Aurora Industries Sdn Bhd v 1. ) Klanggroup Holdings Sdn Bhd (BA-22NCvC-152-04/2023)

KLANGGROUP HOLDINGS SDN BHD (No. Syarikat: 1087129-A)

ONG KWEE LEE (No. K/P: 781116-01-5883)

GAN THIAM KOK (No. K/P: 761126-10-5323)

GOLDEN VALLEY INDUSTRIES SDN BHD (No. Syarikat: 1333617-H) − DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT Introduction [1] The writs summons and statement dated 25-4-2023 filed by the Plaintiff before this Court (after this is refer to as “Suit No. 152”) are for declaration that the letter issued by the Fourth Defendant is null and void; 01/09/2023 23:04:04 BA-22NCvC-152-04/2023 Kand. 25 S/N wEdTij8qOkecAxAMejdzw an order that the Fourth Defendant forthwith pay the Plaintiff its portion of dividends, damages and costs. [2] On 22-5-2023, the First, Second and Third Defendants filed the interlocutory application under section 470 of the Companies Act 2016 (Act 777) and/or Order 92 r. 4 of the Rules of Court 2012 to stay Suit No. 152 pursuant to section 470 of the Companies Act 2016 (Act 777) whilst pending the disposal of the Shah Alam High Court the Winding Up Petition BA-28NCC-96-03/2023 (after this is refer to as the “Winding Up Petition”). [3] In supporting their application, the First, Second and Third Defendants state the following reasons:

to avoid duplicity of proceedings: The possibility of contradictory decisions by 2 High Courts involving the same parties, the same background facts and overlapping issues warrants the Court’s exercise of discretion to grant the stay application.

the Liquidator may conduct investigation on the alleged complaints: It is trite law that once a Winding Up order is made, only the liquidator may act of behalf of the company. Upon Winding Up of the Company, the liquidator would be the best impartial candidate to investigate the alleged complaints and decide whether to obtain leave to proceed with the Writ Action filed by the Plaintiff. S/N wEdTij8qOkecAxAMejdzw

in the proper administration of justice, the Writ Action ought to be stayed pending the disposal of the Winding Up Petition: The parties in the Winding Up Petition have exhausted affidavits and parties are ready to proceed with the hearing proper on 11.7.2023, the decision for this Stay Application (Enc. 7) is fixed on 27.6.2023. Given the Winding Up Petition will be disposed in 2 weeks’ time from the decision of Enc. 7, for proper administration of justice, the Plaintiff’s Writ Action to be stayed pending the outcome of the Winding Up Petition hearing. [4] On 27-6-2023, this Court allowed the stay application and costs in the cause. [5] The Plaintiff appeals. Suit No. 152 [6] The statement of claim dated 25-4-2023 that is about a month prior to the date of the stay application (dated 22-5-2023), the Plaintiff pray for the following reliefs against all Defendants:

a declaration that the Third Defendant (Mr. Gan Thiam Kok) has no authority to sign the company’s letter (Golden Valley Industries Sdn Bhd/Fourth Defendant) dated 30-11-2022 to cancel or rescind the 3rd interim dividend of RM15,000,000.00 which the Fourth Defendant has declared and paid to the shareholders of the Fourth Defendant in March

Therefore, the company’s letter is null and void. S/N wEdTij8qOkecAxAMejdzw

a declaration that the Third Defendant (Mr. Gan Thiam Kok) has no authority to sign the company’s letter (Golden Valley Industries Sdn Bhd/Fourth Defendant) dated 30-11-2022 which purport to set off the sum of RM15,000,000.00 being the 3rd interim dividend purportedly rescinded from the sum of RM14,999,000.00 being capital reduction to be returned to the shareholders of the Fourth Defendant pursuant to Members’ Written Resolution dated 2-9-2022. Therefore, the company’s letter is null and void.

an order that the Fourth Defendant do forthwith pay to the Plaintiff, the sum of RM7,349,510.00, being the Plaintiff’s entitlement to its portion of capital reduction approved pursuant to the Members’ Written Resolution dated 2-9-2022.

an order that the Second Defendant (Mr. Ong Kwee Lee) and the Third Defendant (Mr. Gan Thiam Kok) cause the Fourth Defendant do forthwith pay to the Plaintiff, the sum of RM7,349,510.00, being the Plaintiff’s entitlement to its portion of capital reduction approved pursuant to the Members’ Written Resolution dated 2-9-2022.

an order that the First Defendant (KlangGroup Holdings Sdn Bhd) and the Third Defendant do pay the Plaintiff damages to be assessed. S/N wEdTij8qOkecAxAMejdzw

costs of the proceedings be borne by the First to Third Defendants jointly and severally on an indemnity basis.

such further or other relief and/or order be given by this Court as deemed just and equitable. Winding Up Petition (BA-28NCC-96-03/2023) [7] The petitioner is KLANGGROUP HOLDINGS SDN BHD (the First Defendant in Suit No. 152) and the first respondent is Golden Valley Industries Sdn Bhd (the Fourth Defendant in Suit No. 152); and the second respondent is Aurora Industries Sdn Bhd (the Plaintiff in Suit No. 152). The Winding Up Petition is before the Shah Alam High Court (Insolvency Court). [8] In the petition, the petitioner seeks for the following:

the first respondent (Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit No. 152) be wound up pursuant to section 465(1)(f) and (h) of the Companies Act 2016.

the appointed liquidator for the first respondent is Andrew Heng of Baker Tilly.

all costs and expenses of the liquidator including the liquidator’s professional fees and disbursement be paid out of the assets of the first respondent. S/N wEdTij8qOkecAxAMejdzw

costs.

such further or other reliefs as deemed just and proper by this Court. The facts [9] In order to capture the facts of these 2 suits (Winding Up Petition and Suit No. 152), this Court will start with Winding Up Petition and then Suit No. 152. [10] In the Winding Up Petition, the petitioner states that – the background of the petitioner: • the petitioner (the First Defendant in Suit No. 152) is a private limited company and its shareholders and directors are – the shareholders:

GT-Max Development Sdn Bhd.

