Ace Holdings Berhad v 1. ) Koperasi Permodalan Felda Malaysia 2 Berhad (BA-28JM-18-08/2024)

The Applicant, Ace Holdings Berhad ("AHB"), seeks to place itself under judicial management pursuant to section 405 of the Companies Act 2016 ("CA 2016").

Atotal of twelve (12) proposed interveners have applied to intervene in these proceedings and, in most cases, have additionally sought leave pursuant to section 410(c) CA 2016 to commence or continue legal proceedings against the Applicant.

One of the proposed interveners, Dato' Azmi bin Jaafar, also filed Enclosure 80, an application to strike out the judicial management application pursuant to Order 18 rule 19 of the Rules of Court 2012.

This judgment addresses three key issues: (i) Whether the proposed interveners are entitled to intervene in the judicial management application; (ii) Whether the judicial management application should be struck out at this stage; and (iii) Whether leave ought to be granted under section 410(c) for the proposed interveners to proceed with or commence legal actions. I. Whether the Proposed Interveners may Intervene

The basis of the proposed interveners’ applications to intervene is that they are creditors of AHB with existing or pending legal claims, and the outcome of the JM application will significantly affect their rights and remedies.

All proposed interveners rely on the principle that a party whose legal rights or obligations are directly affected by the relief sought in a proceeding is entitled to intervene under Order 15 rule 6(2)(b).

The Applicant, AHB, objects to the intervention applications. It argues, among others, that unsecured creditors are not entitled to intervene or be heard in JM applications. In support of this, AHB relies heavily on the Court of Appeal’s decision in Desa Tiasa Sdn Bhd v CME Group Berhad & Anor [B-02(IM)-626-04/2023], which it contends stands for the proposition that unsecured creditors have no locus to be heard in JM applications.

{8] In reply, the proposed interveners submit that Desa Tiasa has no binding effect as there is no written judgment. They rely on the case of Tetuan Wan Shahrizal, Hari & Co v Public Prosecutor [2023] 4 MLJ 17, where the Federal Court held that an unwritten decision cannot constitute binding precedent as it lacks a ratio decidendi. Accordingly, the proposed interveners argue that the decision in Desa Tiasa cannot preclude unsecured creditors from intervening where they have demonstrated a legitimate legal interest.

| agree with the submissions of the proposed interveners on this point. The ruling in Tetuan Wan Shahrizal is clear: an appellate court decision that is not supported by written grounds cannot be treated as binding precedent. Without reasons, the decision lacks a discernible ratio that can guide the lower courts.

In contrast, there are several High Court decisions, namely, Goldpage Assets Sdn Bhd v Unique Mix Sdn Bhd [2020] MLJU 2073, Gigatech Engineering Sdn Bhd v EnGreen Sdn Bhd [2022] MLJU 2822, and Novabrite Lighting Sdn Bhd v Emrail Sdn Bhd (Balaranee Construction, proposed intervener) [2024] MLJU 2986, which specifically held that unsecured creditors may be allowed to intervene in JM proceedings as the CA 2016 does not exclude them from participating.

| respectfully concur with the said decisions. There is no provision in the CA 2016 or the Companies (Corporate Rescue Mechanism) Rules 2018 that limits intervention to secured creditors. The nature of judicial management proceedings, which directly affect all classes of creditors, justifies granting access to affected parties to participate in a controlled and limited manner. This is reinforced by the objectives of judicial management under section 405(1), which aims to achieve a better realisation of assets for the benefit of all creditors.

On the facts before me, | find that each of the proposed interveners has a legitimate legal interest in the outcome of the JM application. All proposed interveners claim to have subscribed to the Applicant’s RPS or i-RPS, and in most cases, redemption rights have accrued and been exercised by way of redemption notices. Several have filed legal proceedings to enforce repayment.

These circumstances give rise to vested legal rights in contract and, by extension, establish the proposed interveners as creditors within the meaning of Butterworth Products & Industries Sdn Bhd [1992] 1 MLJ 429.

(14] Their rights as creditors — whether secured or unsecured — are clearly affected by any potential moratorium, the restructuring proposals, and the possibility of asset realisation under a judicial manager.

(15] The relevant provision governing intervention is Order 15 rule 6(2)(b)(ii) of the Rules of Court 2012, which provides that: "At any stage of proceedings in any cause or matter, the Court may on such terms as it thinks just order any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which, in the opinion of the Court, would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter."

This provision enables the courts to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard.

