the father and son for the assessment years 2011 to 2017.
Both Najib and Mohd Nazifuddin subsequently lost their appeals to set aside these judgments at the Court of Appeal in September 2021. However, on May 10, 2022, the Federal Court granted them leave to appeal the matter further.
Earlier, Muhammad Farhan argued that a stay of the bankruptcy proceedings would not prejudice the Government of Malaysia, as the judgment creditor.
He contended that if the bankruptcy proceedings were to continue and a bankruptcy order were issued, it would render the appellants' ongoing appeal before the Special Commissioners of Income Tax (SCIT) nugatory.
"Failure to stay the bankruptcy proceedings would stifle the judgment debtor’s pending appeal before the SCIT and render it nugatory, as a successful outcome in those proceedings would be deprived of any practical effect,” said Muhammad Farhan, who was assisted by counsel Wee Yeong Kang.
In response, Norhisham submitted that the bankruptcy proceedings initiated against the judgment debtors constituted a lawful process, properly invoked when a debtor is unable to satisfy a judgment debt.
He argued that the action was founded upon a final judgment, to which the judgment creditor, as the successful party, is entitled to give immediate effect.
Consequently, the creditor is empowered to take all necessary steps to recover the judgment sum expeditiously, particularly following the conclusive dismissal of the debtors' appeal by the Federal Court on Oct 16, 2023.
Norhisham submitted that stays had previously been granted in cases where the delay in proceedings was attributable to the judgment creditor or the Director General of Inland Revenue (DGIR).
"However, in this case, no such delay has been caused by the judgment creditor or the DGIR. From the date the Form Q (notice of appeal) was accepted by the DGIR until the first case management before the SCIT, the judgment creditor has maintained that no settlement or agreement for settlement has been reached outside of court.
"Therefore, there are no special circumstances or sufficient reasons for this court to grant a stay of the bankruptcy proceedings,” said Norhisham, who was assisted by senior revenue counsel Al-Hummidallah Idrus. – Bernama
