By The Straits Times | Created at 2026-09-04 05:16:24 | Updated at 2026-09-04 06:07:35
57 minutes ago
PUTRAJAYA – Najib Razak and his son Mohd Nazifuddin have succeeded in their appeal to stay bankruptcy proceedings against them over failure to settle tax arrears amounting to billions of ringgit.
A three-judge panel chaired by Justice Alwipa Abdul Wahab unanimously allowed the stay application by Najib and Nazifuddin in the decision on Sept 4.
Other judges on the panel were Justices Shahnaz Sulaiman and Ong Chee Kwan.
Alwipa, who read the decision, said the learned Judicial Commissioner (JC) who dismissed Najib and Nazifuddin’s stay application had erred when he held that the appellants suffer no irreparable harm on the basis of Section 111 of the Income Tax Act (ITA) 1967.
Section 111 guarantees a refund of any tax overpaid, should the appeal by Najib and Nazifuddin before the Special Commissioner of Income Tax (SCIT) on their tax arrears succeed.
“We concede with the appellants’ submission that the JC’s reasoning is only confined to the recoverability of money. It does not and cannot address the distinct and irreversible consequences of an adjudication of bankruptcy as alluded to above.
“The learned JC’s equation of irreparable harm with mere monetary loss was a misdirection,” Alwipa said.
He also said that the “Pay First, Dispute Later” mechanism under the ITA must not be construed as an absolute statutory bar that overrides the court’s discretion in granting appropriate reliefs under special circumstances.
“It (the mechanism) is a procedural framework designed to secure revenue collection but it does not extinguish the court’s inherent jurisdiction to intervene where the balance of justice so requires,” he said.
He added that the present appeal before the court was precisely such a case where a stay was warranted and that a stay would not prejudice the government, as the respondent.
“In conclusion, for all the above reasons, the appeal is allowed and bankruptcy proceedings are stayed pending disposal of the appeal before the SCIT.
“The decision and the order of the learned JC dated Nov 17, 2025, is set aside.”
The Court of Appeal also granted 30,000 ringgit (S$9,400) in costs to Najib and Nazifuddin each.
Najib and Nazifuddin were appealing the Nov 17, 2025, High Court decision that dismissed their application to stay bankruptcy proceedings against them.
The bankruptcy proceedings were initiated by the Inland Revenue Board (LHDN) following Najib and Nazifuddin’s failure to settle tax arrears amounting to 1.69 billion ringgit and 37.6 million ringgit respectively.
In 2020, two separate High Courts allowed LHDN’s applications to enter a summary judgment to recover tax arrears of 1.69 billion ringgit from Najib and 37.6 million ringgit from Nazifuddin for the period between 2011 and 2017.
On Oct 16, 2023, the Federal Court ruled that father and son must pay the arrears after dismissing their appeal to set aside the High Court decision.
Najib and Nazifuddin are disputing the tax assessment in two SCIT proceedings scheduled for September and October, respectively. THE STAR/ASIA NEWS NETWORK
