KUALA LUMPUR: Former prime minister Datuk Seri Najib Razak is not bankrupt despite a court ruling dismissing his application for a stay on a summary judgment that requires him to pay RM1.69bil in tax arrears to the Inland Revenue Board (LHDN).
Lawyer Mohamed Haniff Khatri Abdulla said there was a public misconception that Najib was a bankrupt because of the bankruptcy notice that was issued to him on Feb 4.
According to the lawyer, there are phases to a bankruptcy process that a person must go through before being declared bankrupt.
Until this declaration is made by the court, Najib is still the rightful Pekan MP, he added.
“The disqualification of an MP is governed by Article 48(1)(b) of the Federal Constitution for undischarged bankruptcy,” he said when contacted by The Star here on Tuesday (June 15).
Mohamed Haniff explained that a bankruptcy action begins with a bankruptcy notice.
“However, the issuance of this notice does not mean a person is bankrupt. It only means the person has to pay the amount demanded in the notice, failing which the person has committed what is called in law as an act of bankruptcy,” he added.
After the act of bankruptcy is committed, LHDN, as the creditor, will file for a petition of bankruptcy known as a creditor’s petition.
“The creditor’s petition must be filed within six months. Even at this point, the person is still not bankrupt.
“A creditor’s petition is a way of starting a hearing in court. Once a hearing date is obtained, the creditor’s petition must be heard by the court.
“Only if, after all the process of hearing the case, the court is convinced that the person is to be declared a bankrupt, will it then issue the necessary bankruptcy order,” Mohamed Haniff said.
An MP stands to lose his or her parliamentary seat after being declared bankrupt as per Article 48(1)(b) of the Constitution.
“Once an MP is declared bankrupt (by the court), only a Speaker can declare the seat vacant,” Mohamed Haniff said.
On Monday, the Kuala Lumpur High Court dismissed Najib’s application for a stay of execution on a summary judgment against him obtained by the LHDN on July 22 last year.
A summary judgment is when the court decides a particular case summarily, without calling witnesses to testify in a trial.
In his dismissal, Justice Ahmad Bache said Najib had not proven special circumstances to the court that could warrant a stay.
The judge also pointed out that Najib could still negotiate with LHDN for some payments to be made pending the disposal of his hearing at the Special Commissioner of Income Tax (SCIT), where Najib is appealing against the sum demanded from him.
On June 25, 2019, the government through LHDN filed the suit against Najib seeking payment for a total of RM1.69bil, with interest at 5% a year from the date of judgment, as well as cost and other relief deemed fit by the court.
It also said that Najib was given 60 days to pay the tax, together with the 10% increase, but had failed to do so.
Najib is appealing against the High Court’s decision on the July 22 summary judgment and the appeal would be heard at the Court of Appeal on Wednesday (June 16).