Dhanaraj Sivasampu and S Malar for the Applicant Liquidator in PW 114 and Respondent in PW 54 v Saw Wei Siang and Michelle Teoh for the Applicant in PW 56 and Respondent in PW 114 (POST WINDING-UP APPLICATION NO. WA-28PW-114-04/2021)

and/or (d), Order 92 Rules 4 and Order 94 Rule 2 of the Rules of Court 2012 And In the matter of Post Winding-Up No: WA-28PW-56-03/2021 And In the matter of Dirga Niaga (Selangor) Sdn Bhd (In Liquidation), as Applicant RE: DIRGA NIAGA (SELANGOR) (IN LIQUIDATION) (Company No. 032925-U) Heard together with IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION) POST WINDING-UP APPLICATION NO. WA-28PW-56-02/2021 2 In the matter of Section 482 and 510 of the Companies Act, 2016 And In the matter of Lim Ah Chai, as Applicant RE: DIRGA NIAGA (SELANGOR) (IN LIQUIDATION) (Company No. 032925-U) GROUNDS OF JUDGMENT (Enclosure 1) Motions before the Court

In the Notice of Motion dated 20.4.2021 at enclosure 1 of Post Winding Up Application No. WA-28PW-114-04/2021 (PW 114), the Liquidator Dirga Niaga (Selangor) Sdn Bhd (Company), Augustine T.K James (Liquidator) had applied to this court for an order that the Notice of Motion dated 19.2.2021 in Post Companies (Winding Up) No. WA-28PW-56-02/2021 (Removal Application] and the Affidavit In Support affirmed by Lim Ah Chai (Lim) on 19.2/2021 be struck off on the ground that the cause of action is unreasonable, frivolous and vexatious in nature.

PW 114 is grounded on the following:

Lim is not a creditor of the Company and has no locus standi to file the Removal Application in PW 56 3

(ii) Lim had not sought leave of this Court before filing the Removal Application

(iii) In view of the same, the Removal Application is a non starter and is unreasonable, frivolous and vexatious in nature

In Post Winding Up Application No. WA-28PW-56-02/2021 (PW 56), Lim had applied in the Notice of Motion dated 19.2.2021 pursuant to section 482 of the Companies Act 2016 for inter alia an order that the Liquidator be removed as the liquidator of the Company and that Mok Chew Yin and Ong Hock An be forthwith appointed as the joint liquidators of the Company.

The grounds in support of PW 56 are briefly as follows: a) the Liquidator had acted in breach of the Court Order which appointed Lim as the liquidator and he did not set out a Committee of Inspection as directed by the Court b) the Liquidator committed a breach of trust by failing to account for the company’s money received pursuant to the sale and purchase agreement(s) c) the Liquidator misrepresented the state of affairs of the Company in the Liquidator’s accounts under section 514 of the Companies Act 2016 d) the Liquidator failed to act professionally, expediently and diligently to resolve the liquidation of the Company in a just, expeditious and economical manner e) the Liquidator made unauthorized payments out of the Company’s funds to himself and/or benefited from the said payments 4 f) in 2 cases involving the Liquidator, he was found by the Court of Appeal of being negligent and his credibility was doubted by the Courts and at one occasion, he was removed as the liquidator for a company known as Return 2 Green Sdn Bhd for his unfitness to act impartially and to act expediently for an honest administration of liquidation

As the issues in both PW 114 and PW 56 were related to one another, the parties had agreed for the said matters to be heard together

After hearing the respective counsels submitting before this Court on 5.8.2021 the Court had made an order in respect of PW 114 and dismissed PW 56. The Applicant in PW 56 being dissatisfied with this Court’s decision has now appealed against my said decisions and herewith are my written grounds.

Lim had submitted inter alia that:

no leave was required for Lim to intervene in the winding up proceedings

(ii) he is a creditor

(iii) he has personal knowledge of the issues raised in PW 54 Courts Findings 5

In light of the prayers in the respective Notice of Motions, this Court had to firstly consider and decide the application in PW 114 before moving on to hear PW 56.

Consequently, I have considered whether Lim has to firstly apply for leave to intervene in the Winding Up Proceedings as contended by the Liquidator.

Section 471 of the Companies Act states that

When a winding up order has been made or an interim liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and in accordance with such terms as the Court imposes.

