MAYAMAS BINTI OMAR v Zumatex Engineering Sdn. Bhd. (WA-28PW-283-06/2025)

CHUNG YOO HOCK

OCEANERGY GASES SDN. BHD. [COMPANY NO.: 201101041819 (969942-A)] …PETITIONERS AND ZUMATEX ENGINEERING SDN. BHD. (IN LIQUIDATION) [COMPANY NO.: 200101010176 (545932-K)] …RESPONDENTS GROUNDS OF JUDGMENT

This is the Applicant’s Application, filed pursuant to section 486(2) of the Companies Act 2016, seeking leave of this Court to bring, continue and defend several legal proceedings in the name of and on behalf of Zumatex Engineering Sdn Bhd (in liquidation) (Zumatex).

The Applicant, Mayamas Binti Omar, is a shareholder of Zumatex. She applied for leave to pursue various legal proceedings involving Zumatex, including appeals and civil actions against the Respondents, as well as proceedings against Zumatex’s former solicitors.

Upon considering the affidavits filed, the written submissions of the parties, and the authorities cited therein, this Court allowed the Applicant’s application.

My reasons are set out below.

Zumatex and the Petitioners, namely Chung Yoo Hock and Oceanergy Gases Sdn Bhd, were involved in the appeals No. W-02(NCVC)(W)-891-05/2024 and No. W-02(NCC)(A)-787- 05/2024 at the Court of Appeal, and in the High Court suit No. WA-22NCvC-590-09/2024.

On 27.08.2019, Zumatex commenced an action against the Petitioners in the Kuala Lumpur High Court vide Civil Suit No. WA-22NCvC-619-08/2019 (Suit 619), seeking, among others, injunctive relief, declaratory relief, and damages. In response, the Petitioners filed a counterclaim against Zumatex in the same proceedings.

Following a full trial, the High Court delivered its Judgment on 06.05.2024 in Suit 619. Pursuant to that Judgment, Zumatex was ordered, among other things, to pay the Petitioners a total sum of RM8,081,725.16.

Being dissatisfied with the said Judgment, Zumatex filed a Notice of Appeal against the decision in Civil Appeal No. W- 02(NCvC)(W)-891-05/2024. The Petitioners also filed an appeal against the same Judgment in Civil Appeal No. W- 02(NCvC)(W)-954-06/2024.

Subsequently, on 30.07.2024, the Petitioners presented a winding up petition against Zumatex in the Kuala Lumpur High Court, vide Companies (Winding Up) No. WA-28NCC-706- 07/2024 (the Winding Up Petition).

On 10.09.2024, Zumatex commenced further proceedings against the Petitioners in Kuala Lumpur High Court Civil Suit No. WA-22NCvC-590-09/2024 (Suit 590), seeking, among others, to set aside part of the Judgment in Suit 619 on the ground that the said Judgment was allegedly obtained through fraud, dishonest intention, and/or the concealment of material facts (the Impeachment Proceeding).

On 15.04.2025, the High Court made a Winding Up Order against Zumatex pursuant to the Winding Up Petition.

Following the grant of the Winding Up Order, Zumatex filed an appeal against the order in the Court of Appeal, vide Civil Appeal No. W-02(NCC)(A)-787-05/2025 (the Winding Up Appeal).

Separately, Messrs Ahmeena Aziz & Partners, the former solicitors for Zumatex, commenced an action on 15.01.2024 in the Kuala Lumpur Sessions Court, vide Civil Suit No. WA-A52NCvC-40-01/2024 (Suit 40), against Zumatex, its shareholders, and its directors, claiming RM165,678.00 in legal fees.

Thereafter, on 28.02.2024, Zumatex filed an Originating Summons in the Kuala Lumpur High Court, vide Originating Summons No. WA-17D-7-02/2024 (the Taxation Proceeding), seeking an order that the solicitors’ bills of costs be taxed by the Court. The Taxation Proceeding was fixed for case management on 08.07.2025.

