Daya Asal Sdn. Bhd. v Tlc Plantation Sdn. Bhd. (BA-24NCvC-384-02/2026)

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SIN WI KOCK … RESPONDENTS

This is the Court’s Grounds of Judgment in respect of the Applicant’s Originating Summons seeking an order that the proceedings in Mahkamah Sesyen Sepang, Civil Suit No. BK-A52NCvC-45-12/2025, be transferred to the High Court at Shah Alam. 30/04/2026 10:43:09

The application is brought pursuant to Order 57 rule 1(3)(a) and Order 92 rule 4 of the Rules of Court 2012, read together with paragraph 12 of the Schedule to the Courts of Judicature Act 1964 and sections 65 and 90 of the Subordinate Courts Act 1948.

The Applicant contends that the dispute involves allegations of fraudulent trading under section 540 of the Companies Act 2016 and therefore ought properly to be determined by the High Court.

The Respondents oppose the application and submit that the claim is fundamentally a contractual dispute within the monetary jurisdiction of the Sessions Court.

After hearing the parties and considering the affidavit evidence and pleadings, this Court dismissed the application. These are the reasons for that decision.

The Applicant commenced an action in the Sessions Court against the Respondents seeking the recovery of a deposit sum of

The first Respondent is a private limited company incorporated under the Companies Act 2016. The second and third Respondents are directors of the first Respondent.

The dispute arises from a Mining Agreement dated 1 December 2021 entered into between the Applicant and the first Respondent.

Under the agreement, the Applicant was appointed as the exclusive mining contractor to undertake mining operations involving silica extraction at a mining area in Gua Musang, Kelantan.

The agreement was conditional upon the procurement of a Mining Licence or Mining Lease from the relevant authorities.

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The Applicant alleges that despite the lapse of more than two years, the necessary mining licence was never obtained.

The Applicant therefore terminated the agreement and demanded the refund of the deposit.

When the deposit was not refunded, the Applicant commenced proceedings in the Sessions Court.

In the Statement of Claim, the Applicant alleges that: a. the Respondents made false representations regarding the mining project; b. the Respondents had no intention of fulfilling the agreement; and c. the Respondents engaged in fraudulent trading.

The Applicant further contends that the corporate veil of the first Respondent should be lifted and that the second and third Respondents should be held personally liable.

The Respondents deny these allegations and have filed a defence.

The Applicant subsequently filed the present Originating Summons seeking to transfer the Sessions Court proceedings to the High Court.

The Applicant submits that the claim involves fraudulent trading under section 540 of the Companies Act 2016.

Section 2 of the Companies Act defines the term “Court” as the High Court.

The Applicant therefore argues that proceedings involving section 540 must be determined by the High Court.

It is further submitted that the claim involves the lifting of the corporate veil and the imposition of personal liability upon the directors.

According to the Applicant, such issues involve complex questions of company law which are better suited for determination by the High Court.

The Respondents contend that the action is fundamentally a contractual claim for the recovery of RM300,000.

The Respondents submit that the Sessions Court has jurisdiction over civil claims not exceeding RM1,000,000.

It is further argued that allegations of fraud or misrepresentation do not automatically remove a matter from the jurisdiction of the Sessions Court.

The Respondents also submit that the Applicant’s reliance on section 540 is misplaced and does not justify the transfer of the proceedings.

The issue before this Court is whether the Sessions Court proceedings ought to be transferred to the High Court.

In determining this issue, the Court must consider: a. the nature and substance of the claim; b. whether the Sessions Court lacks jurisdiction to determine the dispute; and c. whether the interests of justice require the transfer of the proceedings.

The power of the High Court to transfer proceedings is discretionary.

The discretion must be exercised judicially and only where there are sufficient grounds to justify such transfer.

In Syarikat Kenderaan Melayu Kelantan Bhd v Transport Workers Union [1995] 2 MLJ 317, the Federal Court held that the discretion to transfer proceedings must be exercised cautiously and only where necessary to prevent injustice.

Similarly, in Bandar Builder Sdn Bhd v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36, the Supreme Court emphasised that the court must consider the substance of the dispute rather than merely the form of the pleadings.

The principle that jurisdiction depends on the real nature of the claim was also reaffirmed in American Express Bank Ltd v Mohamed Toufic Al-Ozeir & Anor [1995] 1 MLJ 160.

