1. ) TOP BUILDERS CAPITAL BHD v 1. ) Seng Long Construction & Engineering Sdn Bhd (WA-24NCC-608-12/2020)

TOP BUILDERS CAPITAL BERHAD (Reg. No. 201301043050 (1072872-D))

IKHMAS JAYA SDN BHD (Reg. No. 199201022513 (254017-H))

IKHMAS EQUIPMENT SDN BHD (Reg. No. 199901020860 (495760-W)) APPLICANTS

SENG LONG CONSTRUCTION & ENGINEERING SDN BHD (Reg. No. 200801024162 (825485-P))

ILHAM METRO CONSTRUCTION SDN BHD (Reg. No. 201401039374 (1164692-V))

EDWINCOM ENTERPISE (Buss. Reg. No. 200603010848 (001596219-D))

STAR EFFORT SDN BHD (Reg. No. 200601008956 (728706-A))

BOFI (MALAYSIA SDN. BHD. (Reg. No. 199501016257 (345459 - A))

S.R. MARBLE SDN. BHD. (Reg. No. 199201013544 (245047 - K))

PERSFLOR SDN. BHD. (Reg. No. 200801003419 (804703-P)) RESPONDENTS JUDGMENT (NO. 3) Introduction [1] By Enclosure 189, the 4th Respondent seeks by a Notice of Application, inter alia, to set aside the order dated 2.12.2021 granted by this Court giving its approval to the Schemes of Arrangement proposed by the Applicants. The 4th Respondent claimed that the Schemes of Arrangement are no longer operable as the 1st Applicant has been classified as a PN17 listed issuer with effect from 30.12.2021. The 1st Securities Berhad Bursa Malaysia to extend the relief period from complying with the listing requirements has been rejected. [2] The Applicants claimed that they are still engaging with Bursa Malaysia to regularise the PN17 status notwithstanding that the time stipulated to do so has expired. In any case, the Applicants contended that the Court has no jurisdiction or power to set aside the order dated 2.12.2021 on the ground of functus officio. [3] This judgment deals with the questions whether the Court has jurisdiction or powers to make further orders relating to a scheme of arrangement post the grant of the approval or sanction under Section 366(4) of the Companies Act 2016 and the limits to such jurisdiction or powers, if any. Background facts [4] The 1st Applicant TBCB is a company listed on the Main Board of Bursa Malaysia and is in the civil and building construction industry. [5] The 2nd Applicant IJSB is a wholly owned subsidiary of the 1st Applicant. The 2nd Applicant is a geotechnical contractor specialising in bore piling works. [6] The 3rd Applicant IESB is a wholly owned subsidiary of the 2nd Applicant and is principally involved in providing services to the 1st TBCB Group ) in the form of rental provision for engineering and construction equipment. [7] On 30.6.2020, the 1st Applicant triggered the Practice Note 17 ( PN17 ) criteria of the Main Market Listing Requirements. However, due to the moratorium and relief measures undertaken by Bursa Malaysia as a response to the COVID-19 pandemic, the 1st Applicant was not classified as a PN17 listed issuer and was not required to comply with the PN17 listing requirements for a period of 12 months from the date of triggering ( Relief Period ). On 17.02.2021, the Relief Period was extended to 18 months. [8] By an Originating Summons dated 29.12.2020, the Applicants commenced the proceedings herein for the approval of their respective proposed Schemes of Arrangement pursuant to Section 366 of the Companies Act 2016 CA 2016 . [9] On 26.8.2021, the Applicants carried out the Scheme Meetings for the Scheme Creditors of each Applicants. The Schemes of A following manner: Company Approval by Percentage Value of Creditors Present and Voting 1st Applicant 75.09% 2nd Applicant 80.90% 3rd Applicant 100.00% [10] On 2.12.2021, an order granting approval or sanction of the Schemes of Arrangement was granted by this Court after considering the submissions by the Applicants and the Respondents including the 2nd and 4th Respondents the Sanction ). [11] The Schemes of Arrangement as contained in the Explanatory Statement ( ES ) of the 1st and 2nd Applicants state that the Unsecured Scheme Creditors of the 1st Applicant or the 2nd Applicant will receive 20% of their debts converted into the 1st Ordinary Share Capital and 10% of their debt to be paid in cash. The White Knight, one JMJ Capital Sdn Bhd JMJ is supposed to carry out the fund-raising exercise which was targeted to be completed no later than the first quarter of 2022. The key terms of ES are reproduced below:

2.3 The White Knight

2.3.1 JMJ is an investment holding company with authorized and paid up capital of RM5,490 and RM5,490 respectively.

2.3.2 JMJ is an investment vehicle held by three shareholders namely, Ng Chye Poh, Yip Chin Hwee and Ong Wei Liam. The details of the key shareholders and their profile are set out in Appendix D.

2.3.3 On 18 December 2020, representatives of the White Knight and TBCB entered into preliminary discussions and expect to commence due diligence by January 2021.

2.3.4 On 15 March 2021, representatives of the White Knight through M One Vision Sdn Bhd (now known as JMJ Capital Sdn Bhd), agreed in principle to provide working capital and funding to TBCB, IJSB and IESB for the purpose of the proposed scheme of arrangement.

2.3.5 The determination of capital injection is set out in paragraph 2.4.

2.4 The Fund Raising Exercise

2.4.1 The White Knight will carry out the fund raising exercise through the capital market upon obtaining requisite in accordance with section 366 of the Companies Act 2016.

