The exercise by the liquidator in a winding up by the Court 165 of the powers conferred by this section is subject to the control of the Court and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.” 170 [16]. In Tee Siew Kai v Machang Indah Development Sdn Bhd [2020] 6 MLJ 168; [2020] 4 CLJ 841; [2020] 2 MLRA 295, the Federal Court reiterated that courts must protect the integrity of the liquidation process by ensuring only meritorious claims proceed. [17]. Thus, Malaysian courts have consistently maintained a stringent 175 approach in granting leave, emphasising that a liquidator cannot be subjected to unwarranted litigation unless clear evidence of misconduct or pecuniary loss is demonstrated. [18]. The requirement to obtain leave before commencing proceedings against a liquidator is a fundamental safeguard in corporate 180 insolvency law. Liquidators, as court-appointed officers, must be able to perform their statutory duties without undue interference. The Federal Court in Ooi Woon Chee & Anor (supra) established two essential criteria for granting leave: a) the existence of a prima facie case, meaning the claim must 185 have legal merit, and b) pecuniary loss to the wound-up company, requiring proof that the company has suffered or will suffer financial harm due to the liquidator’s actions. 190 [19]. His Lordship Justice Zulkefli, CJ (Malaya) in Ooi Woon Chee (supra) states the two essential criteria in these words: “[11] for leave to be granted to proceed with the 505 Suit pecuniary loss must be shown, otherwise the action would be a waste of time and costs. On this point in the case of Abric 195 Project Management Sdn Bhd v. Palmshine Plaza Sdn Bhd & Anor [2007] 1 MLRH 454; [2007] 7 CLJ 516 at p 532 it was held that in an application for leave to commence proceedings for, inter alia, breach of duty against a liquidator, it is necessary to prove pecuniary loss to the company.” 200 … [15] In order to succeed for the granting of leave the majority contributories must also make out a prima facie case, a standard to protect the court's officer and the winding up process. (See the cases of Abric Project Management Sdn Bhd 205 v. Palmshine Plaza Sdn Bhd & Anor [2007] 1 MLRH 454; [2007] 7 CLJ 516; TN Metal Industries Sdn Bhd v. Ng Pyak Yeow [1995] 5 MLRH 110; [1995] 1 LNS 320 and Sarawak Timber Industry Development Corporation v. Borneo Pulp Plantation Sdn Bhd [2004] 2 MLRH 749; [2004] 8 CLJ 584). These cases 210 show that in applying the test the court is compelled to evaluate the evidence led to determine whether the test is met. In Mamone & Anor. v. Pantzer [2001] ACSR 743, it was held that prospective litigant must, to obtain leave, demonstrate its claim has sufficient merit.” 215 [20]. I may also add here that requirement to obtain leave applies not only to court-appointed liquidators but also in cases where liquidators are appointed in companies that have been voluntarily wound up. In Ganda Setia Cemerlang Sdn Bhd v Maika Holdings Berhad 220 [2017] MLRAU 419, the Respondent was voluntarily wound up by its members, Justice Mary Lim (as Her Ladyship then was) emphasised this requirement of leave, stating: “[14] In law, a company may be wound up either by the court or voluntary by the company itself — see s 211 of Division 1. 225 Once a company has been wound up by the court, or once the winding up court has appointed a provisional liquidator, s 226(3) mandates that leave of the winding up court must be procured either before an action or proceeding is commenced or if already commenced, proceeded with. 230 [15] Where the company is wound up voluntarily, and that may be by special resolution of the company, or due to the expiration of the duration of the company fixed either in its memorandum or articles of association and a general resolution has been passed to that effect (see s 254) or even on grounds of 235 insolvency and a statutory declaration to that effect has been lodged with the registrar of companies and with the official receiver (see s 255), s 263(2) carries a similar requirement on leave as that found in s 226(3).” 240 [21]. To satisfy the prima facie case requirement, the applicant must provide substantive evidence beyond mere allegations. Courts have emphasised that this requirement acts as a filter to prevent speculative claims. In N Chanthiran Nagappan (supra), the Federal Court held that claims must demonstrate a reasonable 245 probability of success and not be frivolous. Similarly, See Teow Guan & 10 Ors v. Kian Joo Holdings Sdn Bhd & Ors [2010] 1 MLJ 547 (refd); [2009] 8 AMR 776; [2009] 5 MLRH 462; clarified that mere dissatisfaction with a liquidator’s decisions is insufficient, there must be evidence of statutory breach or misconduct. 250 [22]. The pecuniary loss requirement ensures that leave is not granted for personal grievances but only when the company itself has suffered financial harm. In Abric Project Management Sdn Bhd (supra), the court held that leave should only be granted where clear evidence shows a negative financial impact on the company. 