The jurisdiction of the Sessions Court is governed by the Subordinate Courts Act 1948.

The Sessions Court has jurisdiction to hear civil claims where the amount in dispute does not exceed RM1,000,000.

The Applicant’s claim is for RM300,000, which clearly falls within the monetary jurisdiction of the Sessions Court.

Unless there is an express statutory provision excluding such jurisdiction, the Sessions Court remains competent to determine the dispute.

The Applicant places considerable reliance on the allegation of fraud.

However, allegations of fraud do not automatically deprive the Sessions Court of jurisdiction.

Fraud is essentially a question of fact which may be determined by any court of competent jurisdiction.

In Tan Kok Cheng v Tan Kim Hoo [2014] 3 MLJ 329, the Federal Court emphasized that allegations of fraud must be strictly proved but may nevertheless be adjudicated upon by courts of competent jurisdiction.

The central plank of the Applicant’s argument is section 540 of the Companies Act 2016.

Section 540 provides that where the business of a company has been carried on with intent to defraud creditors or for any fraudulent purpose, the Court may declare that any person knowingly involved shall be personally responsible for the company’s debts.

The provision is intended to prevent the abuse of the corporate structure.

It represents a statutory exception to the doctrine of separate legal personality established in Salomon v A Salomon & Co Ltd [1897]

Malaysian courts have recognised that fraudulent trading provisions are designed to address situations where the corporate form is used as an instrument of fraud.

However, the existence of such statutory provisions does not automatically mean that every dispute involving allegations of fraud must be heard by the High Court.

In the present case, the Applicant’s reliance on section 540 must be considered in the context of the underlying claim.

Upon examining the pleadings, this Court finds that the gravamen of the action is a claim for the refund of a deposit arising from the alleged failure of a commercial agreement.

The Applicant’s cause of action is rooted in: a. breach of contract; b. misrepresentation; and c. recovery of monies paid.

While the Applicant has pleaded fraudulent trading, such pleading appears to be ancillary to the primary claim.

The substance of the dispute remains a commercial claim for recovery of monies.

In Lee Nyan Choi v Voon Noon [1979] 2 MLJ 28, the Federal Court held that courts must identify the real nature of the dispute in determining jurisdiction.

Applying that principle, the present dispute falls squarely within the jurisdiction of the Sessions Court.

The Applicant argues that the directors should be personally liable.

Malaysian courts recognise that the corporate veil may be lifted in appropriate circumstances.

However, the lifting of the corporate veil is not exclusively a High Court function.

Courts of competent jurisdiction may determine whether the facts justify such a finding.

The mere allegation that directors should be personally liable does not automatically elevate the dispute into a specialised company law proceeding. Whether Transfer is Necessary

The Court must also consider whether the interests of justice require the transfer of the proceedings.

The Applicant has not demonstrated that the Sessions Court is incapable of adjudicating the dispute.

Nor has the Applicant shown that the case involves complex insolvency or corporate restructuring issues.

The dispute remains essentially a commercial disagreement arising from a mining agreement.

The Sessions Court is well equipped to determine such disputes.

In the absence of compelling reasons, the Court should not interfere with the ordinary jurisdiction of the subordinate courts.

Having carefully considered the matter, this Court finds that: a. the Applicant’s claim is fundamentally a contractual claim for the recovery of RM300,000; b. the amount claimed falls within the jurisdiction of the Sessions Court; c. allegations of fraudulent trading do not automatically deprive the Sessions Court of jurisdiction; and d. the Applicant has failed to demonstrate sufficient grounds for the transfer of the proceedings.

The invocation of section 540 of the Companies Act 2016 does not, in the circumstances of this case, transform the dispute into one that must necessarily be heard by the High Court.

The Sessions Court remains competent to determine the issues raised in the proceedings.

Accordingly, the Applicant’s Originating Summons is dismissed. Dated this 28th April 2026 -sgd- ………………………………….. Datin Asmah binti Musa Pesuruhjaya Kehakiman Mahkamah Tinggi Malaya Mahkamah Tinggi Shah Alam Counsel for Plaintiff : Mr. Mohammad Badrul Amen bin Saman Messrs. G K Soh & Partners Counsel for Defendant : Mr. Chan Chee Yeen Messrs. Shu Yin, Teh & Taing