Kesenta Development Sdn Bhd v Gula Perak Berhad (28-81-2011)

Essentially, Kesenta Development Sdn Bhd (Kesenta) is seeking for the removal of Liquidators. The application is made pursuant to Sections 232(1), 227(6), 231, 236(2), 266 of the Companies Act 1965 (“the Act”) and Companies (Winding –Up) Rules 1972 and/or the inherent jurisdiction of the court.

Before this Court proceeds to determine the merits of Kesenta’s application, for easy understanding of the matter at hand, it would be appropriate at this juncture for this Court to briefly set out the background facts of the present case leading to the filing of this Application by Kesenta.

Kesenta claims to hold 1,758,750 shares of the Respondent (Gula Perak Berhad). The Respondent was incorporated on 1.10.1968 as a public limited company by shares under the Companies Act 1965 (the Act).

The Respondent had obtained financial assistance from Syndicated Term Loan Lenders. The Syndicated Term Loan Lenders are namely; Aseambankers Malaysia, RHB Bank Berhad (“RHB”), Ambank (M) Berhad) (“Ambank”), DBS Bank LTD Cawangan Labuan (“DBS”), Alliance Merchant Bank Berhad 4 (“Alliance”), Malaysian Industrial Development Finance Berhad (“MIDF”), Sounthern Bank Berhad, Affin Bank Berhad (“Affin”) and Malayan Banking Berhad (“Maybank”){ lenders}.

The Respondent had also issued a Redeemable Convertible Secured Notes (“RCSN”) of 5 years with a nominal aggregate of RM288,820,655.00 under a Trust Deed dated 11.12.2002 (“Trust Deed”) between the Respondent, Universal Trustee (Malaysia) Berhad (“UTB”) and Signet Share Registration Services Sdn Bhd.

The RCSN was then subscribed by the lenders and offered to the public upon listing of the RCSN on BURSA Malaysia. As trustee, UTB was also appointed to act as trustee in the interest of all the RCSN holders.

As security for payment of the RCSN, the Respondent had executed several charges over following lands in favour of the Trustee, namely; i. Land held under Title Grant 37855 (formerly CT 15561), Lot 81 and Geran 37856 (formerly CT 15562), Lot 82 Seksyen 85, both at City of Kuala Lumpur, District of Kuala Lumpur, 5 State of Wilayah Persekutuan Kuala Lumpur (“Setapak Land”)(- Charge Presentation No. 24170/2002 dated 24.12.2002) ii. Dynawell Corporation (M) Sdn Bhd (“Dynawell”) which is a wholly owned subsidiary of the Respondent vide a Charge dated 11.2.2002 had charged its property held under title H.S.(D) 115977, P.T. 199 (formerly GRN 26826, GRN 26532, GRN 26533 and GRN 26534 (No. Lot 85, 86, 87 and 88 respectively) all situated at Seksyen 48, Mukim and District Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur which include among others the Dynasty Hotel Jalan Ipoh (“Dynasty Hotel Land”) iii. KSB Requirement & Rest Sdn Bhd (“KSB”) which is a 70% subsidiary of the Respondent vide a Charge dated 11.12.2002 had charged its property held under PN 32135, Lot 13909 (formerly H.S. (D) 2519, PT 6134 Mukim Dengkil), Bandar Baru Salak Tinggi, District of Sepang, Selangor Darul Ehsan (“Empress Hotel Land”). 6

The Respondent was not able to service its syndicated term loan facility and thus has defaulted payments. This default has led to all the lenders initiating legal proceedings against the Respondent to recover the outstanding loans. A civil suit (Kuala Lumpur High Court Suit No: D5-22-1648-2005) was thereafter filed by the lenders against the Respondent and its guarantor, one Lim Sue Beng.

After a full trial, a judgment dated 29.10.2010 (“the said judgment”) was granted in favour of the lenders. Against the said judgment, the Respondent filed its notice of appeal to the Court of Appeal. The Court of Appeal dismissed the Respondent’s appeal on 29.3.2011. On 28.6.2011, the Federal Court dismissed the Respondent’s application for leave to appeal to the Federal Court.

As at 24.2.2011, under the said judgment the Respondent is still owing the lenders an outstanding sum of RM28,170,931.83.

On 15.3.2011, a company by the name of Infra Purnama Sdn Bhd (“Infra”) had presented a winding-up petition under section 218 of the Companies Act 1965 against the Respondent on the 7 Respondent’s inability to pay Infra a debt amounting to RM4,004,459.70.

