Sundar Venkatachalam v Bharathi: Annulment of Bankruptcy Order

In the case of Sundar Venkatachalam v Bharathi d/o Subbiah, the General Division of the High Court of Singapore addressed the recourse available to a debtor dissatisfied with a bankruptcy order. The court dismissed the defendant's application to set aside the bankruptcy order made against her on 12 October 2023, clarifying that while a first instance court has the power to set aside a bankruptcy order, it should only be invoked in exceptional circumstances to prevent injustice. The court found that the bankruptcy order was properly made and that the defendant had not provided sufficient reasons for not pursuing an appeal or annulment application.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Application dismissed.

1.3 Case Type

Bankruptcy

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

The High Court dismissed an application to set aside a bankruptcy order, clarifying the recourse available to debtors and the court's powers.

1.7 Decision Date

8 April 2024

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Sundar Venkatachalam	Claimant	Individual	Application dismissed	Neutral	Ang Wee Tiong, Katie Lee Shih Ying
Bharathi d/o Subbiah	Defendant	Individual	Application dismissed	Lost	Manickavasagam s/o R M Karuppiah Pillai
Official Assignee	Non-party	Government Agency	Neutral	Neutral	Jeffrey Yip

3. Judges

Judge Name	Title	Delivered Judgment
Wong Hee Jinn	Assistant Registrar	Yes

4. Counsels

Counsel Name	Organization
Ang Wee Tiong	Lumiere Law LLP
Katie Lee Shih Ying	Lumiere Law LLP
Jeffrey Yip	Insolvency & Public Trustee’s Office
Manickavasagam s/o R M Karuppiah Pillai	Manicka & Co

4. Facts

Claimant invested $30,000 in Sareka F&B under an agreement for monthly payments.
Sareka F&B defaulted after two payments, leading to a judgment debt.
Statutory Demand was served on the defendant based on the judgment debt.
Defendant applied to set aside the Statutory Demand, but withdrew the application.
Official Assignee deemed the defendant unsuitable for the Debt Repayment Scheme.
Bankruptcy order was made against the defendant on 12 October 2023.
Defendant applied to set aside the bankruptcy order, alleging negligence by her former solicitor.

5. Formal Citations

Sundar Venkatachalam v Bharathi d/o Subbiah, Bankruptcy No 222 of 2023(Summons No 3297 of 2023), [2024] SGHCR 6

6. Timeline

Date	Event
2019-07-25	Investment agreement and personal guarantee signed.
2022-07-09	Claimant commenced action against Sareka F&B, the defendant and Mr Karuppaiah.
2022-07-15	Defendant served with OC 1291 and Statement of Claim.
2022-08-02	Judgment in default granted against the defendants.
2022-08-07	Notice of Appointment of Solicitor filed for the defendant.
2022-10-09	Statutory Demand served on the defendant.
2023-01-25	Bankruptcy Application filed.
2023-02-06	Defendant served with Bankruptcy Application and supporting affidavit.
2023-02-23	First hearing of the Bankruptcy Application; adjourned.
2023-03-07	Notice of Appointment of Solicitor filed for defendant in Bankruptcy Application.
2023-03-09	Second hearing of the Bankruptcy Application; adjourned.
2023-03-22	Defendant filed application to set aside Statutory Demand.
2023-03-23	Third hearing of the Bankruptcy Application; adjourned.
2023-04-26	Hearing of application to set aside Statutory Demand; application withdrawn.
2023-04-27	Fourth hearing of the Bankruptcy Application; adjourned for DRS assessment.
2023-10-09	Official Assignee determined the defendant to be unsuitable for DRS.
2023-10-12	Bankruptcy order made against the defendant.
2023-10-25	Defendant filed application to set aside bankruptcy order.
2023-12-01	First hearing of application to set aside bankruptcy order.
2024-02-16	Second hearing of application to set aside bankruptcy order.
2024-04-09	Judgment reserved.

7. Legal Issues

Annulment of Bankruptcy Order
- Outcome: The court held that the bankruptcy order should not be annulled.
- Category: Substantive
- Related Cases:
  - [2014] SGHCR 6
  - [2018] 4 SLR 293
Setting Aside of Bankruptcy Order
- Outcome: The court held that there is a free-standing power to set aside a bankruptcy order, but it should be invoked only in exceptional circumstances.
- Category: Procedural
- Related Cases:
  - [2020] 1 SLR 206
  - [2023] 2 SLR 170
Powers of the Court
- Outcome: The court clarified its powers to review, rescind, or vary any order made under the IRDA.
- Category: Jurisdictional
Inherent Powers
- Outcome: The court clarified the scope of its inherent powers in relation to bankruptcy proceedings.
- Category: Jurisdictional