On 21.05.2024, the Sessions Court granted an order to stay Suit 40 pending the disposal of the Taxation Proceeding.

Following the granting of the Winding Up Order, the Applicant’s solicitors issued a letter dated 28.05.2025 to the Malaysian Department of Insolvency, seeking confirmation as to whether the Official Receiver, as the liquidator of Zumatex, intended to pursue the various legal proceedings involving Zumatex in the name and on behalf of the company.

By letter dated 06.06.2025, the Official Receiver responded and requested that an application for leave be filed before this Court if the Applicant intended to pursue the said proceedings. The Official Receiver further stated that, in the absence of such an application, the proceedings would be treated as a lack of interest in pursuing the actions, and the Official Receiver reserved the liberty to discontinue them.

The Applicant sought leave of this Court to bring, continue and defend the following proceedings in the name and on behalf of Zumatex: a. Court of Appeal Putrajaya Appeal No. W-02(NCvC)(W)- 891-05/2024; b. Court of Appeal Putrajaya Appeal No. W-02(NCC)(A)- 787-05/2025; c. to initiate a fresh proceeding as per Kuala Lumpur High Court Civil Suit No. WA-22NCvC-590-09/2024; d. Kuala Lumpur High Court Originating Summons No. WA- 17D-7-02/2024; e. Kuala Lumpur Sessions Court Civil Suit No. WA-A52NCvC-40-01/2024; (Collectively known as “Zumatex-related actions”)

This Court first considers whether the Applicant has locus standi to bring the present application under section 486(2) of the Companies Act 2016.

Section 2 of the Companies Act 2016 defines a “contributory” as a person liable to contribute to a company’s assets in the event of its winding up, which includes a shareholder of the company.

The evidence shows, and it is not disputed, that the Applicant was at all material times a shareholder of Zumatex. Accordingly, the Applicant falls within the definition of a contributory under the Companies Act 2016.

The Petitioners contended that the Applicant would not be a suitable candidate to bring actions in the name and on behalf of Zumatex, relying on findings made during the trial in Suit 619 that the Applicant had not taken an active part in the management of Zumatex. This Court has carefully considered that argument.

This Court is of the view that the question of the Applicant's 'suitability' is properly distinguished from the question of 'locus standi' under section 486(2) of the Companies Act 2016. The statutory right to apply for leave is expressly conferred on any contributory of the wound-up company. The Applicant's status as a contributory is not disputed. It would be contrary to the plain wording of the statute to deny a contributory the right to apply for leave on the basis of her level of managerial involvement in the company prior to the winding up.

Furthermore, the Applicant applies for leave in her capacity as a contributory, that is, as a holder of a beneficial interest in the company's assets upon its winding up, and not in her capacity as a director or officer of Zumatex. In the view of this Court, the degree to which a contributory was involved in the day-to-day management of the company is not a prerequisite for the exercise of the statutory right under section 486(2).

In any event, any residual concern about the Applicant's capacity or suitability to conduct the Zumatex-related actions is adequately addressed by the conditions that this Court proposes to impose upon the grant of leave, as set out further below. Those conditions, including the requirement for a personal undertaking as to costs and full accountability for any proceeds recovered, are specifically designed to ensure that the proceedings are conducted in the interests of Zumatex and its creditors, and not for any personal advantage of the Applicant.

Accordingly, this Court finds that the Applicant has the necessary locus standi to apply for leave to bring, continue, or defend proceedings on behalf of Zumatex. Application under section 486(2) of the Companies Act 2016

The present application was made pursuant to section 486(2) of the Companies Act 2016. The provision expressly provides that, where a company is wound-up by the Court, the exercise of the liquidator’s powers is subject to the control of the Court. The provision further allows any creditor or contributory to apply to the Court regarding the exercise or proposed exercise of those powers.

