Malini A/P Paramasivam v Ayanka Breezes Sdn Bhd (WA-12BNCC-26-10/2024)

UR 6 ENERGY PARTNERS SDN BHD (No. Syarikat: 1308403-U) Page 2 of 18

MALINI A/P PARAMASIVAM … DEFENDAN - (No. K/P: 731024-04-5254) DEFENDAN GROUNDS OF JUDGMENT (Enclosures 1 and 3)

These appeals arise from the decision of the Sessions Court which found the 1st Defendant, UR 6 Energy Partners Sdn Bhd (“UR 6”), liable to the Plaintiff, Ayanka Breezes Sdn Bhd (“Ayanka”), and further imposed personal liability on the 2nd Defendant, Malini a/p Paramasivam (“Malini”).

There are essentially three matters before this Court: i) a preliminary objection by way of the Notice of Application in Enclosure 3 by Ayanka, seeking to strike out the Notice of Appeal dated 26.9.2024 on the ground that it was allegedly filed and/or served out of time; ii) the appeal by Malini against the finding of personal liability imposed on her by the Sessions Court; and iii) the appeal by UR 6 against the decision of the Sessions Court for holding it liable to pay Ayanka the sums claimed. Page 3 of 18

The Sessions Court allowed Ayanka’s claim and held UR 6 liable to pay the sum claimed, together with interest and costs, and further imposed personal liability on Malini.

I allowed Malini’s appeal but dismissed UR 6’s appeal. UR 6 did not pursue any further appeal against that decision.

Accordingly, these Grounds of Judgment will focus on the matters set out in paragraphs 2(i) and (ii) above. A]

Before addressing the merits of the appeal, I deal with Ayanka’s application in Enclosure 3 to strike out the Notice of Appeal filed by Malini.

The application was premised on the contention that the Notice of Appeal was filed and served out of time and was therefore invalid.

The material facts are not in dispute. The Sessions Court delivered its decision on 12.9.2024. The Notice of Appeal was filed on 26.9.2024. The unsealed copy was served on Ayanka on the same day, whilst the sealed copy was served on 1.10.2024.

The issue is whether such non-compliance, if any, is sufficient to render the appeal incompetent. Page 4 of 18

I am not persuaded that Ayanka’s application ought to be allowed.

Order 55 of the Rules of Court 2012 requires the filing of a notice of appeal within the prescribed time and service of a duplicate copy. There is no express requirement that a sealed or endorsed copy must be served within that same period.

This position is supported by the authorities such as Redang Paradise Vacation Sdn Bhd v. Yap Chuan Bin [2017] 5 MLJ 35 and Lee Kok Kee v. Ooi Chee Wee and another appeal [2019] MLJU 1448, which adopt a practical approach to the issue of service. In Redang Paradise (supra), the Court of Appeal recognised that the sealing or endorsement of court documents is not always effected immediately upon filing, whether at the court registry or through the e-filing system, and that to insist on strict compliance in such circumstances would elevate form over substance and may result in injustice.

Further, Order 2 rule 3 of the Rules of Court 2012 makes clear that non-compliance with procedural rules does not, without more, warrant the striking out of proceedings unless it has occasioned a substantial miscarriage of justice or prejudice that cannot be compensated by costs.

In the present case, no such prejudice has been demonstrated. Ayanka was aware of the appeal and had participated in the proceedings before raising the objection. Page 5 of 18

In those circumstances, I am satisfied that the objection raised is technical in nature and does not go to the root of the appeal.

Accordingly, Ayanka’s application in Enclosure 3 is dismissed. B]

The dispute arises from a commercial transaction between Ayanka and UR 6 for the supply of goods.

At all material times, Malini was a director and shareholder of

Ayanka’s claim, as pleaded in the Statement of Claim, is for the sum of RM315,123.13, together with interest at the rate of 5% per annum from 24.08.2020 until full realisation, costs, and other relief.

Ayanka’s case is that it made payments to UR 6 pursuant to the transaction and that a balance sum of RM315,123.13 remains outstanding and due.

Ayanka also relies on the issuance of post-dated cheques in connection with the alleged repayment of that sum. Ayanka’s case is that those cheques were not honoured.

Arising from the above, Ayanka commenced proceedings against both UR 6 and Malini. Page 6 of 18

The Sessions Court found that Ayanka had proven its case on a balance of probabilities against the UR 6 and Malini.

Accordingly, the Sessions Court allowed Ayanka’s claim and held UR 6 liable to pay the sums claimed. The Sessions Court also imposed personal liability on Malini. C]

In determining whether the Sessions Court was correct in imposing personal liability on Malini, the following issues arise: i) whether there was any pleaded cause of action against Malini capable of sustaining personal liability; ii) whether there exists any legal basis to impose personal liability on Malini in her capacity as a director of UR 6; iii) whether the issuance or signing of the post-dated cheques provides a basis to impose personal liability on Malini; and iv) whether there was any pleaded and proven basis to support a finding of bad faith or personal wrongdoing on the part of Malini. Page 7 of 18 D]

The first issue is whether there was any pleaded cause of action against Malini capable of sustaining personal liability.