WorldRS Group Sdn Bhd.

Newforce Assets Sdn Bhd.

Ong Kwee Lee.

Ng Keng Hoe (Huang Qinghe). S/N wEdTij8qOkecAxAMejdzw the directors:

Ng Keng Hoe (Huang Qinghe).

Ong Kwee Lee.

Gan Thiam Kok.

Lee Chang Soo.

On Boon Seng. • the nature of businesses of the petitioner (the First Defendant in Suit No. 152) are investment holding, provision of management services and property development. • the petitioner (the First Defendant in Suit No. 152) had incorporated numerous subsidiaries company to undertake its property development projects. the background of the first respondent (Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit No. 152): • the first respondent (Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit No. 152) is incorporated as Joint Venture Company (“JV Company”). S/N wEdTij8qOkecAxAMejdzw the shareholders:

the petitioner (the First Defendant in Suit No. 152) holds 510 (51%) shareholding.

the second respondent (the Plaintiff in Suit No. 152) holds 490 (49%) shareholding. the directors:

Gan Thiam Kok.

Ong Kwee Lee.

Goh Cheng Huat (Dato’). the Board of Director of the JV Company:

the petitioner (the First Defendant in Suit No. 152) been represented by Gan Thiam Kok and Ong Kwee Lee.

the second respondent (the Plaintiff in Suit No. 152) been represented by Goh Cheng Huat (Dato’). S/N wEdTij8qOkecAxAMejdzw • the JV Company is a private limited company and as at the date of the petition, and after the Capital Reduction has an authorized share capital of RM1000.00 divided into 1000 ordinary shares of RM1.00 each, of which are fully paid up. • the JV Company is incorporated to undertake the development of a parcel land in Klang, Selangor. • it is the common understanding between the petitioner (the First Defendant in Suit No. 152) and the second respondent (the Plaintiff in Suit No. 152) that the land will be divided and sold at the prevailing market value to raise working capital and generate immediate returns. • it is mutually agreed that the JV Company would be managed on a basis of mutual trust, confidence and good faith between the petitioner (the First Defendant in Suit No. 152) and the second respondent (the Plaintiff in Suit No. 152). the background of the second respondent (Aurora Industries Sdn Bhd/the Plaintiff in Suit No. 152): • the second respondent (Aurora Industries Sdn Bhd/the Plaintiff in Suit No. 152) a private limited company and its shareholders and directors are – S/N wEdTij8qOkecAxAMejdzw the shareholders:

Goh Cheng Huat (Dato’).

Goh Li Li the directors:

Goh Cheng Huat (Dato’).

Yeoh Cheng Chye. • the nature of businesses of the second respondent (Aurora Industries Sdn Bhd/the Plaintiff in Suit No. 152) are property developer, construction of buildings and buying, selling, renting and operating of self-owned or leases real estates and involved in general trading. Joint Venture and Shareholders Agreement [11] Now, the crux of the disputes between the parties i.e. the Plaintiff in Suit No. 152 (in the Winding Up Petition is the second respondent) and the First Defendant in Suit No. 152 (in the Winding Up Petition is the petitioner) is about a Joint Venture and Shareholders Agreement dated 27-12-2019 (after this is refer to as the “JV & Shareholders Agreement”). S/N wEdTij8qOkecAxAMejdzw [12] The Plaintiff and First Defendant in Suit No. 152 had executed the JV & Shareholders Agreement dated 27-12-2019 to govern their mutual understanding, rights and obligations in respect of their shareholdings in Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit No. 152 (in the Winding Up Petition is the first respondent), and also the terms and conditions for the operation, management and administration of Golden Valley Industries Sdn Bhd. [13] After 2 weeks of the JV & Shareholders Agreement’s date, that is on 15-1-2020, the Plaintiff, First Defendant and Fourth Defendant signed the Addendum to vary and supplement the provisions to the JV & Shareholders Agreement (after this is refer to as the “Addendum”). [14] The shareholdings composition in Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit No. 152 (in the Winding Up Petition is the first respondent) is as follows (15,000,000 Ordinary Shares of RM1.00 each) upon the execution of the JV & Shareholders Agreement: [15] In clause 4.7 of the Addendum, the Plaintiff has a right to purchase 1% Ordinary Shares from the First Defendant. Plaintiff/Aurora Industries Sdn Bhd 7,350,000 or 49% First Defendant/KlangGroup Holdings Sdn Bhd 7,650,000 or 51% S/N wEdTij8qOkecAxAMejdzw [16] The composition of Board of Directors (BoD) in Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit No. 152 (in the Winding Up Petition is the first respondent) is as follows:

in clause 5.1 of the JV & Shareholders Agreement, it provides that the BoD shall consist of 5 directors and the shareholders shall be entitled to nominate 2 persons from the Plaintiff and 2 persons from the First Defendant as the directors.

the shareholders jointly agree to appoint one person, that is Ng Keng Hoe (Huang Qinghe) from the First Defendant as the fifth director and he is also become the chairman of the BoD. The Plaintiff pleaded that at the time when the JV & Shareholders Agreement was signed, Ng Keng Hoe (Huang Qinghe) was yet to be appointed as the fifth director and the chairman of the BoD.

