1. ) Sandora Binti Mohd Panut v 1. ) Koperasi Felda Bukit Cherakah Selangor Berhad (BA-22NCvC-535-12/2022)

SANDORA BINTI MOHD PANUT

MOHAMAD SAMSUDIN BIN HJ. SAIDIN

AHMAD JAMALULAIL BIN ABD JALIL

SHAHNOR AZWAN BIN SHAHAROM (NO. K/P: 840217-01-5193) …PLAINTIF-PLAINTIF

KOPERASI FELDA BUKIT CHERAKAH SELANGOR BERHAD

MOHD ALWI BIN DAUD

ROSLI BIN DAUD (NO. K/P: 660812-10-5021) 17/10/2024 09:51:02

ISA BIN YAACOB

MUSA BIN SURATIN

KAMARUDDIN BIN BASUNI

RIZQULLAH HOLIDAYS SDN BHD (NO. SYARIKAT: 1294075-T) …DEFENDAN-DEFENDAN JUDGMENT Introduction [1] The Co-operative Societies Act 1993 was enacted to make provisions for, inter alia, the control and regulation of co-operative societies. The objective of this legislation is to promote the development of co-operative societies “in accordance with the co-operative values of honesty, trustworthiness and transparency in order to contribute towards achieving the socioeconomic objectives of the nation and for matters connected therewith”. Part VIII of the Act deals with matters relating to Inspection, Inquiry, Dissolution and Disputes. [2] The present matter before this Court requires it to examine in detail the ambit and application of a provision relating to the mechanism for the settlement of disputes as legislated in the Co-operative Societies Act