In essence, section 486(2) empowers this Court to grant leave, where appropriate, to enable a creditor or contributory to bring, continue, or defend legal proceedings in the name and on behalf of the wound-up company.

The applicable legal test for determining such an application is whether granting leave would be in the interests of the company. This principle was clearly explained by the High Court in Small Medium Enterprise Development Bank Malaysia Bhd v Oren Venture Sdn Bhd & Ors and another case [2022] MLJU 410 (Oren Venture).

In that case, the High Court held that the legal scheme under the Companies Act 2016 is clear. As a general rule, only the liquidator has the authority to bring, continue, or defend legal proceedings on behalf of a wound-up company. However, where the liquidator refuses to act, is unable to act, is advised not to act, or has no funds to do so, a creditor or contributory may apply to the winding up Court either to compel the liquidator to act or to obtain the Court's leave to proceed with the action on behalf of the company.

The High Court further held that, in such circumstances, the applicant must satisfy the Court that granting the leave would be in the interests of the company. The Court also recognised that, when granting the sanction, it may impose appropriate terms and conditions, including requiring security or indemnity, to protect the interests of the company.

It is also noted that the decision in Oren Venture was subsequently affirmed by the Court of Appeal. This affirms the legal position governing applications for sanction under section 486(2) of the Companies Act 2016.

Under section 486(2) of the Companies Act 2016 and the authority of Oren Venture, this Court finds that the requirements for granting leave may be summarised as follows: a. First, the application must be made by a creditor or contributory of the wound-up company; b. Second, the liquidator must have refused to act, been unable to act, been advised not to act, or had no funds to bring, continue, or defend the proceedings (this list is not exhaustive); and c. Third, and most importantly, the Court must be satisfied that granting leave would be in the interests of the company.

Therefore, the central issue before this Court is whether the Applicant has satisfied these requirements, in particular whether granting the leave sought would be in the interests of Zumatex.

This Court will now examine the facts and circumstances of the present case in light of these established legal principles. Whether continuing Zumatex-Related Actions is in the interest of Zumatex

The primary issue before this Court is whether granting the Applicant leave to continue the Zumatex-related actions would be in Zumatex's interests, as required by section 486(2) of the Companies Act 2016.

The Applicant submitted that it is in Zumatex’s interests for the Zumatex-related actions to proceed, as the outcome of those actions may directly affect the winding up of Zumatex. In particular, the Applicant contended that the winding up petition against Zumatex was premised on the decision in Suit 619, which is currently the subject of an appeal and an Impeachment Proceeding. As such, the continuation of these proceedings may affect the validity and consequences of the winding up.

In support of this position, the Applicant relied on the decision of the High Court in Tan Aik Ling v CT World Construction Sdn Bhd and another suit [2024] MLJU 2479. In that case, the High Court held that granting a sanction to pursue an appeal would be in the interests of the company where the appeal sought could reverse a judgment against the company and thereby increase the company's assets for the benefit of its creditors. The Court in that case recognised that pursuing such proceedings was consistent with the legal test set out in Oren Venture.

The Petitioners relied on Magarditch v Australia & New Zealand Banking Group Ltd [1999] 30 ACSR 265 (Magarditch), which held that the Court must consider the strength and quality of the proposed action before granting leave.

The Petitioners further argued that allowing the Applicant to proceed with the actions could expose Zumatex to further liabilities, which would not be in the interests of the company.

The Petitioners also argued that certain proceedings could be addressed through the liquidator’s statutory functions, including proof-of-debt procedures.

The Petitioners contended that Zumatex was wound up for failing to pay the petition debt of RM5,428,042.71 within 21 days of the statutory notice of demand dated 05.07.2024. As a result of this failure, the statutory presumption arose that Zumatex was unable to pay its debts, as recognised under section 466(1)(a) of the Companies Act 2016 and as explained in the decision of Klass Corp (M) Sdn Bhd v MKRS Management Sdn Bhd [2018] MLJU 329.