255 Courts have consistently ruled that personal losses do not justify leave unless directly linked to company losses. [23]. To sum up, the legal threshold for leave to sue a liquidator is high. It is designed to prevent vexatious claims while ensuring legitimate grievances are addressed. Courts will only grant leave in 260 exceptional circumstances where clear misconduct or financial harm to the company is proven. [24]. In light of the cause papers filed, there is no ambiguity regarding the nature of the application before this court i.e. whether it seeks leave to commence action against the liquidator, FOSB, or both. Although 265 enclosure 1 does not explicitly specify this, the applicant’s cause papers and submissions clearly indicate that the request pertains to leave to proceed against the liquidator. Accordingly, for the purposes of this judgment, the court’s focus will be solely on determining whether leave should be granted for legal proceedings 270 against the liquidator. [25]. Having set out the legal threshold for leave, I will now examine whether the applicant met the requirements. Issue 1: Share Impropriety and Pecuniary Losses [26]. Upon careful consideration of the submissions and evidence 275 presented by both parties, this court finds that the applicant’s claims regarding the alleged improprieties of the shareholding in FOSB are untenable. The Court of Appeal in Civil Appeal No: A-02(NCC)(A)- 963-05/2019 had already adjudicated on this issue during the winding-up proceedings, the Court of Appeal ruled that the applicant 280 had no basis to claim unfair dilution of shares as he was offered the right to subscribe additional shares in proportion to his existing holdings but declined to do so. The applicant’s failure to appeal this ruling to the Federal Court renders the matter conclusively settled under the doctrine of res judicata. 285 [27]. The principle of res judicata, as expounded in Asia Commercial Finance (M) Berhad v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189; [1995] 3 CLJ 783; [1995] 1 MLRA 611; [1995] 3 AMR 2559 dictates that once a competent court has decided a matter, the same issue cannot be relitigated. The Supreme Court, inter alia, stated the 290 principle as follows: “[23] What is res judicata? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicature. When a matter between two parties has been adjudicated by a Court of competent jurisdiction, the 295 parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that it is in the public 300 interest that there should be finality in litigation - interest rei publicae ut sit finis litium. It is only just that no one ought to be vexed twice for the same cause of action - nemo debet bis vexari pro eadem causa. Both maxims are the rationales for the doctrine of res judicata, but the earlier maxim has the further 305 elevated status of a question of public policy.” [28]. The Supreme Court in Asia Commercial (supra) when further to explain on issue of estoppel, which is applicable in the circumstance of the present case: 310 “[35]… the issue estoppel literally means simply an issue which a party is estopped from raising in a subsequent proceeding. However, the issue estoppel, in a nutshell, from a consideration of case law, means in law a lot more ie. that neither of the same parties or their privies in a subsequent proceeding is entitled to 315 challenge the correctness of the decision of a previous final judgment in which they, or their privies, were parties. This sounds like explaining a truism, but it is the corollary from that statement that is all important and that could have given birth to the controversies alluded to above; the corollary being that 320 neither of such parties will be allowed to adduce evidence or advance any argument to contradict such decision” [29]. Further, the difference between the doctrine of issue estoppel and cause of action estoppel was well articulated by Justice Peter 325 Gibson in Lawdor v. Gray [1984] 3 All ER 345, who said: "Issue estoppel... prevents contradiction of a previous determination, whereas cause of action estoppel prevents reassertion of the cause of action". 330 [30]. In OCBC Bank (M) Bhd v Kredin Sdn Bhd [1997] 2 MLJ 544; [1997] 2 CLJ 534; [1995] 1 MLRA 611, the Court of Appeal held, inter alia, as follows: “The plea of res judicata encompasses two distinct forms of estoppel, ie, 'cause of action estoppel' and 'issue estoppel'... 335 'Issue estoppel' represents an extension of the doctrine of res judicata to include a bar on the subsequent litigation not only of all decided issues whose resolution was essential to the determination of earlier proceedings but also 'to every point which properly belonged to the subject of litigation, and which 340 the parties, exercising reasonable diligence, might have brought forward at the time”. [31]. Accordingly, the applicant is estopped from raising the alleged shareholding irregularities again in a separate proceeding. 