A copy of the winding-up petition and the affidavit verifying petition was forwarded by Infra’s solicitors to RHB’s solicitors (Messrs. Soo Thien Ming & Nashrah) by Infra’s letter dated 29.4.2011. Messrs. Soo Thien Ming & Nashrah on behalf of RHB thereafter filed a notice of intention to appear on the petition to support the winding-up petition.

However, Infra’s petition was subsequently struck out by the Court when Infra applied to withdraw its petition on the ground that the Respondent had paid Infra’s outstanding debt.

RHB being a judgment creditor of the Respondent was however desirous to proceed with the winding up petition. RHB thereafter had applied to set aside the order striking out the winding up petition. RHB was successful in its application and by a Court order dated 7.6.2011 RHB was substituted as the petitioner in the winding-up petition against the Respondent. 8

Alliance, Affin, DBS, Ambank, Maybank and CIMB Bank Berhad are Supporting Creditors to the winding-up petition.

On 1.3.2013, RHB’s winding up petition to wind up the Respondent was granted by the Court. Pursuant to the winding up order, Ooi Woon Chee and Ong Hock An were appointed as Liquidators to manage the affairs of the Respondent. Ong Hock An is now replaced by Mohamed Raslan Abdul Rahman.

Sometime in late 2013, UTB commenced foreclosure proceedings to obtain an order for sale of the Setapak Land. The other director of the Respondent, Tan Sri Elyas bin Omar (“TSE”) who is also a contributory of the Company has sought sanction from the liquidators to challenge the foreclosure proceedings in the name of the Company.

TSE’s basis to seek sanction from the Liquidators to challenge the foreclosure action was on the premise that there is a good prima facie defence to that action as certain investors sourced by Dato’ Rahim bin Baba (DRB) had purchased Notes from various financial institutions 9 and who claimed to hold a simple majority in value of the Notes do not wish the foreclosure proceedings to be proceeded with.

The Liquidators however refused to grant TSE the sanction. After the Liquidators refused sanction, TSE and three other investors (Pavilion Yields Sdn. Bhd, Greenpower Value Sdn. Bhd & Tan Sri Dato’ Lim Cheng Pow) had filed applications to the foreclosure court to intervene the proceedings as contributories of the Company to raise the proposed challenge that the investors do not wish UTB to proceed with the foreclosure proceedings.

On 4.3.2014, the High Court in the foreclosure proceedings dismissed TSE and the investors’ applications on the ground that the contributories did not have the locus to intervene in the proceedings.

This Court takes cognizance that before this Court, TSE had also filed an application to intervene this proceeding but did not proceed with his application as in August 10 2014, TSE withdrew his application. Upon TSE’s application to withdraw the application, this Court had accordingly struck out TSE’s application to intervene this proceeding with no order as to costs.

In managing the affairs and assets of the Respondent, Kesenta has also alleged that the Liquidators have failed to conduct the following duties: i. to call for creditors/contributories meeting ii. to lodge statement of affairs (“SOA”) with the Companies Commission Malaysia; iii. to take into possession all books, documents and records of the Respondent; and iv. realise the assets of the Respondent.

Based on the above facts and allegations, Kesenta contends that the Liquidators had failed to maintain 11 impartiality and independence, to comply with statutory provisions, to recover and/or take into possession all books, documents and records of the Respondent and to carry out their duties in the best interest of the Respondent, and thus, the Liquidators are therefore not fit to continue to carry out their duties and ought to be removed.

Kesenta’s application is supported by an affidavit dated 18.2.2014 affirmed by Datuk Rahim bin Baba (“DRB”) who is the director of Kesenta. As mentioned earlier DRB is also the other director of the Respondent.

Kesenta’s application was vigorously opposed by the Liquidators and all the supporting creditors.

At the outset, the Liquidators had submitted that Kesenta is only a mere contributory or shareholder of the Respondent and not a creditor of the Respondent, and therefore Kesenta has no locus standi in making this application to remove the Liquidators. 12

It was contended on behalf of the Liquidators that upon the Respondent being wound up and in the state of liquidation, the Respondent is undeniably an insolvent company. According to the learned counsel for the Liquidators, at this juncture, the real stakeholders of the Respondent are the creditors and not the contributory/ies alike Kesenta. Thus, the Liquidators owe no duty to Kesenta. More so, in the present case, all assets of the Respondents, except a shop lot in Kelana Jaya), are charged in favour of UTB as trustee for the RCSN holders. It was further argued by the Liquidators that the shop lot’s estimated market value is only RM390,000.00