The Petitioners further relied on the findings in the winding up proceedings in Chung Yoo Hock & Anor v Zumatex Engineering Sdn Bhd [2025] MLJU 1408, where the High Court examined Zumatex’s financial position and found that Zumatex’s liabilities were substantial and its financial position remained dire. The High Court also found that Zumatex had failed to rebut the presumption of insolvency and was unable to pay its debts as and when they became due.

In addition, the Petitioners referred to the affidavit affirmed by Zumatex’s former director, which disclosed that Zumatex had limited funds in its bank accounts, ongoing financial commitments, and outstanding liabilities, including unpaid invoices and damages payable to Tenaga Nasional. The Petitioners argued that these facts demonstrated Zumatex’s financial difficulties.

Given these matters, the Petitioners argued that the present application would not benefit Zumatex but would instead expose Zumatex to further liabilities despite its existing financial difficulties.

Having considered the Petitioners’ argument, this Court finds that the issues relating to Zumatex’s financial position and its inability to pay its debts had already been determined in the winding up proceedings.

In the present application, the relevant consideration is whether granting leave to pursue the Zumatex-related actions would be in Zumatex's interests, as required under section 486(2) of the Companies Act 2016.

This Court is of the view that, at this stage, Zumatex’s financial condition, whether strong or weak, is not the determining factor. Rather, the Court must consider whether allowing the proceedings to continue would preserve and protect Zumatex’s legal rights and interests.

This Court also notes that the Applicant has expressly stated her willingness and ability to provide security, should this Court deem it necessary, to safeguard Zumatex’s interests.

In the circumstances, this Court finds that the Petitioners’ arguments regarding Zumatex’s financial difficulties do not preclude the grant of leave under section 486(2) of the Companies Act 2016 and do not outweigh the need to preserve Zumatex’s right to pursue and defend the pending legal proceedings.

This Court agrees with the Applicant’s contention that where legal proceedings have the potential to reverse adverse judgments or reduce liabilities, their continuation may serve the interests of the company.

Furthermore, Zumatex-related actions involve substantial monetary claims and liabilities. These include an appeal to set aside a judgment of approximately RM8,081,725.16, the Impeachment Proceeding to set aside sums amounting to approximately RM2,886,824.50, the defence of legal proceedings involving a claim of RM165,678.00, and Taxation Proceedings involving legal fees totalling RM634,246.09. The outcome of these proceedings could significantly affect Zumatex’s financial position. A favourable outcome could reduce Zumatex’s liabilities or increase its assets, thereby benefiting Zumatex and its creditors.

This Court finds merit in the Applicant’s argument that continuing these proceedings may place Zumatex in a better financial position. Conversely, preventing Zumatex from pursuing these proceedings may permanently deprive it of the opportunity to challenge or defend substantial claims affecting its financial position.

The Respondents also argued that the Applicant had not demonstrated sufficient merit in the proposed actions and had failed to provide corroborative evidence to substantiate the strength of the claims.

The Petitioners placed reliance on the decision of the Federal Court of Australia in Magarditch (supra), where it was held that a court considering an application of this nature must have regard to the quality and strength of the proposed action before granting leave. The Petitioners submitted that the Applicant had failed to substantiate the merits of the Zumatex-related actions and that, on the authority of Magarditch, the application should therefore be dismissed.

The Applicant submitted that there are merits in the Zumatex-related actions and that granting leave would be just and proper to avoid prejudice and injustice to Zumatex.

This Court takes the view that Magarditch is a decision of a foreign court and, at best, has only persuasive value. It is not binding on this Court. More importantly, the applicable legal framework in Malaysia has been clearly and authoritatively settled by the High Court in Oren Venture, as affirmed by the Court of Appeal. Under Oren Venture, the test is whether it is in the company's interests to grant leave, not whether the applicant has proven the strength or merits of the underlying case to the satisfaction of the winding up court.

