Prismaworld Embassyview Sdn Bhd v Tanah Bayumas Sdn Bhd (WA-22NCC-142-03/2025)

TANAH BAYUMAS SDN BHD [Company No.: 20240102890 (1574749-A)]

ADAM PRIMUS VARGHESE BIN ABDULLAH [NRIC No.: 550131-08-5849] MACPHERSON SIMON [NRIC No.: 830308-13-6071] OF ADAMPRIMUS & CO, PLT [202306000018 (LLP0035785-LCA)] (As Receivers and Managers of

RHB BANK BERHAD [Company No.: 196501000373 (6171-M)] DEFENDANTS S/N 8pcyk5IolEi9XmsAlWl/OQ GROUNDS OF JUDGMENT (ENCLOSURE 4 INJUNCTION SOUGHT BY THE PLAINTIFF)

The Plaintiff seeks the following interim relief pending the outcome of this claim against the Defendants:- S/N 8pcyk5IolEi9XmsAlWl/OQ S/N 8pcyk5IolEi9XmsAlWl/OQ

follows:

Alleged Serious Issues to Be Tried

2.1 There are serious issues to be tried. The Plaintiff claims that:-

2.1.1 The 2nd Defendant as the receivers and managers of the Plaintiff, appointed by the 3rd Defendant entered into the sale and purchase agreement with the 1st Defendant to sell the said property identified earlier severely below the market value of the property.

2.1.2 The Plaintiff di attempt to restructure the company by way of 6 Judicial Managements the last of which was filed on 25-11-2024.

2.1.3 The 2nd and 3rd Defendants are aware of the restructuring exercise and had failed to disclose to the Plaintiff that the 2nd Defendant wanted to sell the S/N 8pcyk5IolEi9XmsAlWl/OQ property to the 1st Defendant despite being aware of the Judicial Management application filed on 25-11-2024.

2.1.4 The above sale and purchase agreement dated 12-12-2024 executed by the 2nd Defendant, as receivers and managers of the Plaintiff, with the 1st Defendant breaches section 410 of the Companies Act.

2.1.5 The Defendants have conspired to defraud and injure the Plaintiff.

2.1.6 The 3rd Defendant had been negligent in dealing with the property.

2.1.7 The 2nd and 3rd Defendants have been acting in bad faith and / or acted without any good faith.

2.1.8 The 1st Defendant has been or will be unjustly enriched from the sale of the property at a S/N 8pcyk5IolEi9XmsAlWl/OQ substantially reduced price compared to its market value.

2.1.9 The Sale and Purchase Agreement dated 12-12- 2024 is unlawful as it was entered in contravention of Section 410 of the Companies Act 2016.

(ii) Balance of Convenience

2.2 The Balance of Convenience lies with the Plaintiff as the Interim Injunction will not prejudice the Defendants. The ll not be effected by an interim injunction pending the outcome of

(iii) Damages are not adequate

2.3 Damages would not be an adequate remedy as the present suit concerns land and the Plaintiff depends on the said property to continue as a going concern. S/N 8pcyk5IolEi9XmsAlWl/OQ

(iv) Undertaking as to damages

2.4 The Director affirms the affidavit is ready and willing to give an undertaking as to damages to cover the potential losses, if any, that may arise if this injunction is found to be wrongful.

provided substantial arguments to oppose the said interlocutory injunction. B. Summary of the Decision of this Court

After considering the pleaded case, the affidavits and submissions filed as well as oral arguments put forth by learned counsels for the parties, I find that the Plaintiff has not passed the threshold required before an interlocutory injunction should be granted as prayed for against the Defendants.

I find that:- S/N 8pcyk5IolEi9XmsAlWl/OQ

The said sale and purchase agreement dated 12-12-2024 executed by the Receiver and Manager on behalf of the Plaintiff with the 1st Defendant, is not void ab initio and is only rendered unenforceable at the time of the validity of the moratorium period under section 410 of the Companies Act. Since the Judicial Management Order application was withdrawn, the Receivers and Managers are entitled to give effect to the Sale and Purchase Agreement dated 12-12-2024.

(ii) The Judicial Management application filed by the Plaintiff is bound to fail as the 3rd Defendant, RHB Bank Berhad, did appoint a receiver and manager on 22-11-2023. According to section 409 of the Companies Act, the High Court has no other option but to dismiss the said Judicial Management application as there is an existing receiver and manager appointed by RHB Bank Berhad per the terms of the Debenture, and it does not fall under section 405(5) of the Companies Act.