the First Defendant has appointed the Second Defendant (Ong Kwee Lee) and the Third Defendant (Gan Thiam Kok) as its nominee directors to the BoD of the Fourth Defendant.

the Plaintiff has only appointed one person (that is Mr. Goh Cheng Huat/Dato’) as its nominee director to the BoD of Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit No. 152 (in the Winding Up Petition is the first respondent). S/N wEdTij8qOkecAxAMejdzw The sale and purchase agreement with Sime Darby Plantation Bhd (SPA): [17] In clause 3.4 of the JV & Shareholders Agreement, the JV Company (the Fourth Defendant in Suit No. 152 and the first respondent in the Winding Up Petition) and Sime Darby Plantation Bhd had entered into a SPA to acquire a parcel of land in Klang, as mentioned earlier, (after this is refer to as “Land”). The Land is for a development project named as KIIP Project @ Kapar-Lot 91 (after this is refer to as “Development”). [18] Following the successful completion of the Development, the JV Company (the Fourth Defendant in Suit No. 152 and the first respondent in the Winding Up Petition) has declared and paid dividends totalling RM210,000,000.00 to its shareholders by 6 interim dividends as follows: First interim dividend for the financial year ending 31-12-2021, declared and approved on 16-12- 2021 RM50,250,000.00 Second interim dividend for the financial year ending 31-12-2022, declared and approved on 12-1- 2022 RM20,250,000.00 S/N wEdTij8qOkecAxAMejdzw Third interim dividend for the financial year ending 31-12-2022, declared and approved on 11-3- 2022 RM15,000,000.00 Fourth interim dividend for the financial year ending 31-12-2022, declared and approved on 25-3- 2022 RM60,000,000.00 Fifth interim dividend for the financial year ending 31-12-2022, declared and approved on 22-4- 2022 RM620,250,000.00 Sixth interim dividend for the financial year ending 31-12-2022, declared and approved on 8-6-2022 RM2,2500,000.00 [19] The dividends as per the Table are paid to its shareholders. S/N wEdTij8qOkecAxAMejdzw Members’ Written Resolution dated 2-9-2022: [20] This resolution has been approved and the effect is that the reduction of share capital of the Fourth Defendant by cancelling 14,999,000 shares from the 15,000,000. Therefore, the share capital of the Fourth Defendant is RM1,000.00, where RM510.00 Ordinary Shares was held by the First Defendant and RM490.00 Ordinary Shares was held by the Plaintiff. The Notice of Confirming Reduction of Share Capital dated 21-10-2022 was lodged with Suruhanjaya Syarikat Malaysia (SSM). [21] The Plaintiff/Aurora Industries Sdn Bhd (the second respondent in the Winding Up Petition) pleads that –

in paragraph 23 of the statement of claim, the First, Second and Third Defendants had wrongfully stopped the JV Company (the Fourth Defendant/the first respondent in the Winding Up Petition) from paying out the sum of RM14,999,000.00 to the shareholders of the JV Company as per the Members’ Written Resolution dated 2-9-2022.

in paragraph 24 of the statement of claim, the Third Defendant (as the First Defendant’s nominee director) had wrongfully issued a letter dated 30-11-2022 purportedly on behalf of the Fourth Defendant to the shareholders of the Fourth Defendant a notice that the Fourth Defendant is cancelling the declared interim dividends amounting to RM15,000,000.00 due to insufficient fund to cover the JV Company business operation expenses. S/N wEdTij8qOkecAxAMejdzw

on the same day (30-11-2022), in paragraph 25 of the statement of claim, the Third Defendant (as the First Defendant’s nominee director) had wrongfully issued a letter purportedly on behalf of the Fourth Defendant to the shareholders of the Fourth Defendant a notice that the refund amount from the cancellation of interim dividends will be off-set with the amount owing due to capital reduction. [22] As a result of the action taken, the Plaintiff pleads that the Third Defendant (the reasons as the Plaintiff pleads in paragraphs 27 to 30 of the statement of claim) –

has not been authorized by the Fourth Defendant to issue the 2 letters cum notices on behalf of the Fourth Defendant.

the 2 letters cum notices require the consent and approval of the shareholders of the Fourth Defendant.

no resolution passed by the shareholders of the Fourth Defendant to approve the matters as contained in the 2 letters cum notices.

