Any transfer or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void.” [9] It was argued by learned counsel for the respondent that the appellant is not entitled to seek direct payment from the respondent as BHL Builders had been wound up and is now under receivership. According to learned counsel, any payment to be made to the appellant would amount to undue preference in the appellant’s favour. It was pointed out that the appellant is not the only creditor of BHL Builders as BHL Builders has 69 other creditors waiting in line to have their debts settled. 5 [10] It was further argued that section 30 of CIPAA is akin to garnishee proceedings against the assets of BHL Builders and as such the appellant cannot, by virtue of section 528 and section 533 of the Companies Act 2016, seek the court’s intervention to sanction an attachment of any debt due to BHL Builders from the respondent upon presentation of a winding up petition. [11] Learned counsel for the appellant contended otherwise, arguing that the provisions on undue preference under the Companies Act are not applicable as the liquidator was not involved. It was submitted that it was for the liquidator to satisfy himself whether the payment to be made to the appellant amounted to undue preference, and not for the respondent. [12] Reliance was placed on JCT Limited v Muniandy Nadasan & Ors and another appeal [2016] 3 CLJ 692 where this court, after taking into account the Federal Court decision in Sime Diamond Leasing (M) Sdn Bhd v JB Precision Moulding Industries Sdn Bhd (In liquidation) [1998] 4 CLJ 557 agreed that it is the liquidator who may decide whether there is undue preference under section 293 of the Companies Act read together with section 53 of the Bankruptcy Act. [13] In considering the scope of section 293 of the Companies Act, the Federal Court in Diamond Leasing (supra) observed: “We must now turn to consider s. 293 of the Companies Act. The law relating to fraudulent preferences is set out in s. 53 of the Bankruptcy Act, which is made applicable to companies by s. 293 of the Companies Act, and is designed to preserve the sanctity of the pari passu principle by which creditors in a winding up share rateably in the assets available for distribution… 6 To take the matter further, it is clear law that the Court has no power to make an order setting aside payments and transfers made in the run-up to bankruptcy in favour of a particular creditor which were designed to prefer him over other creditors unless the following five conditions are satisfied: … The onus was, of course upon the Liquidator to satisfy all the five requirements aforesaid… The principle of central importance underlying s. 293(1) of the Act is that where a debtor company, has at a relevant time, given a preference to any person, the Liquidator may apply to the court for an order under the section setting aside the preference.” [14] In the instant case, the liability of the respondent to make payment is imposed by statute, i.e. by section 30(3) of CIPAA. Thus, payment made by the respondent to the appellant would not be from the assets of BHL Builders, but because the adjudicated sum is paid by the respondent, it will be a debt due from BHL Builders to the respondent (once the respondent makes direct payment to the appellant) which the respondent will have to recover from BHL Builders pursuant to subsection 30(4). [15] We agree with learned counsel for the appellant that a legal obligation to pay may arise either by statute (as in the present case) or by contract. In fact, an obligation imposed by statute, in this case by subsection 30(3) of CIPAA, is stronger because in the absence of proof of payment by BHL Builders as requested by the respondent under subsection (2), it becomes mandatory for the respondent as the principal to pay the adjudicated sum of RM9,065,335.67 to the appellant. It is a requirement of law which the respondent has no discretion not to comply with it. [16] We are also in agreement with learned counsel for the appellant that section 30 of CIPAA creates an independent statutory obligation on the 7 part of the respondent, as a principal in its own right, to pay the appellant and that this is a separate obligation to pay imposed by statute which exists in parallel with BHL Builder’s obligation as the main contractor to pay the appellant under the adjudication decision. [17] To support his argument that the direct payment by the respondent to the appellant is permissible despite BHL Builder’s status as a bankrupt, learned counsel for the appellant referred us to five authorities, all of which are from beyond our shores. The first case is Glow Heating Limited v The Eastern Health Board, Patrick Rooney and Building and Engineering Limited (in liquidation) [1988] IR 110 where it was held that a contract provision which requires direct payment from the principal creates an independent liability on the part of the principal, notwithstanding that the main contractor was in liquidation. [18] The second case is Golden Sand Marble Factory Ltd v Easy Success Enterprise Ltd & Anor [1999] 2 HKC 356. In this case, it was agreed that all future payments in relation to the nominated subcontractors’ works would be paid directly by the employer to the subcontractors. The main contractor was later wound up. The Hong Kong Court of First Instance granted a declaration that the subcontractor was entitled to the whole sum due under the final account from the employer on the basis that as at the date of liquidation, no property in the money in dispute was vested in the main contractor and therefore the money did not become part of the fund for distribution to creditors pari passu. [19] The third case is Veitchi Co v Crowley Russell & Co [1972] SC 225 where it was held that a supervening liquidation did not render unenforceable the requirement of condition 30 as to payment of a 8 subcontractor by a principal as a condition of receiving any further certificate. [20] The fourth case is Re Wilkinson Ex parte Fowler [1905] 2 KB 713 which held that the power conferred by the clause which allows the engineers to order direct payment was not annulled or revoked by the main contractor’s bankruptcy and that the appellant by virtue of the two orders of the engineer was entitled to be paid directly. [21] The last case is Gericevich Contracting Pty Ltd (in liq) v Sabemo (WA) Pty Ltd (1984) 9 ACLR 452. In this case the Supreme Court of Western Australia sanctioned direct payment to the subcontractor following the main contractor’s liquidation on the basis that the employer’s debt to the main contractor was for the balance of any amount due after the subcontractor had been paid. [22] These authorities are only of persuasive value but they do in our view support the appellant’s contention that despite BHL Builder’s status as a bankrupt, the respondent is bound by statute, i.e. by section 30(3) of CIPAA, to make direct payment to the appellant of the adjudicated sum of RM9,065,335.67. [23] We cannot accept learned counsel for the respondent’s argument that the mandatory nature of subsection 30(3) of CIPAA only works to compel an able principal to be bound by an adjudication decision but not to have the liberty to contract out of such obligation. Such argument is contrary to what the subsection provides for. 9 [24] It was for the reasons aforesaid that we found the learned High Court Judge to be wrong when he held (1) that there is no independent obligation and liability imposed on the respondent to make direct payment to the appellant; and (2) that payment by the respondent to the appellant would amount to preferential payment in view of the fact that the main contractor, BHL Builders, was in liquidation. [25] Accordingly we allowed the appeal and set aside the decision of the High Court. We allowed costs in the sum of RM20,000.00 to the appellant, subject to payment of the allocator fee. Signed ABDUL RAHMAN SEBLI Judge Court of Appeal Malaysia Dated: 25 October 2019 For the Appellant: Foo Joon Liang of Messrs Gan Partnership. For the Respondent: Ng Sai Yeang and Wong Chee Chien of Messrs Raja, Darryl & Loh.