1. ) Ingit Tibrewal v 1. ) Devi Meyyammai a/p Ramanathan (WA-22NCC-198-04/2019)

INGIT TIBREWAL (Act as a personal representative of the estate of Sures Tibrewal, the deceased)

BEENA TIBREWAL … PLAINTIFFS

DEVI MEYYAMMAI A/P RAMANATHAN [Identity Card No.: 871207145404]

MEENAKSHI A/P M. RAMANATHAN [Identity Card No.: 920203145368]

ALSORAYAI COMMERCE SDN. BHD. [Company No.: 544030-P] …DEFENDANTS JUDGMENT (NO. 2) (Assessment of Damages) Background Facts [1] On 18.8.2022, the Court of Appeal set aside the judgment of this Court delivered on 24.7.2020 after trial and ordered the 1st and 2nd Defendants to transfer their 510,000 shares of the 3rd Defendant (“the Shares”) to the 1st Plaintiff (“the CA Order”). [2] By paragraph 3.3 of the CA Order, the Court of Appeal further ordered the 1st and 2nd Defendants to pay the 1st Plaintiff damages, in addition to specific performance, in the sum that shall be assessed by the High Court with interest thereon (“the Assessment of Damages Order”). [3] Following the Assessment of Damages Order, the 1st Plaintiff filed for a hearing before this Court for his damages to be assessed and paid by the 1st and 2nd Defendants. This was proceeded with on 30.6.2023. [4] The 1st Plaintiff is seeking a sum of RM 300,000.00 as his damages which he claimed he had sustained by reason of the delay in the transfer of the Shares to the 1st Plaintiff. The said sum of RM 300,000.00 comprised of a sum of RM 200,000.00 which the 1st Plaintiff contended is the difference in the profits of the 3rd Defendant for the period between 2019 to 2020 (“the first period”) and 2021 to 2022 (“the second period”) as reflected in the 3rd Defendant’s audited accounts. The audited accounts of the 3rd Defendant showed that the profits of the company between the first period and the second period were lower by around RM 200,000.00. [5] The 1st Plaintiff contended that had the Shares been transferred to the 1st Plaintiff in March 2019, it would have resulted in the 1st Plaintiff having full control and management of the 3rd Defendant. With the Plaintiffs being in control of the management of the 3rd Defendant, the 1st Plaintiff contended that the lowering of profits of RM 200,000.00 would have been avoided. [6] In this regard, it is the 1st Plaintiff’s case that he has discharged his burden of proof to show the damages simply on the ground that the 1st and 2nd Defendants have not been able to satisfactorily explain to this Court the reasons for the lowering of the 3rd Defendant’s profits during the period from 2019 to 2022. [7] The 1st Plaintiff also sought a further sum of RM 100,000.00 as aggravated damages for deliberately refusing or delaying the transfer of the Shares. Court’s Deliberation [8] After considering the testimonies of the witnesses and hearing the oral submissions of counsel for the respective parties, I am not satisfied that the 1st Plaintiff has discharged his burden that he has sustained damages by reason of the delay in the transfer of the Shares. [9] At the outset, it must be noted that the order for damages to be assessed is an order for assessment of damages sustained by the 1st Plaintiff. [10] It is trite that the company and its shareholders are 2 separate and distinct legal entities. The loss sustained by the company is not equated to the loss of the shareholders even if the aggrieved shareholders are the owner of the full 100% of the shareholdings of the company. [11] In the instant case, all that the 1st Plaintiff has shown is that the 3rd Defendant’s profits were lower during the period from 2019 to 2022. This “loss”, if at all, is a loss sustained by the 3rd Defendant and cannot be equated to be the loss of the 1st Plaintiff at all. [12] Indeed, even if the loss sustained by the 3rd Defendant was caused by some mismanagement or breach(es) of duties by the officers or directors of the company, the 1st Plaintiff can always cause the company to bring an action against the officers or directors who had committed the misfeasance or breach of duties to recover the loss to the company. After all, the 1st Plaintiff is now in complete control of the management of the 3rd Defendant. [13] Learned counsel for the 1st Plaintiff referred this Court to the Singapore Court