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Page 1 of 11 IN THE HIGH COURT OF MALAYA AT SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN POST WINDING UP NO: BA-28PW-106-04/2023 COMPANIES (WINDING-UP) NO: BA-28NCC-273-04/2019 In the matter of the Companies Act 1965 And In the matter of the Companies Act 2016 And In the matter of Straight Engineering Sdn Bhd (952848-A) ANN YAK SIONG HARDWARE SDN BHD (COMPANY NO: 94954-K) AND PETITIONER STRAIGHT ENGINEERING SDN BHD (IN LIQUIDATION) (COMPANY NO: 952848-A) . . . RESPONDENT AND ANG TECK LEE (NRIC NO: 690215-03-5739) GROUNDS OF JUDGMENT (ENCLOSURE 1) APPLICANT Introduction [1] This is an application by Mr. Ang Teck Lee ["the Applicant"] seeking, pursuant to Section 517 of the Companies Act 2016, to set aside S/N XGxckLniqECNunvQlvkAQ Page 2 of 11 the decision of the Liquidator, Dato' Saw Eng Guan ["the Liquidator"], who rejected the Applicant's Proof of Debt ["POD"] dated 30 September 2021 in the sum of RM1 million. The Applicant further seeks an order for the Liquidator to admit the POD in full. [2] Section 517 of the Companies Act 2016 confers upon any person aggrieved by an act or decision of the Liquidator the right to apply to the court for confirmation, reversal, or modification of such decision. The court, in exercising its discretion, must ensure that justice, equity, and good conscience prevail. [3] The Applicant's primary complaints against the Liquidator are twofold: i. that the Liquidator failed to assess the POD independently and correctly; and ii. that the Liquidator was out of time to reject the POD, having done so only 18 months after its submission. [4] Having reviewed the submissions of the parties, the relevant evidence, and the applicable law, I am satisfied that the Liquidator acted within his duties and obligations under the law. For the reasons set out below, this application is dismissed. Background Facts [5] The Applicant claims to have provided a loan of RM1 million to Straight Engineering Ltd ["the "Company"] via a Loan Agreement dated 1 April 2017. The loan was purportedly provided in cash over the period 2015-2017, and the Applicant contends that the loan was used to assist the Company in its financial difficulties. The Company was wound up by S/N XGxckLniqECNunvQlvkAQ Page 3 of 11 the Shah Alam High Court on 31 July 2017, and the Official Receiver was initially appointed as the Liquidator. Dato' Saw was appointed as Liquidator in place of the Official Receiver on 11 March 2020. [6] The Applicant submitted the POD on 30 September 2021, supported by the Loan Agreement, a Statutory Declaration by one Mohamed Ameen Mohideen Pitchari ["Mohamed Ameen"], a Director of the Company, various payment vouchers, bank statements, and a Statement of Acknowledgment by the Company confirming the receipt of funds from the Applicant. [7] On 23 March 2023, the Liquidator issued a Notice of Rejection ("NOR") of the Applicant's POD, citing various grounds, including the lack of verification of the Loan Agreement, absence of supporting documentation, and concerns about the credibility of the Applicant's claim. Applicant's Complaints and Submissions [8] The Applicant's primary complaints are as follows. Delay in Rejection (9] The Applicant argues that the Liquidator failed to comply with Rule 98 of the Companies (Winding-Up) Rules 1972 ["the Winding-Up Rules"], which requires that the Liquidator admit or reject a POD within 28 days of submission unless an extension of time is sought from the court. The rejection, made 18 months after submission, is argued to be procedurally "fatal." The Applicant contends that the delay prejudiced his right to recover the loan amount. S/N XGxckLniqECNunvQlvkAQ Page 4 of 11 Failure to Consider Evidence [10] The Applicant asserts that the Liquidator failed to properly consider the supporting documents, including the Statutory Declaration by Ameen, the payment vouchers, and the bank statements. The Applicant emphasizes that the Liquidator could have verified the Loan Agreement through witness testimony but failed to do so. Applicability of the Turquand Rule [11] The Applicant further submits that, even if there were no internal company resolutions approving the loan, the common law Turquand rule, as discussed in Mahfuz bin Hashim v Koperasi Pekebun Kecil Daerah Segamat & Ors [2005] 3 MLJ 726, protects outsiders dealing with the company in good faith. The Applicant cannot be expected to inquire into the company's internal affairs. Precedent Supporting Court Intervention [12] Relying on Torita Rubber Works v Chew Chong Eu [2009] 9 CLJ 280, the Applicant submits that the court has a duty to intervene when justice, equity, and good conscience are likely to be compromised by a Liquidator's decision, and that the court should reverse the rejection of the POD. Liquidator's Reasons for Rejection and Submissions [13] The Liquidator provided several reasons for rejecting the POD, which I find persuasive. S/N XGxckLniqECNunvQlvkAQ Page 5 of 1f Unverifiable Loan Agreement [14] The Liquidator could not verify the existence and authenticity of the Loan