1. ) Ter Thian Tin v 1. ) Chiptar Holdings Sdn Bhd (In Liquidation) (WA-28PW-358-08/2023)

TER THIAN TIN (Identity Card No.: 760705-14-5771)

CHONG FONG HAR (Identity Card No.: 760630-14-5522)

CHANG NGI MOOI (Identity Card No.: 501128-08-5134)

THC RICE SDN BHD (Company No.: 199001011702) … APPLICANTS

CHIPTAR HOLDINGS SDN BHD (IN LIQUIDATION) (Company No.: 198601009017)

RALPH RAVIN RATNASWAMY (Identity Card No.: 850927-10-5475) … RESPONDENTS S/N uyxHfraXs0icCQK/qfhaw GROUNDS OF JUDGMENT INTRODUCTION [1] Enclosure 1 is an application for various orders. On the date fixed for oral hearing, the Applicants decided to withdraw Prayers 1, 2 and 6, leaving prayers 3, 4 and 5 to be decided by this Court. [2] The remaining orders sought by the Applicants are reproduced verbatim below:

The First Applicant, Ter Thian Tin shall be given leave to initiate proceeding against the above-named liquidator, Ralph Ravin Ratnaswamy and company, Chiptar Holdings Sdn Bhd (In Liquidation) to remove Ralph Ravin Ratnaswamy as the liquidator of Chiptar Holdings Sdn Bhd (In Liquidation)

(ii) The First and Fourth Applicants, Ter Thian Tin and THC Rice Sdn Bhd shall be given leave to initiate a proceeding against the above-named liquidator, Ralph Ravin Ratnaswamy and company Chiptar Holdings Sdn Bhd (In Liquidation) to set off the Judgment Sum of RM3,050,829.25 obtained in Suit No. WA-24NCC-364-08/2021 with the sum of RM1,128,161.15 until the final appeal avenue; S/N uyxHfraXs0icCQK/qfhaw

(iii) The First to Third Applicants, Ter Thian Tin, Chong Fong Har and Chang Ngi Mooi shall be given leave to initiate a contempt of court proceeding against the above-named liquidator, Ralph Ravin Ratnaswamy for the breach of the terms of the Court Order dated 1/3/2023 in Suit No. WA-24NCC-530- 11/2020 until the final appeal avenue. THE LAW ON REMOVAL OF LIQUIDATOR [3] A court-appointed liquidator may be removed on “cause shown”

The rationale underlying the requirement that a prospective litigant should obtain leave to sue a court-appointed liquidator is two-fold:

The court will protect its office from spurious or vexatious litigation;

(ii) The court will protect the integrity of the winding up process to ensure no wrongful interference with that process. …

The test for granting leave to commence proceedings against a court-appointed liquidator was initially formulated in Chi Liung Holdings, where the Court of Appeal held that the court should be satisfied as to the probable success of the proposed claim and that the proposed claim should not be vexatious or merely oppressive. This test was further refined by the Federal Court in Ooi Woon Chee, where it was held as follows:

The party seeking leave to proceed against a liquidator should make out a prima facie case… In applying the test of whether a prima facie case was made out, the court is compelled to evaluate the evidence led to determine whether such test is in fact met; and

(ii) Pecuniary loss suffered by the wound-up company should be shown.” [6] Guided by the above, this Court will address the prayers for leave to remove the Liquidator and to commence legal proceedings against the Liquidator and/or Chiptar:

6.1 Prayer 3 is an application for the removal of the court-appointed Liquidator; S/N uyxHfraXs0icCQK/qfhaw

6.2. Prayer 5 (an application by the First to Third Applicants for leave of this Court to initiate contempt of court proceedings against the Liquidator; and

6.3 Prayer 4 (an application by the First and Fourth Applicants) for leave to initiate proceedings against Chiptar and the Liquidator to force a set-off. ISSUES Prayer 3 [7]

With respect to Prayer 3, which is an application by the First Applicant for leave to commence proceedings to remove the Liquidator of Chiptar, the grounds given by the Applicant are as follows:

The Liquidator has failed to perform his duties in an impartial manner and only acts in the interest of other shareholders of Chiptar in disregard of the First Applicant’s interests.

(ii) This allegation by the First Applicant is premised upon the Liquidator’s purported refusal to form a committee of inspection, and the Liquidator’s act of convening an Extraordinary General Meeting (“EGM”) of THC Rice Sdn Bhd for the appointment of four additional directors. S/N uyxHfraXs0icCQK/qfhaw [8]

The Liquidator’s refusal to form a committee of inspection as a ground for his removal is hinged on the provision of section 450(4) of the CA 2016. This purported ground for the Liquidator’s removal is misconceived because section 450(4) is inapplicable to a court ordered winding-up. That section only applies to companies in voluntary liquidation.