A liquidator appointed by the Court may resign or on cause shown be removed by the Court.” [32] In the case of Ng Yok Gee & Nor v CTI Leather Sdn Bhd ( Metro Brillant Sdn Bhd & Ors, intervener) [2006] 7 MLJ 28, Ramly Ali J (as he then was) had in his judgment clearly stated the principles of law with regards to removal of liquidator(s). At paragraphs [48], [49] and [50] of his judgment, he has said this: “[48] The principles of law is that a liquidator may be removed if it is in the interest of all those who are interested in the company being liquidated. [49] However, in the present case, the applicant has not shown that all the contributories and creditors support his application. [50] For convenience, the court, set out below the relevant legal principles applicable to an application to remove a liquidator:

A liquidator appointed by the court can only be removed by the court ‘on cause shown’- s 232 of Companies Act 1965. 17

The court does not have an unfettered discretion as ‘cause must be shown’. The position is not the same as it is when a liquidator is first appointed and the court may choose between two or more competing candidates.

The normal ground for removal is that the liquidator has a personal unfitness, had failed to act impartially or is in a position where his duty and interest are in conflict. See:

In re Sir John Moore Gold Mining (1879) 12 Ch Div 325, p 331;

(ii) Advance Housing v Newcastle Classic Developments

12 ACLC 701; and

(iii)

