Kanesin A/l S.v. S. Sappaniapply v 1. ) VYTHILINGAM A/L SAPPANI (BA-22NCC-81-10/2018)

VYTHILINGAM A/L SAPPANI (No. K/P: 560715-10-6163)

PERUMAL SUNDERAN A/L BYTHILINGAM (No. K/P: 870802-14-5877)

PONNAMAL ESTATE SDN BHD (No. Syarikat: 1153174-K) … DEFENDAN

The Plaintiff’s claim arises from a Bridging Investment Contract dated 8.12.2015 which he entered into, involving the 1st Defendant, the 3rd Defendant and the representatives of the Estate of Ponnamal A/P Ramasamy Pillai. The instant suit is brought primarily to enforce the performance of certain terms of said contract. In the alternative, the Plaintiff seeks damages in lieu of specific performance. Factual background

The Plaintiff’s suit is better understood in the context of the history of litigation which had preceded this suit.

3.

Six months later, Nadarajah passed away, leading to a long and chequered history of legal proceedings between Madam Ponnamal and the administrators of the Estate of Nadarajah which began in 1984 and was only concluded 2015, spanning three decades.

In the midst of the proceedings, Madam Ponnamal also passed away on 25.11.1988. She left behind a will. This event spawned its own legal battles. The Plaintiff’s wife, Madam Vijayaletchumi a/p Mookapillai and her brother, Balasubramaniyam a/l Mookapillai were appointed representatives of the Estate of Madam Ponnamal being the named executors and trustees of the will of Madam Ponnamal. Their appointment led to various challenges by their siblings to oust them from representing the Estate of Ponnamal and their attempt to be reinstated from suits filed in the courts in various states.

The legal dispute on the sale and purchase of Kamatchy Estate came to an end when on 24.11.2015, the Federal Court ordered the Estate of Madam Ponnamal to pay the balance sum of RM 2,370,135.00 within 14 days, to Messrs. Shook Lin & Bok as solicitors for the Estate of Nadarajah. This was the balance purchase price for the Kamatchy Estate which had been agreed upon by Madam Ponnamal and the Estate of Nadarajah pursuant to a consent order dated 31.10.1985 recorded in the High Court in Ipoh.

As it was imperative that the sum of RM 2,370,135.00 be paid within the stipulated time, the money had to be sourced urgently. In view of the substantial sum, the representatives of the Estate of Ponnamal approached the Plaintiff and the 1st Defendant for financial assistance.

Both agreed to contribute towards the balance purchase price to comply with the order of the Federal Court. The monies were to be provided by way of their respective investments in the Kamatchy Estate. Their combined investment was RM 2,250,000.00, out of which RM 850,000 was provided by the Plaintiff and RM 1,400,000.00, by the 1st Defendant. The balance sum of RM 120,135.00 was provided by one Ragu Ram a/l R. Nadarajan (“Ragu Ram”) to make up the requisite sum to be paid to Messrs. Shook Lin & Bok.

To provide for the obligations of the parties following their financial contribution towards the purchase price of the Kamatchy Estate, on 8.12.2015, the Plaintiff, the 1st Defendant, the 3rd Defendant and the representatives of the estate of Ponnamal entered into an agreement termed as Bridging Investment Contract (“BIC”).

The balance purchase price for the Kamatchy Estate was paid to Messrs. Shook Lin & Bok between 2.12.2015 and 4.12.2015. Ragu Ram had since been repaid the amount of RM 120,135.00 which he advanced.

As this suit emanates from the alleged breach of the terms of BIC which the Plaintiff is now seeking to enforce, the provisions contained therein are material. The material portions of the agreement is produced below:- Bridging Investment Contract to complete the Sale and Purchase Agreement dated 18th February 1982 between Madam Ponnamal A/P Ramasamy (deceased) and vendor, Mr. Nadarajah A/L Sithambaram (deceased) and Consent Order dated 31 October 1985. This agreement is made this 8th December, 2015 between:- a. Estate of Ponnamal A/P Ramasamy Pillai, represented by its personal representatives, Vijayalatchumi A/P Mookapillai (IC no. 551229-05-5394) and/or Bala Subramaniam A/L Mookapilai (IC No. 580228-05-5141). Since Bala Subramaniam A/L Mookapillai is a bankrupt and does not have sanctions, only Vijayalatchumi A/P Mookapillai is allowed to represent the Estate of Ponnamal A/P Ramasamy Pillai. b. Investors consist of Vythilingam A/L Sappani, (IC No. 560715-10- 6163) and Kanesin A/L S.V.S Sappaniapply (IC No. 471229-08-5825). a. Ponnamal Estate Sdn Bhd, represented by its director, Ragu Ram