(iii) The numerous Judicial Management applications filed by the Plaintiff have since been discontinued. There were no S/N 8pcyk5IolEi9XmsAlWl/OQ Judicial Management orders sought by the Plaintiff. The said issue is now academic.

(iv) Even if there was a moratorium preventing any steps from being taken to enforce any charge on or security over the said moratorium no longer applies. It does not prevent or invalidate the sale and purchase agreement executed by the Receivers and Managers from being implemented at this stage.

The appointment of the Receivers and Managers by the 3rd Defendant is not challenged and is deemed to be valid. As Receivers and Managers, the 2nd Defendant is an agent of the company and is entitled to sell the said property as they deem fit, following the terms of their appointment and under the Debenture.

(vi) The Balance of Convenience did not lie with the Plaintiff. Even the Plaintiff is willing to sell the property to a third party, Al Shamal LLC-FZ, but at a higher price. S/N 8pcyk5IolEi9XmsAlWl/OQ

(vii) Damages are adequate to compensate the Plaintiff for any wrongs alleged. Even if the Plaintiff is correct in its allegation that the property was sold at a lower price, the difference, if any, could be compensated with damages.

(viii) The Plaintiff also proposes selling the property to a Dubai company for the sum of RM 160,000,000.00. The difference between the price to be paid by the 1st Defendant and the price offered to the Plaintiff will therefore represent the damages, if any, that the Plaintiff may claim against the Defendants if the alleged claims are proven against the Defendants. This also applies to the alleged market price based on the valuation of the property undertaken by the valuers appointed by the Plaintiff.

(ix) Even if the said property is valued at about RM 300 million, the difference in price remains the damage claimable, if any, and would be sufficient to compensate the Plaintiff. The property in question is merely a commercial property owned by the Plaintiff, and even the Plaintiff acknowledges this by its intention to sell the property to Al Shamal LLC-FZ. S/N 8pcyk5IolEi9XmsAlWl/OQ

For the above reasons, and those explained in the following paragraphs, the application in Enclosure 4 is dismissed with costs of RM 20,000.00 to be paid by the Plaintiff to each set of Defendant, subject to allocator.

The Plaintiff did agree to obtain Banking Facilities from the 3rd Defendant. The Banking Facilities were regulated by the following documents:-

Letters of Offer dated 20-8-2013 and 24-8-2020.

(ii) Facilities Agreement dated 9-10-2013.

(iii) Specific Debenture dated 9-10-2013.

(iv) Power of Attorney dated 5-10-2020; and

Supplemental Letter of Offer dated 15-12-2021.

For our purposes, the material terms of the Specific Debenture dated 9-10-2013 are as follows:- S/N 8pcyk5IolEi9XmsAlWl/OQ S/N 8pcyk5IolEi9XmsAlWl/OQ S/N 8pcyk5IolEi9XmsAlWl/OQ S/N 8pcyk5IolEi9XmsAlWl/OQ S/N 8pcyk5IolEi9XmsAlWl/OQ

Plaintiff did charge the whole land and all buildings on the land, which consists of 93 units of low-rise luxury condominium villas known as Brunsfield Residence 3, Jalan U-Thant, Kuala Lumpur, that is held under Master Title PN (WP) 39542, Lot 66, Seksyen 89, Bandar and Daerah Kuala Lumpur, Wilayah Persekutuan. This property is subject to the legal charge dated 16-10-2013 in favour of the 3rd Defendant.

The Plaintiff did commit an event of default on the terms of the Facilities Agreement. This caused the 3rd Defendant to appoint the 2nd Defendant as the Receiver and Manager of the Plaintiff under the terms of the Debenture on 22-11-2023. The Plaintiff is not challenging the validity of the said appointment. S/N 8pcyk5IolEi9XmsAlWl/OQ

The Plaintiff has filed 6 Judicial Management applications. Each of these applications was eventually withdrawn by the Plaintiff. The Judicial Management was filed by the Plaintiff on the following dates:-

I note that all of the Judicial Management application was not heard on its merits and was withdrawn by the Plaintiff. The Plaintiff did not obtain the orders to appoint a Judicial Manager under section 411 of the Companies Act. S/N 8pcyk5IolEi9XmsAlWl/OQ

The Plaintiff claims that during the Judicial Management process, it had obtained the initial agreement of Ethos Invest to act as its white knight to rehabilitate the business and operations of the Plaintiff. This allegedly led to the nomination of Al Shamal L.L.C. letter of offer to the Plaintiff dated 12-11-2024 that contains the following:- S/N 8pcyk5IolEi9XmsAlWl/OQ

The 2nd Defendant, as the Receiver and Manager, entered into a Sale and Purchase Agreement with the 1st Defendant dated 12-12-2024 to purchase the said property for the sum of RM 145,000,000.00.

