Chia Kian Yong v Batu Kemas Industri Sdn Bhd (WA-28PW-269-06/2025)

These Grounds concern a Notice of Appeal (Encl 35) filed against my decision on 24.11.2025 dismissing, inter alia, Encl 1, a Notice of Motion dated 13.6.2025 filed for an interim stay for 12 months of the Winding Up Order dated 28.3.2006 made against the Respondent.

The Applicant, vide a Grant of Letters of Administration dated 30.7.2024 issued by the High Court of Kuala Lumpur in WA- 31NCvC-2274-07/2024, is the administrator for all the property of Chia Soon Hua (“the Deceased”) the majority contributory and former director of the Respondent.

The Respondent is a company having its business in manufacturing and producing brick products since 1990. On 28.3.2006, the Respondent was wound up by the KL HCt in Companies (Winding-up) No.: D5-28-636-2005 and whereby, the Official Receiver was appointed as the liquidator.

All references to ‘sections’ herein are with reference to the sections of the Companies Act 2016 (“CA 2016”) or sections of the Companies Act, 1965 (“CA 1965”), where the contexts so permits.

Tenaga Nasional Berhad (“TNB”) supplied electricity to the Respondent's factory pursuant to the supply of electricity contract dated 1.3.1996 ("the Supply Contract"). As required by TNB, the Respondent constructed a power substation which housed the switchgear and relay system which functioned as a protection system against internal fault.

On or around 13.10.1997, Jabatan Kerja Raya ("JKR"), under the control of the Government of Malaysia (“GOM”), embarked on constructing a rest and recreation area (“the Project”) on the Ipoh - Kuala Lumpur’s highway, whereby the GOM appointed Markas Perdana Sdn Bhd (“the Contractor”) as Contractor.

On 5.8.1998, the Contractor whilst carrying out the works at the site struck an underground cable (“the Cable”) belonging to TNB which was connected to the Respondent’s factory via a switching station. The Cable was broken and interrupted the supply of electricity to the Respondent’s factory. Consequently, the operations in the factory ceased and the Respondent’s equipment were damaged.

Following the incident, the Respondent filed a claim against the GOM and TNB in the High Court of Ipoh for damages due to the power disruption that damaged the Respondent’s manufacturing equipment.

The legal proceedings for Reparations went to the Federal Court. The Respondent was successful. On 24.04.2018, the Federal Court maintained the finding of liability for negligence by the GOM and TNB in favour of the Respondent. The Respondent's claim for economic losses due to physical damage to goods, was to be assessed by the High Court in Ipoh, together with other miscellaneous claims.

On 10.5.2019, the Respondent filed a Notice of Appointment for Assessment of Damages in the High Court in Ipoh for the purpose of assessing damages for the physical damage to goods as ordered by the Federal Court. The GOM and TNB are to pay 2/3 of the losses and damages assessed to the Respondent.

On 17.3.2022, the High Court of Ipoh assessed and awarded damages to the Respondent in the sum of RM36,470,306.32.

On appeal, on 11.11.2024, the Court of Appeal allowed the Respondent’s appeal in part in that the appeal on post-judgment interest was allowed at the rate of 5% per annum on the judgment sum until realization. Motions for leave to the Federal Court were dismissed. As such, the Respondent emphasised that it had gone through more than 26 years of litigation to obtain a final judgment of RM23,340,174.88 with interest at the rate of 5% until full realization.

The Company was wound up on 28.03.2006.

Notwithstanding the liquidation, the Company did successfully prosecute its claims against TNB and GOM and secured final judgment for RM23,340,174.88; the Official Receiver also appears to have received RM16,168.026.29 as part of the judgement sum paid by TNB on 9.6.2025 (collectively, “the Reparations”), see p 6 of Encl 16 and the Liquidator’s Report under s. 494 sealed on 3.9.2025.

The Applicants claim that the Winding Up Order ought to be temporarily stayed under s. 492(1) so that the Respondent may be allowed to re-commence its business as before, whereby the Respondent would then settle its creditors.

Encl 1 provides, inter alia, that: a. an interim stay be granted against the Winding-Up Order dated 28.3.2006; b. the said Winding-up Order and/or all proceedings relating thereto be stayed for a period of 12 months from the date of this order for the purpose of the Respondent’s settlement with its creditors, including but not limited to the unfreezing and reactivation of the Respondent’s bank accounts; c. consequential to (a) and (b) above, the appointment of the liquidator through the said Winding-Up Order be stayed and the powers be reverted to the directors of the Respondent; d. consequential to (a) and (b) above, the Respondent be allowed to resume operations and conduct its business as usual; e. an order be granted for the Companies Commission of Malaysia to update and amend the Respondent’s status in its records from a wound-up company to not wound-up or temporarily stayed upon obtaining the order.