The principles in Order 15 rule 6(2)(b) are further fortified in the locus classicus decision of the Privy Council in Pegang Mining Co. Ltd v Choong Sam & Ors [1969] 2 MLJ 52. At paragraph [25], the Privy Council held: “It has been sometimes said as in Moser v. Marsden [1892] 1 Ch 487 and Re LG Farbenindustrie AG [1944] Ch 41 that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between "legal" and "commercial" interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?”

In my judgment, the proposed interveners’ legal interests meet this threshold. Accordingly, | allow the applications by the proposed interveners to intervene in these proceedings pursuant to Order 15 rule 6(2)(b){ii) of the ROC 2012. ll. Application to Strike Out the Judicial Management Application — Deferred Consideration

Dato’ Azmi applies to strike out AHB’s judicial management application on the grounds that: (i) | The application is scandalous, frivolous or vexatious; (ii) It prejudices or delays the proceedings in Suit No. WA-22NCC- 208-04/2023 which he had commenced against AHB; and (iii) The application constitutes an abuse of process.

He contends that AHB’s application is not bona fide and lacks any viable or genuine proposal for rehabilitation. There is no affidavit from the proposed judicial! manager, and no detailed proposal showing how AHB intends to revive its operations. These shortcomings, he argues, are fatal under /n re Sin Soon Hock Sdn Bhd [2020] 1 LNS 976 and Surrealist Communities (M) Sdn Bhd v SCEC Group (M) Sdn Bhd [2022] CLJU 965.

He also raises the issue of full and frank disclosure, alleging that AHB has failed to disclose material facts regarding its major debtors, particularly Ace Credit (M) Sdn Bhd and various suspicious loans made to dissolved companies.

AHB, in response, contends that these objections are premature and that the substantive merits of the JM application should be evaluated at the hearing under section 405 of the Companies Act 2016.

Having considered the submissions and affidavits, | agree that these issues — while serious — are best reserved for determination at the substantive JM hearing. Striking out the application now would deprive the Applicant of the opportunity to be fully heard on the merits.

Accordingly, | defer the ruling on the striking out application filed by Dato’ Azmi. It shall be revisited and determined together with the JM application. lll. Section 410(c) Applications — Deferred Consideration

Given the nature and timing of these applications, | am of the view that it would be premature to determine the requests for leave under section 410(c) at this juncture.

While ! am satisfied that all proposed interveners have demonstrated sufficient legal interest to be joined as parties (see above), the question of whether leave should be granted to proceed with individual suits ought to be considered only after the full hearing of the JM application.

This approach will allow the Court to assess the bona fides and viability of the proposed restructuring without compromising the rights of the creditors to seek redress, should the JM ultimately be dismissed or prove unworkable. IV. Orders

{28] The following orders are made: (i) All twelve (12) proposed interveners are allowed to intervene in the judicial management application. (ii) | The striking out application filed by Dato’ Azmi (Encl. 80) is kept in view and shall be heard and determined at the substantive hearing of the JM application. (iii) | The proposed interveners’ applications for leave under section 410(c) CA 2016 are similarly deferred for determination after the JM hearing. Costs in the ¢ause. Dated: 10 March 2025 AJA RgeELABINT A TORA ici missioner amalat and Insolventy Coutt COUNSELS Solicitors for the Interveners Tetuan Azraai, Hazieq, Zikry B-8-5A, Tingkat 10 Menara Uncang Emas, Jalan Loke Yew 55000 Kuala Lumpur Tetuan Kah Sheng & Co 28-2, Jalan Kuchai Maju 8, Kuchai Enterpreneurs Park, 58200 Kuala Lumpur Tetuan Nurul Hafizah & Associates B-7-2, Alam Avenue, Jalan Serai Wangi G 16/G Persiaran Selangor, Seksyen 16, 42000 Shah Alam Tetuan Wan Ahmad Ridzuan & Co 62-1, Jalan Tasik Utama 5, Medan Niaga Tasik Damai, . The Trillium Lakefield, 57000 Sungai Besi, Kuala Lumpur Tetuan R. Yogeswari & Co Lot 61-2A, OG Business Park, Jalan Taman Tan Yew Lai, 58200 Kuala Lumpur Tetuan Wan Sarimah & Co C-9-1, Melawati Corporate Centre, Jalan Taman Melawati, Taman Melawati 53100 Kuala Lumpur Tetuan Zul Rafique & Partners D3-3-8, Solaris Dutamas, No. 1, Jalan Dutamas 1, 50480 Kuala Lumpur Solicitors for the Applicant Tetuan Chuah Qian & Patners D8-9-2 Dana 1 Commercial Centre Jalan PJU 1A/46, Petaling Jaya 47301, Selangor