2.4.2 The fund raising exercise is targeted to be completed no later than the first quarter of 2022.

3.2 The Unsecured Scheme Creditors shall compromise their debt owed at the Lodgment Date as follows:

3.2.3 A moratorium shall be in effect on all outstanding debt owing as at the Cut Off Date to the Unsecured Scheme Creditors until the completion of the Fund Raising Exercise as set out in paragraph 2.4

3.2.4 On Effective Date, the Company shall settle the Unsecured Scheme C i. Adjudicated Debt as at the Cut Off Date, shall be paid in cash within 7 business days from the issuance of TBCB Ordinary Share Capital in paragraph 3.2.4(ii) to all Unsecured Scheme Creditors in proportion to the total Adjudicated Debt as at the Cut Off Date. ii. Adjudicated Debt as at the Cut Off Date, shall be converted into TBCB Ordinary Share Capital. The terms of the TBCB Ordinary Share Capital are set out in Appendix B. iii. For the purposes of the success of this Scheme Intercompany Creditors will relinquish all entitlement rights to the settlement for the benefit expenses requirement.

3.2.5 Adjudicated Debt as at the Cut Off Date and any amount incurred and Claim thereafter shall be waived on Lodgment Date.

3.2.6 On Lodgment Date, all Unsecured Scheme Creditors shall observe paragraph 10.3 pending the implementation of paragraph 3.2.4. Upon settlement under paragraph 3.2.4 all outstanding amount due shall be deem full and final settlement. Thereafter, each and every Unsecured Scheme Creditor shall not have any claim against the Company, the corporate guarantors (if any) of any Claim [emphasis added] [12] However, it seems that the Schemes of Arrangement never took off. Within 26 days of being granted the Sanction Order, on 28.12.2021 the 1st Applicant made an announcement in relation to the triggering of the Suspended Criteria and has been categorized as a PN17 listed issuer and remains classified as a PN17 listed issuer to this date. [13] On 28.12.2021, the 1st Applicant applied to Bursa Malaysia to extend the Relief Period from 29.12.2021 to 28.6.2022. However, Bursa Malaysia has rejected the 1st 1st Applicant was classified as a PN17 listed issuer with effect from 30.12.2021. [14] On 30.12.2021, the 4th, 6th and 7th Respondents filed their respective Appeals against the grant of the Sanction Order which are now pending before the Court of Appeal. [15] Pursuant to the Sanction Order, the Applicants are at liberty to apply for such further orders for directions, including any abridgement or extension of any period prescribed by any order made in these proceedings but have not done so. [16] In fact, the previous solicitors engaged by the Applicants to act as solicitors for the Court proceedings have discharged themselves from further acting for the Applicants asserting that they had not been paid and had not received any further instructions in respect of the proceedings in the High Court and in the Court of Appeal. [17] It is the 4th st Applicant is hopelessly insolvent and not in any position to implement the Schemes of Arrangement and to make the payments to settle the Unsecured Scheme Creditors debts as per the adjudicated Proof of Debts claims ( Adjudicated Debt ). [18] The 4th Respondent further claimed that it is apparent the Applicants are not in a position to comply with the Sanction Order, in particular prayers (1), (2) and (3) which requires the Schemes of Arrangement contained in the ES to be implemented and carried out by certain timelines. It is therefore a mere illusion that the Schemes of Arrangement will bring more benefit to the creditors as compared to a liquidation scenario. The Applicants had vigorously ventilated at the Sanction Hearing that the Unsecured Scheme Creditors will receive an estimated 15% recovery in a liquidation scenario, as opposed to an estimated 30% recovery under the Schemes of Arrangement. This is now appearing to be a deception in order to frustrate legitimate legal proceedings from being continued or commenced against the Applicants. [19] By reason of the aforesaid, the 4th Respondent by its Notice of Application vide Enclosure 189 seeks, inter alia, the following orders from this Court:

that the order granting sanction of the Schemes of Arrangement dated 2.12.2021 (Sanction Order) be set aside;

further and or in the alternative, a consequential order that the Schemes of Arrangement pursuant to the Sanction Order dated 2.12.2021 have lapsed and or terminated;

that leave be granted to the 4th Respondent to proceed with the Shah Alam High Court vide Action No.BA-22NCvC-133- 05/2020 against the 1st Applicant Suit 133-05 Legal Questions [20] The legal questions for the determination of Enclosure 189 are:

whether the Court has the jurisdiction or powers to make any subsequent order(s) post the grant of the Sanction Order, and if so, what are the limits of such jurisdiction or powers;

whether the Court has the jurisdiction or powers to set aside the Sanction Order made under Section 366(4) of the CA;

what are the legal consequences when the applicant to a scheme of arrangement breaches its obligations under the said scheme post the sanction of the same by the Court? [21] Before embarking on the legal issues outlined above, it is instructive to remind ourselves as to the legislative purpose behind the enactment of Section 366 of the CA 2016. In this regard, I have in Airasia X Berhad v BOC Aviation Limited & Ors [2021] MLRHU 2008; [2021] MLJU 189, at para [27] to [29] set out my understanding of the purpose in the following manner: The primary object of s. 366 of the Act is to allow a struggling company or its creditors or members to propose a restructuring plan in order for the company to continue as a going concern and for the creditors to secure payments of their debts or to secure a better repayment than the alternative of the company being wound up leading to the associated value destruction for all creditors. [28] Upon approvals of the creditors and sanction of the Court, the scheme will bind all classes of creditors, including the minority creditors who may have opposed the scheme. More specifically, s. 266(3) states: The compromise or arrangement shall be binding on

all the creditors or class of creditors;

the members or class of members;