345 [32]. Pursuant to Section 25(2) and Paragraph 11 of the Schedule to the Courts of Judicature Act 1964, this court can dismiss proceedings where the matter is res judicata. As the Court of Appeal has already ruled on the issue raised by the applicant, the matter is conclusively settled. Consequently, the applicant has failed to 350 establish a prima facie case or demonstrate any pecuniary loss. Therefore, this court finds no grounds to grant leave for the applicant to commence an action against the liquidator. Issue 2: 26 units of shop lots purportedly belonging to Arena Ria Sdn. Bhd. 355 [33]. After reviewing the submissions and evidence, this court rules in favour of the respondent and its liquidator regarding the purported irrevocable power of attorney and its alleged conferral of proprietary interest in the disputed shop lots to ARSB. [34]. The applicant contends that the PA was irrevocable, granted 360 valuable consideration, and transferred ownership rights in the 26 shop lots to ARSB. However, the respondent has demonstrated that this assertion lacks both legal and evidentiary support. The case of Affluent Freight Sdn Bhd v. Sumathi K Appukuttan Pillai & Anor [2001] 8 CLJ 71 (refd); [2001] MLJU 635; [2001] AMEJ 0252; 365 [2001] 4 MLRH 29 establishes that a PA cannot be deemed irrevocable if valuable consideration is not proven. Here, the applicant has failed to provide substantive evidence of such consideration beyond a mere recital in the document. [35]. Furthermore, in Tee Siew Kai (supra), the Federal Court held that 370 a PA ceases to have legal effect upon the winding up of both the donor and the attorney. Since both FOSB and ARSB are under liquidation, any rights purportedly granted by the PA have become legally ineffective. [36]. The respondent has also successfully argued that a PA does not 375 confer proprietary rights. In Ngadi Apandi v. Mohamad Ali Md Ahsan & Ors [2017] 3 AMR 83; [2016] CLJU 1743; [2016] MLJU 1548; [2016] MLRHU 1548, His Lordship Justice Wan Ahmad Farid bin Wan Salleh held that a PA is merely an instrument delegating authority and does not in itself transfer ownership. His Lordship 380 relied on Firstcrest Global Limited & Ors v. Indexia Assets [2006] 2 MLRA 1; [2006] 5 MLJ 723; [2006] 3 CLJ 860; [2006] 5 AMR 304, where the Court of Appeal reaffirmed that a PA does not create a proprietary right independent of an underlying principal agreement. His Lordship said this: 385 “[19] A power of attorney, no matter how the words therein are couched, does not have a life of its own. It does not confer any proprietary right to the donee. In Firstcrest Global Limited & Ors v Indexia Assets and another appeal [2006] 5 MLJ 723 CA, James Foong JCA (as he then was) in delivering the judgment 390 if the Court of Appeal stated the law as follows: ….. But it is my view that this instrument (Power of Attorney) is only a subsidiary document to the Sale of Shares Agreement. Without the Sale of Shares 395 Agreement, which is the principal instrument, the Power of Attorney cannot subsist. It does not have a life of its own. It is appendant to the Sale of Shares Agreement. So when the principal agreement cannot give proprietary right in law then the Power of 400 Attorney, a subsidiary instrument, also confers no such right.” [37]. Further, the liquidator of ARSB has confirmed in writing that the PA does not form part of ARSB’s official records and that the disputed 405 shop lots are not registered as ARSB’s assets. This further undermines the applicant’s claim that the properties should revert to ARSB for distribution. [38]. Due to conflicting ownership claims, the court had previously directed the liquidators of both FOSB and ARSB to submit affidavits 410 clarifying the ownership of the 26 shop lots. The court noted discrepancies between ARSB’s financial records, where the properties were listed as assets, and the liquidator’s position that ARSB had no ownership claim. The liquidator of FOSB complied and submitted an affidavit, supported by financial records and land 415 searches, affirming that the properties belong to FOSB. However, the liquidator of ARSB failed to submit an affidavit, further complicating the ownership determination. [39]. Given that ARSB is under liquidation, its liquidator is the only legally authorised party to assert ownership claims over its assets. Despite 420 the court’s explicit directive, the liquidator of ARSB failed to provide an affidavit clarifying the company’s claim over the shop lots. As a contributory (shareholder) of ARSB, the applicant lacks locus standi to assert ownership on behalf of ARSB. If ARSB indeed had a valid ownership claim, it was the responsibility of its liquidator and not the 425 applicant to take legal action. [40]. Since the liquidator of ARSB has not asserted any ownership rights over the properties, the applicant’s attempt to independently pursue the claim is legally untenable. The lack of a formal claim from the ARSB liquidator further weakens the applicant’s position. 