Vythilingam A/L Sappani, (IC No. 560715-10-6163) and Kanesin A/L Sappaniapply (IC No. 471229-08-5825) (will be referred to as “Investors”) will invest RM2,250,000 (“investment”) in Estate of Ponnamal A/L Ramasamy Pillai (referred to as “the Estate of Ponnamal”) to help Estate of Ponnamal pay the balance purchase price to the estate of Nadaraja as per Federal Court Consequential Reliefs Order dated 24 November 2015. Breakdown of the investment is as per below. Vythilingam A/L Sappani (560715-10-6163) - RM1,400,000 Kanesin A/L S.V.S Sappaniapply (471229-08-5825)

The estate of Ponnamal through their solicitors, The Law Offices of Bernard Francis & Associates and their personal representatives Vijayalatchumi A/P Mookapillai (IC No. 551229-05-5394) or Bala Subramaniam A/L Mookapillai (IC No. 580228-05-5141) have to give an undertaking to YS Wong & Associates so that titles and MOT’s relating to Kamatchy Estate are passed to YS Wong & Associates before the investors invest. …….

Ponnamal Estate Sdn Bhd will be the only nominee of Estate of Ponnamal until the investments are repaid with their guaranteed appreciations/profits.

Investors to have temporary ownership and/or control of Ponnamal Estate Sdn Bhd until the investment is repaid.

6.1 Investors to hold 5 out of 6 shares in the interim period.

6.2 Investors, Kanesin and Vythillingam to be appointed as directors of Ponnamal Estate Sdn Bhd.

6.3 One director to be appointed by Estate of Ponnamal through their personal representative, Vijayalatchumi A/P Mookapillai and Bala Subramaniam A/L Mookapillai with consent from both the investors.

Total financial control of the Ponnamal Estate Sdn Bhd. Only investors will be able to sign the cheques of Ponnamal Estate Sdn Bhd until investment is repaid.

The investor and the estate of Ponnamal through their personal representatives, Vijayalatchumi A/P Mookapillai and Bala Subramaniam A/L Mookapillai has joint management rights to the estate but all proceeds from sales have to go into Ponnamal Estate Sdn Bhd...

For the first 3 months, all profit from operational will got to the Estate of Ponnamal through their personal representatives, Vijayalatchumi A/P Mookapillai and Bala Subramaniam A/L Mookapillai….

20% guaranteed appreciation on investment in the first three (3) months.

30% guaranteed appreciation on investment in the first six (6) months.

From month four to six (4-6), a minimum of RM10,000 or any higher amount determined at the discretion of the investors will be set aside for capital servicing to the investors.

After six (6) months, 3% guaranteed appreciation per month. There will also be another meeting after the 6 months period by the investors and/or the personal representatives and/or the executor and/or the Letters of Administration holder of the estate and/or any party that can bind the estate, for directions on how the investors are to be repaid.

14.1 The investors also have the right to call upon the collateral after twelve (12) months of the investment not being fully paid with the guaranteed appreciation….

Collateral for investment is Kamatchy Estate, any monies from damages claim with the estate of Nadarajah in Ipoh and sales proceeds of Fresh Fruit Bunches from Kamatchy Estate.

Investors must be paid first before any distribution is made by the Estate of Ponnamal.

The following appended their signature before Wong Yip Shaun, an advocate and solicitor:-

Vythilingam A/L Sappani;

(ii) Kanesin A/L S.V.S Sappaniapply;

(iii) Vijayalatchumi A/P Mookapillai; and

(iv) Ragu Ram A/L Nadarajan.