the company; or

the liquidator and contributories, if the company is being wound up, if the compromise or arrangement is agreed by a majority of seventy-five per centum of the total value of the creditors or class of creditors or members or class of members present and voting either in person or by proxy at the meeting or the adjourned meeting [29] The section, thus, has the ability to prevent, in suitable cases, a minority in a class frustrating a beneficial scheme. This make a jest of the interest of the minority Sovereign Life Assurance Co v. Dodd [1892] 2 QB 573 ) at 582-583. [1891-4] All ER Rep 246 at 251: makes the majority of the creditors or of a class of creditors bind the minority; it exercises a most formidable compulsion upon dissentient, or would be dissentient, creditors, and it therefore requires to be construed with care, so as not to place in the hands of some of the creditors the means and opportunity of forcing dissentients to do that which it is unreasonable to require them to do, or of making a mere jest of the interest of the min [22] Further to the aforesaid, I also referred to Walter Woon on Company Law (Tan Cheng Han gen ed) (Sweet & Maxwell Asia, 3rd Ed, 2005) at para 16.2 referring to section 210 of the Singapore Companies Act on scheme of arrangement and stating as follow: Section 210 [of the Companies Act (Cap 50, 1994 Rev Ed)] provides for schemes of arrangement to be binding on creditors and members alike after the requisite approval by the specified majority and upon confirmation by the court. This section obviates the need for a messy and complicated series of negotiations with a view to obtaining the unanimous approval of the members or creditors to a novation or assignment or other variation of their rights. A scheme of arrangement may be proposed where it is desired t rights inter se, or to reorganize the share capital of the company, merger. In particular, recourse to s 210 is often made when it [is] desired to compromise cr company. [23] The requirement that the scheme of arrangement will become binding on creditors and members after obtaining the requisite approvals by the specified majority and only upon confirmation by the Court has given rise to 2 divergent views on the treatment of the order sanctioning the scheme of arrangement. [24] In Kempe v Ambassador Insurance Co [1998] 1 WLR 271, the Privy Council held that a scheme of arrangement derives its force from the statute and operates as a statutory contract based on terms once a scheme of arrangement has been approved by the necessary majority and sanctioned by the court, the court has no jurisdiction to make any substantive alterations to the scheme save in cases of obvious mistakes or fraud [See: Fletcher v Royal Automobile Club Ltd [2000] 1 BCLC 331 where consent was procured by fraud] where the court may in exercise of its inherent jurisdiction makes the appropriate orders to remedy the scheme. [25] The relevant passages from p. 275 276 in Kempe v Ambassador Insurance Co are set out below: of the scheme] has been Denning M.R. said in Reg. v. Bloomsbury and Marylebone County Court, Ex parte Villerwest Ltd. [1976] 1 W.L.R. 362, 365, period of 21 days in clause 2.3.1 a time which was ordered by the Chief Justice [of Bermuda] when he approved the scheme? In the [Bermudian] Court of Appeal, Kempster J.A. thought that it was. He said that the clauses of the scheme would have been sanction of the court on 23 March 1993 and the subsequent delivery of that order to the registrar. Although the case was not cited to him, his view has the support of the decision of the Supreme Court of Western Australia in Caratti v. Hillman [1974] said, at p. 95, that order and the procedure whereby those rights are to be established or ascertained is a procedure which is also created nd any period prescribed by the scheme under its power to extend periods fixed by its orders. The case has since been followed at first instance in Australia and in Bond Corporation Holdings Ltd. v. State of Western Australia (No. 2) (1992) 7 W.A.R. 61, 68 Anderson J. at p. 95] that has effect, not the resolution of the creditors and not Their Lordships respectfully disagree. It is true that the sanction of the court is necessary for the scheme to become binding and that it takes effect when the order expressing that sanction is delivered to the registrar. But this is not enough to enable one to say that the court (rather than the liquidators who proposed the scheme or the creditors who agreed to it) has by its order made the scheme. It is rather like saying that because royal assent is required for an Act of Parliament, a statute is an expression of the royal will. Under section 99 [of the Bermudian Companies Act] it is for the liquidators to propose the scheme, for the creditors by the necessary majority to agree to it and for the court to sanction it. It is the statute which gives binding force to the scheme when there has been a combination of these three acts, just as the rules of the constitution give validity to [A]cts duly Ltd. [1937] Ch. 594, 598 nk of Northern India Ltd. [1938] 4 All E.R. 337, 343. [26] Based on the said approach, the Privy Council in Kempe v Ambassador Insurance Co dismissed the application by the scheme creditors to extend the time for creditors to file their proofs of debt pursuant to the scheme. Such extension is said to be a no jurisdiction to impose a term not agreed to by them. It is said that such an approach would promote certainty and finality in the scheme of arrangement. [27] On the other hand, the Australian Courts adopt the position that a scheme of arrangement derives its efficacy from the order of court approving the scheme and in fact operates as an order of court. [28] More specifically, Santow J of the Supreme Court of New South Wales in Re AGL Gas Networks Ltd (2001) 37 ACSR 441 elaborating on the Australian approach, carefully explained at para [46] why the approach in Kempe v Ambassador Insurance Co should not be followed: 46 ( b ) In Australia, [the] authorities [namely, Hill v Anderson Meat Industries Ltd [1971] 1 NSWLR 868, Caratti and Bond Corp Holdings Ltd v Western Australia (1992) 7 ACSR 472] establish that an approved scheme does indeed derive its force from the court order, [and] not from the antecedent resolutions of members and creditors. In this respect Street J found (at 877) in Hill v Anderson Meat Industries Ltd in relation to a creditors to a discharge o law. The discharge is effected by the court order and not by the events antecedent thereto, albeit that these antecedent events jurisdiction to make an order approving a scheme and thus

The effect of these cases is that, once approved, there is sal decided at the relevant meetings is subsumed into and by the order of the court.

(d)

( f ) With respect compels me to a different conclusion. Their Lordships proceed[ed] on the assumption that a scheme does not derive its efficacy from the order of a court. Rather a scheme is given binding force by a statute which operates on a number of ingredients (in the case of a scheme, a scheme put forward by the scheme proponent, the necessary majorities of members or creditors and the sanction of the court). Taken to its logical conclusion, that reasoning would produce incongruous consequences. Take, for example, the jurisdiction of a court which is conferred by statute. The fact that the jurisdiction is conferred by statute does not make any decisions of the court under the statutory jurisdiction any less orders of the court deriving their efficacy from being made. The statute may be an indispensable statutory ut it is, in Kennedy.