The Plaintiff claims that the said Sale and Purchase Agreement is contrary to Section 410 of the Companies Act and is therefore unlawful and unenforceable. It says that as on the date of the said Sale and Purchase Agreement, there was a Judicial Management application filed by the Plaintiff, and that as a result, no steps should be taken to enforce any security or charge over the assets of the company. This moratorium exists until such time as the Judicial Management application is heard and disposed of by the Court. S/N 8pcyk5IolEi9XmsAlWl/OQ

The Plaintiff also claims that the decision by the 2nd Defendant and the 3rd Defendant to sell the said property at a gross undervalue compared to its valuation at RM 300 million and that the Plaintiff has secured an interested buyer who was willing to pay about RM 160 million shows that the sale and purchase agreement executed by the Receiver and Manager is suspect and defrauds the Plaintiff. The Plaintiff also claims that the Defendants had conspired to cause losses and to injure it by selling the property at a gross undervalue and that the said sale is unlawful and contrary to law.

The law on this area is trite and can be seen in the often-referred case of Keet Gerald Francis Noel John v Mohd Noor & Ors (supra) where Gopal Sri Ram JCA (as he then was) stated:- interlocutory injunction should undertake an inquiry along the following lines:- S/N 8pcyk5IolEi9XmsAlWl/OQ first, he must ask himself whether the totality of the facts presented before him discloses a bona fide serious issue to be tried. He must, when considering this question, bear in mind that the pleadings and evidence are incomplete at that stage. Above all, he must refrain from making any determination on the merits of the claim or any defence to it. It is sufficient if he identifies with precision the issues raised on the joinder and decides whether these are serious enough to merit a trial. If he finds, upon a consideration of all the relevant material before him, including submissions of Counsel, that no serious question is disclosed, that is an end of the matter and the relief is refused. On the other hand if he does find that there are serious questions to be tried, he should move on to the next step of his inquiry; second, having found that an issue has been disclosed that requires further investigation, he must consider where the justice of the case lies. S/N 8pcyk5IolEi9XmsAlWl/OQ In making his assessment, he must take into account all relevant matters, including the practical realities of the case before him. He must weigh the harm that the injunction would produce by its grant against the harm that would result from its refusal. He is entitled to take into account, inter alia, the relative financial standing of the litigants before him. If after weighing all matters, he comes to the conclusion that the plaintiff would suffer greater injustice if relief is withheld, then he would be entitled to grant the injunction especially if he is satisfied that the plaintiff is in financial position to meet his undertaking in damages. Similarly, if he concludes that the defendant would suffer the greater injustice by the grant of an injunction, he would be entitled to refuse relief. Of course, cases may arise where the injustice to the plaintiff is so manifest that the Judge would be entitled to dispense with the usual undertaking as to damages (see: Cheng Hang Guan v. Perumahan S/N 8pcyk5IolEi9XmsAlWl/OQ Farlim (Penang) Sdn. Bhd. 1988] 1 CLJ 435 (Rep);[1988] 3 MLJ 90). Apart from such cases, the Judge is entitled to take into account the plaintiff's ability to meet his undertaking in damages should the suit fail, and, in appropriate cases, may require the plaintiff to secure his undertaking, for example, by providing a bank guarantee; thirdly, the Judge must have in the forefront of his mind that the remedy that he is asked to administer is discretionary, intended to produce a just result for the period between the date of the application and the trial proper and intended to maintain the status quo, an expression explained by Lord Diplock inGarden Cottage Foods Ltd. v. Milk Marketing Board [1984] AC 130 and applied in Cheng Hang Guan (supra). It is a judicial discretion capable of correction on appeal. Accordingly, the Judge would be entitled to take into account all discretionary considerations, S/N 8pcyk5IolEi9XmsAlWl/OQ such as delay in the making of the application or any adequate alternative remedy that would satisfy the plaintiff's equity, such as an award of monetary compensation if he succeeds in establishing his claim at the trial. Any question going to the public interest may, and in appropriate cases should, be taken into account. A Judge should briefly set out in his judgment the several factors that weighed in his mind when a

I also refer to the decision of the Federal Court in AV Asia Sdn Bhd v Measat Broadcast Network Systems Sdn Bhd [2014] 1 CLJ 821 and the decision of the Court of Appeal in Plusbury Development Sdn Bhd v Goldpage Assets Sdn Bhd [2021] 1 LNS 1886. S/N 8pcyk5IolEi9XmsAlWl/OQ