the 2 letters cum notices issued without the authority of the Fourth Defendant. [23] As a result of the 2 letters cum notices, the Plaintiff has been refused of its entitlement to receive RM7,349,510.00 being the Plaintiff’s portion of capital reduction as approved pursuant to the Members’ Written Resolution dated 2-9-2022. S/N wEdTij8qOkecAxAMejdzw [24] On 16-1-2023, the Plaintiff has issued a notice to the First Defendant/KlangGroup Holdings Sdn Bhd (the petitioner in the Winding Up Petition) in respect of the matters in dispute. [25] Failure to reach an amicable settlement, the Plaintiff file this Suit (Suit No. 152) against the Defendants (KlangGroup Holdings Sdn Bhd; Ong Kwee Lee; Gan Thiam Kok; and Golden Valley Industries Sdn Bhd). The First, Second and Third Defendants contentions to support its application for Stay under section 470 of the Companies Act 2016 [26] The application for stay the writ summons is made by the First, Second and Third Defendants pursuant to section 470 of the Companies Act 2016 (Act 777) whilst pending the disposal of the Shah Alam High Court the Winding Up Petition BA-28NCC-96-03/2023 (Winding Up Petition) petitioned by the First Defendant (KlangGroup Holdings Sdn Bhd). [27] The petition to wind up the JV Company (Golden Valley Industries Sdn Bhd) that is the Fourth Defendant in Suit No. 152 by the First Defendant (KlangGroup Holdings Sdn Bhd) is because the relationship between the Plaintiff and the First Defendant deteriorated around late December 2022, a management deadlock exists in the affairs of the Fourth Defendant. It became apparent that both parties could no longer work together and that there is a breakdown of mutual trust and confidence between both parties. S/N wEdTij8qOkecAxAMejdzw [28] In the petition, the First Defendant (the petitioner) give the details of the management of the JV Company (Golden Valley Industries Sdn Bhd) that is the Fourth Defendant in Suit No. 152 and the “crisis” between KlangGroup Holdings Sdn Bhd and Aurora Industries Sdn Bhd pertaining to the JV Company (Golden Valley Industries Sdn Bhd/first respondent in the Winding Up Petition/Fourth Defendant in Suit No. 152), namely – • prior to the breakdown of relationship between the KlangGroup Holdings Sdn Bhd and Aurora Industries Sdn Bhd, the affairs of the JV Company were managed by the BOD with mutual trust and confidence, whereby all decisions relating to the management of the JV Company were unanimously agreed upon by the BOD. • for the purpose of the development of the Land, the JV Company (Golden Valley Industries Sdn Bhd/first respondent in the Winding Up Petition/Fourth Defendant in Suit No. 152) had engaged KlangGroup Holdings Sdn Bhd to provide project management services to the JV Company (‘Property Management Services’). • in return for the services rendered by KlangGroup Holdings Sdn Bhd, it was agreed that 1% of the net sales generated in the Land will be paid as property management fees to KlangGroup Holdings Sdn Bhd. Aurora Industries Sdn Bhd and/or Goh Cheng Huat (Dato’) is aware of this at all material time since 11.7.2019 (‘Property Management Fees’). S/N wEdTij8qOkecAxAMejdzw • through the corporation between both factions (KlangGroup Holdings Sdn Bhd and Aurora Industries Sdn Bhd), the development of the Land is materialized, whereby the Land was successfully subdivided into 12 plots of subdivided lands as intended. These lands were then sold to purchasers. • following the conclusion of the Land, the JV Company (Golden Valley Industries Sdn Bhd/first respondent in the Winding Up Petition/Fourth Defendant in Suit No. 152) had generated profit. A copy of the Statement of Comprehensive Income, Statement of Financial Position are annexed to the Winding Up Petition). • the JV Company had then issued and paid out a total of RM210 million dividends to KlangGroup Holdings Sdn Bhd and Aurora Industries Sdn Bhd. • it is not in dispute that the development of the Land was a success and/or had concluded, whereby parties had agreed to wind down the JV Company. A copy of the letter from Aurora Industries Sdn Bhd to KlangGroup Holdings Sdn Bhd dated 16-1-2023 is annexed to the Winding Up Petition. • following the conclusion of the Land, and on 10-11-2022, KlangGroup Holdings Sdn Bhd had informed that there is an outstanding sum of RM5,855,791.10 owing by the JV Company, being the fee in providing the Property Management Services to the JV Company (‘Outstanding Property Management Fees’). S/N wEdTij8qOkecAxAMejdzw • notwithstanding that, Aurora Industries Sdn Bhd and/or Goh Cheng Huat (Dato’) was not agreeable to the payment of Outstanding Property Management Fees without providing any reason. • sometime in early December 2022, Goh Cheng Huat (Dato’) had appointed an individual known to him (‘Dato Goh’s Representative’) to resolve the issue of Outstanding Property Management Fees with KlangGroup Holdings Sdn Bhd. • on 6-12-2022, a meeting was held at the Kuala Lumpur Hilton at approximately 6.40pm between Ong Kwee Lee (the Second Defendant in Suit No. 152) and Dato Goh’s Representative to discuss over the issue of Outstanding Property Management Fees (‘Hilton Meeting’). • the Hilton Meeting lasted for approximately 30 mins whereby no consensus was reached between the parties. However, Dato Goh’s Representative had informed that Goh Cheng Huat (Dato’) and/or Aurora Industries Sdn Bhd (the Plaintiff in Suit No. 152/second respondent in the Winding Up Petition) had objected to the Outstanding Property Management Fees, for reason that Goh Cheng Huat (Dato’) and Ng Keng Hoe (Huang Qinghe) have a direct and/or indirect interest in Aurora Industries Sdn Bhd’ stake in the JV Company and/or the Land. S/N wEdTij8qOkecAxAMejdzw • the KlangGroup Holdings Sdn Bhd’s Faction (the First Defendant in Suit No. 152/the petitioner in the Winding Up Petition) was surprised over such revelation and/or discovery that Ng Keng Hoe (Huang Qinghe) has a direct and/or indirect secret interest in Aurora Industries Sdn Bhd, given that Ng Keng Hoe (Huang Qinghe) is both a director and shareholder of KlangGroup Holdings Sdn Bhd (‘Discovery of Secret Interest’). • following thereon, the Discovery of Secret Interest had culminated a state of distrust between the KlangGroup Holdings Sdn Bhd’s Faction and Aurora Industries Sdn Bhd’s Faction within the JV Company (Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit no. 152/the first respondent in the Winding Up Petition). • the acrimonious and fragile relationship between KlangGroup Holdings Sdn Bhd and Aurora Industries Sdn Bhd had intensified over time. This led to a series of events which demonstrate, amongst others, a total irretrievable breakdown of mutual trust confidence between the parties, which once formed the foundation and basis of relationship within the JV Company. S/N wEdTij8qOkecAxAMejdzw [29] With that, KlangGroup Holdings Sdn Bhd (the First Defendant in Suit No. 152/the petitioner in the Winding Up Petition) stated that it is just and equitable to wind up the JV Company (Golden Valley Industries Sdn Bhd/the Fourth Defendant in Suit no. 152/the first respondent in the Winding Up Petition) for the following reasons:

Management deadlock;

Illegal and/or unconscionable act of Goh Cheng Huat (Dato’) and/or Aurora Industries Sdn Bhd (the Plaintiff in Suit No. 152/second respondent in the Winding Up Petition);

Attempts by Aurora Industries Sdn Bhd and/or Goh Cheng Huat (Dato’) to stifle the management of the JV Company;

Justifiable lack of confidence between the parties, therefore, it is apparent that there was a complete breakdown of relationship whereby parties no longer able to corporate with each other in the best interest of the JV Company. [30] In the conclusion, KlangGroup Holdings Sdn Bhd (the First Defendant in Suit No. 152/the petitioner in the Winding Up Petition) stated that they had demonstrated the following:

the JV Company was initially founded on a mutual trust and confidence between KlangGroup Holdings Sdn Bhd and Aurora Industries Sdn Bhd; S/N wEdTij8qOkecAxAMejdzw

there has been an irretrievable breakdown in the relationship of mutual trust and confidence between KlangGroup Holdings

there exists a deadlock in the management of the JV

it is no longer practicable and/or possible for KlangGroup Holdings Sdn Bhd and Aurora Industries Sdn Bhd to work together in the best and common interest of the JV Company;

the affairs of the JV Company were acted in the own interests of Goh Cheng Huat (Dato’) and/or Aurora Industries Sdn Bhd rather than in the interest of the members as a whole and/or acted in a manner which appears to be unfair and unjust to the members;

it is impracticable and/or impossible for the affairs of the JV Company to be conducted effectively and properly; and

the substratum of the JV Company had ceased to exists. This is especially where the parties have agreed to wind up the JV Company, therefore, it is just and equitable that the JV Company to be wound up by the Court pursuant to s. 465(1)(f) and (h) of the Companies Act 2016, and for an independent liquidator be appointed. On 28-2- 2023, Andrew Heng of Baker Tilly Insolvency PLT (‘Baker Tilly’), an S/N wEdTij8qOkecAxAMejdzw approved liquidator, has given his consent to act as a liquidator for the JV Company. The Plaintiff contentions to oppose the application for stay [31] The Plaintiff submits that the application for stay is not bona fide as the object of the application is purely to stall and delay the proceedings in Suit No. 152. [32] This is particular so as follows:

since KlangGroup Holdings Sdn Bhd on the one hand is seeking a stay of this action, while on the other hand, KlangGroup Holdings Sdn Bhd is proceeding with another suit (suit no. 505) in respect to KlangGroup Holdings Sdn Bhd’s claim for project management fees against Grand Valley Industries Sdn Bhd (the JV Company/first defendant in the Winding Up Petition/Fourth Defendant in Suit No. 152).

KlangGroup Holdings Sdn Bhd filed the Winding Up Petition to destroy Grand Valley Industries Sdn Bhd when KlangGroup Holdings Sdn Bhd is unable to obtain quickly payment for its unlawful claim for project management fees from Grand Valley Industries Sdn Bhd. The Winding Up Petition therefore smacks of bad faith and tactical maneuver to destroy Grand Valley Industries Sdn Bhd and cover up KlangGroup Holdings Sdn Bhd wrongdoings against Aurora Industries Sdn Bhd and Grand Valley Industries Sdn Bhd through Gan Thiam Kok and Ong Kwee Lee (both are the Second and Third Defendants in S/N wEdTij8qOkecAxAMejdzw Suit No. 152). [33] The Plaintiff denied that there are any issue of duplicity and multiplicity of proceedings because −

the reliefs claimed by Aurora Industries Sdn Bhd in Suit No. 152 are declaratory reliefs in relation to the validity of the 2 letters dated 30 November 2022 issued by Gan Thiam Kok (the Third Defendant) purportedly on behalf of Grand Valley Industries Sdn Bhd (the Fourth Defendant). These reliefs are not claimable by Aurora Industries Sdn Bhd (the second respondent) in the Winding Up Petition and not the subject of the Winding Up Petition.

there are no common issues between Suit No. 152 and the Winding Up Petition. [34] The learned counsel for the Plaintiff submit that Aurora Industries Sdn Bhd’s claim in Suit No. 152 can be adjudicated by proof of debt in the event Grand Valley Industries Sdn Bhd (the Fourth Defendant) is wound up is misconceived in law because −

a liquidator does not have the power to grant declaratory reliefs which are sought by Aurora in this action.

furthermore, this action also involves the quantification of damages for which it is unlikely that a liquidator could adequately deal with. S/N wEdTij8qOkecAxAMejdzw The Law [35] Subdivision 7 of the Companies Act 2016 (Act 777) contains the provisions on Winding Up by Court, where section 470 reads – Power of Court to stay or restrain proceedings against company prior to order of winding up

(1) At any time after the presentation of a winding up petition and before a winding up order has been made, the company or any creditor or contributory may, where any action or proceeding against the company is pending, apply to the Court for an order to stay or restrain further proceedings in the action or proceeding, and the Court may stay or restrain the action or proceeding accordingly on such terms as it thinks fit.