430 [41]. Based on these legal principles and factual findings, the court concludes that the PA does not confer proprietary rights to ARSB. The respondent’s arguments regarding the PA’s invalidity and ineffectiveness are well-supported by decided cases. Furthermore, as the liquidator of ARSB is the only proper party to assert any 435 ownership claim over the shop lots, the applicant lacks the legal standing to bring this matter before the court. [42]. Accordingly, the court finds that the applicant has failed to meet the necessary criteria for leave to commence proceedings against the liquidator of FOSB. The application therefore stands dismissed 440 Issue 3: Is the applicant entitled to form a COI? [43]. After reviewing Issues 1 and 2, the court finds that the applicant has not demonstrated the necessity of forming a COI in FOSB’s liquidation. The applicant’s request for a COI to investigate alleged improprieties in FOSB’s shareholding is barred by res judicata. 445 Further, the claim over the 26 shop lots based on the PA lacks merit, as the PA does not confer ownership rights, the ARSB liquidator has not asserted any claim, and no legal proprietary transfer has occurred. [44]. The cases of Affluent Freight Sdn Bhd (supra) and Tee Siew Kai 450 (supra), firmly establish that a COI is not an automatic right but a discretionary measure to be summoned upon the request of a contributory or creditor. The respondent submits that such a request was made, and a vote was held among the creditors and contributories of FOSB. However, the majority of creditors and 455 contributories opposed its formation. In accordance with Rule 119 of the Companies (Winding-Up) Rules 1972, a resolution is deemed passed when a majority in both number and value vote in favour of the decision. In this case, the decision against the formation of a COI was validly made and is binding. 460 [45]. The applicant has provided no evidence to challenge the validity of the voting process or to demonstrate that the rejection of the COI was unreasonable. Furthermore, in AA Sawit Sdn Bhd v. Stable-Win Sdn Bhd [2014] CLJU 667; [2014] AMEJ 0766; [2014] MLRHU 222, it was reinforced that a liquidator is vested with 465 discretion in summoning meetings to consider the appointment of a COI, which is not a mandatory requirement unless explicitly requested and approved by creditors or contributories. Justice Gunalan Muniandy held this in AA Sawit Sdn Bhd (supra): “[18] For instance, it was alleged that he had failed to call for a 470 meeting of creditors and contributories and had also failed to constitute a committee of inspection. A plain reading of s 241(1), which is the governing provision on this issue, by the use of the word 'may', shows that the Liquidator is vested with a discretion whether to summon separate meetings of the 475 creditors and contributories to ascertain if the creditors and contributories require the formation of a committee of inspection. There is no mandatory requirement to summon separate meetings unless requested by any creditor or contributory. As there was no evidence on record in the instant 480 case that any creditor or contributory had requested any such meeting to be summoned, the allegation of breach of s 241(1), CA by the Liquidator was unfounded and misconceived.” [46]. The court further finds that the liquidation of FOSB is a solvent 485 winding-up with only three (3) creditors and five (5) contributories. As established in Lim Boon Chuan @ Lim Ban Huat v. Wonderful Castle Sdn Bhd & Anor [2019] 1 CLJ 65; [2018] 6 MLRA 372, a COI is typically necessary in cases involving a large number of creditors, making it impractical for all to participate in liquidation 490 proceedings. Given the small number of stakeholders in this case, forming a COI would serve no practical purpose. [47]. The court also takes into account that the applicant’s primary reason for seeking the formation of a COI relates to allegations of improprieties in the allotment and transfer of shares in FOSB. 495 However, these allegations have already been litigated and do not constitute valid grounds to revisit the issue through a COI. The applicant failed to provide any new evidence to justify re-examining these claims. [48]. The respondent has provided the applicant access to FOSB’s books 500 and records, ensuring transparency in the liquidation process. There is no evidence to suggest that the liquidator has refused, neglected, or failed to fulfil his statutory obligations under the Companies Act 2016. [49]. Given these findings, the court concludes that the applicant has not 505 established a valid basis for leave to commence proceedings against the liquidator of FOSB. Issue 4: Does the applicant have standing to demand directorship changes in Puspa Sepakat Sdn. Bhd. (PSSB)? [50]. The court finds that the applicant has failed to establish any legal or 510 factual basis to compel the liquidator of FOSB to remove a director of PSSB and appoint the applicant