It is clear that if Encl 1 were granted and a stay of the winding order comes into effect, the directors’ powers would be revived and the directors would have full control over the Company and its assets. This would include power to deal with the Reparations to the exclusion of the Official Receiver.

The Test for a Stay of Winding up proceedings is as set out by the Federal Court in Vijayalakshmi Devi d/o Nadchatiram v. Dr Mahadevan s/o Nadchatiram & Ors [1995] 3 CLJ 493. Recently, the test was comprehensively explained by the Court of Appeal in SKN Land & Development Sdn Bhd v Crest Worldwide Resources Sdn Bhd (In liquidation) (Mudajaya Corp Bhd & Ors, interveners) and another appeal [2026] MLJU 282.

In SKN (supra), the Court of Appeal quoted Vijayalakshmi (supra) in extenso. These are the material portions of the Judgment “[35] The only apex decision which had explained s 243(1) CA

was the judgment of Mohd. Dzaiddin FCJ (as he then was) in Vijayalakshmi Devi, at p. 716 to 718, as follows: “It is clear from [s 243(1) CA] that the court has a discretion, on the application of the liquidator or Official Receiver, or any creditor or contributory to stay the proceedings under a winding-up order. But, before granting a stay, the section requires on proof to the satisfaction of the court that it ought to grant a stay. This means that the court has to be satisfied that it is right to stay the winding-up proceeding and if there be matters as to which the court has doubts, it should not grant a stay (Re Lowston Ltd [1991] BCLC 570). The principles which govern the court in the exercise of its jurisdiction whether to grant or refuse a stay have been established in the following cases. In the leading case of Re Telescriptor Syndicate Ltd [1903] 2 Ch 174, Buckley J was dealing with an application under s 89 of the English Companies Act 1862, which is similar to our s 243, which provided that the court may at any time after a winding-up order, upon the application of any creditors or contributory and ‘upon proof to the satisfaction of the court that all proceedings in relation to such winding-up ought to be stayed’, make an order staying the same. What then should be the material considerations to induce the court to order a stay? According to Buckley J (taken from the headnote which summarized the text of his decision) [1903] 2 Ch 174 at p 174: In the exercise of its jurisdiction with reference to staying proceedings under an order for the winding-up of a company, the court should, so far as possible, act upon the principles which are applicable in exercising jurisdiction to rescind a receiving order or annul an adjudication in bankruptcy against an individual - in which cases the court refuses to act upon the mere assent of the creditors in the matter, and considers not only whether what is proposed is for the benefit of the creditors, but also whether the rescission or annulment will be conducive or detrimental to commercial morality and to the interests of the public at large. In refusing or postponing a stay of winding-up proceedings the court will have regard to the following facts:

That directors have not complied with their statutory duties as to giving information to the Official Receiver or furnishing a statement as to the affairs of the company...

That there are any other matters connected with the promotion, formation, or failure of the company, or the conduct of its business or affairs, which appear to the court to require investigation. We pause here to state that we respectfully accept the above principles laid down by Buckley J and would apply them in dealing with the present appeal. In Krextile Holdings Pty Ltd v Widdows, Gillard J of the Supreme Court of Victoria held [1974] VR 689, at p 694: It is not merely necessary for the applicant to establish that a stay is reasonable in the circumstances. He must satisfy the court it ought to grant a stay. As was emphasized by Buckley J in Re Telescriptor Syndicate Ltd [1903] 2 Ch 174 at p 182: ‘I decline to order a stay of these proceedings until it is proved to my satisfaction that the winding up ought to be stayed. That will not be proved to my satisfaction until it is shown to me that all the facts are as I hope they are - that the trading operations of this company have been fair and above-board.’ The above principles have been summarized by the learned editors of 1 Palmer’s Company Law (24th Ed) para 88–28 at p 1390 as follows: In exercising this discretion the court will be guided by the analogy of the former practice in bankruptcy in rescinding a receiving order - that is to say, it will consider the interests of commercial morality and not merely the wishes of creditors, and will refuse a stay if there is evidence of misfeasance or of irregularities demanding investigation. In Re Calgary & Edmonton Land Co Ltd, it was held that the jurisdiction of the court was discretionary and that it was for those who sought a stay to make out a sufficient case. Megarry J also dealt with the persons whose interests the court had to consider on an application for a stay. In his judgment ([1975] 1 All ER 1046 at p 1051; [1975] 1 WLR 355 at p 360), his Lordship stated: These must, of course, depend on the circumstances of each case; but where, as here, there is a strong probability, if not more, that the assets of the company will suffice to pay all the creditors and the expenses of the liquidation, and so leave a surplus for the members of the company, there are plainly three categories to consider. First, there are the creditors. … Second, there is the liquidator.… Third, there are the members of the company. No question of satisfying them by immediate payment of all that they are entitled to can very well arise; for unlike the creditors, with their ascertained or ascertainable debts, the rights of the members cannot be quantified until the liquidation is complete. Accordingly, in normal circumstances I think that no stay should be granted unless each member either consents to it, or is otherwise bound not to object to it, or else there is secured to him the right to receive all that he would have received had the winding up proceeded to its conclusion. Each member has a right of a proprietary nature to share in the surplus assets, and each should be protected against the destruction of that right without good cause. It will be observed that each of the heads is qualified by the words ‘in normal circumstances’. I am not suggesting that in these cases there are hard and fast rules; but I am saying that the circumstances that I have mentioned will usually be at least highly material in deciding how the court’s discretion should be exercised. In summary, the principles which emerge from the above authorities are these:

The granting of a stay under s 243 of the Act is discretionary and the onus is on the party seeking a stay to make out a positive or sufficient case.

The attitude of the creditors, contributories and the liquidator is a relevant consideration.

That in exercising its discretion, the court will consider not only the interest of the creditors, but also whether it is conducive or detrimental to commercial morality and to the interests of the public at large.

Last, and which by no means least, is that a stay will be refused if there is evidence of misfeasance or of irregularities demanding investigation. [36] In Ga-Seng Paper Marketing Sdn Bhd v Percetakan Warni Sdn Bhd [2015] 9 CLJ 640, at [19], the High Court had applied s 243(1) CA

as follows: “[19] I am of the following view regarding s 243(1) CA:

whether a winding up order should be stayed or not under s 243(1) CA, depends on the exercise of the court’s discretion based on the evidence adduced before the court - the Federal Court case of Vijayalaksmi Devi. It is trite law that the exercise of judicial discretion in a case is not a binding precedent from the view point of the stare decisis doctrine - please see the Court of Appeal’s judgment in Structural Concrete Sdn Bhd v Wing Tiek Holdings Bhd [1997] 1 CLJ 300, at 306. Reasons which are considered relevant and decisive in one Section 243 Application, may not be pertinent or conclusive in another

the legal burden to persuade the winding up court to exercise its discretion to stay a winding up order under s 243(1) CA is on the applicant - the Federal Court’s judgment in Vijayalaksmi Devi. Even if the petitioner, the company’s liquidator and all the creditors and contributories of the company are unanimously in favour of a Section 243 Application, the winding court may still refuse the Section 243 Application if the applicant fails to discharge the legal onus to satisfy the court to stay the winding up order. In Ting Yuk Kiong, a Section 243 Application was refused despite the OR’s view that the company in question was solvent and the OR’s support for the

as decided by the Federal Court in Vijayalaksmi Devi, the legal burden is on an applicant in a Section 243 Application to make “a positive or sufficient case”. The applicant should have a heavy burden as the effect of a stay under s 243(1) CA is permanent and far-reaching - the Court of Appeal case of Vijayalakshmi Devi. If the Section 243 Application is allowed, there is always a risk that the “resurrected” company may subsequently be unable to pay its debts, to the detriment of creditors in particular and the business community in general;

the factors to be considered by the winding up court in considering a Section 243 Application as explained in Vijayalaksmi Devi (Federal Court’s judgment) and Ting Yuk Kiong, are not exhaustive. Judicial discretion of the winding up court in deciding a Section 243 Application should not be fettered as is clear from the phrase “on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed” in s 243(1) CA; and

if a company is wound up under s 218(1)(e) CA on the ground that the company is unable to pay its debts -

the winding up court should give more weight to the consideration of public interest and commercial morality, than the wishes of the company’s liquidator, creditors and contributories. This is because the winding up court should be vigilant to ensure that s 243(1) CA is not abused to “resurrect” a commercially insolvent company to the detriment of the creditors in particular and the business community in general;

(ii) subject to the consideration of public interest and commercial morality, the wishes of the commercially insolvent company’s contributories should be given less weight than the interest of the wound up company’s creditors, especially unsecured ones. This is understandable in view of the limited liability of companies and their shareholders as embodied in s 16(5) CA (with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up);