I reproduce the summary of the applicable law as found by the Suraya Othman JCA in Plusbury Development Sdn Bhd v Goldpage Assets Sdn Bhd (supra):- It was our considered view that the decision of the learned Judge was correct as it was premised on the correct principle of law. The requirements in Keet Gerald Francis Noel John v. Mohd Noor bin Abdullah & Ors [1995] 1 CLJ 293; [1995] 1 MLJ 193 provides that:

the plaintiff's claim must disclose a bona fide serious issue to be tried. At this interlocutory stage, the court is not required to make a final determination on the merits of the claim or the rights of the parties;

they must then consider where the justice of the case lies. In doing so, the court must consider the harm that the injunction would produce by its grant and the harm that would result from its refusal and come to the conclusion as to which party would suffer greater injustice. In determining this, the court must consider whether damages would constitute an adequate S/N 8pcyk5IolEi9XmsAlWl/OQ remedy in respect of the plaintiff's claim. If damages are adequate, the court should not grant the injunction sought for; and

if the relevant factors are evenly balanced, the court should maintain the

I do note that at this stage, the evidence is incomplete and that, as a general rule, it would not be appropriate for this Court to make any final determination whether there exists a serious issue to be tried, as seen in the decision of the Court of Appeal in SV Beverages Holdings Sdn Bhd & Ors v Kickappp (M) Sdn Bhd [2008] 4 CLJ 20.

However, as with all general rules, there are always exceptions. This Court must still determine whether the issue put forth by the Plaintiff that it says constitutes a triable issue, must be logical, valid, and reasonable based on the established legal principles and applicable laws. Simply put, it is not sufficient to merely say S/N 8pcyk5IolEi9XmsAlWl/OQ there exists a serious issue to try to justify the application for an interlocutory injunction.

Having considered the notice of application, the affidavits and written submissions filed, and the oral arguments by the Plaintiff passed the threshold required to restrain the Defendants from completing the sale and purchase agreement dated 12-12-2024.

I will explain in the following paragraphs the reasons why I find that the interlocutory application sought by the Plaintiff should not be allowed based on the facts of this case. E. Application of the applicable law to the Facts of this case No Interlocutory Injunction should be entered against the

Locus Standi of the Plaintiff S/N 8pcyk5IolEi9XmsAlWl/OQ

longer has locus standi to initiate this action to impinge on the powers of the Receivers and Managers from selling the assets of the company to reduce the indebtedness of the company. The Defendants refer to various authorities to support this proposition.

In Kerr & Hunter on Receivership and Administration, Sweet & Maxwell 2024, the learned authors stated:- company and its directors to deal with the property comprised in the appointment (both property subject to the crystallised floating charge and property subject to a fixed charge), except in accordance with the charge, are paralysed: for although, under charges in the usual form, the receiver is agent for the company, the as regards carrying on the business or collecting the assets; and frequently so as to enable the receiver as attorney to convey a legal estate. However, the actual S/N 8pcyk5IolEi9XmsAlWl/OQ powers depend on the terms of the instrument. If, for example, they give no sufficient power to carry on the business, it may be necessary to apply to the court to make the appointment, or for a vesting order to vest the

It is also trite that the Receivers and Managers are agents of the company. This can be seen in section 375 of the Companies Act which is reproduced below:- under instrument

Unless the instrument expressly provides otherwise-

a receiver or receiver and manager is the agent of the This also appears in the terms of the Debenture referred to earlier, as well as in the terms of the Power of Attorney agreed to by the Plaintiff. S/N 8pcyk5IolEi9XmsAlWl/OQ

Generally, once a Receiver and Manager is appointed, the powers of the board of directors are frozen and are put into the hands of the Receivers and Managers. However, the board of directors retains a residual power to institute proceedings against the Receiver and Managers (i) to challenge the appointment of the said Receiver and Manager or (ii) to prevent the Receivers and Managers from taking any steps that go beyond their powers or are wrong or unlawful. Such actions by directors would not be considered as steps interfering with the functions of the Receivers and Managers, and therefore the board of directors retain locus standi to initiate such actions on behalf of the company.