in their place. Section 206(3) of the Companies Act 2016, which the applicant relies on, merely prescribes the procedural requirement of issuing a special notice and passing a resolution for the removal or appointment of a 515 director. It does not, in any way, grant the liquidator unilateral authority to effect such changes in PSSB’s board of directors. The applicant has not provided any justification for why his appointment to PSSB is necessary to safeguard FOSB from pecuniary losses, an essential criterion for obtaining leave to initiate legal proceedings 520 against the liquidator. In the absence of any legal duty on the liquidator to act in the manner sought and given the lack of evidence of financial harm to FOSB, the court finds no merit in the applicant’s request. [51]. The claim that FOSB, as the largest shareholder in PSSB, holds the 525 right to dictate director appointments is incorrect. FOSB holds an equal number of shares as another company, Z.K.S Serangkai Sdn Bhd, and does not have a controlling interest. Courts, including in Chan Thiam Teng v. Ban Swee Heng Sdn Bhd [1992] 2 MLJ 583; [1992] CLJU 37; [1992] 4 MLRH 277, have consistently ruled that 530 shareholders must follow proper legal channels rather than demand unilateral changes. The court in Chan Thiam Teng (supra) said: “A resolution properly passed, which is so in this case, is binding on the defendants and until it is dissolved, cancelled or annulled, expressly or by implication, it bound the defendants 535 on actions taken by its director who acted within the ambit of the resolution.” [52]. As there is no prima facie evidence of mismanagement or financial harm to FOSB, the court dismisses the applicant’s request, 540 reaffirming that the liquidator has no obligation to interfere in PSSB’s directorial affairs. Court’s Discretion in Granting Leave [53]. The decision to grant leave is ultimately at the discretion of the court, which must assess the merits of the case based on available 545 evidence. Courts have repeatedly emphasised the need for judicial caution in granting leave to prevent the liquidation process from being derailed by unnecessary litigation. [54]. In Sarawak Timber Industry Development Corporation v. Borneo Pulp Plantation Sdn Bhd [2004] 8 CLJ 584 (refd); [2005] 550 2 MLJ 74; [2004] AMEJ 0097; [2004] 2 MLRH 749, the court stated – “there must be more than a mere allegation to move the court into granting leave to bring an action against a liquidator. An applicant who takes out misfeasance proceedings against a 555 liquidator must show that he has sufficient interest in the outcome of the application”. In other words, courts should be reluctant to interfere with a liquidator’s decisions unless there is clear evidence of bad faith or 560 misconduct. The role of the court is to ensure that liquidation is conducted in a fair and orderly manner, not to entertain speculative claims. [55]. Liquidators are officers of the court and are entitled to judicial protection when carrying out their duties. Courts have recognised 565 that permitting unfounded lawsuits against liquidators could lead to delays in winding-up proceedings and increased costs, ultimately prejudicing creditors and contributories [56]. This court is bound by the doctrine of stare decisis, which ensures consistency and certainty in judicial decisions. The Federal Court in 570 N Chanthiran a/l Nagappan (supra) emphasises that adherence to binding precedent is mandatory. The requirement of obtaining leave before initiating proceedings against a liquidator is a long-established legal principle, and this court must apply it accordingly. Conclusion 575 [57]. The liquidator’s conduct in the management of the company has been consistent with statutory requirements. The applicant has failed to provide credible evidence of bad faith, misconduct, or pecuniary loss to the company. Accordingly, the Applicant's application is dismissed, and costs of RM2000 awarded to the 580 Respondent. This judgment reinforces the importance of protecting the integrity of the liquidation process and ensuring that liquidators can discharge their duties without undue interference. Date: 12 March 2025 585 Moses Susayan MOSES SUSAYAN Judicial Commissioner 590 High Court in Malaya at Ipoh, Perak Counsel: 595 For the Applicant: Domnic Selvam Gnanapragasam Advocates and Solicitors [Messrs Domnic Pragasam Tan & Co] 600 Kuala Lumpur For the Liquidator/Respondent: Lee Boon Koon Advocates and Solicitors 605 [Messrs Arissa Tan Chien & Co] Puchong, Selangor (Notice: This Grounds of Decision is subject to official editorial revision) 610 Headnotes Companies and Corporations — Winding up — Liquidator — Whether 615 leave of the winding-up court is required to commence proceedings against a court-appointed liquidator — Whether the applicant established a prima facie case or demonstrated pecuniary loss to the company in various allegations — Whether allegations warrants the court intervention in the liquidation process. 620