I observe the BIC to be wanting in many aspects. It transpired at the trial that the parties were not formally represented for the purposes of the BIC and it was not drafted by any lawyer. Apart from the language employed, there is much ambiguity in the obligations of the parties it purported to provide for.

At the trial, the Plaintiff stated that his investment sum of RM 850,000 was comprised of RM 150,000 advanced by his daughter who owns Poliklinik & Surgeri Meru Jaya and the balance of RM 300,000 was contributed by his wife.

Notwithstanding the ambiguity alluded to earlier, the terms of the BIC that are now the focus in this trial are these. The BIC stipulated inter alia, that the Plaintiff and the 1st Defendant were to be the investors, and that they were to have temporary ownership and control over Ponnamal Estate Sdn Bhd (3rd Defendant) until their investment is repaid. Both of them were also to be appointed as directors of the 3rd Defendant. All the profits of the first 3 months from Kamatchy Estate were to be paid into the accounts of the 3rd Defendant to repay the investors. The 1st and 2nd Defendant were to be repaid first before any distribution is made by the Estate of Ponnamal. The Plaintiff’s case

The Plaintiff alleges that the terms of the BIC have been breached based on the following facts.

Sometime in December 2015, after the balance purchase price for Kamatchy Estate had been paid, the 1st Defendant, the 2nd Defendant (1st Defendant’s son) together with Ragu Ram A/L Nadarajan (“Ragu Ram”), the director of the 3rd Defendant from its inception, managed the operations of Kamatchy Estate. The 2nd Defendant handled the finance aspect, leaving the operations of the estate to Ragu Ram and his brother. This was the state of affairs until November 2016.

Subsequently a severe fallout between Ragu Ram and the 2nd Defendant caused Ragu Ram to leave Kamatchy Estate in December 2016. The control of the estate was not without acts of violence and several police reports were lodged as a consequence. The resulting conflict was most unfortunate as both Ragu Ram and the 2nd Defendant are cousins.

Thereafter, from December 2016, the Plaintiff and the personal representatives of the estate of Ponnamal were excluded entirely from the management of the estate. The 1st and 2nd Defendant assumed control and management of Kamatchy Estate.

From the time the estate was managed by the 1st and 2nd Defendants, all proceeds from the sales of fruits in Kamatchy Estate have not been directed and/or channelled into accounts of the 3rd Defendant as envisaged under the BIC. The monies were not applied in accordance with the terms of the contract. Instead, the proceeds had been diverted to the personal accounts of the 1st and 2nd Defendants. The Plaintiff contend that the proceeds of sales from the estate that was banked into the Maybank joint account belonging to both Defendants were subsequently transferred out to their respective personal accounts. Between 2017 to 2018, the sum of RM 647,089.87 was transferred to the 2nd Defendant’s personal account, and the sum of RM 225,134.00 was transferred to the 1st Defendant’s personal account.

In addition to these amounts, Ragu Ram (PW4) testified that when he was managing the estate together with the 2nd Defendant, he transferred an amount of RM 705,343.05 to the personal account of the 2nd Defendant from his Maybank account. The proceeds from the sale of the oil palm fruits from Kamatchy Estate was banked into this Maybank account.

Thus, from December 2015 until November 2018, a total sum of RM 1,352,432.92 had been transferred to the 2nd Defendant’s personal account.

Further, in breach of the terms of the BIC, the 1st and 2nd Defendants failed to pay the profits for the first 3 months to the personal representatives of the Estate of Ponnamal for them to repay the Plaintiff his investment, as well as the guaranteed appreciation pursuant to the terms of the BIC. The Plaintiff subsequently discovered that the 1st Defendant had repaid himself his investment of RM 1,400,000 together with interest. The repayment was assisted by the 2nd Defendant.

The Plaintiff through his solicitors, caused to be issued 2 letters of demand to the 1st Defendant to furnish accounts for the sale of the proceeds from Kamatchy Estate. There was no response to the letters from the 1st Defendant.