It arose out of an application by the Defendants in Enclosure 9 to strike out the Plaintiffs’ Writ and Statement of Claim on the ground that this Court is not the proper forum to determine the dispute between the parties. The Prevailing Poser [3] The overriding issue raised in Enclosure 9 is whether this Court is the proper forum to determine the dispute between the parties. [4] In resolving the above issue, this Court is required to scrutinize the claims brought by the Plaintiffs against the Defendants and make a determination as to whether the dispute between the parties falls within the scope of section 82 of the Co-operative Societies Act 1993, thereby rendering the Malaysia Co-operative Societies Commission as the appropriate adjudicating body to hear the dispute. The Plaintiffs’ Main Action [5] The Plaintiffs initiated a Writ action against the Defendants on 29 December, 2022. [6] The Plaintiffs alleged, inter alia, that the Second to the Sixth Defendants had breached their statutory and fiduciary duties as directors of the First Defendant, a co-operative society. The Plaintiffs were at all material times, members of the First Defendant. [7] At paragraph [80] of their Statement of Claim, the Plaintiffs sought the following reliefs from the Defendants: a) Bahawa suatu audit forensik oleh juruaudit bertauliah dijalankan ke atas Defendan Pertama dan Defendan Ketujuh secara menyeluruh dan telus; b) Deklarasi bahawa perjalanan pengoperasian Defendan Ketujuh tidak menurut peruntukan yang terkandung dalam Undang-undang Kecil Defendan Ketujuh dan/atau Akta Koperasi 1993 dan/atau Peraturan-peraturan Koperasi 2010 dan/atau GP17: Garis Panduan Membentuk, Mempunyai, Memperoleh atau Menubuhkan Subsidiari oleh SKM dan/atau Akta Syarikat 2016; c) Bahawa Defendan Kedua hingga Defendan Keenam secara bersesama dan/atau berasingan telah melanggar tugas statutori terhadap Plaintif-plaintif dan Defendan Ketujuh; d) Bahawa Defendan Pertama telah gagal mengambil sebarang langkah yang sewajarnya untuk menghalang dan/atau memberhentikan pelanggaran tugas statutori oleh Defendan Kedua hingga Defendan Keenam; e) Bahawa Defendan Kedua hingga Defendan Keenam secara bersesama dan/atau berasingan telah melakukan pecah amanah terhadap Plaintifplaintif dan Defendan Ketujuh; f) Bahawa Defendan Pertama telah gagal mengambil sebarang langkah yang sewajarnya untuk menghalang dan/atau memberhentikan kegiatan pecah amanah oleh Defendan Kedua hingga Defendan Keenam; g) Bahawa Defendan Kedua hingga Defendan Keenam secara bersesama dan/atau berasingan telah melanggar tugas fiduasiari dan tugas berhati-hati (breach duty of care) terhadap Plaintif-plaintif dan Defendan Ketujuh; h) Bahawa Defendan Pertama telah gagal mengambil sebarang langkah yang sewajarnya untuk menghalang dan/atau memberhentikan pelanggaran tugas fiduasiari dan tugas berhati-hati (breach duty of care) oleh Defendan Kedua hingga Defendan Keenam; g) Bahawa Defendan Kedua hingga Defendan Keenam secara bersesama dan/atau berasingan telah melanggar tugas fiduasiari dan tugas berhati-hati (breach duty of care) terhadap Plaintif-plaintif dan Defendan Ketujuh; h) Bahawa Defendan Pertama telah gagal mengambil sebarang langkah yang sewajarnya untuk menghalang dan/atau memberhentikan pelanggaran tugas fiduasiari dan tugas berhati-hati (breach duty of care) oleh Defendan Kedua hingga Defendan Keenam; i) Bahawa Defendan Kedua hingga Defendan Keenam secara bersesama dan/atau berasingan telah melakukan penyelewengan aset Defendan Pertama dan/atau Defendan Ketujuh; j) Bahawa segala aset yang dipindahkan kepada Defendan Ketujuh dikembalikan kepada Defendan Pertama oleh Defendan Kedua hingga Defendan Ketujuh secara bersesama dan/atau berasingan; k) Bahawa nama Defendan Pertama didaftarkan sebagai pemegang saham Defendan Ketujuh di dalam rekod Suruhanjaya Syarikat Malaysia; l) Bahawa Defendan Pertama hingga Defendan Keenam secara bersesama perlu mengemukakan dan membentangkan Laporan Kewangan Tahunan beraudit beserta rekod dan/atau resit rasmi keluar dan masuk aset Defendan Ketujuh dalam setiap Mesyuarat Agung Tahunan Defendan Pertama; m) Bahawa satu siasatan dijalankan terhadap Defendan Kedua hingga Defendan Keenam oleh Suruhanjaya Koperasi Malaysia dan/atau pihak berkuasa; n) Bahawa keahlian Defendan Kedua hingga Defendan Keenam digantung daripada memegang jawatan dalam Defendan Pertama sehingga Mesyuarat Agung Tahunan Defendan Pertama yang seterusnya diadakan dan/atau secara alternatifnya, Defendan Kedua hingga Defendan Keenam dilucutkan jawatan daripada memegang jawatan dalam Defendan Pertama; o) Bahawa Defendan Kedua hingga Defendan Keenam secara bersesama dan/atau berasingan menanggung kos bagi tindakan ini; dan p) Apa-apa relif selanjutnya atau lain-lain relief yang difikirkan sesuai dan berpatutan oleh Mahkamah yang Mulia ini. [8] The reliefs sought are declarative and injunctive in nature. The Defendants’ Submissions [9] The crux of the Defendants contention in support of their application in Enclosure 9 to strike out the Plaintiffs’ Writ and Statement of Claim is premised on the ground that the dispute between the parties falls squarely within the jurisdiction of the Malaysia Co-operative Societies Commission. [10] The Defendant further averred that the dispute resolution mechanism provided by the Co-operative Societies Act 1993 “offers appropriate remedies and