The applicant shall lodge with the Registrar the office copy of the order within fourteen days from the making of such order under subsection (1). [36] This Court will extract the Bench Book (Civil Procedure), 3rd Edn pertaining to Section 470 of the Companies Act 2016 (Previously section 222 of the Companies Act 1965) as follows: “93. After the presentation of a winding up petition but before a winding up order has been made, the court may grant a stay or restrain any pending action or proceeding against the company at the behest of the company or any creditor or contributory. S/N wEdTij8qOkecAxAMejdzw

On the proper analysis of the manner in which section 470 is constructed, during the pendency of the winding up petition in question, there is also pending an action or proceeding against the company that is sought to be wound up. The action or proceeding that is also pending must be other than the winding up petition in question, although it may be some other winding up petition. What may be applied for and ordered under the section is a stay of further proceedings in the action or proceeding that is also pending, not further proceedings in the winding up petition in question, which in this case is the present winding up petition.

What may be applied for and ordered under section 470 of the Act is, a stay of further proceedings in the action or proceeding that is also pending, not further proceedings in the winding up petition in question.

The provision is designed to allow the court discretion to protect the assets of the company from the risk of pending litigation and the costs of defending proceedings in the hiatus between the presentation of the petition and the winding up order.

On the hearing of an application under section 470, the court is concerned with ensuring that no creditor should gain priority over others in his class or that the granting of the order will save costs. Costs savings is achieved through the filing of a proof of debt once the winding up order is made unless the creditors claim cannot be adequately dealt with by the liquidator or the remedy sought is not available in winding up.”. S/N wEdTij8qOkecAxAMejdzw Evaluation & Findings of this Court [37] This Court has allowed the stay application as applied by the First, Second and Third Defendants. [38] The reliefs sought by the Plaintiff are pertaining to the issue for determination in this action (Suit No. 152) are specifically on whether the 2 letters dated 30 November 2022 issued by Gan Thiam Kok (the Third Defendant) purportedly on behalf of Grand Valley Industries Sdn Bhd (the Fourth Defendant in Suit No. 152) is null and void and of no effect. The letters are regarding − • the Fourth Defendant (Golden Valley Industries Sdn Bhd) is cancelling its declared interim dividend amounting RM15 million due to insufficient fund to cover the Company business operation expenses. • the Fourth Defendant (Golden Valley Industries Sdn Bhd) has gave notice to the shareholders of the Fourth Defendant that the refund amount from the cancellation of interim dividend in respective shareholder will be off-set with the amount owing due to capital reduction. [39] When the Plaintiff submits in length and then concluded that there is as such no commonality of issues between this action and the Winding Up Petition, this Court disagree. The facts remaining in Suit No. 152 and the Winding Up Petition are about Golden Valley Industries Sdn Bhd that is the Fourth Defendant and as well as the first respondent. S/N wEdTij8qOkecAxAMejdzw [40] Prior to Suit No. 152, KlangGroup Holdings Sdn Bhd has filed petition to wind up Golden Valley Industries Sdn Bhd. The profits vide the dividends sought by the Plaintiff in its reliefs are about shareholding profits in Golden Valley Industries Sdn Bhd. [41] The provision that gives the discretion for the Court to stay or restrain further proceedings in Suit No. 152, at any time after the presentation of a winding up petition and before a winding up order has been made, KlangGroup Holdings Sdn Bhd has apply to the SAHC Insolvency Court for an order to stay or restrain further proceedings in Suit No. 152. [42] This Court has stay or restrain the action or proceeding in Suit No. 152 accordingly in order that the issues before the Insolvency Court be resolved first before this Court may proceed with the Plaintiff’s writ of summons and statement of claim. [43] The adjudication pertaining to a company that already been petition for winding up must be able to adjudge the declaratory reliefs between the petitioner and the respondents. The petitioner and the respondents are among the same parties named in Suit No. 152. [44] As correctly stated by the Plaintiff about the Winding Up Petition, the First Defendant’s (KlangGroup Holdings Sdn Bhd) allegations in its petition has stated that –

it is just and equitable pursuant to Section 465 (1)(h) of the Companies Act 2015 to wind up GV due to management deadlock and “total irretrievable breakdown of mutual trust and S/N wEdTij8qOkecAxAMejdzw confidence which formed the foundation and basis of relationship within the JV Company”.

that Goh Cheng Huat (Dato’) has acted in the affairs of Golden Valley Industries Sdn Bhd in manner to be unfair or unjust to KlangGroup Holdings Sdn Bhd pursuant to Section 465 (1) (g) of the Companies Act 2016. [45] The so called allegations are the issues for determination in the Winding Up Petition and these issues are common to Suit No. 152 since Golden Valley Industries Sdn Bhd is the JV Company that formed part and parcel in the JV & Shareholders Agreement whereby KlangGroup Holdings Sdn Bhd as the majority shareholder (51% shareholding in Golden Valley Industries Sdn Bhd) and Aurora Industries Sdn Bhd as the 49% shareholding in Golden Valley Industries Sdn Bhd. [46] Both the learned counsels for the Plaintiff and the First, Second and Third Defendants had cited the authority of cases. [47] The cases cited by the learned counsel for the Plaintiff are –

in the case of ShenCourt Sdn Bhd v. Perumahan Nck Sdn Bhd [2008] 3 CLJ 582, the Court of Appeal allowed an appeal against High Court decision dismissing an application for leave to proceed with action after winding up order was made under Section 263 of the Companies Act 1965 which is the equivalent of Section 471 of the Companies Act 2016 and also in relation to the principles applicable to the grant of leave under Section 263 of the Companies Act 1965. S/N wEdTij8qOkecAxAMejdzw In applying ShenCourt Sdn Bhd case, the Plaintiff submits that even if an order for winding up order is made against Golden Valley Industries Sdn Bhd, the Plaintiff will be entitled to leave to proceed with action under Section 471 of the Companies Act 2016. This is so since the relief or remedy sought by the Plaintiff in this Suit No. 152 cannot be given by the liquidator or cannot be adequately dealt with or resolved by the liquidator. Therefore, this Court should not grant stay.