In further breach of the BIC, the 1st Defendant also caused to be allotted 1 share in the 3rd Defendant to the 2nd Defendant without the knowledge and consent of the Plaintiff. This was done notwithstanding the fact that at all material times, the 2nd Defendant was not an investor under the BIC.

Sometime in June 2018, the Plaintiff discovered that the 2nd Defendant and one Gunasaiklaran a/l Malayalam had been appointed as the company secretaries of the 3rd Defendant without the knowledge of the Plaintiff, as a director of the 3rd Defendant. There was no board of directors’ resolution passed for this purpose.

On 8.10.2018, the Plaintiff discovered that he had been wrongly removed as a director of 3rd Defendant. The removal was pursuant to an Extraordinary General Meeting held on 4.7.2018. He claimed that no notice of shareholders meeting was given to him as a shareholder notifying him of the proposed resolution for his removal as a director. The meeting was orchestrated specifically for his removal. As he was not notified, he did not attend the meeting.

Premised on the above stated facts, and the evidence adduced at the trial, the Plaintiff claims that he is entitled to repayment of the sum of RM 850,000 together with the guaranteed appreciation under the BIC which is to be paid from the sale proceeds of Kamatchy Estate. He is also entitled to the information pertaining to the sale proceeds which had been diverted to the personal accounts of the 1st and 2nd Defendants. Consequent thereto, he seeks the following primary reliefs:-

a declaration that the 1st and 2nd Defendants held the monies that they appropriated the sale of the palm oil fruits from the Kamatchy Estate from December 2015 until November 2018 on trust for the Plaintiff and the representatives of the estate of Ponnamal;

(ii) the 1st and 2nd Defendants be held accountable and liable for an accounts of all the monies that they had appropriated and diverted from the sale of the palm oil fruits from Kamatchy Estate to their personal accounts from December 2015 until November 2018;

(iii) a declaration to invalidate the appointment of Perumal and Gunasaiklaran as the company secretaries of Ponnamal Estate Sdn Bhd; and

(iv) a declaration to set aside the removal of the Plaintiff as a director of Ponnamal Estate Sdn Bhd.

In addition, the Plaintiff also sought for damages for the sum of RM 1,077,375 against the 1st Defendant. This amount was calculated based on his investment sum of RM 850,000 and the guaranteed appreciation on the investments as provided for in the BIC. The Defence case

In response to the Plaintiff’s claim, the Defendants contend that the BIC is unenforceable as:-

there were material pre-conditions that have not been satisfied by Vijayalatchumi A/P Mookapillai, who was the personal representative of the Estate of Ponnamal. In addition, she did not have the capacity to enter into the said contract as the personal representative to the Estate of Ponnamal as her application for Probate was subsequently dismissed by the KL High Court on 9.3.2010;

(ii) Ragu Ram was not authorised to sign on behalf of the 3rd Defendant as there was never any resolution authorising him to do so; and

(iii) no consideration was given for the BIC by the Plaintiff to the Defendant.

In response to the alleged unlawful appointment of Perumal and Gunasaiklaran as the company secretaries of the 3rd Defendant and the removal of the Plaintiff as a director of the 3rd Defendant, both were validly effected pursuant to the resolutions passed.

Apart from contending the BIC is unenforceable, the Defendants also contend that the obligation to repay the Plaintiff’s investment monies lies with the Estate of Ponnamal. Similarly, the right to request for an order of accounts lies with the estate.

In view of above contention, the Defendants seek for a declaration that the BIC is illegal, null and void and unenforceable. The Defendants also pray for an order that the investment of both the Plaintiff and the 1st Defendant be recovered from the Estate of Ponnamal when the Probate/Letters of Administration is lawfully obtained.

As stated earlier, the representation to the Estate of Ponnamal had lead to a series of litigation amongst the children of Madam Ponnamal. The hostility amongst the siblings was apparent from the litigation which resulted from their attempts to be appointed as legal representatives to the estate. At the time this suit was filed, the application for probate had not been settled. It was eventually settled when a consent was order recorded before the Taiping High Court on 21.9.2021. Analysis and decision of this court

It is trite law that the Plaintiff bears the onus of proving his claims and the Defendants, their counterclaim. (See: sections 101 and 102 of the Evidence Act, 1950 and Letchumanan Chettiar Alagapan (as executor to SL Alamelooo Achi (Deceased) & Anor v Secure Plantation Sdn. Bhd.) [2017] 5 CLJ 418).