procedures for addressing the Plaintiff’s grievances within the cooperative context”. [11] The Defendants underscored the fact that the Plaintiffs, as members of the First Defendant, “should have followed the appropriate internal channels provided by the cooperative to address their grievances”. They also alluded to the fact that an investigation had been initiated by the Malaysia Co-operative Societies Commission pursuant to section 45 of the Malaysia Co-operative Societies Commission Act 2007 against the Second to the Sixth Defendants with a view of addressing the claims raised by the Plaintiffs in their Writ of Summons. [12] Hence, it was the Defendants’ contention that the initiation of the present action has resulted in a duplicity of actions and that such an action “is not only unnecessary but also goes against the efficient resolution of the dispute”. The Defendants submitted that “by filing a separate legal action, the Plaintiffs not only create an unnecessary burden on the court system but also undermine the investigative process initiated by the cooperative authority. [13] In view of the above, the Defendants’ application in Enclosure 9 was made pursuant to Order 18 rule 19(1)(a) of the Rules of Court 2012. The Plaintiff’s Reply [14] In opposing the Defendants’ application to strike out their Writ and Statement of Claim, the Plaintiffs argued that they have clearly pleaded the causes of action in the Statement of Claim dated 29 December, 2023 and these causes of action fall within the jurisdiction of this Court. [15] The Plaintiffs cited the case of Serac Asia Sdn Bhd v Sepakat Insurance Brokers Sdn Bhd [2013] 4 AMR 385; [2013] 6 CLJ 673; [2013] 5 MLJ 1; [2013] 5 MLRA 175 where the Federal Court observed as follows: [42] We agree with above assertions of the appellant. In our view, the very filing of encl. 29 is inherently defective and unknown under our RHC, and should have been summarily dismissed by the High Court. We also make this observation on the application of the court’s summary power to strike out a pleading under O. 18 r. 19 Rules of Court 2012 (successor to RHC 1980). Although the power to strike out is a wide discretion, it should be exercised with care and only when the threshold requirement of “an obvious and unsustainable case” can a pleading be struck out. In exercising it, and especially under r. 19(1)(a), the court must have regard to the “quality of an all the circumstances surrounding the plea (see Lembaga Kumpulan Wang Simpanan Pekerja v. Kesatuan Kakitangan Lembaga Kumpulan Wang Simpanan Pekerja [2000] 3 CLJ 81; [2000] 2 AMR 2119, FC). The court should also bear in mind that the effect of striking out a pleading is to completely deprive a plaintiff from having his day in court. [16] The Plaintiffs reiterated the causes of action that they have pleaded and these were: a) Perlanggaran tugas statutori sebagai sebuah koperasi berdaftar di bawah Suruhanjaya Koperasi Malaysia oleh Defendan Pertama; b) Pelanggaran tugas statutori ahli lembaga pengarah Defendan Pertama serta sebagai pengarah dan pemegang saham Defendan Ketujuh oleh Defendan Kedua hingga Defendan Keenam secara bersesama dan/atau berasingan dan kegagalan Defendan Pertama untuk menghalang dan/atau memberhentikan pelanggaran tugas statutori yang dilakukan oleh Defendan Kedua hingga Defendan Keenam; c) Pecah amanah terhadap Plaintif-Plaintif dan Defendan Ketujuh oleh Defendan Kedua hingga Defendan Keenam secara bersesama dan/atau berasingan dan kegagalan Defendan Pertama untuk menghalang dan/atau memberhentikan kegiatan pecah amanah yang dilakukan oleh Defendan Kedua hingga Defendan Keenam; dan d) Pelanggaran tugas fidusiari dan kecuaian oleh Defendan Pertama hingga Defendan Keenam secara bersesama dan/atau berasingan dan kegagalan Defendan Pertama untuk menghalang dan/atau memberhentikan perlanggaran tugas fidusiari yang dilakukan oleh Defendan Kedua hingga Defendan Keenam. [17] According to the Plaintiffs, the above causes of action revolve around issues relating to breaches of statutory and fiduciary duties and these matters are beyond the jurisdiction of the Malaysia Co-operative Societies Commission. The Plaintiffs underscored the point that the jurisdiction of the Malaysia Co-operative Societies Commission is set out in section 82(1) & (2) of the Co-operative Societies Act 1993. [18] The Plaintiffs relied on three decisions, namely, Koperasi Serbausaha Makmur Bhd (KOSMA) v Jamil Ninggal [2019] 9 CLJ 600; [2018] 5 MLJ 766; [2018] 5 MLRA 184 (“Koperasi Serbausaha Makmur”), Bank Kerjasama Rakyat Malaysia Bhd v Koperasi Amanah Pelaburan Bhd [2019] AMEJ 0858; [2020] 6 CLJ 203; [2020] 11 MLJ 1; [2022] 2 MLRH 426 (“Koperasi Amanah Pelaburan”) and Koperasi Telekom Malaysia Bhd v Ismail Nordin & Ors [2020] 3 CLJ 277; [2020] MLJU 20; [2020] 3 MLRH 1 (“Koperasi Telekom Malaysia”). [19] The Plaintiffs also submitted that even though the incorporation of the Seventh Defendant had been approved by the Malaysia Co-operative Societies Commission, this does not render the Plaintiffs’ claim academic. This is because, as the Plaintiffs argued, the issues pertaining to breaches of statutory and fiduciary duties are still before this Court for determination. The Law and Applicable Principles [20] Order 18 rule 19(1)(a) of the Rules of Court 2012 provides as follows: Striking out pleadings and endorsements (O. 18 r. 19)