The fact that their Lordships [in Kempe] were proceeding from what may be attackable reasoning does not necessarily mean that their conclusion is wrong. However, an analysis of the facts vulnerab dissatisfied scheme creditor to apply to the court for an order reversing or varying certain decisions of the liquidators. Their Lordships proceeded on the basis that there was nothing untoward in this. However, their Lordships [did] not indicate where the court obtains jurisdiction to exercise the functions conferred. If schemes generally operate as an order of the court, jurisdiction is inherent. On the other hand, if schemes only operate by virtue of the relevant statute then the court would have no jurisdiction as the statute only refers to a compromise or [an] arrangement between a company and its creditors (or between a company [emphasis added] [29] As an order of court, the courts in Australia could overcome the inflexibility of the English Courts to make subsequent orders after it has sanctioned inherent jurisdiction to vary its own orders and or to rely on the statutory provisions on civil procedure to, inter alia, e.g permit an extension of time to file its proof of debts. [30] However, it would seem that the Australian approach which had its genesis from the case of Caratti and Bond Corp Holdings Ltd v Western Australia (1992) 7 ACSR 472 is not universally held by all Australian judges. In Ray Brooks Pty Ltd v New South Wales Grains Board (No 2) (2002) 43 ACSR 657 Austin J clearly preferred the approach in Kempe v Ambassador Insurance Co but followed Caratti as a matter of precedent. At para [88] [90] of the judgment, he opined thus: The issue was addressed, admittedly in a different context, in Caratti v Hillman [1974] WAR 92; (1973) 4 ACLR 170. In that case the Full Court of the Supreme Court of Western Australia took the view that the procedure leading to the extinguishment of rights of creditors under a scheme of arrangement under companies legislation was a procedure created by order of the court. The order approving the scheme of arrangement fixed the period within which a creditor was authorised to lodge a claim under the scheme. Therefore the order of the court approving the scheme was an order fixing the period within which a person was authorised to do an act, for the purposes of the rule of court comparable with Pt 4, r 4 [of the Supreme Court Rules (NSW), which is in pari materia with O 3 r 4 of the Rules of Court]. Consequently the rule of court was available to permit the court to extend the period for lodgment of claims by creditors. That reasoning has been accepted by later Australian cases on several occasions: Re Terri Co Pty Ltd (1987) 12 ACLR 457; Bond Corp Holdings Ltd v Western Australia (No 2) (1992) 7 WAR 61; 7 ACSR 472; Re Matine Ltd (1998) 28 ACSR 268. However, it is inconsistent with the reasoning of the Privy Council The reasoning of Lord Hoffmann [in Kempe] is highly persuasive. However, the approach taken in Caratti was the approach of an intermediate appellate court in Australia. According to the High Court in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; 112 ALR 627; 10 ACSR 230, a judge at first instance in this country should not depart from the interpretation of companies legislation adopted by an Australian intermediate appellate court. Moreover, the Caratti decision has stood since 1973 and has been followed, as I have said, on several occasions. I note, in particular, that although Santow J found it unnecessary to choose between Caratti and Kempe in Re Matine, he expressed the view (at 286) that he would follow the Australian cases were [it] necessary to do so. As a matter of precedent, therefore, I shall follow the reasoning in Caratti in preference to the reasoning in Kempe. [emphasis added] [31] The Singapore Court of Appeal in The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd [2008] SGCA 18, after considering the differences between the aforesaid English and the Australian approaches, had opted for the latter. V K Rajah JA at para [61] held: 61 We noted earlier (at [25] above) that the Judge justified her preference for the English approach on the basis that the purpose of s 210 of the Companies Act, the established principles relating to schemes of arrangement and the overarching need for clarity, certainty and finality in this area of the law cumulatively supported the position in Kempe ([21] supra). Nevertheless, we are of the view that the Australian approach is also consistent with these established principles. Adopting the Australian approach does not necessarily mean that clarity, certainty and finality would be sacrificed on the altar of expediency or that the objectives of s 210 can no longer be properly achieved. Between the English and the Australian approaches, we are not entirely comfortable with the former approach, which, with respect, appears to be unnecessarily strict and mechanical, leading perhaps to potentially unjust consequences in some instances. We now elaborate on the reasons for our decision [emphasis added] [32] The learned judge gave the following reasons for preferring the Australian approach:

The English approach is intuitively restrictive as the court will no longer has jurisdiction once it has sanctioned a scheme of arrangement. As a general principle, the Court should be slow to abdicate the powers conferred on it by section 210 of the Singapore Companies Act vis-à-vis schemes of arrangement (our equivalent of section 466 of our Companies Act 2016), especially when doing so would allow an injustice to stand;

Adopting the reasonings of Santow J in Re AGL Gas Networks, that conferred by statute does not make any decisions of the court under the statutory jurisdiction any less orders of the court deriving their efficacy from being made . Further, unlike the UK provisions, under the Singapore and the Australian provisions governing schemes of arrangement, the court has the expressly-defined power to impose such conditions on or make such amendments to the terms of a scheme as it deems fit before approving any scheme;

The English approach is incongruous in that if indeed a court loses all jurisdiction in respect of a scheme of arrangement once it has sanctioned the scheme (save for its inherent jurisdiction to intervene in cases of fraud or obvious mistakes in the documents setting out the scheme), this begs the question where the court obtains the necessary jurisdiction to exercise the appellate function conferred by the scheme in Kempe v Ambassador Insurance Co;