8. Remedies Sought

Setting aside of bankruptcy order
Costs to be borne by former solicitor

9. Cause of Actions

Breach of Contract

10. Practice Areas

Insolvency
Bankruptcy Law

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Harmonious Coretrades Pte Ltd v United Integrated Services Pte Ltd	Court of Appeal	Yes	[2020] 1 SLR 206	Singapore	Cited for the principle that a court has inherent power to set aside a garnishee order to prevent injustice, but this power should not be used for frivolous applications or back-door appeals.
Rex Lam Paki v PNG Sustainable Development Program Ltd	High Court	Yes	[2023] 2 SLR 170	Singapore	Cited for the principle that the court has the power to set aside a judgment on admissions, notwithstanding that the revoked Rules of Court makes no express provision for it.
Ong Cher Keong v Goh Chin Soon Ricky	Court of Appeal	No	[2001] 1 SLR(R) 213	Singapore	Cited for the common law grounds that may warrant a court to set aside a judgment or order of court.
TYC Investment Pte Ltd v Chan Siew Lee Jannie and another	Court of Appeal	No	[2018] 4 SLR 293	Singapore	Cited regarding the practical effect of an annulment and an appeal against a bankruptcy order being allowed.
Tang Yong Kiat Rickie v Singesinga Sdn Bhd (transferee to part of the assets of United Merchant Finance Bhd) and others	High Court	No	[2014] SGHCR 6	Singapore	Cited for the two-step assessment in an application to annul a bankruptcy order.
Re Amos William Dawe	N/A	No	[1980] 1 MLJ 200	N/A	Cited for the principle that the onus lies on the bankrupt to satisfy the court that he or she ought not to have been made a bankrupt.
Re Peter Wong, Ex parte the Debtor	N/A	No	[1959] MLJ 27	N/A	Cited for the principle that the court retains the ultimate discretion to decide whether a bankruptcy order should be annulled.
Re Dunn	N/A	No	[1949] 2 All ER 388	England and Wales	Cited for the principle that the court retains the ultimate discretion to decide whether a bankruptcy order should be annulled.
HSBC Bank (Singapore) Ltd v Ong Chee Han Jeremy	High Court	No	[2022] SGHCR 10	Singapore	Cited for the principle that the court must also consider how annulment might impact third-party interests.
Koh Kim Teck v Shook Lin & Bok LLP	Court of Appeal	No	[2021] 1 SLR 596	Singapore	Cited for the factors that a court ought to take into consideration when deciding whether to grant an extension of time to file an application to set aside a Statutory Demand.
Rafat Ali Rizvi v Ing Bank NV Hong Kong Branch	High Court	No	[2011] SGHC 114	Singapore	Cited for the factors that a court ought to take into consideration when deciding whether to grant an extension of time to file an application to set aside a Statutory Demand.
Tan Hup Yuan Patrick v The Griffin Coal Mining Co Pty Ltd	High Court	No	[2014] 4 SLR 221	Singapore	Cited for the principle that the court will not go behind the judgment or order and inquire into the validity of the debt on an application to set aside a statutory demand based on a judgment or an order.
Lim Poh Yeoh (alias Lim Aster) v TS Ong Construction Pte Ltd	High Court	Yes	[2016] 5 SLR 272	Singapore	Cited for affirming the principle that the court will not go behind the judgment or order and inquire into the validity of the debt on an application to set aside a statutory demand based on a judgment or an order.
Wong Kwei Chong v ABN-AMRO Bank NV	High Court	No	[2002] 2 SLR(R) 31	Singapore	Cited for the principle that it is not the function of the bankruptcy court, at the hearing of an application to set aside a statutory demand, to conduct a full hearing of the dispute and adjudicate on the merits of the creditor’s claim.
Chimbusco International Petroluem (Singapore) Pte Ltd v Jalalludin bin Abdullah and other matters	High Court	No	[2013] 2 SLR 801	Singapore	Cited for the principle that where a creditor commences insolvency proceedings after having had its rights adjudicated in a civil suit, its standing to bring insolvency proceedings is irrefutably established.
K Shanker Kumar v Nedumaran Muthukrishnan (Official Assignee, non-party)	High Court	No	[2023] SGHC 214	Singapore	Cited as a helpful illustration as to when a court may consider setting aside a bankruptcy order even after a Notice of Unsuitability has been issued by the Official Assignee.

13. Applicable Rules

Rule Name
Rules of Court 2021
Order 3 r 2(8) of the Rules of Court 2021
O 1 r 2(11) of the Rules
O 25 r 6 of the Rules
O 28 of the Rules
O 1 r 2(12) of the Rules
O 18 r 24 of the Rules
O 18 r 25(4) of the Rules
Rule 137(2) of the PIR Rules
Rule 137(4) of the PIR Rules
Rule 67(2)(b) of the PIR

14. Applicable Statutes

Statute Name	Jurisdiction
Insolvency, Restructuring and Dissolution Act 2018	Singapore
s 3 of the IRDA	Singapore
s 5(a) of the IRDA	Singapore
s 2 of the IRDA	Singapore
Part 16 of the IRDA	Singapore
s 8(1) of the IRDA	Singapore
ss 392(1) of the IRDA	Singapore
s 393(2) of the IRDA	Singapore
s 7 of the IRDA	Singapore
ss 311(1) of the IRDA	Singapore
s 316(1) of the IRDA	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Bankruptcy order
Statutory demand
Debt Repayment Scheme
Annulment
Inherent powers
Negligence
Official Assignee

15.2 Keywords

Bankruptcy
Insolvency
Annulment
Setting Aside
Debt Repayment Scheme
Singapore Law

16. Subjects

Bankruptcy Law
Insolvency Law
Civil Procedure

17. Areas of Law

Insolvency Law
Bankruptcy
Civil Procedure