Commonwealth of Australia v O’Reilly (1984) 52 ALR ” [33] This Court also finds valuable guidance from Ramly J’s decision in the case of Abric Project Management & Anor v Palmshine Plaza Sdn Bhd & Anor [2007] 5 MLJ 685, wherein a contributory and a former director (Ong Say Lam) of the first respondent Company (Palmshine Plaza Sdn Bhd) had also filed an application under section 232 (1) of the Act to remove the liquidator (Lim Tian Huat) from his office and to appoint the official liquidator. In addressing this application, Ramly J has held the following: 18 “A liquidator may be removed if it can be shown that the removal would be advantageous to those interested in the assets of the company. Here however, there were no more assets left in the liquidation and therefore none could be imperilled by the continuance in office by the liquidator. Accordingly, fair play to the liquidator ought to be regarded and the liquidator be allowed to finalise the tail end of the liquidation (see para 50). “ [34] Ramly J in Abric Project Management had also re-emphasised the Court’s power to remove liquidators under section 232(1) of the Act in paragraph 14 of his judgment: “The jurisdiction of the court to remove a liquidator under s 232 of the Companies Act 1965 for ‘due cause shown’ is not to be exercised in the same way as if the power had been for the court to remove the liquidator ‘if the court shall think fit’. Some unfitness in the liquidator must be shown in order to justify his removal and the removing of him is not a matter of pure judicial discretion. That being the case the liquidator has a right to say that he is not to be removed unless due cause is shown, see in Re Sir John Moore Gold Mining Co.” [35] In relation to the Court’s power in appointing and removing the liquidators from office, the Singapore court in the case of Chua Boon Chin v JM McCormack & Ors [1979] 2 MLJ 156 has held : 19 “If the court is satisfied on the evidence before it that it is against the interest of the liquidation (all those interested in the company being liquidated), that a particular person should be made liquidator, then the court has power to remove the present liquidator and then to appoint some other person in his place.” [36] The learned author Professor Walter Woon has remarked in his book Walter Woon on Company Law Revised Third Edition (Sweet & Maxwell, Thomson Reuters) at paragraph 17.143: “A liquidator, whether appointed by the court or in a voluntary winding up, may be removed by the court on cause shown.442 Cause may be shown when there is some unfitness of the person of his personal character, or from his connection with other parties, or from the circumstances in which he is mixed up.443 Thus, for instance, if liquidator refuses to take action against miscreant directors because he is one of them444 or because they are his friends,445 impartial because of his connection with person against whom there might be pending claims, there would be cause to have him removed.446 Where it appears that the liquidator is in a position where his duty and interest conflict, the court may remove him.447” 20 [37] What is clear here is that Section 232(1) of the Act has conferred upon this Court a statutory power regarding applications to set aside any liquidator(s) who has been appointed by the Court. Therefore, when this Court is requested by any applicants to invoke this statutory power, the Applicant must demonstrate or show that the Applicant is indeed an interested party(ies) qualified to make such application be it the creditor, contributory, shareholder et cetera in which, in proving such qualification, the Applicant must prove that he has a legitimate interest in the relief sought. It is vivid that at least in the Malaysian and Singaporean chapters that, applications for removal of liquidators are open to “all those who are interested in the company” or “all those interested in the company being liquidated”. By no means at all it was limited to any classes or persons interested in the company or liquidation. [38] This Court is also of the view that the wordings of section 232(1) of the Act, section 232(1) itself did not limit or prescribe the category of persons who could seek a court order removing a liquidator. The utmost consideration the Court must consider is; whether in the interest of the liquidation, the Applicant is able to show cause that the Liquidators ought to be removed from his office. Therefore, the 21 issue of locus standi raised by the Liquidator is actually a non-issue. The question remained to be considered by this Court is, whether Kesenta is able to show any cause(s) to compel this Court to order the removal of the Liquidators. C. THE APPLICANT HAS FAILED TO SHOW ANY CAUSE TO JUSTIFY THE REMOVAL OF LIQUIDATORS Alleged Failure to maintain impartiality and independence [39] It is not in dispute that Kesenta’s main grievance against the Liquidators is the Liquidators’ refusal to grant sanction to TSE to challenge the foreclosure proceedings in the name of the Respondent. [40] The question now would be, is the Liquidators’ Refusal to give consent to TSE to oppose foreclosure proceedings commenced by UTB in respect of charged Setapak land justified? 22 [41] It is settled law that for a liquidator to decide whether or not to sanction proceedings by a creditor or director in the name of the company, one of the factors which the liquidator must consider and satisfy himself is that the action is not vexatious or merely oppressive. ( See: Aliprandi v Griffith Vintners Pty Ltd (in liq) and Another 6 ACSR 250 at 252 - the Privy Council in Lloyd-Owen at 276 - “ A judge in winding up is the custodian of the interests of every class affected by the liquidation. It is his duty… to see to it that all assets of the company are brought into the winding up. In authorising proceedings, especially if they may or will involve some drain upon the assets, he must satisfy himself as to their probable success; where… they involve no possible charge on assets, he will nevertheless be careful to see that any action taken in the company’s name under his authority is not vexatious or merely oppressive.” (See also Carpenter v Pioneer Park Pty Ltd 65 ACSR 564 at p. 571-57) [42] The learned counsel for the liquidators contended that before the liquidators have decided against granting sanction to TSE to oppose the foreclosure proceedings by UTB, the liquidators have duly performed their duties as outlined and prescribed by the law. The Liquidators contended that they have duly considered and evaluated 23 whether or not the action under the name of the Respondent is either vexations or merely oppressive. [43] This Court agrees with the contention by the learned counsel for the Liquidators that based on the documentary evidences exhibited by the Liquidators vide affidavits filed to oppose Kesenta’s application, it is sufficiently telling that the Liquidators have appropriately and lawfully denied sanction to TSE. This is because TSE has clearly failed to satisfy and conform to the requirements to justify a granting of sanction, in that, TSE has ultimately failed to prove any good defence to oppose the foreclosure proceedings. [44] The Liquidators’ refusal to grant TSE, essentially, was made on the legal advice given by Messrs Skrine & Co who is the solicitors appointed by the Liquidators. TSE in applying for sanction had attempted to raise an issue that the Respondent has good defence to oppose the foreclosure proceeding commenced by UTB. This supposed good defence is that, some investors of the Respondent who have purchased notes from numerous 24 financial institutions, claiming simple majority (from the aspect of holdings of notes) are not in favour and are not desirous of UTB proceeding with the said foreclosure proceedings. Nonetheless, Skrine has given their views on the law under the said Trust Deed, that in order to compel UTB to cease the foreclosure proceedings, an ordinary resolution is far from sufficient. Further according to Skrine, based on the said Trust Deed, UTB can be compelled to cease the foreclosure proceedings only vide a special resolution. A decision by a simple majority as claimed by TSE is far from anything that may compel TSE from ceasing the foreclosure proceedings which has already been commenced. [45] With regards to the defence raised by TSE, the Liquidators from the very outset had requested TSE to show to the Liquidators that there is a prima facie defence against the foreclosure proceedings. In furtherance to the Liquidators’ request, the Liquidators had written to TSE seeking from him inter alia a detailed opinion on the merits of the proposed defence from a legal firm of good reputation (which is not conflicted) and 25 had suggested the names of various firms of good repute. TSE then had responded to say that all those firms suggested by the Liquidators were in fact conflicted. TSE had informed the Liquidators that he intends to seek legal opinion from Messrs Brendan Siva to which the Liquidators agreed. The Liquidators had also asked the TSE’s appointed solicitors to address the Liquidators on the following points:

Under the Trust Deed, only those RSCN Holders whose names appear in the Register of Depositors are entitled to be recognised. The appointed solicitors is required to prove the names of the new investors referred to by TSE and the grounds they are entitled to be recognised as RCSN Holders. If these so called new investors are entitled to be recognised under the Trust Deed and who claimed that they hold a simple majority in terms of the value of notes holding, the next question to be addressed by the appointed solicitors is; whether a simple majority of the Note Holders can compel the Trustee to withdraw the foreclosure proceedings. 26

to show or to prove to the Liquidators by way documentary evidence in particular the Trust Deed; whether there is any provision under the Trust Deed allowing a simple majority of the Note Holders to give such instructions to the Trustee Consequent to this request, the Liquidators never received any response from TSE or his appointed solicitors. Only at the very last minute that TSE’s appointed solicitors, Chiang Chambers (not Messrs Brendan Siva) has furnished their latent response vide their letter dated 15.4.2014 which was exactly a meagre one day before the trial date for the foreclosure action. This letter dated 15.4.2014 has only provided a very brief opinion without any legal opinion or views on all the queries raised by the Liquidators’ solicitors to TSE’s appointed solicitors. On the same day, the Liquidators have informed Chiang Chambers the grounds in which the Liquidators have denied sanction to TSE. Chiang Chambers has not responded to this. 27 [46] Based on the above chronology, this Court is of the considered view that there are no reasons at all for this Court to disagree with the Liquidators’ decision to deny granting of sanction to TSE to oppose UTB’s foreclosure proceedings. [47] Here, TSE or his appointed solicitors have not at all given any response to the queries raised to them by the Liquidators. The Liquidators have received legal advice that the said Trust Deed requires a special resolution to compel UTB to cease its foreclosure proceedings. TSE or his appointed solicitors have failed and refused to even respond to this issue. TSE has not shown or substantiated their assertion that a simple majority of supposed new investors is enough to compel UTB to cease their foreclosure proceedings. TSE’s contention is utterly baseless without any legal merits. [48] As rightly done, the Liquidators have requested TSE to obtain detailed opinion from his appointed solicitors on the queries raised. TSE’s and TSE’s appointed solicitor’s failure to give their detailed opinion when requested is 28 verily telling that, it is more probable than not that the defence purported by TSE is not supported by any legal basis. [49] It is vividly clear here that TSE has utterly failed to demonstrate that there was a prima facie defence or valid against the foreclosure proceedings merely because a simple majority of the new investors are opposing to the foreclosure proceedings and do not wish UTB( Trustee) to proceed with the sale of the Setapak Land vide public auction. [50] In these foregoing circumstances, the granting of sanction to TSE to oppose the foreclosure proceedings without any prima facie defence, would only unduly delay this proceedings and would tantamount to an abuse of process of this Court. [51] It is this Court’s finding that the refusal of the Liquidators to grant sanction to TSE was indeed a just and appropriate decision squarely within the confines of the law and the Liquidators cannot be deemed to have 29 conducted themselves unfairly, with bias or inappropriately. Alleged Failure to call for creditors/contributories meeting [52] A company by the name Town Hang Securities Co Ltd (“Town Hang”), another contributory of the Respondent has made a request to the Liquidators to hold creditors’/contributories’ meetings. The Liquidators did not accede to this request primarily on the ground that the financial position of the Respondent would not permit such meeting to be held. [53] In the present case, Town Hang itself is the debtor to the Respondent. Previously, Town Hang had failed in its bid to apply for a restraining order under section 176 of the Act on behalf of the Company. Town Hang’s application was dismissed by the Court and Town Hang was ordered to pay the Liquidators RM20,000.00 as costs. Despite numerous requests and reminders from the Liquidators, 30 Town Hang has yet to pay the Liquidators the sum of RM20,000.00. [54] With regards to convening a contributories’ meeting, reference must be made to section 287 of the Act. Section 287 of the Act provides as follows:- “Unless expressly directed to do so by the Official Receiver, a liquidator shall not be liable to incur any expense in relation to the winding up of a company unless there are sufficient available assets. The Official Receiver may on the application of a creditor or a contributory direct a liquidator to incur a particular expense on condition that the creditor or contributory indemnifies the liquidator in respect of the recovery of the amount expended and if the Official Receiver so directs gives such security to secure the amount of the indemnity as the Official Receiver thinks reasonable.”