The evidence taking at the trial involved a total of 8 days in all. A large part of the evidence adduced was to substantiate and refute the allegations of control of Kamatchy estate and funds diversion by the 1st and 2nd Defendants.

I shall now deal with the respective contention of the parties. Breach of fiduciary duty of the 1st and 2nd Defendants

From his evidence adduced at the trial, it appears that the Plaintiff’s main grouse was his investment monies have not been repaid. The 1st and 2nd Defendants having had control of the management of Kamatchy Estate from December 2015 to November 2018, channelled the proceeds of the sale of the estate into their personal accounts instead. Meanwhile, the investment of the 1st Defendant had been repaid.

The Plaintiff claims that the actions of the 1st and 2nd Defendants, was tantamount to a breach of their fiduciary duty.

At this juncture, I note that the Plaintiff’s Statement of Claim however, made no mention of a cause of action founded on breach of fiduciary duty. It is trite law that parties are bound by their pleadings and the court cannot allowed to be argued an issue not raised in the pleadings. (See: Samuel Naik Siang Ting v Public Bank Bhd [2015] 6 MLJ 1, Federal Court). In view of the failure to plead, I do not consider this court to be obliged to make any determination on whether there was a breach of fiduciary duty.

Nonetheless, I am of the view that even if breach of fiduciary can be considered, I did not find the circumstances of this case to give rise to any fiduciary duty owed to the Plaintiff by the 1st and 2nd Defendants. My reasons are as follows.

The BIC provided for the proceeds to be channelled into the accounts of the 3rd Defendant. Pursuant to the BIC, the 3rd Defendant was the sole nominee of the Estate of Ponnamal. The investment monies were advanced to enable the Estate of Ponnamal to purchase the Kamatchy Estate pursuant to the Federal Court order of 24.11.2015. It was also stipulated that the investment monies were to be repaid from the proceeds of Kamatchy Estate.

Kamatchy Estate belonged to the Estate of Ponnamal. Therefore the obligation to repay the investment monies rested on the representatives of the Estate of Ponnamal. Apart from the Plaintiff and the 1st Defendant, the Estate of Ponnamal was also a party to the BIC. At the material time, the representative to the said estate was one Vijayalatchumi a/p Mookapillai, the wife of the Plaintiff. As the obligation to repay fell on the estate, I am of the view that if at all a fiduciary duty exists to ensure that the proceeds are properly accounted for, it was owed to 3rd Defendant as the nominee of the Estate of Ponnamal. The duty was not owed to the Plaintiff.

I had also considered the salient terms of the BIC. Clause 6 allowed the Plaintiff to have control of the 3rd Defendant which retains the profits from Kamatchy Estate. The Plaintiff was also a director of Ponnamal Estate Sdn Bhd. from the inception of the BIC until his removal in April 2018. Clause 18 states that the collateral for the Plaintiff’s investment is Kamatchy Estate, which is owned by the Estate of Ponnamal and which Ponnamal Estate Sdn Bhd. is its nominee for the purpose of the execution of the BIC. All these clauses taken cumulatively showed that the Plaintiff had sufficient control of 3rd Defendant, to ensure that the 1st and 2nd Defendant who were managing Kamatchy Estate channel the proceeds of the harvest to its accounts. This would negate any fiduciary duty owed by the 1st and 2nd Defendant to him.