On this, although there are a plethora of cases on this point, I will only refer to the Court of Appeal case of Chi Liung Holdings Sdn Bhd v Ng Pyak Yeow [1995] 3 MLJ 204, which although was decided on the previous Companies Act 1965, is in my view still applicable where the Court held: “we struck off this appeal as we agreed with the learned judge that the motion, as such, in the first place, required the leave of the court before it could be brought but not for the reason found by the judge. Firstly, we read the powers of liquidator in s 236(3) of the Companies Act 1965 ('the Act'): 6 The exercise by the liquidator of the powers conferred by this section shall be 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. We are of the view from the above provision, it is clear that a liquidator having been appointed by the court, is an officer of the court. It goes without saying leave of the court is needed before an action is commenced against him and officers like him.”

As regards Lim’s position as a creditor, I had found that Lim had not exhibited any evidence of his Proof Of Debt (POD) to show that he is a creditor of the Company. Based on the documents before me, all Lim has referred to when challenged on this point was to exhibit an affidavit by one Noormazlinah Bt Abdul Talib, an officer at the Jabatan Insolvensi Malaysia, Cawangan Wilayah Persekutuan at exhibit LAC-18 in enclosure 7 of PW 54 which showed that Lim had attended a meeting of creditors on 12.6.2008, as well as a letter dated 3.5.2008 from the solicitors for the Liquidator, Messrs Hakem Arabi & Associates stating that the purchasers of units will be creditors of the Company as seen in exhibit LAC-5 of enclosure 2 in PW 56. These documents referred to by Lim are not evidence that Lim is a creditor of the Company and is at most evidence, if at all, that Lim had attended the meeting of creditors on 12.6.2008. If Lim was indeed a creditor, I see no reason for him not to have exhibited his POD for the same as proof and I hold that such a burden lies on him to prove the same and not the Liquidator to disprove the contention. 7

Since the Removal Application is based on section 482 of the Companies Act 2016, it is clear that only creditors or contributories of the Company are entitled in law to make such a removal Application. Authority for this can be found in the Federal Court case of Tee Siew Kai v Machang Indah Development Sdn Bhd (In Liquidation) [2020] 4 CLJ 481 where Her Ladyship Nallini Pathmanathan FCJ in delivering the judgment of the Court held: “[69] In our view, any allegation of selling at an undervalue, even if true, is available only to a creditor or contributory. The liquidator owed no duty of care to Machang in this context. Machang has no basis to so allege because it is not a creditor of Merger.”

The Liquidator’s counsel had quoted McPherson on the Law of Company liquidation, 4th Edition which reads: Review of acts or decisions, Section 1321(d) confers on the court a jurisdiction to reverse or modify any act or decision of the liquidator and to make such order as it thinks fit. At the footnote 691-an application under S 1321 is the proper way for a creditor or a contributory to challenge a decision of a liquidator: Burnells Pty Ltd v Walsh; Re Burnells Pty Ltd (1979) Qd R 440. To challenge an act or decision of a liquidator, one should normally take out an originating summons under this section rather than seek leave under S471B to institute separate proceedings against the liquidator: Re Grant (1982) 6 ACLR 727; affd on appeal; 8 The power will not be exercised to affect rights acquired by outsiders in consequence of an act or decision of the liquidator and it ordinarily does not extend to interfere with matters of day to day administration or with the exercise in good faith of the liquidator’s discretionary powers, since this would make it virtually impossible to carry out the winding up.

This Court agrees and adopts the passage above and finds that in the circumstances before me, Lim is a stranger who has no locus to apply for the Removal Application as he has no interest in the liquidation of the Company.

Further authority for this can be found in Section 475 of the Companies Act 2016 which reads: “An order for winding up a company shall operate in favour of all the creditors and contributories of the company as if made on the joint petition of a creditor and of a contributory.”

From section 475 of the Companies Act 2016, it is thus expressly provided that the winding up order shall only operate in favour of the creditors and contributories of the Company, of which Lim is neither.

After having considered the respective counsel’s submissions and in light of my above findings, this Court had allowed and granted Order In Terms for enclosure 1 in PW 114 for an order that the Notice of Motion dated 19.2.2021 in Post Companies (Winding Up) No. WA-28PW-56-02/2021 and the Affidavit In Support affirmed by Lim Ah Chai (Lim) on 19.2/2021 be struck off. Accordingly, I had 9 dismissed Post Companies (Winding Up) No. WA-28PW-56- 02/2021 with costs of RM15,000. Dated: 6th day of October 2021 sgd. NADZARIN BIN WOK NORDIN JUDICIAL COMMISSIONER KUALA LUMPUR HIGH COURT Parties: Dhanaraj Sivasampu and S Malar for the Applicant Liquidator in PW 114 and Respondent in PW 54 [Messrs Hakem Arabi & Associates] Saw Wei Siang and Michelle Teoh for the Applicant in PW 56 and Respondent in PW 114 [Messrs Nethi & Saw]