the principles in ShenCourt Sdn Bhd case has been adopted by the Court of Appeal in Mesuntung Property Sdn Bhd v. Kimlin Housing Development Sdn Bhd [2014] 7 CLJ 202, the Court of Appeal in holding that leave ought to be granted to proceed with the action under Section 263 of the Companies Act 1965 held at paragraph 24 of the judgment that “it is our view that there is little doubt that the appellant’s claim of specific performance cannot be dealt with by the winding up court in that its claim Is unlike say a proof of debt.”.

in the case of Ganda Setia Cemerlang Sdn Bhd & Anor v. Maika Holdings Bhd [2018] 2 CLJ 401, the Court of Appeal held that leave to proceed with action after winding up order was made under Section 263 of the Companies Act 1965 ought to be granted if the relief or remedy cannot be given by the liquidator or adequately resolved by the liquidator. S/N wEdTij8qOkecAxAMejdzw [48] Furthermore, the learned counsel for the Plaintiff submits that it is trite law that the legal threshold to satisfy in an application for stay of proceedings under Section 470 of the Companies Act 2016 based on a winding up petition which is not presented on ground of insolvency of the company is very high as the trial court is required to dispose of the cases within a specific time, expeditiously and fairly. There must be compelling reasons to justify a stay of proceedings and such application for stay will be dismissed if the object of the application is to delay the adjudication of the claim or is not bona fide. [49] The learned counsel for the Plaintiff cited the case of International Construction & Civil Engineering Sdn Bhd v. Jittra Sdn Bhd & Ors [2018] MLJU 2088, the Court of Appeal has set out the legal principles applicable to an application for stay of proceedings under Section 470 of the Companies Act 2016 pending the determination of a winding up petition which is presented by a contributory under the just and equitable ground. The relevant part of the judgement is set out below – “[11] … A stay under this section should not, however, be ordered mechanically or as a manner of course, but must be made judicially upon an examination of all the facts in their several aspects: … A stay is not to be granted if the object of applying for it appears to be merely to delay adjudication on a claim. S/N wEdTij8qOkecAxAMejdzw [14] …

The threshold to satisfy an application for stay of proceedings in contrast to stay of execution in this time and era is very high as the trial court is required to dispose of the cases within a specific time, expeditiously and fairly. … The court’s position in England as well as many other countries inclusive of Malaysia is that the ‘overriding objective’ of the court is to ensure that a case is dealt with economically, expeditiously as well as justly. In addition, if the application prima facie is not bona fide, the Bowkett principle will not apply and the application must be dismissed in limine. … [15] … the court will not exercise its inherent jurisdiction to stay a proceeding unless there are extremely compelling reasons to do so and not merely on the grounds of what is often referred to as ‘interest of justice’, etc. The strict rule in vogue is that once an action is filed, it must proceed expeditiously. The threshold to seek a stay of proceeding is very high in cases before the trial court. Very importantly, if the bona fide of the application is in doubt, a stay application must be dismissed in limine.”. S/N wEdTij8qOkecAxAMejdzw [50] The First, Second and Third Defendants’ application for stay is made under Act 777, a specific statute to govern the winding up of company by Court. It is crystal clear that the First Defendant has filed the petition to wind up the Fourth Defendant and later the Plaintiff filed the legal action against all the Defendants (First to Fourth Defendant). [51] The learned counsel for the First, Second and Third Defendants cited the provision of section 25(2) of the Court of Judicature Act 1964 (CoJA) and paragraph 11 of the Schedule to CoJA. Section 25(2) of the CoJA reads – Without prejudice to the generality of subsection (1) the High Court shall have the additional powers set out in the Schedule: Provided that all such powers shall be exercised in accordance with any written law or rules of court relating to the same. Paragraph 11 of the Schedule to CoJA reads – Power to dismiss or stay proceedings where the matter in question is res judicate between the parties or where by reason of multiplicity of proceedings in any court or courts the proceedings ought not to be continued. S/N wEdTij8qOkecAxAMejdzw [52] The learned counsel for the First, Second and Third Defendants also submit that –

It is only in very exceptional circumstances the Court will refuse to grant a stay under s 470 CA 2016. English authority of Bowkett v Fullers United Electric Works Limited [1923] 1 KB 160: The general policy of the Court in exercising this jurisdiction, when a petition has been presented which may result in a winding-up order or a scheme, is to secure that no creditor shall thenceforward gain priority over others of his class, and when an application is made to stay proceedings under s. 140 very exceptional circumstances must exist to justify the Court in refusing to accede to the application, because if the plaintiff's action is not stayed he will get payment in full while if his action is stayed he will take his place properly among other creditors of his class. I cannot see any exceptional circumstances in the present case.