This Court is of the view that it would be inappropriate, and indeed contrary to principle, for this Court to conduct a mini-trial into the merits of the Zumatex-related actions on a leave application under section 486(2). The merits of those actions are properly for the courts before which they are pending, namely the Court of Appeal and the relevant High Court divisions, to determine. At this stage, this Court’s function is limited to a gatekeeping inquiry: whether there is a sufficient prima facie case that pursuing those actions would be in the interests of Zumatex. This Court is satisfied that such a prima facie case exists, for the reasons set out in paragraphs 52 to 53 above.

The Petitioners further argued that, since the liquidator had decided not to pursue the Zumatex-related actions, it must be inferred that the liquidator had assessed the overall circumstances and concluded that it was not in Zumatex's interests to continue with those proceedings.

This Court has carefully perused the letter issued by the Official Receiver. From its contents, it is clear that, in its capacity as liquidator, the Official Receiver expressly directed the Applicant to obtain leave of the Court before the Zumatex-related actions could be pursued. The letter further stated that, in the absence of such an application, the Official Receiver would treat the matter as a lack of interest in pursuing the actions and reserved the liberty to discontinue them.

Having considered the contents of the said letter, this Court does not find that the liquidator had made any definitive assessment of the merits or overall circumstances of the Zumatex-related actions. Instead, it is evident that the liquidator had directed the Applicant to obtain the necessary leave of the Court for the proceedings to continue.

This Court also notes that the liquidator did not file any affidavit in opposition to the present application. At the hearing, the liquidator informed this Court that they did not object to the Applicant’s application and would leave the matter to this Court’s discretion.

In light of the above, this Court finds that the liquidator does not object to the present application. Rather, the liquidator has taken the position that the Applicant should apply to the Court for the necessary leave before the Zumatex-related actions may proceed.

Accordingly, this Court accepts the Applicant’s submission that, without such leave, the Official Receiver may discontinue the Zumatex-related actions.

The Applicant further argued that the consequences of refusing leave would be severe. In particular, all Zumatex-related actions may be discontinued. Zumatex would lose the right to pursue its appeal and to defend itself. As a result, Zumatex would remain burdened with debts exceeding RM8 million without the opportunity to challenge those liabilities.

The Applicant also informed this Court that a sum of RM100,000.00 had already been paid as security for costs in the Impeachment Proceeding. If the Impeachment Proceeding is discontinued for lack of leave, the deposit may be lost. On the other hand, if the Impeachment Proceeding succeeds, Zumatex may recover the deposit and potentially set aside substantial sums previously awarded.

The Applicant further contended that significant time, legal costs, and judicial resources have already been expended in the Zumatex-related actions. Refusing leave at this stage would render those efforts futile.

However, this Court notes that the Petitioners have drawn attention to the fact that Suit 590, i.e., the Impeachment Proceeding, was struck out on 17.09.2025, with liberty to file afresh. The security for costs of RM100,000.00, which had been paid by Encik Syed Nazeer Bin Abdul Kareem, was also ordered to be returned to that payer.

In light of this development, this Court notes that prayer (a)(iii) of the Amended Notice of Motion, by way of further oral amendment, was framed as an application for leave “to initiate a fresh proceeding as per Kuala Lumpur High Court Civil Suit No. WA-22NCvC-590-09/2024”. The prayer is therefore prospective in nature and is not contingent upon Suit 590 remaining on foot. The striking out of Suit 590 with liberty to file afresh, in this Court's view, does not render the prayer academic or incapable of being granted.

The underlying subject matter of Suit 590, namely, the allegation that the judgment in Suit 619 was obtained through fraud, dishonest intention, and/or the concealment of material facts, remains a live and substantive issue. Striking out Suit 590 on procedural grounds does not extinguish Zumatex’s right to pursue an equivalent fresh action. Indeed, the court’s order striking out Suit 590 expressly preserves that right by granting liberty to file afresh.