The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that –

it discloses no reasonable cause of action … [21] Crucial to the present application is the provision in section 82 of the Co-operative Societies Act 1993. It stipulates as follows: Settlement of disputes

(1) If a dispute touching the constitution, by-laws, election of officers, conduct of general meetings, management or business of a co-operative society arises –

among members, past members and persons claiming through members, past members and deceased members;

between a member, past member or person claiming through a member, past member or deceased member, and the co-operative society, its Board, or any officer of the co-operative society;

between the co-operative society or its Board and any officer of the co-operative society; or

between the co-operative society and any other co-operative society, such dispute shall be referred to the Commission for decision.

A claim by a co-operative society for any debt or demand due to it from a member, past member or the nominee, heir or legal representative of a deceased member shall be deemed to be a dispute touching the business of the co-operative society within the meaning of subsection (1).

The Commission may, on receipt of a reference under subsection (1) –

decide the dispute by itself;

refer the dispute to an arbitrator or arbitrators for disposal; (ba) refer the dispute to the tribunal established under section 83; or

require the parties concerned to refer the dispute to a court.

Any party aggrieved by the award of the arbitrator or arbitrators may appeal therefrom to the Commission within two months from the date of the award and in such manner as may be prescribed in the regulations.

The decision of the Commission shall be final and shall not be called in question in any civil court.

The award of the arbitrator or arbitrators under subsection (3) shall, if no appeal is preferred to the Commission under subsection (4) or if such appeal is withdrawn or abandoned, be final and shall not be called in question in any civil court.

The decision of the Commission or the award of the arbitrator or arbitrators which, by virtue of subsections (5) and

(6), is final shall be enforced by the Sessions Court having jurisdiction over the place where the registered office of the co-operative society is situated in the same manner as if the decision or award had been a judgment of such Sessions Court.

Any party aggrieved by the decision of the court on any dispute referred to it under paragraph (3)(c) may appeal therefrom in accordance with the provisions of the rules of court applicable thereto. [22] The following provision in section 83(1) of the same Act then provides that: The Minister may, on the recommendation of the Commission, establish a tribunal to perform the functions specified in subsection

(2). The relevant subsection (2) states that: A tribunal established under subsection (1) may hear and determine any dispute within the meaning of subsections 82(1) and (2) which is referred to it under this section. [23] Another provision to be borne in mind is section 84 of the Co-operative Societies Act 1993 and that provision stipulates as follows: Case stated on question of law

(1) Notwithstanding anything contained in section 82, the Commission, at any time when proceeding to a decision under this Act, or the Minister at any time when an appeal has been preferred to him against any decision of the Commission under this Act, may refer any question of law arising out of such decision for the opinion of the High Court.

Any Judge of the High Court, as the Chief Justice may direct, may consider and determine any question of law referred to such High Court under subsection (1), and the opinion given on such question shall be final and conclusive. [24] Section 45 of the Malaysia Co-operative Societies Commission Act 2007, a section alluded to by the Defendants (see paragraph [11] above), provides as follows: Appointment, power, function and duty of investigating officer

(1) For the purposes of this Part, the Commission may appoint any officer or employee of the Commission or any person appointed under section 9 to be an investigating officer.

Subject to subsection (3), an investigating officer appointed under subsection (1) shall have all the powers, functions and duties conferred on an investigating officer under this Act, and where such investigating officer is not an officer or employee of the Commission, he shall, in relation to such powers, functions and duties —

be subject to; and

enjoy such rights, privileges, protections, immunities and indemnities as may be specified in, the provisions of this Act, the Co-operative Societies Act 1993 or any other written law enforced by the Commission applicable to an officer or employee of the Commission as if he were an officer or employee of the Commission.

An investigating officer shall be subject to the direction and control of the Executive Chairman or of such other officer as may be authorized by the Executive Chairman to act on behalf of him or of any other investigating officer or officers superior in rank, and shall exercise his powers, perform his functions and discharge his duties referred to in subsection (2) in compliance with such directions, instructions, conditions, restrictions or limitations as the Executive Chairman or of such other officer as may be authorized by the Executive Chairman to act on behalf of him or an investigating officer or officer superior in rank, may specify orally or in writing, either generally, or in any particular case or circumstance.

The Executive Chairman or any officer, employee or any person authorized by the Executive Chairman to act on behalf of him shall have all the powers, functions and duties of an investigating officer.