In the case of Sri Jeluda Sdn Bhd v Pentalink Sdn Bhd [2008] 4 CLJ 359, the Court of Appeal referred to Bowkett and recognised that Bowkett is very persuasive authority given that the English companies act is almost similar to the provision section 222 of the Companies Act 1965 (in pari materia with s 470 CA 2016): S/N wEdTij8qOkecAxAMejdzw [22] Apart from the provision of paras. (a) and (b) under the English s. 226, which had been explained by the learned judge as aforesaid, that section is almost similar to s. 222 of the Act. We are of the view that the principle, object and reason underlying both provisions are the same. The decisions in Bowkett v. Fullers United Electric and Re Dynamics Corporation of America which we have adverted to, are therefore, very persuasive references in the interpretation of s. 222 of the Act. [53] The Plaintiff has acknowledged that it is seeking 3 monetary orders which are consequential to the declarations sought in Suit No. 152, namely – • the Plaintiff is seeking for money compensation from all of the Defendants which could be dealt with by the winding up court. • an order that the Second and Third Defendants cause the Fourth Defendant being the Plaintiff’s entitlement to its portion of capital reduction approved pursuant to the Member’s Written Resolution dated 2 September 2022. • an order that the First, Second and Third Defendants do pay the Plaintiff damages to be assessed. S/N wEdTij8qOkecAxAMejdzw [54] All the reliefs seek by the Plaintiff are matters central to the Writ Action and these are also important or significant which form part of the Winding Up Petition. Therefore, the winding up court will consider these matters in disposing the Winding Up. [55] This Court also will refer to the case cited by the learned counsel for First, Second and Third Defendants in Zulhisham Ayob & Anor v Perunding Pakarmedia Sdn Bhd & Anor [2011] 1 MLRH 873 where Y.A Mary Lim Thiam Suan J (as Yang Arif then was) delivered the following: [12] Of the two English cases referred to by the Court of Appeal in Sri Jeluda Sdn Bhd, I find the decision in Bowkett v. Fullers United Electric Works Limited [1923] 1 KB 160 most helpful. In that decision, Bankes LJ made this interesting observation about how stay applications are in fact to be entertained: “....and when an application is made to stay proceedings under s 140 very exceptional circumstances must exist to justify the Court in refusing to accede to the application, because if the plaintiff's action is not stayed he will take his place properly among other creditors of his class. .... No doubt the Court has a discretion whether it will stay a plaintiff's action, but it is against the policy of the Court to exercise that discretion by allowing the plaintiff to proceed except in very exceptional circumstances.”. S/N wEdTij8qOkecAxAMejdzw [13] Having examined these several decisions, it would appear that the policy of the court is to stay other petitions or proceedings save in exceptional circumstances. This appears to be contrary to popular thought that stay is an exception. In fact, it is only in the “very exceptional circumstances” that a party may be allowed to proceed with its action where a windingup petition has already been filed. This makes good sense particularly when one bears in mind the role of the Official Receiver or the Liquidator who in law, is charged with dealing with all the assets, liabilities and affairs of the wound-up companies. That task surely cannot fall on more than one Liquidator as it can only bring havoc to the whole business of what is in effect the winding-down of a company from its business, operations and legal existence.”. [56] Both of the parties that are the Plaintiff and the First, Second and Third Defendants alleged on the bad faith among them, the most important point at this stage of proceeding is that Suit No. 152 must be put on hold i.e. stay to avoid duplicity of proceedings between this Court and the winding up Court. [57] Based on the factual facts that already analysed by this Court, there is no ambiguity that the Defendants had satisfied the threshold given that there is commonality of background facts, parties and overlapping issues. S/N wEdTij8qOkecAxAMejdzw [58] This Court agree with the Plaintiff in tracing the principles of laws that a stay proceeding – • should be ordered mechanically or as a manner of course, but must be made judicially upon an examination of all the facts in their several aspects. • should not to be granted if the object of applying for it appears to be merely to delay adjudication on a claim. • the threshold as the trial court is required to dispose of the cases within a specific time, expeditiously and fairly. • the court will not exercise its inherent jurisdiction to stay a proceeding unless there are extremely compelling reasons to do so and not merely on the grounds of what is often referred to as ‘interest of justice’, etc. • if the bona fide of the application is in doubt, a stay application must be dismissed in limine, this Court is satisfied that the application for stay has fulfilled the principles of laws that a stay proceeding should be granted. [59] The Defendants had filed their memorandum of appearance and yet to file the defence. S/N wEdTij8qOkecAxAMejdzw [60] In allowing the application for stay, this Court has applied the principles after thorough examination of all the facts in their several aspects; made judicially; the objective of granting the stay is not merely to delay adjudication of Suit No. 152; as the trial court is required to dispose of Suit No. 152 within a specific time, expeditiously and fairly; has exercise its inherent jurisdiction because of the extremely compelling reasons to do so and not merely on the grounds of what is often referred to as ‘interest of justice’ and the application was made bona fide. Conclusion [61] In conclusion, therefore, based on the aforesaid reasons, and after careful scrutiny and judicious consideration of all the evidence before this Court, the First, Second and Third Defendants’ Application as in Enclosure 7 is allow with costs. Dated: 1 September 2023. RoziBainon ( ROZI BINTI BAINON ) Judicial Commissioner High Court NCvC12 Shah Alam S/N wEdTij8qOkecAxAMejdzw The Counsels: For the Plaintiff: Tan May Xia Tetuan Pregrave & Matthews, Georgetown, Penang For the First, Second & Third Defendants: Chang Jin Yee Tetuan Cheang & Ariff, Kuala Lumpur For the Fourth Defendant: Ian Phua Tetuan Aaron KC Ng & Partners, Petaling Jaya S/N wEdTij8qOkecAxAMejdzw