In determining this issue, it is necessary to examine the Ayanka’s pleadings.

Upon a consideration of the Statement of Claim, the Ayanka’s case is directed primarily against UR 6. The pleadings allege that: i) UR 6 entered into the transaction with Ayanka; ii) UR 6 received the monies from Ayanka; and iii) UR 6 failed to perform its obligations.

As against Malini, the pleadings go no further than describing her as a director and shareholder of UR 6.

Critically, no independent cause of action is pleaded against Malini. In particular, there are no material facts pleaded to establish that she: i) personally contracted with Ayanka; Page 8 of 18 ii) gave any personal guarantee or undertaking; iii) committed fraud, misrepresentation, or any other recognised tort; or iv) should be made personally liable by reason of any basis to lift or pierce the corporate veil.

It is well established that parties are bound by their pleadings, and that a court is not entitled to decide a case on a basis which has not been pleaded. In Janagi v. Ong Boon Kiat [1971] 2 MLJ 196, the Federal Court held that a court should not make a finding on a case not pleaded.

In the present case, the absence of any pleaded cause of action against Malini is fatal. The Sessions Court was therefore not entitled, in law, to impose personal liability on her.

This finding alone is sufficient to dispose of the appeal in Malini’s favour. E] WHETHER THERE IS ANY LEGAL BASIS TO IMPOSE

The next issue is whether there exists any legal basis to impose personal liability on Malini in her capacity as a director of UR 6. Page 9 of 18

It is a fundamental principle of company law that a company is a separate legal entity distinct from its shareholders and directors (Salomon v. A Salomon & Co Ltd [1897] AC 22). As such, the debts and liabilities of the company are not, without more, the personal debts of its directors.

This principle, established in Salomon v. A Salomon (supra), has been consistently applied in Malaysian law that directors are not personally liable for the obligations of the company unless exceptional circumstances are established. These exceptional circumstances include, for example: i) where a director has personally assumed liability, such as by way of a guarantee; ii) where there is a recognised tortious cause of action against the director, such as fraud or misrepresentation; or iii) where the corporate veil may be lifted on established legal principles.

In the present case, none of these circumstances arise on the pleadings or the evidence.

There is no evidence that Malini entered into any personal contract with Ayanka or gave any personal guarantee. Nor is Page 10 of 18 there any pleaded or proven basis to establish any recognised exception to the principle of separate legal personality.

The Sessions Court, in imposing liability on Malini, effectively treated her as personally liable by reason of her position as a director of UR 6. Such an approach is inconsistent with settled principles of law.

In the absence of any legal basis to depart from the principle of separate legal personality, the imposition of personal liability on Malini cannot be sustained. F]

The next issue is whether the issuance or signing of the post-dated cheques provides a legal basis to impose personal liability on Malini.

From the record, Ayanka relies on the issuance of post-dated cheques in support of its case that the balance sum of RM315,123.13 remained outstanding. The evidence shows that such cheques were issued in connection with the transaction, but were subsequently countermanded.

However, the critical question is not the existence of the cheques, but the capacity in which they were issued. Page 11 of 18

On the evidence, the cheques were issued on behalf of UR 6. There is no evidence that Malini issued the cheques in her personal capacity or that she assumed personal liability by reason of signing them.

It is trite that a director who signs a company cheque does so as an agent of the company. Such an act, without more, does not give rise to personal liability. To hold otherwise would be to extend, or stretch, established principles of company law beyond their proper limits by treating the mere act of signing as automatically attaching personal liability, without the need to satisfy any recognised legal basis for doing so. If every director who signs a company cheque were to be automatically held personally liable, it would effectively undermine the principle that a company is a separate legal entity.

In this regard, the Court of Appeal in Victor Cham & Anor v. Loh Bee Tuan [2006] 5 MLJ 359 held as follows: “[8] In C Evans & Sons Ltd v Spritebrand Ltd & Anor, Slade LJ relying on the case of Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 stated the legal position in the following words: The mere fact that a person is a director of a limited company does not by itself render him liable for torts committed by the company during the period of his directorship: see, for Page 12 of 18 example, Rainham Chemical Works Ltd (in Hq) v Belvedere Fish Guano Co Ltd [1924] 2 AC 465 at 488,....” (emphasis added)

There is no evidence that Malini made any personal representation or undertaking that she would be personally liable for the sums stated in the cheques. Nor is there any basis to conclude that the issuance of the cheques amounted to an admission of personal liability on her part.

The mere fact that the cheques were subsequently stopped does not alter the legal position. At most, it may be relevant to the liability of UR 6, but it does not, without more, justify the imposition of personal liability on Malini.

In the circumstances, the reliance placed on the post-dated cheques does not provide a valid legal basis to impose personal liability on Malini. G]

The next issue is whether there was any pleaded and proven basis to support a finding of bad faith or personal wrongdoing on the part of Malini.

It is well established that allegations of fraud, bad faith, or personal wrongdoing must be specifically pleaded with full Page 13 of 18 particulars and must be anchored to a recognised cause of action. A mere general allegation is insufficient.