An investigating officer conducting any inquiry of any person under section 66 of the Co-operative Societies Act 1993 shall have the power to administer an oath or affirmation to the person who is being examined. [25] The purview of the phrase "dispute touching on the management or business of a co-operative society" in section 82(1) of the Co-operative Societies Act 1993 was examined by the Court of Appeal in Koperasi Serbausaha Makmur. In that case it was held that a complaint of wrongful termination or unfair dismissal by an employee of a co-operative society does not fall within the purview of the above phrase and consequently, the Malaysia Co-operative Societies Commission did not have any jurisdiction or power to deal with such a dispute or to refer it to the Tribunal established under section 83(1) of the Act. [26] In Koperasi Amanah Pelaburan, the High Court had occasion to examine the objects, powers and functions of the Malaysia Co-operative Societies Commission. In addressing the question of whether the civil courts only have jurisdiction to decide on an action if it were referred to it by the Malaysia Co-operative Societies Commission, Wong Kian Kheong J (as his Lordship then was) answered the question in the negative. The High Court further held that “the plaintiff and defendant are not obliged under s 82(1)(d) of the CSA to refer a dispute which concerns trade mark infringement under s 38(1)(a) of the TMA and tort of passing off (‘two causes of action’) to MCSC because MCSC has no capability to decide the two causes of action” and that “MCSS has no jurisdiction and power to grant the following relief for the two causes of action: (1) damages; (2) account of profits; (3) injunction to restrain trade mark infringement and tort of passing off; and/or (4) mandatory injunction to destroy products and materials which constitute trade mark infringement and tort of passing off”. [27] In Koperasi Telekom Malaysia, the High Court held as follows: [35] Having had the benefit of reading the said judgment and the discussion, I am of the same view that the Civil Court surely cannot only have jurisdiction to hear a matter concerning a cooperative society only once the Commission requires the parties concerned to refer the dispute to court. [36] Back to the facts of the case at hand, based on the facts of this case and in particular, the nature of the plaintiff’s claim and its various causes of action, and applying the principles set out in the Kooperasi Serbausaha and Bank Kerjasama Rakyat cases, I have no hesitation in dismissing the defendants’ application to strike out the plaintiff’s claim. [37] I am of the considered view that the facts of the present case are distinguishable from Arulandan as the relief sought herein does not relate to a disciplinary action against an employee. Further, bearing in mind that the causes of action relate to breach of fiduciary/statutory duty, such claims cannot be considered a dispute touching on the management or business of the plaintiff. [38] Further, in relation to the specific prayers sought by the plaintiff in the action, I also agree with the plaintiff that with reference to the powers and functions expressly set out in s 23 of the said Act, the Commission has no power/jurisdiction to grant such injunctive relief or award damages, etc. [39] In the upshot, encl 7 is dismissed with costs of RM8,000.00 (subject to 4% allocatur) to be paid by the defendants to the plaintiff. The trial dates of 4 and 5 February 2020 are maintained whereby this court will hear this dispute on the merits. The Decision of this Court [28] Although the Defendants asserted that “the claims made by the Plaintiffs are frivolous and vexatious, constituting an abuse of the court’s process”, they have chosen to only invoke paragraph (a) of Order 18 rule 19(1) and not paragraphs (b) and/or (d) which stipulate that a writ or statement of claim may be struck out on the ground that it is frivolous or vexatious or is otherwise an abuse of the process of the Court respectively. [29] Regardless of the above, this Court is in full agreement with the High Court in Koperasi Amanah Pelaburan and Koperasi Telekom Malaysia that the civil court’s jurisdiction to hear a dispute involving a co-operative society is not dependent on a reference of a dispute to it by the Malaysia Co-operative Societies Commission. [30] Subsection (1) of section 82 of the Co-operative Societies Act 1993 provides the scope or ambit of the Commission’s jurisdiction while subsection (2) is the deeming provision. [31] This Court is of the considered view that even if a dispute falls squarely within the ambit of section 82 of the Co-operative Societies Act 1993, affording the Malaysia Co-operative Societies Commission with the necessary jurisdiction to settle the dispute, this does oust the civil courts’ jurisdiction to hear the said dispute. [32] In enacting section 82 of the Co-operative Societies Act 1993, it is Parliament’s intention to provide an economically efficient dispute resolution mechanism, in line with the overall objective of the Act as alluded to in the opening remarks of this judgment. Hence, even though the civil courts possess the necessary jurisdiction, they will give space to the Malaysia Co-operative Societies Commission to adjudicate the dispute in the manner the Malaysia Co-operative Societies Commission deems fit within the confines of the provisions of the Co-operative Societies Act 1993. [33] Bearing in mind the pleaded case of the Plaintiffs in the main action and the reliefs sought, this Court is of the view that it is proper that it assumes jurisdiction over the present dispute. [34] This Court is not in any way usurping the power of the Malaysia Co-operative Societies Commission by assuming jurisdiction over the present dispute. Nor is this Court acting against the legislative intent and the scheme of the Co-operative Societies Act 1993 by exercising jurisdiction over the present matter. [35] The Defendants application in Enclosure 9 is hereby dismissed. [36] The Second to the Sixth Defendants to each pay costs of RM3,000 to the Plaintiffs, subject to allocatur. Dated: 10 October, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Arief Firdaus Ashikin bin Ashral Azizi for the Plaintiffs (Messrs. Faizal Rahman & Co.) Syed Fakhruzzaman bin Syed Mansor for the Defendants (Messrs. Halim Ashgar)