of Appeal case of Straits Engineering Contracting Pte Ltd v. Merteks Pte Ltd [1996] 1 SLR 227 (“Straits Engineering”). [14] In that case, after the Court of Appeal had found that the appellant had indeed breached the agreement to sell the shares of its subsidiary to the respondent, the Court of Appeal proceeded to evaluate the quantum representing the loss of opportunity or chance to make profits by reason of the respondent being deprived of the ownership of the appellant’s subsidiary company. The trial judge’s award of S$ 1,430,000.00 was reduced to S$ 250,000.00. [15] According to learned counsel for the 1st Plaintiff, the aforesaid case supports his contention that the 1st Plaintiff is entitled to claim for losses sustained by the 3rd Defendant. It was contended that the 1st Plaintiff had been deprived of the opportunity or chance to enjoy the 3rd Defendant’s profits for the period from 2019 to 2022 which would not have been lower by RM 200,000.00 had the Shares been transferred to the 1st Plaintiff in 2019. [16] With respect, Straits Engineering does not stand for the proposition that a shareholder of a company is entitled to claim for the loss sustained by the company at all. When the facts in Straits Engineering are examined more closely, it is abundantly obvious that the Court of Appeal was considering the loss of chance sustained by the respondent in expanding its businesses had the respondent successfully acquired the appellant’s subsidiary company. The Court of Appeal was not equating the profits of the subsidiary company and treating the same as the respondent’s loss of the opportunity or chance to make that profits. [17] To my mind, the aforesaid alone is sufficient to determine the 1st Plaintiff’s application seeking to recover damages from the 1st and 2nd Defendants. [18] In any case and for completeness, it is also my judgment that the failure by the 1st and 2nd Defendants to explain satisfactorily the reasons for the lower profits by the 3rd Defendant for the period 2019 to 2022 is not sufficient in itself to discharge the 1st Plaintiff’s legal burden that he has sustained losses and or that there was some mismanagement by the 1st and 2nd Defendants during the period in question. [19] It is significant that by the time of the hearing for the assessment of damages, the Plaintiffs were already in full control of all the shares of the 3rd Defendant and have complete management of the 3rd Defendant. Yet, the only documents that were produced in Court in support of the claims for damages were the audited accounts of the 3rd Defendant for the relevant period. [20] Hence, when the 1st and 2nd Defendants’ sole witness, Dato’ Ramanathan (“DW1”) was asked to explain the alleged ‘discrepancies’ in the figures stated in the 3rd Defendant’s audited accounts for the periods from 2019 to 2022, DW1 could only refute the allegations of mismanagement and maintained that the accounts of the 3rd Defendants produced were all properly audited. Without having any other accounting documents put to him in support of the allegation of mismanagement, it was impossible for DW1 to defend the figures in the audited accounts except to provide his oral testimony to the questions asked of him and to deny any mismanagement. [21] At the end of the day, the burden continues to rest with the 1st Plaintiff to demonstrate to this Court that the lower profits during the period from 2019 to 2022 was due to some wrongdoings or breaches by the 1st and 2nd Defendants. Regrettably the 1st Plaintiff has not adduced any positive evidence in support of the same. [22] As regards the claim for aggravated damages, the 1st Plaintiff has not demonstrated to this Court that the circumstances in this case justify the claim for any aggravated damages at all. Conclusion [23] For the reasons above, I dismissed the 1st Plaintiff’s application for damages to be paid by the 1st and 2nd Defendants with costs fixed at RM 5,000.00 subject to payment of allocator. Dated the 5th day of October 2023 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 Counsel:

Mr. Amarjeet Singh together with Mr. Astav Singh for Plaintiffs for

Mr. V. Rajadevan for Defendant

Straits Engineering Contracting Pte Ltd v. Merteks Pte Ltd [1996] 1