(ii) The applicable provision of the CA 2016 is Item 1 of the 10th Schedule, which only requires the Liquidator to assist in the formation of a committee of inspection by calling for a separate meeting of creditors and contributories to determine whether they will resolve to appoint a committee of inspection. In any event, the prayer to compel the Liquidator to form a committee of inspection (Prayer b of Enclosure 1) was withdrawn by the First Applicant on the last hearing date. Therefore, this ground for the Liquidator’s removal has become academic.

(iii) Other than the purported grounds given in paragraph 7 above the First Applicant has failed to provide any evidence of misconduct or misfeasance by the Liquidator. Prayer 4 [9] For ease of reference, Prayer 4 of the motion is reproduced as follows: S/N uyxHfraXs0icCQK/qfhaw “The 1st and 4th Applicants, Ter Thian Tin and THC Rice Sdn Bhd shall be given leave to initate a proceeding against the above-mentioned named liquidator, Ralph Ravin Ratnaswamy and company, Chiptar Holdings Sdn Bhd (In Liquidation) to set off the Judgment Sum of RM3,050,829.25 obtained in Suit No. WA-24NCC-364-08/2021 with the sum of RM1,128,161.15 until the final appeal avenue.” [10] (i) Prayer 4 is an application by the First Applicant and THC Rice to force the Liquidator and Chiptar to accept a set-off.

(ii) That prayer, if allowed, would be in breach of the pari passu principle in section 527(10), which states: “(10) Subject to this Act, all debts proved in a winding-up shall be paid pari passu.” [11] For context, Chiptar initiated a writ action vide WA-22NCC-364- 08/2021 against, amongst others, THC Rice for the sum of RM3,050,829.25. Chiptar succeeded in its claim against THC Rice and obtained a judgement for the sum of RM3,050,829.25. Chiptar sought to execute the judgment dated 10.11.2022 by way of garnishee proceedings vide Kuala Lumpur High Court Garnishee Proceedings No.: WA-37G-85-03/2023. [12] THC Rice’s solicitors proposed for a set-off of the judgment sum with THC Rice’s proof of debt in the sum of RM1,128,161.15. As such, THC Rice proposed to only pay RM2,058,908.10 to Chiptar. The Liquidator refused to accede to this proposal because it would amount to a preference of THC Rice over the other unsecured creditors of Chiptar. Furthermore, this would be in breach of the pari passu principle and section 527 of the CA 2016. S/N uyxHfraXs0icCQK/qfhaw [13] In Malaysian Trustees Bhd v Transmile Group Bhd & Ors [2012] 3 MLJ 679 (CA) the Court of Appeal stated: “[22] The pari passu rule is the cornerstone of insolvency law. It is one of the most fundamental principles of the law of liquidation and is at the very heart of the whole statutory scheme of winding up. It is considered as the most universal of all insolvency principles. It is an old equitable principle that all persons similarly situated are entitled to equality in treatment in the distribution of the assets of the company in the process of liquidation (see Mc Pherson's Law of Company Liquidation at para 13.100, at pp 13–1051 and Roy Goode Principles of Corporate Insolvency Law at p 175 para 7.02). [23] Section 292(1) of the Companies Act 1965 deals with matters relating to distribution of assets in the winding up of an insolvent company i.e. the liquidator is obliged to apply the unencumbered assets of the company first to settle the statutory preferential debts under the provisions of the section and secondly under sub-s (2) to pay the unsecured debts of the company pari passu i.e. debts of the same class shall rank equally between themselves, and shall be paid in full, unless the property of the company is insufficient to meet them, in which case they shall abate in equal proportions between ‘themselves’.” [14] The pari passu rule dictates that the debts of unsecured creditors shall rank equally and be paid in full. If the assets of a accompany are insufficient to meet such debts, payment to the unsecured creditors shall be reduced in equal proportions. [15] In the circumstances, this Court finds that the leave application in Prayer 4 is misconceived and is in contravention of section 527(10) of the CA 2016. The Applicants have also failed to show how the refusal to set-off has caused pecuniary loss to Chiptar. Therefore, Prayer 4 has no basis and ought to be dismissed. S/N uyxHfraXs0icCQK/qfhaw Prayer 5 [16] Prayer 5 reads as follows: - “The First to the Third Applicants, Ter Thian Tin, Chong Fong Har and Chang Ngi Mooi shall be given leave to initiate contempt of court proceedings against the above-named liquidator, Ralph Ravin Ratnaswamy for breach of the terms of the Court Order dated 1/3/2023 in Suit No. WA-24NCC-530-11/2020 until the final appeal avenue.” [17] Before 18.6.2020, Chiptar was the 80.93% shareholder of THC Rice the Fourth Applicant herein. The First Applicant, was the other shareholder and held 19.07%. [18] In November 2020, Chiptar (not in liquidation at that point in time), filed legal proceedings pursuant to section 346 of the CA 2016 against the First to Third Applicants for oppression. Among others, the grounds for oppression were the issuance of 8,043,478 new shares in THC Rice. The issuance of shares resulted in Chiptar’s dilution as a shareholder from 80.93% to 19.19%. After the issuance of additional shares, the First Applicant became an 80.81% shareholder. [19] On 01.03.2023, the High Court granted an order in favour of Chiptar against the First to Third Applicants for oppression. By paragraph 1.3 of the Oppression Order, the High Court restored Chiptar as the 80.93% shareholder of THC Rice. Consequently, the First Applicant’s share is reduced to 19.07%. S/N uyxHfraXs0icCQK/qfhaw [20] Over and above the restoration of Chiptar as the 80.93% shareholder, the First to Third Applicants were ordered to buy out Chiptar’s shareholding in THC Rice within 90 days of the determination of fair value. The Court further ordered that in the event the First to Third Applicants failed to purchase Chiptar’s shares in THC Rice, THC Rice would be wound-up. The First to Third Applicants did not file any application for a stay of the Oppression Order. [21] With Chiptar restored as the 80.93% shareholder, the Liquidator caused Chiptar to convene an extraordinary general meeting (“EGM”) of THC Rice on 10.08.2023 for the appointment of four additional directors of THC Rice. The First Applicant caused for the EGM to be inquorate by his non-attendance. At the adjourned EGM on 17.08.2023, the First Applicant again caused the EGM to be without quorum by his non-attendance. [22] The reason given by the Liquidator for the proposed appointment of the additional four directors is because of the possibility that THC Rice would be wound-up. Just prior to the Oppression Order, counsel for the Applicants herein submitted to the Court that the First to Third Applicants will not be able to buy-out Chiptar’s shareholding. It is within such a context that the Liquidator has caused for the convening of the EGM. S/N uyxHfraXs0icCQK/qfhaw [23] The First to Third Applicants’ reasons for wanting to initiate contempt proceedings through Prayer 5 is only confined to one paragraph of the First to Third Applicants’ affidavit in Enclosure 2 i.e., paragraph 24 as follows: “24 However, the 2nd Respondent despite being a liquidator to the First Respondent company which is supposed to “impartial”, intends to assume control of the management and affairs of the First Respondent company by placing additional directors to the company including the Second Respondent’s father. Having been advised by my solicitors, I verily believe that the Second Respondent by bringing his father, Dato’ Jeyaraj a/l V. Ratnaswamy as a director of the First Respondent company is for personal gains and also stifle the purchase of the shares by the First to Third Applicants to buy the shares of the First Respondent company…” [24] The issue of whether leave should be granted to he First to Third Applicants for the purported contemptuous acts that allegedly breach paragraph 1.4 of the Oppression Order are based on the following:

24.1 that the nomination of the Liquidator’s father as a director of THC Rice is for ‘personal gain’; and

24.2 the attempt to appoint additional directors of THC Rice is to stifle the First to Third Applicants’ purchase of Chiptar’s shares in THC Rice. [25] Having perused, the First to Third Applicant’s affidavit in Enclosure 2, the Applicants have failed to provide any cogent reasons and/or evidence to establish a prima facie case to show how any of the above acts by the Liquidator was in breach of paragraph 1.4 of the S/N uyxHfraXs0icCQK/qfhaw Oppression Order. Unless this Court is shown how the act of nominating additional Directors, including his father by the Liquidator amounts to a contravention of the oppression order, this Court is left with no assistance in terms of the evaluation of evidence as justification for leave to be granted to the First to Third Applicants to initiate contempt of court proceedings. This Court, thus, finds that the First to Third Applicants have failed to establish a prima facie case for leave to initiate contempt proceedings against the liquidator. [26] For the reasons aforesaid, the applications in Prayers 3, 4 and 5 of Enclosure 1 are dismissed with costs of RM15,000.00. Dated 27 August 2024 …………t.t…..….………… Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur S/N uyxHfraXs0icCQK/qfhaw COUNSEL FOR THE APPLICANTS: MR JAMES EE KAH FUK SOLICITORS FOR THE APPLICANTS: TETUAN KF EE & CO COUNSEL FOR THE RESPONDENTS: MR DERRICK CHAN WITH MATHEWS HUN LACHIMANAN SOLICITORS FOR THE RESPONDENTS: TETUAN CK CHAN LAW PRACTICE Cases Referred to: ➢ Shencourt Sdn Bhd (in liquidation) (in receivership) v Shencourt Properties Sdn Bhd (in liquidation) [2019] 12 MLJ 184 ➢ N Chanthiran a/l Nagappan v Kao Che Jen [2023] 5 MLJ ➢ Malaysian Trustees Bhd v Transmile Group Bhd & Ors [2012] 3 MLJ 679 Legislation Referred to: ➢ Companies Act 2016 Decision date: 12.01.2024 S/N uyxHfraXs0icCQK/qfhaw