The English approach does not comport with the plain wording of the relevant UK, Australian and Singapore provisions on schemes of arrangement, all of which stipulate that a scheme the 1985 UK Companies Act) n Corporations Act) and s 210(3) of the Singapore Companies Act. The plain wording of these subsections would suggest that the efficacy of a scheme (or, at least, its binding nature, which is the key to the ability of a scheme of arrangement to fulfil its intended function of serving as machinery to overcome the impossibility of obtaining the individual consent of every creditor or member to a proposed scheme) stems from the court order which sanctions or approves it;

Finally, V K Rajah JA was of the view that the application for an extension of time in Kempe v Ambassador Insurance Co ought to be treated as a matter of procedure rather than a material alteration which goes into the substance of the scheme of arrangement. Viewed as such, the Court in permitting such an extension would not fall foul of the established principle that a scheme cannot be altered after the creditors or the members an arrangement to which they did not agree. [33] India, on the other hand, has adopted a statutory solution to the post the sanctioning of the scheme of arrangement by providing their Courts with continuous supervisory powers to make consequential orders necessary for the proper carrying out of the scheme. More specifically, section 392 of the Indian Companies Act 1956 provides: "392. Power of High Court to enforce compromises and arrangements-(1) Where a High Court makes an order under section 391 sanctioning a compromise or an arrangement in respect of a company, it-

shall have power to supervise the carrying out of the compromise or arrangement; and

may, at any time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or arrangement.

If the Court aforesaid is satisfied that a compromise or arrangement sanctioned under section 391 cannot be worked satisfactorily with or without modifications it may, either on its own motion or on the application of any person interested in the affairs of the company, make an order winding up the company, and such an order shall be deemed to be an order made under section 433 of this Act". [34] In S. K. Gupta & Anr v K. P. Jain & Anr 1979 AIR 734, 1979 SCR

(2)1184, Desai J delivering the judgment of the Supreme Court of India commented on the significance of section 392 of the Indian Companies Act 1956: At the outset it may be mentioned that though a large number of provisions of the Companies Act, 1956, are in pari materia with the provisions of Companies Act, 1948, of the U.K. ('U.K. Act' for short), there is no provision analogous to s. 392 in the U.K. Act. The Court under the U.K. Act has no power to modify the scheme either at the time when it is offered for its sanction or at any time subsequent thereto. The Parliament has in its wisdom, conferred a power of wide amplitude on the High Court in India to provide for its continuous supervision of the carrying out of compromise and/or arrangement and also the consequential power to make the supervision effective by removing the hitches, obstacles or impediments in the working of compromise or arrangement by conferring power to give such direction in regard to any matter or for making such modification in the compromise or arrangement as it may consider necessary for the proper working of the compromise and/or arrangement. Sub-s. (2) confers power on the Court to act under s. 392 either on its own motion or on the application of any person interested in the affairs of the company. What falls for consideration is the true meaning of the expression 'on the application of any person interested in the affairs of the company. : When a scheme is being considered by the Court, in all its ramifications, for according its sanction, it would not be possible to comprehend all situations, eventualities and exigencies that may arise while implementing the scheme. When a detailed compromise and/or arrangement is worked out, hitches and impediments may arise and if there was no provision like the one in s. 392, the only obvious alternative would be to follow the cumbersome procedure as provided in s. 391(1), viz., again by approaching the class of creditors or members to whom the compromise and/or arrangement was offered to accord their sanction to the steps to be taken for removing such hitches and impediments. This would be unduly cumbersome and time consuming and, therefore, the legislature in its wisdom conferred power of widest amplitude on the High Court under s. 392 not only to give directions but to make such modification in the compromise and/or arrangement as the Court may consider necessary, the only limit on the power of the Court being that such directions can be given and modifications can be made for the proper working of the compromise and/or arrangement. The purpose underlying s. 392 is to provide for effective working of the compromise and/or arrangement once sanctioned and over which the Court must exercise continuous supervision [see s. 392(1)], and if over a period there may arise obstacles, difficulties or impediments, to remove them, again, not for any other purpose but for the proper working of the compromise and/or arrangement. This power either to give directions to overcome the difficulties or if the provisions of the scheme themselves create an impediment, to modify the provision to the extent necessary, can only be exercised so as to provide for smooth working of the compromise and/or arrangement. To effectuate this purpose the power of widest amplitude has been conferred on the High Court and this is a basic departure from the scheme of the U.K. Act in which provision analogous to s. 392 is absent. The sponsors of the scheme under s. 206 of the U.K. Act have tried to get over the difficulty by taking power in the scheme of compromise or arrangement to make alterations and modifications as proposed by the Court. But the Legislature foreseeing that a complex or complicated scheme of compromise or arrangement spread over a long period may face unforeseen and unanticipated obstacles, has conferred power of widest amplitude on the Court to give directions and if necessary, to modify the scheme for the proper working of the compromise or arrangement. The only limitation on the power of the Court, as already mentioned, is that all such directions that the Court may consider appropriate to give or make such modifications in the scheme, must be for the proper working of the compromise and/or arrangement [emphasis added] Position in Malaysia [35] Our Section 366(4) of the CA 2016, similar to Section 210(4) of the Singapore Companies Act and Section 411(6) of the 2001 Australian Corporation Act, also stipulates that the court may grant its approval to a compromise or arrangement subject to such alterations or conditions as it thinks just [36] Section 366(1) also stipulates that the compromise or arrangement shall be binding only if the same is agreed by the requisite creditors or class of creditors or members or class of members present and voting either in person or by proxy at the meeting or the adjourned meeting and . [37] The objection to the Courts having power post an order approving the scheme is that the aforesaid provisions only allow a court to amend the terms of a scheme before scheme is given and does not go as far as to allow the courts to amend the terms of a scheme after approving the scheme. [38] With respect, I beg to differ. [39] As so eloquently pointed out by V K Rajah JA in The Oriental Insurance Co Ltd, t would seem incongruous that the court has such wide powers to amend the terms of a scheme before giving its approval to the scheme, but promptly loses all jurisdiction after it approves the scheme . [40] However, whist I wholeheartedly share and adopt the learned judge aforesaid statement, with respect to the learned judge, I subscribe to the view that a scheme, when approved by the court, takes effect as an order of court and, is to be treated like any other court order. I would prefer to view that the scheme derives its force from the statute and constitutes a statutory contract between the applicant company and its scheme creditors. I will elaborate but not before setting out the roles and powers conferred on the Court by Section 366(4) of the CA 2016. [41] In AirAsia X Bhd v. BOC Aviation Ltd & Ors at para [41], I had referred to the English Chancery Court decision of Re Telewest Communications plc (No 2); Re Telewest Finance (Jersey) Ltd (No 2) [2005] 1 BCLC 772 Re Telewest where the guiding principles for the Courts at the sanction stage was set out as follows: court in considering whether to sanction a scheme was set out by Plowman J in Re National Bank Ltd [1966] 1 All ER 1006 at 1012, [1966] 1 WLR 819 at 829 by reference to a passage in Buckley on the Companies Acts (13th edn, 1957) p 409, which has been approved and applied by the courts on many 'In exercising its power of sanction the court will see, first, that the provisions of the statute have been complied with, second, that the class was fairly represented by those who attended the meeting and that the statutory majority were acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent and thirdly, that the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve. The court does not sit merely to see that the majority are acting bona fide and thereupon to register the decision of the meeting, but, at the same time, the court will be slow to differ from the meeting, unless either the class has not been properly consulted, or the meeting has not considered the matter with a view to the interests of the class which it is empowered to bind, or some blot is found in the scheme.' [21] This formulation in particular recognises and balances two important factors. First, in deciding to sanction a scheme under s 425, which has the effect of binding members or creditors who have voted against the scheme or abstained as well as those who voted in its favour, the court must be satisfied that it is a fair scheme. It must be a scheme that 'an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve'. That test also makes clear that the scheme proposed need not be the only fair scheme or even, in the court's view, the best scheme. Necessarily there may be reasonable differences of view on these issues. [22] The second factor recognised by the above-cited passage is that in commercial matters members or creditors are much better judges of their own interests than the courts. Subject to the qualifications set out in the second paragraph, the court 'will be slow to differ from the meeting'. [emphasis added] [42] The primary role of the Courts in sanctioning a scheme of arrangement is to ensure compliance with the statutory requirements and to safeguard procedural fairness in the scheme. In order to further ensure that the statutory majority were acting bona fide and are not coercing the minority in order to promote interests adverse to them due to the cram-down provisions, the Court the scheme of arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve. [43] It is this very supervisory powers that the Court exercises when it grants its approval to a compromise or arrangement subject to such alterations or conditions as it thinks . It is to ensure that the scheme that is approved is one that is fair and is effective. This can only be achieved if such powers which are vested in the Courts by Parliament continue to remain vested in the Court post the sanction order until the completion of the scheme. [44] To my mind, the fact that Section 366(4) stipulates that the Court may grant its approval to a compromise or arrangement subject to such alterations or conditions as it thinks just does not necessarily alterations or conditions as it thinks just after granting its approval at all. Indeed, Section 366(4) did not express any such limitations. On the contrary, it is my judgment that Section 366(4) confers on the Court an overarching supervisory power over the scheme throughout from the moment an application is placed before the Court until the completion of the implementation of the scheme. Such supervisory power is necessary and is consistent with stated roles. [45] The reason for the continuing supervisory power is obvious. To borrow from the passage by Desai J in S. K. Gupta & Anr hen a scheme is being considered by the Court, in all its ramifications, for according its sanction, it would not be possible to comprehend all situations, eventualities and exigencies that may arise while implementing the scheme. When a detailed compromise and/or arrangement is worked out, hitches and impediments may arise In other word, it is to provide for effective working of the compromise and or arrangement once sanctioned. [46] Further and significantly, Section 370(2) of the CA 2016 expressly any subsequent order further provisions including:

the provision to be made for any persons who, within such time and in such manner as the Court directs, dissent from the compromise or arrangement; or

such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation . [47] Although Section 370 applies to a compromise or arrangement in respect of a scheme for the reconstruction of any company or the amalgamation of any two or more companies and under the scheme the whole or any part of the undertaking or the property of any nevertheless, to my mind sub-sections (e) and (f) above are confirmation of a continuing supervisory powers to the Court to make any consequential orders to secure that the scheme be fully and effectively carried out. [48] In fact, I would even venture to state that the powers vested in the Court in Section 370(2) are more than what I would hold to be the limits on the general supervisory power of the Court under Section 366(4) to viz, that the Court may only give such orders as it considers appropriate to give or make such modifications in the scheme as are necessary for the proper working of the compromise and or arrangement, guided at all times by the principle to ensure procedural fairness to all parties and that the scheme is essentially a commercial arrangement arrived at by them. [49] The powers confer under Section 370(2) are more extensive because of the more varied and challenging legal issues and ramifications that may arise in order to address and satisfy the multifaceted legal requirements that are inherent in the reconstruction and or amalgamation of any two or more companies. [50] Accordingly for the reasons above, with respect to learned counsel for the Applicants, I am unable to agree that the express provision of the Cour 370(2) necessarily excludes any supervisory powers under Section 366(4). [51] In any case, since Section 366(4) provides that the Court may order such alterations or conditions as the Court thinks just when it grants approval to the scheme, the Court when making such orders always possesses an inherent jurisdiction to dispense ancillary or supplemental orders to augment or substitute the original orders so as to give effect to the intent and purpose of the order. Such consequential or ancillary orders do not at all infringe on the functus officio rule. [52] Our Federal Court in Stone World Sdn Bhd v Engareh (M) Sdn Bhd [2020] 12 MLJ 237 at 244 paragraphs [15] to [20] has very clearly opined on the principle of functus officio: [15] The general rule is that an adjudicator only exercises his decision-making powers once, in respect of a particular matter, so as to give a final and conclusive order or judgment in respect of the particular legal rights or claims made. This decision cannot be revoked or varied by the decision maker. It is important to emphasise in this context that the court is not so much bereft of jurisdiction but is bound by the said rule not to exercise such power in the interests of the finality of litigation. [16] In Tenaga Nasional Bhd v Prorak Sdn Bhd & Anor [2000] 1 MLJ 479; [2000] 1 CLJ 553, Gopal Sri Ram JCA (as he the n was) affirmed the position in law that the rule of functus officio is a part of the broader doctrine of res judicata. This body of law in turn comprises the basis for the principle of finality, which is an essential aspect of adjudication, and contributes to the rule of law. As with all general rules there are exceptions to the functus officio doctrine. [17] There are limited and discrete situations where the court may make a further order subsequent to its previous sealed order. These situations include:

an amendment of a previous order to reflect the original intention of the court which is evident from the previous and original order, or the body of the judgment of the original order;

(b)

the clarification, supplementing of or amendment of a previous order so as to give effect to the original order under

if there is provision in the Rules to amend an original order so as to enlarge time specified. [18] These are well-recognised and accepted categories where the principle of finality as reflected in the rule of functus officio is not violated. [19] Where is this jurisdiction to amend or supplement the original sealed order found? It is found in the inherent jurisdiction of the courts. The superior courts possess a residual inherent jurisdiction to, inter alia, clarify the terms of an order and to make ancillary orders primarily to give effect to the decision or judgment handed down. It is a necessary jurisdiction to enable a court to ensure that substantive justice between the parties is served, so as to give effect to its primary decision, through the dispensing of procedural justice. [20] That the court has the jurisdiction to dispense ancillary or supplemental orders to augment or substitute the original relief or remedy so as to give effect to the intent and purpose of its original decision is not in doubt. The doctrine of functus officio does not encroach upon that jurisdiction. [53] Having set out the aforesaid, I will now address the issue as to the legal nature of the Sanction Order, is it a statutory contract or is it an order of the Court? [54] As alluded to above, in exercising its power to grant its approval for the relevant provisions of the CA 2016 have been complied with, that the class was fairly represented by those who attended the meeting and that the statutory majority were acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent and that the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve. [55] The Court does not normally provide any input into the substance of the scheme. In fact, apart from considering the bona fide of the scheme, the Court is not to be concerned with the commercial merits of the same which is a matter exclusively for the creditors to decide. Accordingly, when the Court grants its approval of the scheme, it cannot at all be said that the Court has made any determination at all as regards the substantive terms of the scheme (save for such alterations or conditions that it imposed). [56] As such, I would respectfully depart from following the Australian approach treating the sanction order as a court order on the terms of the scheme [per Butt J in Caratti v Hillman at p. 95] that has Bonds Corporation Holdings Ltd v. State of Western Australia (No 2) (1997) 7 W.A.R 61, 68 Anderson J]. [57] To my mind, it is the company who proposes the scheme and it is the creditors who agree to it. Without the agreement of the creditors by the requisite majority, the Court has no jurisdiction to make the sanction order. The scheme derives its force from the provisions of the statute based on the requisite agreement of the creditors and the scheme constitutes a statutory contract binding on all the creditors for which the Court gives its sanction only upon satisfaction that the scheme is procedurally fair to all creditors and substance is one that an intelligent and honest man of the particular class would agree. [58] It is a distinction without a difference. [59] Accordingly, I am inclined to follow the English approach but subject to the added supervisory powers vested in our Courts as stipulated in our Section 366(4) of the CA 2016 which is absence from the UK Companies Act. [60] that of lending its imprimatur to a consent order entered into between the parties appearing before it except that in the case of a scheme of arrangement, the Court has the added supervisory role and powers to ensure procedural and substantive justice and fairness underlies the scheme and maintaining its overarching presence throughout to render any consequential and ancillary orders necessary for the effective implementation of the scheme. [61] Just as the Court has no jurisdiction to vary a consent judgment, given that the scheme of arrangement is essentially an agreement reached between the creditors and the applicant company, it must necessarily follow that the Court too does not have jurisdiction to vary or set aside the scheme of arrangement subject only to the effect to the scheme and ensure fair play to all the creditors. [62] Similarly, just as the Court has no jurisdiction to set aside a consent judgment by reason of any repudiatory breach because such repudiatory breach effectively terminates the consent judgment prospectively and releases the parties of their respective future obligations [See: Tuft Club Auto Emporium Pte Ltd v. Yeo Boong Hua [2017] 2 SLR 12], any repudiatory breach of the scheme of arrangement by the company would result in the termination of the scheme and releases the scheme creditors of their obligations therein. In other words, the Court has no jurisdiction to set aside the sanction order where there is a repudiatory breach of the scheme by the company. [63] For completeness, learned counsel for the 4th Respondent has referred this Court to the case of Hoban Steven Maurice Dixon v Scanlon Graeme John [2007] 2 SLR(R) 770 for the proposition that a consent order can be set aside ab initio on the basis that it had been rendered inoperative. The contention is that the Sanction Order has been rendered inoperative in this case as the 1st Applicant is currently in PN17 and has not been able to implement any regularisation plan within the 12 months stipulated by Bursa Malaysia. In addition, the White Knight has not been able to raise the requisite capital even after more than 1 year from the Sanction Order. [64] Hoban Steven Maurice Dixon was in fact relied upon as an alternative ground to set aside the consent order in Tuft Club Auto Emporium Pte Ltd. Sundaresh Menon CJ held that the principle that an inoperative order can be set aside does not apply to a consent order, clarifying that the Valuation Order in Hoban Steven Maurice Dixon was not a truly contractual consent order. This is clear from the passage at para [172] of the judgment: 172 In our judgment, Hoban ([57] supra) is distinguishable from the present case. It seems to us that the Valuation Order in Hoban was an order made by the trial judge, albeit premised on a broad agreement between the parties, as opposed to a truly contractual consent order. We note that the court ultimately decided on the parameters of the Valuation Order which the parties had not been able to agree on. It is also telling that the Court of Appeal observed at [41] that it would be wholly unreasonable and unjust to attribute to the trial judge rather than to the parties as would be expected if the order was truly a contractual consent order an intention that the Shares should be effectively given away if they were assessed as value. If the Valuation Order was indeed not a contractual that it was empowered to set it aside would be uncontroversial. In our judgment, this was the true basis of the decision in Hoban and on this basis, it does not assist the Respondents. [65] Given my view that the Sanction Order is a statutory contract, it follows that I am unable to accept the contention by the learned counsel for the 4th Respondent that this Court can set aside the Sanction Order even if it is the case that the same has been rendered inoperative. [66] In any event, the facts of the present case do not support the contention that the Sanction Order is inoperative. Rather, it at all, the facts suggest that the 1st Applicant has simply failed and or unable to perform the terms of the scheme as yet until it regularises its PN17 status. If the aforesaid means that the Applicants have breached their obligations under the Schemes of Arrangement, it is a case of breach of the terms of the Schemes and that is not the same as being inoperative. [67] Finally, I will now address the 4th of this Court to continue with its Suit 133-05. This is an action that the 4th Respondent had commenced prior to the Applicants filing the Schemes of Arrangement. The Suit is now subject to the moratorium under the Schemes of Arrangement. [68] and counterclaims against the company which the creditors had commenced prior to the scheme are to be discharged or the same are revived by reason of the breach would very much depends on the terms of the scheme. [69] In the present case, the Applicants had obtained a restraining order under Section 368(1) of the CA 2016 which had remained effective until the Sanction Order. Typically, under the scheme of arrangement there will be provisions requiring the scheme creditors to withdraw their legal actions against the company or an agreement to a stay of the action following the sanction order given by the Court of the scheme of arrangement. Specifically, in the present case, the ES provides: A moratorium shall be in effect on all outstanding debt owing as at the Cut Off Date to the Unsecured Scheme Creditors until the completion of the Fund Raising Exercise as [70] In the event of a repudiatory breach by the company of its obligations under the scheme, a natural consequence resulting from such a breach will be that the scheme creditors will no longer to bound to keep to their bargain, freeing them to seek whatever reliefs that are normally available in such cases. [71] In our present case, the Applicants are disputing that they have breached the provisions of the Schemes of Arrangement, let alone that the onset of the 1st steps to be taken to regularise its status with Bursa Malaysia. This is still an on-going process notwithstanding the fact that the application for extension of time has been rejected. The fact that the 1st Applicant had fallen under the PN17 status was disclosed in the ES and the time lines stated in the ES was premised on the 1st Applicant not having the need to comply with the listing requirements. However, with the triggering of the PN17 status after Applicants contend that they have every intention to proceed with the Schemes of Arrangement as approved and are still engaging Bursa Malaysia to resolve its PN17 status. [72] To my mind, the question whether there is a repudiatory breach or otherwise by the Applicants of the obligations in the Schemes of Arrangement is to be determined in a separate action. As such it is not for this Court to make the order granting to the 4th Respondent leave to proceed with its action filed in the Shah Alam High Court vide Action No.BA-22NCvC-133-05/2020 against the 1st Applicant. Conclusion [73] For the reasons above, I am unable to grant the orders prayed for by the 4th Respondent in its application vide Enclosure 189 and thereby dismissed the same with costs. Dated on the 27th day of February 2023 ONG CHEE KWAN J Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 COUNSEL:

Mr. Tai Wei Jeat together with Ms. Maxine Lim for Applicants Messrs Juen, Jeat, Nic & Nair (Kuala Lumpur)

Mr. S. Ramesh together with Mr. Julian Lee and Mr. G. Kanarasan for 4th Respondent Messrs. Ramesh K. Supramaniam (Klang)

Airasia X Berhad v BOC Aviation Limited & Ors [2021] MLRHU 2008; [2021] MLJU 189 2. Kempe v Ambassador Insurance Co [1998] 1 WLR 271 3. Fletcher v Royal Automobile Club Ltd [2000] 1 BCLC 331 4.

Caratti and Bond Corp Holdings Ltd v Western Australia (1992) 7 ACSR 472 6. Ray Brooks Pty Ltd v New South Wales Grains Board (No 2)

43 ACSR 657 7. The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd [2008] SGCA 18 8. S. K. Gupta & Anr v K. P. Jain & Anr 1979 AIR 734, 1979 SCR

(2)1184 9. Re Telewest Communications plc (No 2); Re Telewest Finance (Jersey) Ltd (No 2) [2005] 1 BCLC 772 10. Stone World Sdn Bhd v Engareh (M) Sdn Bhd [2020] 12 MLJ 237 11. Bonds Corporation Holdings Ltd v. State of Western Australia (No 2) (1997) 7 W.A.R 61 12. Tuft Club Auto Emporium Pte Ltd v. Yeo Boong Hua [2017] 2 SLR 12 13. Hoban Steven Maurice Dixon v Scanlon Graeme John [2007] 2 SLR(R) 770 LEGISLATION REFERENCE:

Sections 366(4); 370(2); 368(1) and 466 of the Companies Act 2016 2. Section 210 of the Singapore Companies Act 3. Section 425(2) of the 1985 UK Companies Act 4. Section 411 of the 2001 Australian Corporations Act 5. Section 392 of the Indian Companies Act 1956

Walter Woon on Company Law (Tan Cheng Han gen ed) (Sweet & Maxwell Asia, 3rd Ed, 2005)