(Emphasis added) 31 [55] Section 287 of the Act clearly stipulates that a liquidator shall not be liable to incur any expense in relation to the winding up of a company unless there are sufficient available assets. The question then would be; is the Respondent’s financial standings be able to cover the expenses to hold such creditors/contributories meeting? [56] According to the Liquidators, even until now they have yet to receive the Respondent’s Company Share Register from the Registrar Company, Tricor Investor Services Sdn Bhd (“Tricor”). The Respondent still owes as much as RM40,000.00 to Tricor. The undisputable fact is that the Respondent is a public listed company which definitely has more than a thousand shareholders. With the insolvent state of the Respondent as well as the overdue debts to Tricor, it is clear that the Respondent is in a state of financial ruin whereby the total cash in hand is extremely limited. In fact, the only asset owned by the Respondent which is not charged is the shop lot in Kelana Jaya which still has yet been able to be disposed of. And even the market value of this shop lot is nowhere near the massive magnitude of the Respondent’s total 32 debts. In order to conduct a creditors/contributories meeting, the Liquidators must first obtain the Company Share Register from Tricor and for Tricor to release this Share Register, the Respondent must first pay up the debt to Tricor. As a Public Listed company, the holding of this meeting would definitely incur a massive expense. This Court agrees with the Liquidators that instead of obtaining the Share Register vide paying the debts to Tricor just for the sake of holding this meeting it is instead more beneficial to use the already limited monies for more beneficial matters. This is especially considering that it is obvious that none of the contributories or shareholders would be paid anything considering there is absolutely nothing left for the Respondent’s contributories and shareholders. The liquidation and disposal of all of the Respondent’s assets can hardly even satisfy all of the Respondent’s debts. The meeting requested by Town Hang would be reduced to a complete waste, devoid of any meaningful pursuit. [57] It must be noted Town Hang still owes the Respondent RM20,000.00. This Court agrees with the Liquidators that 33 in making such requests, if Town Hang is bona fide in its action, Town Hang should pay the RM20,000.00 to improve the Respondent’s financial state. However, Town Hang has yet to pay despite numerous demands and reminders. [58] Kesenta attempted to question the weak financial state of the Respondent by raising an issue regarding the Liquidators’ Application on behalf of the Respondent in Seremban High Court to remove a Provisional Liquidator, Dynawell (Respondent’s subsidiary company). With regards to this bare allegation, this Court agrees with the learned counsel of the Liquidators that this assertion cannot be taken into account as evidence as Kesenta itself has no personal knowledge of anything regarding the real facts behind the Application at the Seremban High Court. In fact, Kesenta has not adduced any proof or evidence whatsoever in support of this bare assertion. [59] Hence, it is this Court’s judgment that it is appropriate and legally justified that the Liquidators would decide not to hold the creditors/contributories meeting on the ground 34 that the Respondent lacks the necessary funds to hold such meeting as well as the meeting is wasteful devoid of any meaningful pursuit. The Liquidators cannot be deemed to have failed to abide by the law. This is obviously not any valid ground to remove the Liquidators. Alleged failure to lodge statement of affairs (“SOA”) with the Companies Commission Malaysia [60] Kesenta had fallibly attempted to place the responsibility of submitting the Respondent’s Statement of Affairs (“SOA”) with the Companies Commission Malaysia (“CCM”) on the Liquidators. However, it is clear that by law, the responsibility to submit the company’s SOA rests on the Respondent’s directors when the Respondent was wound up on 1.3.2013. This is clearly prescribed under Section 234 of the Act: “234. Statement of company’s affairs to be submitted to Official Receiver. 35