In so deciding, I am guided by the judgment of the Federal Court case of Solid Investments Ltd v Alcatel-Lucent (M) Sdn Bhd (previously known as Alcatel Network Systems (M) Sdn Bhd) [2014] 3 MLJ 785 on whether a contractual relationship can give rise to a fiduciary relationship. It held, [47] In the instant case the business relationship between the plaintiff and the defendant did not fall under the accepted traditional categories of fiduciary relationship. Even if we were to apply the flexible approach to the circumstances of the case we are of the view that such fiduciary relationship did not exist in the case. This is because commercial transactions often do not give rise to fiduciary duties because they do not meet the criteria for characterization as fiduciary in nature (see John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (Matter No S309/2009] [2010] HCA 19 High Court of Australia). We also find it useful to refer to the judgment of the High Court of Australia in Hospital Products Limited v United States Surgical Corporation & Ors at p 69 where Gibbs CJ said: On the other hand, the fact that the arrangement between the parties was of a purely commercial kind and that they had dealt at arm's length and on an equal footing has consistently been regarded by this Court as important, if not decisive, in indicating that no fiduciary duty arose: see Jones v Bouffier (1911) 12 CLR 79; Dowsett v Reid (1912) 15 CLR 695; Para Wirra Gold & Bismuth Mining Syndicate NL v Mather [1934] 51 CLR 582; Keith Henry & Co Ptv Ltd v Stuart Walker & Co Ptv Ltd (1958) 100 CLR 342. A similar view was taken in Canada in Jirna Ltd v Mister Donut of Canada Ltd (1971) 22 DLR (3d) 639. [48] The circumstances of the relationship in the instant case could not, in our view, give rise to a relationship of trust and confidence. It was not appropriate to expect a commercial party to subordinate its own interests to another commercial party as they had dealt with each other at arm's length and on equal footing.

Contractually, the obligation to repay the Plaintiff’s investment is that of the Estate of Ponnamal. Bearing in mind the decision of the Federal Court that although the categories of fiduciary relationships are not closed, on the facts of this case, I am not prepared to impose a fiduciary relationship between the Plaintiff and the 1st and 2nd Defendants. In the absence of any fiduciary relationship, no question of breach arises.

Ipso facto, the consequential order that the 1st and 2nd Defendants do give an account of the monies received from the proceeds of sales is that to be sought by the 3rd Defendant/Estate of Ponnamal, not the Plaintiff.

The concern of the Plaintiff his investment is refunded to him is evident from the tenor of his Statement of Claim, and his allegations that the actions of the 1st and 2nd Defendants appear to jeopardise the refund. His concerns have now been taken care of by the disposal of the Taiping High Court suit filed vide Suit No:.AB- 22NCVC-13-10/2018 (“Taiping Suit”). The disposal of the suit has a bearing on the present suit.

The Taiping Suit was filed as a contentious probate proceeding, in which the plaintiffs were 3 of Madam Ponnamal’s children who sought to be appointed legal representatives to the Estate of Ponnamal. Vijayalatchumi A/P Mookapillai was cited as one of the defendants.

On 21.9.2021, a Consent Order was entered into by the parties containing numerous terms. It was agreed that the plaintiffs in the Taiping Suit were to be appointed administrators of the Estate of Ponnamal together with another sibling of theirs. Of particular relevance to these proceedings is the order for Kamatchy Estate to be sold by public tender and/or auction or private sale. Upon the sale of the estate, the proceeds shall first be utilised towards all necessary and incidental expenses.

The Consent Order then reads,

From the proceeds of the sale, the following deductions shall be made:- …..

19.5 The monies advanced by the persons named in Annexure D for the purchase of the Kamatchy Estate and paid to the Vendor (the Estate of Nadaraja), through Messrs Shook Lin & Bok vide letter dated 7.12.2015 shall be refunded to the persons named together with simple interest at 6% per annum from the date the monies were advanced. The persons who were to be refunded as listed in Annexure D were the Plaintiff, his daughter and his wife wherein the amount advanced by them were stated as RM 850,000.

With these terms, the Plaintiff’s claim in the present suit for damages comprising of his investment including the guaranteed return on investment is now academic. His concerns as to refund of his monies have been addressed. Appointment of Perumal and Gunasaiklaran as the company secretaries of Ponnamal Estate Sdn Bhd

Both Perumal and Gunasaiklaran were appointed as company secretaries of the 3rd Defendant pursuant to a directors’ resolution dated 8.9.2017. The material portion of the resolution stated as follows, APPOINTMENT OF SECRETARY That Mr Perumal Sunderan A/L Vythilingam and Mr Gunasaiklaran A/L Malayalam having consented to act as Secretary of the Company, be and are hereby appointed Secretary of the Company with immediate effect.