This Court is of the view that it remains in Zumatex's interests to grant leave to initiate a fresh equivalent proceeding. If the allegations underlying Suit 590 are well-founded, a successful impeachment action could result in the setting aside of a substantial portion of the judgment entered against Zumatex in Suit 619, thereby directly reducing Zumatex's liabilities and benefiting its creditors. The fact that the previous iteration of the action was struck out does not diminish the potential benefit to Zumatex; it merely means that any fresh action must be properly constituted.

Therefore, in the absence of leave, Zumatex would be effectively unable to pursue its appeal or defend the claims against it. This would result in Zumatex losing its legal rights and remedies without the matters being fully heard and determined. Allowing the proceedings to continue would preserve Zumatex’s ability to pursue or defend its legal claims.

This Court finds no evidence that the Applicant’s application was made for any personal or collateral advantage. On the contrary, this Court is satisfied that the application was brought to safeguard Zumatex’s interests. It is evident that if the application were dismissed, Zumatex would be deprived of the opportunity to pursue its claims and appeals.

Having considered all the circumstances of this case, including the nature of the Zumatex-related actions, the financial implications, and the legal principles established in the decided cases, this Court is satisfied that granting leave would be in Zumatex's interests.

Accordingly, this Court finds that this is an appropriate case for the exercise of the Court’s discretion under section 486(2) of the Companies Act 2016 to grant the leave sought.

The Petitioners further submitted that, in the event leave is granted, this Court should impose as a condition that the Applicant provide a personal indemnity against any adverse costs, charges, or expenses that may be ordered against Zumatex in the Zumatex-related actions. In this regard, the Petitioners relied on the decision of the Federal Court in Lai King Lung (practising as advocate and solicitor under the name and style of Messrs Chris Lai, Yap & Partners) & Anor v Merais Sdn Bhd [2020] 5 MLJ 614, and the decision of the Supreme Court of New South Wales in Eros Cinema Pty Ltd v Michael Assad Nassar [1996] 14 ACLC 1374.

This Court accepts that, where leave is granted under section 486(2) of the Companies Act 2016, it is appropriate and prudent to impose protective conditions, having regard to the interests of the company and its creditors. The Court also notes that the Applicant has expressed readiness to provide security, if required by the Court, to safeguard Zumatex's interests.

Having weighed the interests of all parties, this Court is satisfied that the conditions set out at paragraph [80] below adequately protect the Petitioners and the estate of Zumatex. In particular, the requirement for a personal undertaking by the Applicant to bear all legal costs arising from the Zumatex-related actions, coupled with the obligation to account for and pay over any proceeds recovered to the estate of Zumatex, ensures that any adverse costs orders made in favour of the Petitioners in those proceedings can, in substance, be met by the Applicant personally. This Court is therefore of the view that a separate, freestanding indemnity in favour of the Petitioners is not additionally required at this stage.

Therefore, for the reasons stated above, this Court hereby allows the Applicant’s application as set out in the Amended Notice of Motion, including the further oral amendments sought by learned counsel for the Applicant.

This Court further orders that the leave granted is subject to the condition that Mayamas Binti Omar, the Applicant, shall personally provide an undertaking to the liquidator to bear all legal costs arising from the said proceedings. The Applicant shall also ensure that any proceeds recovered from the said proceedings, if any, shall be fully accounted for and paid to the estate of the Respondent, Zumatex.

There shall be no order as to costs. Dated 24 FEBRUARY 2026 -sgd-JAMHIRAH ALI JUDGE HIGH COURT OF MALAYA KUALA LUMPUR To the parties’ solicitors: For the Applicant : Bahari Yeow with Lim Zhi Jian and Ling Siew Hui (Messrs Rosli Dahlan Saravana Partnership) For the Petitioner : Kang Mei Yee with Wong Yan Zhang (Messrs Gan Partnership) For the Respondent: Engku Nursuhaila Binti Engku Zain (The Liquidator) (Malaysian Insolvency Department)