In this context the Federal Court in Instantcolor System Sdn Bhd v. Inkmaker Asia Pacific Sdn [2017] 2 MLJ 697 held as follows: “In a similar vein the House of Lords in Dow Hager Lawrance v Lord Norreys and others (1890) 15 App Cas 210 (HL), when dealing with the issue of concealed fraud within s 26 of the Statute of Limitations (UK) held: In such an action general averments of fraud are not sufficient: the statement of claim must contain precise and full allegations of facts and circumstances leading to the reasonable inference that the fraud was the cause of the deprivation, and excluding other possible causes. In default of such allegations the court may, by virtue of its inherent jurisdiction, dismiss the action as an abuse of the procedure, where the claim is incapable of proof and without any solid basis. It is a cardinal rule that parties are bound by their pleadings and are not allowed to adduce facts and submissions on matters which they had not pleaded. Cases must be decided on the issues on the record; and if it is desired to raise other issues they must be placed on the record by amendment (see: State Government of Perak v Muniandy [1986] 1 ML] Page 14 of 18 490; Anuar bin Mat Amin v Abdullah bin Mohd Zain [1989] 3 MLJ 313; and Blay v Pollard and Morris [1930] 1 KB 628).” (emphasis added)

Although bad faith was pleaded against Malini, the pleading was vague and devoid of material particulars. It was not anchored to any recognised cause of action such as conspiracy, collusion, fraud, or dishonest assistance.

Standing alone, the allegation amounted to no more than a bare assertion and was incapable, as pleaded, of sustaining personal liability against Malini.

In the absence of clear pleadings, the Sessions Court was not entitled to make adverse findings of bad faith against her.

In any event, the evidence does not support any such finding. The record indicates that Malini’s involvement arose after the relevant commercial dealings had taken place, and that she acted based on company records.

There is nothing to suggest that Malini acted outside her capacity as a director or engaged in any personal wrongdoing that would justify the imposition of personal liability.

In the circumstances, there is no basis in law or fact to support any finding of bad faith or personal wrongdoing against Malini. Page 15 of 18 H]

For the reasons set out above, I am satisfied that the Sessions Court erred in law and in fact in imposing personal liability on Malini. In particular, there was no pleaded cause of action against her, no legal basis to depart from the principle of separate legal personality, and no evidence to support any finding of personal wrongdoing.

These errors demonstrate that the Sessions Court failed to properly evaluate the evidence and misapplied the applicable legal principles, thereby warranting appellate intervention (Clarke v. Edinburgh and District Tramways Co Ltd 1919 SC (HL) 35; Yuill v. Yuill [1945] P 15; [1945] 1 All ER 183; Merita Merchant Bank Singapore Ltd v. Dewan Bahasa dan Pustaka [2014] 9 CLJ 106; MMC Oil & Gas Engineering Sdn Bhd v. Tan Bock Kwee & Sons Sdn Bhd [2016] 2 MLJ 428).

In the circumstances, the imposition of personal liability on Malini cannot be sustained.

For the reasons given, Malini’s appeal is allowed. The decision of the Sessions Court insofar as it imposes personal liability on Malini is set aside.

UR 6’s appeal is dismissed. Page 16 of 18

Ayanka’s application in Enclosure 3 is dismissed. Dated this 5th day of May, 2026 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) JUDGE HIGH COURT OF MALAYA, (COMMERCIAL DIVISION) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA COUNSEL FOR THE APPELLANT / 2ND DEFENDANT : Chanravathane a/p S. Ponnudurai Messrs SP Chanra 184-A, Jalan Mahkota, Taman Maluri, 55100 Kuala Lumpur Tel: 03-9200 3546 Email: spcadvocates@gmail.com Page 17 of 18 COUNSEL FOR THE RESPONDENT / PLAINTIFF : Devinder Kaur Dhaliwal Messrs A S Dhaliwal No. 14, Lorong 5/17C, Seksyen 5, 46000 Petaling Jaya, Selangor Tel: 03-7499 0870 Email: asdhaliwalkl@gmail.com LEGISLATION / RULES CITED Rules of Court 2012 ▪ Order 2 rule 3 ▪ Order 55

Clarke v. Edinburgh and District Tramways Co Ltd 1919 SC

Instantcolor System Sdn Bhd v. Inkmaker Asia Pacific Sdn [2017] 2 MLJ 697

Janagi v. Ong Boon Kiat [1971] 2 MLJ 196

Lee Kok Kee v. Ooi Chee Wee and another appeal [2019] MLJU 1448

Merita Merchant Bank Singapore Ltd v. Dewan Bahasa dan Pustaka [2014] 9 CLJ 106

MMC Oil & Gas Engineering Sdn Bhd v. Tan Bock Kwee & Sons Sdn Bhd [2016] 2 MLJ 428 Page 18 of 18

Redang Paradise Vacation Sdn Bhd v. Yap Chuan Bin [2017] 5

Salomon v. A Salomon & Co Ltd [1897] AC 22

Victor Cham & Anor v. Loh Bee Tuan [2006] 5 MLJ 359

Yuill v. Yuill [1945] P 15; [1945] 1 All ER 183