The signatories to the resolution were Ragu Ram and the 1st Defendant. They signed as directors of the 3rd Defendant. The Plaintiff did not sign the resolution, although the resolution was sent by post for his signature to be appended thereto. The newly appointed company secretaries were duly informed of the matter by a letter dated 8.9.2017 signed by both Ragu Ram and the 1st Defendant. The resolution and the letters of appointment were adduced in evidence.

The Plaintiff called Ragu Ram to testify. In his testimony he denied signing the resolution and the letters of appointment. He alleged that his signature was forged. To substantiate his story, he referred to a police report lodged by him on 1.10.2021.

I note that the police report was lodged some 4 years after the appointment of the company secretaries. It was also lodged well after this suit was filed in 2018. In the course of the trial, it was evident that there was bad blood between Ragu Ram and the 2nd Defendant, notwithstanding that they are cousins. The hostility between them seemed to have stemmed from the 2nd Defendant having wrested control and management of Kamatchy Estate. This event led to acts of violence and numerous police reports lodged between them.

The contents of the police report lodged in 2021 on the alleged forgery of his signature on the resolution and letters of appointment were on events which happened well after it occurred. I would be circumspect to accept the truth of what is stated therein. It appeared to be self-serving. He has now taken the side of the Plaintiff in this case after the fall-out with the 2nd Defendant. I am therefore not convinced by his oral testimony that his signature was forged.

In this regard, I am mindful of the approach taken by the Federal Court in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229 where it was said, “Judicial reception of evidence requires that the oral evidence be critically tested against the whole of the other evidence and the circumstances of the case.” Where the veracity of a witness and the truth of what he asserts is in issue, the Supreme Court in Eastern and Oriental Hotel Sdn Bhd v Ellarious George Fernandez & Anor [1989] 1 MLJ 35 stated, “It is frequently very difficult to tell whether a witness is telling the truth or not, and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents to the witnesses’ motives, and to the overall probabilities can be of very great assistance to a judge in ascertaining the truth…”

Taking into account the oral evidence of Ragu Ram, and his police report some 4 years after the resolution he was said to have signed, I find that it is more likely than not that Ragu Ram signed the resolution. That being the case, as the resolution was signed by two out of three directors, it was validly passed. Consequently, the challenge to the appointment of both Perumal and Gunasaiklaran as the company secretaries of the 3rd Defendant fail. Removal of the Plaintiff as a director of the 3rd Defendant

The BIC provided for the 1st Defendant and the Plaintiff to be appointed as directors of the 3rd Defendant. However, the Plaintiff lost control of the 3rd Defendant when he was removed as the director in 2018. The removal was pursuant to a resolution passed at an Extraordinary General Meeting (“EGM”) held on 4.7.2018 in which the decision to remove him was made.

The Plaintiff denied receiving the Notice of the EGM dated 6.6.2018, which was signed by the 2nd Defendant and Gunasaikaran a/l Malayalam, as company secretaries. The Agenda of the said notice stated that the ordinary business of the meeting was to remove both Ragu Ram and the Plaintiff as directors of the 3rd Defendant.

The Plaintiff in his evidence stated that he did not receive the said notice. Section 206 of Companies Act 2016 [Act 777] provide for the removal a director by way of a special notice as follows, Removal of directors

(1) A director may be removed before the expiration of the director’s period of office as follows:

subject to the constitution, in the case of a private company, by ordinary resolution; or

in the case of a public company, in accordance with this section.

Notwithstanding anything in the constitution or any agreement between a public company and a director, the company may by ordinary resolution at a meeting remove the director before the expiration of the director’s tenure of office.

Special notice is required of a resolution to remove a director under this section or to appoint another person instead of the director at the same meeting.

Notwithstanding paragraph (1)(b), if a director of a public company was appointed to represent the interests of any particular class of shareholders or debenture holders, the resolution to remove the director shall not take effect until the director’s successor has been appointed.

A person appointed as director in place of a person removed under this section shall be treated, for the purpose of determining t the time at which he or any other director is to retire, as if he had become a director on the day on which the person in whose place he is appointed was last appointed a director.