There shall be made out and verified in the prescribed form and manner and submitted to the Official Receiver or the liquidator, as the case requires, a statement as to the affairs of the company as at the date of the winding up order showing –

the particulars of its assets, debts and liabilities;

the names and addresses of its creditors;

the securities held by them respectively;

the dates when the securities were respectively given; and

such further information as is prescribed or as the Official Receiver or the liquidator requires.

The statement shall be submitted by one or more of the persons who are at the date of the winding up orders directors, and by the secretary of the company, or by such of the persons hereinafter mentioned as the Official Receiver or the liquidator, subject to the direction of the Court, requires, that is to say, persons –

who are or have been officers of the company;

who have been part in the formation of the company, it any time within one year before the date of the winding up order; or 36

who are or have been within that period officers of or in the employment of a corporation which is, or within that period was, an officer of the company to which the statement relates.” [61] Pursuant to Section 234 of the Act, it is the duty of the directors of the Company to submit the SOA to the liquidators showing the assets and liabilities of the Company as at the date of the winding up order which in this case was 1.3.2013. [62] In the present case, at the relevant time, the 2 directors of the Respondent were DRB and TSE. Both DRB and TSE had never submitted to the liquidators any SOA as at the winding up date. [63] As a matter of fact, the Liquidators upon the Respondent being wound up had requested the directors to submit to them the SOA of the Respondent. However, the directors had only submitted the SOA dated 11.5.2011 which was the SOA that they have prepared at the time when the Respondent proposed to go into creditors’ voluntary 37 liquidation (which was the SOA BEFORE the Respondent was wound up). This SOA dated 11.5.2011 is not the proper SOA in compliance with Section 234 of the Act. [64] Pursuant to section 234 of the Act, the Respondent’s directors, namely TSE and DRB are duty bound to submit the SOA to the liquidators. And this Court fully agrees with the Liquidators that since DRB was one of the directors of the Respondent, DRB is directly responsible for the fact that no proper SOA was submitted to the liquidators in compliance with section 234 of the Act. Here, DRB would have no basis to complain that the Liquidators did not submit the SOA to the CCM. Alleged failure to take into possession all books, documents and records of the Company [65] Kesenta has alleged that the liquidators have failed to take into possession all the books documents and records presumably of the Respondent. 38 [66] In the present case, in one of the Liquidators’ affidavit, Mr Ooi Woon Chee has averred that he has attempted to gain control and possession of all the books and records of the Respondent since he was appointed as one of the provisional liquidators (“PL”) of the Respondent on 29.6.2011 and his representatives had met with DRB on one occasion. But, the Liquidators were not able to meet with TSE as DRB informed the Liquidators that TSE was not well. The only person who had knowledge of the affairs of the Company was Madam Lim Bee Khim, who was the company secretary. [67] DRB even though he was one of the director of the Respondent, appears as though that he does not know much about the affairs of the Company and he himself did not assist in getting possession of the books and records of the Company for the Provisional Liquidators or the Liquidators. [68] This Court has scrutinised the correspondences exhibited by the Liquidators in exhibit “A-5”, Enclosure 3. Exhibit A-5 are copies of the correspondences between the 39 Liquidators and the directors/ Lim Bee Khim in relation to the affairs of the Company which shows that it was DRB and his co-director TSE who did not give possession of the complete books and records to the PL and the liquidators. The Correspondences show that requests for books and records of the Respondent has duly been sent to the company directors and secretary since the time the same Liquidators were appointed as

Liquidators through letters dated 1.7.2011, followed by letters dated 7.7.2011,

7.2011,

20.7.2011 and 21.7.2011. In fact, on 16.4.2013, the Liquidators have written to the Respondent’s directors and secretary that the Respondent even till the year 2013 has still failed to submit the company’s proper and complete books and records. For ease of reference the letter dated 16.4.2013 is reproduced: 40 41 42 [69] It is this Court’s finding that from the documentary evidences produced before it, the failure to take possession of books, documents and records of the Respondent was not due to any lack of effort on the part of the Liquidators but due to the refusal and lackadaisical conducts of the directors who were not keen to forward all the book and records of the Respondent to the Liquidators. [70] In this present application, DRB being one of the Respondent’s director is duty bound to ensure that all the books and records are forwarded to the liquidators or the liquidators would be able take possession of all the books and records. [71] Now, DRB, being Kesenta’s director and also the Respondent’s director, has attempted to put the blame on the Liquidators when in real respect, it is his own fault as the Respondent’s director that the Respondent has yet to furnish the complete set of books and records of the Company to the Liquidators. Instead the fault of the 43 failure is attributable to the directors of the Respondent, being DRB and TSE themselves. The Liquidators cannot be faulted on this matter. Thus, the lame ground raised by Kesenta is clearly baseless and devoid of any merits. Alleged failure to realise the assets of the Company [72] Kesenta has alleged that the Liquidators had failed to realise the assets of the Respondent expeditiously and economical namely; to complete the sales of Setapak Land, the Dynasty Land and the Empress Hotel. [73] It is a clear fact that in respect of Setapak Land, the Dynasty Land and the Empress Hotel Land (“assets”), the Respondent had executed the charges over these assets in favour of UTB as security for the payment of the RCSN. [74] It was Kesenta’s averment that according to Exhibits “KDB-4” and “KDB-5” exhibited by DRB in his supporting affidavit, the Liquidators have allegedly failed to realise the sale of the said assets mentioned in these exhibits. These exhibits are the Respondent’s KLSE announcement regarding sale of the said 44 assets. For ease of reference the relevant portions of the announcement are reproduced below; Setapak Land “The Board of Directors of GPB wishes to announce that that GPB has entered into Sales & Purchase Agreements (“SPAs”) on 25 June 2010 with Perth International Limited (Co. no. 1433569), a company incorporated in Hong Kong (“the Purchaser”) for the disposal of:

the development land forming Parent Lot 24 and of Parent Lot 458 both within Mukim of Batang Berjuntai, District of Kuala Selangor, Selangor Darul Ehsan measuring approximately 97.58 hectares (“the Said BB Property”) for total cash consideration of RM19,000,000,00.