(iii) to substantiate a Section 243 Application, the applicant must adduce credible evidence that if the Section 243 Application is allowed, the wound up company is likely to be commercially solvent and is likely to be able to pay its debts when such debts become due and payable in the future. In other words, there must be cogent evidence of the likelihood of the company’s commercial solvency or cash flow solvency. If there is no reliable evidence of the likelihood of the company’s commercial solvency, the Section 243 Application should be dismissed on this ground alone and it does not matter if the total value of the assets of the company exceeds its total liabilities (balance sheet solvency). This is because if such a company is “resurrected”, the company may still be commercially insolvent and may incur debts to the prejudice of its creditors, contrary to public interest and detrimental to commercial morality. … I rely on the “commercial solvency” test or the “cash flow solvency” test as a factor to be considered in a Section 243 Application because if a company is wound up based on the “commercial solvency” test, this same test should be satisfied by an applicant in a Section 243 Application to stay the same winding up order (obtained based on the “commercial solvency” test); and

(iv) evidence to show the likelihood of the company’s commercial solvency may be given …”. The Case Here

The case here is a little different. It is clear that the burden is on the applicant to satisfy me that I should stay the winding up proceedings. Further, the 3 main stakeholders should support the application, the most important may well be the creditors, and the weakest, the contributories. Other interests creep in, being the business community as a whole, who may be prejudiced if insolvency resurrects itself.

In this case, the interests of the Financial Creditors, Eon Bank Berhad and Hong Leong Finance Bhd, (collectively, “the Fis”), (both of whose assets are now vested in the Hong Leong Bank Bhd. The Bank has Judgments against the Company comprising: a. EON Bank Berhad’s Judgment against the Company on 21.06.2000, vide Kuala Lumpur High Court Suit No. D2- 22-776-2000; and b. Hong Leong Finance Berhad’s Judgment against the Company on 18.02.2000 vide Kuala Lumpur High Court Suit No. D3-22-3347-98.

The sums owed to the Bank are calculated as at 28.03.2006, the date of the winding up. It was RM2,403,532.71, having deducted the value of the security realized (under the judgment of EON Bank Berhad) and RM5,692,817.81 (under the judgment of Hong Leong Finance Berhad).

The Official Receiver continues to administer the assets and estate of the Company and the liquidation remains in progress.

Chia claims that as the Reparations were obtained from TNB and GOM through the efforts of the Respondent, it would not be fair for the Respondent to be excluded in negotiations with them. I know of no authority to support this assertion.

The Bank also contends that Chia’s intention to restore the Company to active operations remains premature and speculative. Until creditors are paid and/or resolved, there would no funds nor ability for the Company to carry on business. Although there maybe evidence that suggests that the Company is solvent, the opposition by the Bank and the OR makes it difficult to accept the submissions of the Respondent over the Bank’s and the objections of the OR in Encl 16, Part D.

It may be that the Bank and the OR would prefer Mr. Chia not to deal with the Reparations. Whatever the reason, the OR should be allowed to complete the administration of the estate.

I dismissed Encl 35. Dated the 14th day of February 2026 ...........................tt............................ YA TUAN SAHERAN SUHENDRAN JUDICIAL COMMISSIONER OF THE HIGH COURT (COMMERCIAL 11) (INSOLVENCY 2) OF KUALA LUMPUR, MALAYSIA Case References: • SKN Land & Development Sdn Bhd v Crest Worldwide Resources Sdn Bhd (In liquidation) (Mudajaya Corp Bhd & Ors, interveners) and another appeal [2026] MLJU 282 • Vijayalakshmi Devi d/o Nadchatiram v. Dr Mahadevan s/o Nadchatiram & Ors [1995] 3 CLJ 493 Legislation References: • Companies Act 2016 (“CA 2016”) • Companies Act, 1965 (“CA 1965”) Decision Date: 24th November 2025 Counsel for the Petitioner: Solicitors: Dato John Clark Sumugod & Chuan Li (PDK) Messrs. Clark Soon & Partners (Petaling Jaya) Counsel for the Applicant: Solicitors: Abdullah Az Zubayr & Bushro Anuar Messrs. Zulpadli & Edham (Kuala Lumpur) Official Receiver (OR) Aizatul Aina & Mohd Afwan bin Hajiman Jabatan Insolvensi Malaysia Wilayah Persekutuan Kuala Lumpur (Kuala