63.

The only evidence adduced of the special notice envisaged in paragraph (3) of section 206 is the Notice of the EGM. As the Plaintiff had asserted that he did not receive the said notice, it was incumbent on the 2nd and 3rd Defendants to furnish proof that the notice was duly received.

The 2nd Defendant claimed that the notice was received by the Plaintiff. He relied on the proof of posting through the stamp of Resit Pengeposan affixed on the notice of EGM. However, this notice was addressed to the 3rd Defendant. The 2nd Defendant in his cross examination admitted that the notice was not addressed to either Plaintiff and Ragu Ram, the directors who were to be removed at the EGM. Apart from this document, there was no other evidence to establish that the Plaintiff had received the notice and was aware of it.

On 4.7.2018, the EGM proceeded to remove both of them as directors of the 3rd Defendant. The 1st Defendant and the 2nd Defendant attended the meeting. The 2nd Defendant attended in his capacity as a shareholder. Upon the removal of both the directors, the 1st Defendant became the sole director.

In the absence of proof as to due receipt of Notice of EGM, I am not satisfied that the provisions of the Companies Act, 2016 on removal of directors had been complied with.

The 2nd Defendant in his submission alleged that the removal was valid as the necessary quorum was fulfilled pursuant to the Articles of Association (“AA”) of the 3rd Defendant. However, I was not referred to the relevant provisions of the AA relied on to substantiate his contention.

The 2nd Defendant also referred to the findings of the Companies Commission of Malaysia (“SSM”) to support his contention that the Plaintiff was validly removed as a director. Subsequent to his removal, the Plaintiff complained to SSM. An investigation was carried out. The 2nd Defendant received a letter from SSM to inform that no further action will be taken on the complaint of the Plaintiff.

The fact that SSM decided not to take further action is not conclusive of the issue whether the Plaintiff was lawfully removed. His removal must be shown to be effected by observing the requisite statutory provisions.

As it is the Defendants who assert that the removal was lawful, the onus lies on them to prove it was so. (See: Juahir Sadikon v Perbadanan Kemajuan Ekonomi Negeri Johor [1996] 4 CLJ 1, (Court of Appeal), section 103 of the Evidence Act 1950). Having considered the evidence on the removal of the Plaintiff as a director of the 3rd Defendant, I am of the view that on the burden of establishing that the removal was valid, was not discharged by the Defendants. On the other hand, the Plaintiff had established on a balance of probabilities that he was unlawfully removed as a director on 4.7.2018.

The Defendants have, in their counterclaim sought for an order that the BIC is illegal, null and void and unenforceable. This position was taken in defence of the Plaintiff’s action. The Plaintiff’s claim to enforce the terms of the BIC failed for reasons stated above, but not because the BIC is unenforceable. In any event, the parties to the BIC are not only the Plaintiff and the 1st Defendant. There are two other parties to the BIC and they are not before the court. This court ought not to make orders in the absence of parties before it.

The Defendants have also sought for an order that the investment sums paid by the Plaintiff and the 1st Defendant be recovered from the Estate of Ponnamal when the legal representatives have been appointed. This prayer is now rendered academic as a result of the Consent Order in the Taiping Suit.

For the reasons stated aforementioned, I only allow two of the reliefs sought by the Plaintiff. They are as follows:-

a declaration that any resolution passed for the removal of the Plaintiff as a director of the 3rd Defendant be invalid and null and void; and

(ii) an order that any resolution passed for the removal of the Plaintiff as a director of the 3rd Defendant be set aside and the name of the Plaintiff be reinstated in the registers of the 3rd Defendant as a director.

The counterclaim of the Defendants is dismissed. I also order that costs of RM 20,000 be paid to the Plaintiff. Dated : 7th October 2022 -sgd- ………………..….... Alice Loke Yee Ching Judicial Commissioner High Court of Malaya at Shah Alam Counsel for Plaintiff : Mr. Sanjeev Kumar Rasiah (Mr. Ilyas bin Ramli with him) Tetuan Sanjeev Kumar Counsel for Defendants : Mr. George C. Proctor