(ii) the development land forming Lots 81 and 82 and Lots 1140 and 3767 within Mukim of Setapak, District of Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur measuring approximately 118,451 square feet (“the Said Property”) for a total cash consideration of RM6,100,000.00” Dynasty land: “GULA PERAK BERHAD (“GPB” or the “Company”) wishes to announce that Dynawell Corporation (M) Sdn Bhd (“Dynawell”), a wholly owned subsidiary of GPB has entered into a Sale & Purchase Agreement (“SPA”) on 28 June 45 2010 with Time Glory Investment Limited (Co no 146373), a company incorporated in Hong Kong (“the Purchaser”), for the disposal of: ● The Dynasty Hotel, Kuala Lumpur, Located at Jalan Ipoh, Erected on Lot Nos 85-88, Held Under Title Nos. Geran 26826, 26532 – 26534 (Formerly CT Nos 15199 – 15202) Respectively, All in Section 48, Town and District of Kuala Lumpur, State of Wilayah Persekutuan, Kuala Lumpur (“the Said Dynasty Hotel”) for a total cash consideration of RM151,000,000,00;” 46 [75] This Court fully agrees with the Liquidators that the allegations raised by Kesenta on this matter are totally unwarranted. DRB being one of the directors of the Respondent surely must be fully aware of the details of the announcement made by the Respondent. It is obvious from the said announcements that the Respondent is not even the vendors of Dynasty and Empress Hotels and thus the hotels are not the property or assets of the Respondent. The Liquidators are appointed as Liquidators of the Respondent to manage the Respondent’s affairs and assets. Considering that both of the hotels are obviously not the assets of the Respondent, the Liquidators are not in any position to complete the sale. The allegations by Kesenta against the Liquidators are totally baseless and out of line. [76] With respect of the sale of the Setapak Property, Skrine, the solicitors for the Liquidators themselves cannot ascertain the status of the Sale and Purchase Agreement of the land. Skrine had then by a letter dated 8.4.2013 (Exhibit “A-6”) had written to the former solicitors of the Respondent Faizah Lim & Associates to enquire the 47 same. But Faizah, Lim & Associate has never responded to the letter and enquiry. Having no information on such sale, this Court opines that it is impossible for the Liquidators to take any steps with regard to the sale of the Setapak land. [77] This Court is also in agreement with the Liquidators' contention that it would have been impossible for the Liquidators to complete the sale of the Setapak Property to Perth International at RM6.1 million considering the overwhelming fact that UTB had set the redemption sum for the said property in the massive region of RM327 million which was the amount owing to UTB. [78] The only unencumbered asset owned by the Respondent is the shop lot in Kelana Jaya. In respect of this shop lot, the Liquidators are in the process of disposing the shop lot which only has an estimated value of RM390,000.00. D. COURT’S DIRECTIONS [79] Based on the above aforementioned reasons and deliberations before this Court, it is the judgment of this 48 Court that Kesenta’s application is devoid of any merit or basis and Kesenta has miserably failed to show any cause to justify why the Liquidators ought to be removed under section 232(1) of the Act. Therefore, this Court hereby orders that the application be dismissed with costs. On the issue of costs [80] This Court hereby orders that Kesenta to pay the Liquidators RM7000.00 in costs and RHB (the petitioner) costs of RM5000.00. Kesenta is also ordered to pay a global sum of RM5000.00 in costs to all the supporting creditors. ...................................................... (DATUK AZIMAH BINTI OMAR) Judicial Commissioner High Court Shah Alam Selangor Darul Ehsan Dated the 8th July, 2015 49 For the Applicant - Messrs S. Ravenesan Mr. Ravenesan Sivanesan For the Liquidators - Messrs Skrine & Co. Mrs Wong Chee Lin For the Supporting Creditors i.Alliance Investment Bank Berhad - Messrs Soo Thien Meng & Nashrah Mrs Lua Ai Siew ii.Malayan Banking Berhad, Affin Bank - Messrs Shook Lin & Bok Berhad, DBS Bank Limited, Mrs Ng Hooi Huang CIMB Bank Berhad