Agreement. There was no evidence of any Board resolution authorizing the loan, no documentation showing disbursement of the funds to the Company, and no indication that the Company used the loan. Additionally, the Loan Agreement was unstamped, and the purported security over land was never formalized. Absence of Company Records [15] The Liquidator emphasized that the loan was not disclosed in the Company's Statement of Affairs submitted to the Official Receiver on 21 September 2019. There were no records of the loan in the Company's financial or corporate documents, which raised doubts about whether the loan was a company liability or a personal transaction between the Applicant and Mohamed Ameen. Bank Records [16] The Company's bank statements showed that RM200,000.00 of the alleged loan amount came from a third party identified as "Abdul Karim & Basirah (M) Sdn Bhd', and there was no evidence that the remaining RM800,000.00 was provided by the Applicant. This discrepancy raised serious doubts about the true source and purpose of the funds. Credibility of Supporting Documents [17] The Liquidator questioned the credibility of the payment vouchers and the Statutory Declaration by Ameen. The payment vouchers were not part of the Company's official records, and Mohamed Ameen's Statutory Declaration was considered self-serving, particularly as Mohamed Ameen S/N XGxckLniqECNunvQlvkAQ Page 6 of 11 had refused to cooperate in discovery proceedings and failed to provide relevant documents to the Liquidator. Legal Principles [18] The Liquidator's counsel relied on several cases, including Wong Sing Fan v Ng Peak Yam [2013) 3 CLJ 17, to argue that the court should be slow to interfere with a Liquidator's decision unless it was unreasonable or absurd. Additionally, in Genisys Integrated Engineers Pte Ltd v UEM Genisys [2023] 3 MLJ 627, 637, the Federal Court held that a creditor must provide sufficient supporting evidence to substantiate a POD, and the Liquidator has a duty to examine the evidence critically. Analysis and Decision [19] I am satisfied that the Liquidator acted within his statutory duties and that his decision to reject the Applicant's POD was both reasonable and justified. The Liquidator was under no obligation to accept the Applicant's documents at face value, particularly when there were significant gaps and credibility issues surrounding the loan. [20] While the Applicant takes issue with the delay in rejecting the POD, Rule 98 provides that the court may extend the time for a Liquidator to make a decision. In this case, the complexity of the claim and the lack of supporting documents justified the time taken by the Liquidator. The Applicant has not demonstrated any real prejudice arising from the delay. [21] The absence of corporate records, financial documents, or a Board resolution supporting the loan raised significant doubts about whether the loan was a genuine company liability. The Turquand rule does not apply I l ; ! ! S/N XGxckLniqECNunvQlvkAQ Page 7 of 11 in circumstances where there is no evidence that the company approved the loan or received the funds. [22) The Liquidator's concerns about the credibility of the payment vouchers and the Statutory Declaration were valid. The refusal by Ameen to comply with discovery orders further undermines the Applicant's case. [23) The court should only intervene in a Liquidator's decision if it is clearly unreasonable or irrational. In this case, the Liquidator's decision, which was based on a careful review and detailed examination of the available evidence, does not reach that level of unreasonableness. Therefore, there is no justification for this Court to interfere. [24) Rule 98 of the Winding-Up Rules provides the framework for the Liquidator's duty to address a Proof of Debt (POD). The rule stipulates that, upon receipt of a POD, the Liquidator has 28 days to either: a. Admit the debt in whole or in part, b. Reject the debt, or c. Require further evidence from the creditor to substantiate the claim. [25) Rule 98 also provides a safety mechanism whereby, if the Liquidator requires more time to assess the POD, he may apply to the court for an extension of time. This provision is crucial in ensuring that complex claims, such as those involving insufficient or unclear documentation, can be thoroughly investigated without causing procedural unfairness to either the creditor or other stakeholders in the liquidation process. S/N XGxckLniqECNunvQlvkAQ Page 8 of 11 [26] In this case, the Applicant has argued that the Liquidator's rejection of the POD, 18 months after submission, violates the 28-day period under Rule 98 and is therefore "fatal" to the Liquidator's ability to reject the claim. The Applicant further submits that the Liquidator did not seek an extension of time from the court and instead attempted to bypass the rule by requesting certified true copies {CTCs) of supporting documents, which the Applicant provided promptly. [27] While the Applicant is correct in pointing out that the 28-day period exists, it is important to understand the intent and flexibility built into Rule