This proposition can be seen in the decision of the Court of Appeal in Score Option Sdn Bhd & Anor v Duar Tuan Kiat & Ors [2013] 5 MLJ 716, where the Court made the following statement:- from the object of obtaining the appointment of a S/N 8pcyk5IolEi9XmsAlWl/OQ receiver that is to place the assets of the company under the protection of the court, and to prevent everybody except the receiver, as an officer of the court, from in any way intermeddling with them. A manager is appointed when it is desired not merely to protect the assets, but also to carry on a trade or business to protect the goodwill since a receiver has no power to carry on the business. Once receivers and managers have been appointed, directors no longer have authority over the company or to act on behalf of the company. Since an action could interfere with the functions of the receivers and managers, as well as impact upon the assets of the company, the consent of the receiver and manager is necessary if the directors seek to conduct legal proceedings on behalf of the company against a third party. See Newhart Developments Ltd v Co-operative Commercial Bank Ltd [1978] 2 All ER 896. [6] The directors have residual authority to take action against the receiver and manager, the party appointing the receiver and manager for any misconduct or if the S/N 8pcyk5IolEi9XmsAlWl/OQ appointment of receiver and manager is contested. See Tudor Grange Holdings Ltd and Others v Citibank NA

The same can be seen in the decision of the Court of Appeal in Simpang Empat Plantation Sdn Bhd v Ali Tan Sri Abdul Kadir [2006] 1 CLJ 41, where Gopal Sri Ram JCA held:- e was summed up by Wan Yahya J in Tan Tah Teck v Coffral (M) Sdn Bhd [1991] 3 CLJ 2227 at p 2230 in the following passage with which I am entirely in agreement: The appointment of a debenture holder receiver even with authority to act as agent of the company does not operate to terminate the unless such appointment of receiver is inconsistent with the continued employment of a in a debenture empowering the receiver to bring S/N 8pcyk5IolEi9XmsAlWl/OQ an action in the name of the company whose assets were charged was merely an enabling provision, investing the receiver with the capacity to bring such an action, and did not divest the that the proceedings did not interfere with the assets or prejudicially affect the debenture holder Returning to the present case, it cannot by any stretch of the imagination to be said that penalizing the receivers and managers for doing an act, namely selling and transferring the subject land, they were not entitled in law to do is hardly an interference with their function. If that were so every wrongdoer will have a carte blanche. So there is no really no interference at all. It is only a question of making the wrongdoers accountable. And that is quite in order. S/N 8pcyk5IolEi9XmsAlWl/OQ summons proceeds to trial and terminates in the n the subject land returns to the appellant. There is a benefit to the appellant and no

Also refer to the decision of Ong Chee Kwan J in Cranborne Enterprise Limited & Anor v Export-Import Bank of Malaysia Berhad & ors [2019] 1 LNS 994.

retain a residual right to (i) challenge the appointment of the receivers and managers and (ii) to challenge any wrong the Receivers raised by the directors of the Plaintiff is whether the sale and purchase agreement dated 12-12-2024 breaches section 410 of the Companies Act and should be restrained pending the outcome of this suit. S/N 8pcyk5IolEi9XmsAlWl/OQ

As such, I will have to determine whether the validity of the sale and purchase agreement entered on 12-12-2024 by the Receivers and Managers is an issue that ought to be determined at trial and justify the restraint of the disposal of the property. If there is nothing unlawful concerning the said sale and purchase agreement as of to date, then there may not be a serious issue that justifies the restraint of the sale of the property by the Receivers and Managers.

(ii) Legality of the Sale and Purchase Agreement dated 12-12-2024

It is not controversial for me to say that the moratorium laid down by section 410 is designed to assist in the process of rehabilitating the company or of preserving all or part of its business as a going concern as part of the judicial management process. Under section 404 of the Companies Act, the company board of directors or its creditors could apply for the appointment S/N 8pcyk5IolEi9XmsAlWl/OQ of a Judicial Manager if it believes that the following requirements are fulfilled:-

the company is or will be unable to pay its debts; and

there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern or that otherwise the interests of creditors would be better served than by resorting to a winding up.

Once a Judicial Management application is filed, a moratorium is in place until the application is heard and disposed of. It is provided under section 410 of the Companies Act that:-

no resolution shall be passed or order made for the winding up of the company;

no steps shall be taken to enforce any charge on or security agreement, chattels leasing agreement or retention of title S/N 8pcyk5IolEi9XmsAlWl/OQ agreement, except with leave of the Court and subject to such terms as the Court may impose; and

not other proceedings and no execution or other legal process shall be commenced or continued and no distress may be levied against the company or its property except with leave of the Court and subject to such terms as the Court may impose.

However, it must be noted that this moratorium is not absolute. An application for leave from Court may be made by any creditor either to (i) enforce such security or even (ii) to commence any proceedings or execution of any legal process prohibited by section 410(b) and (c) of the Companies Act. The Court may, in suitable circumstances, grant leave to allow such actions to be taken by any creditor.

Leave under section 410 of the Companies Act to either take steps to enforce a security or charge or even to institute proceedings, could even be granted nunc pro tunc as seen in the S/N 8pcyk5IolEi9XmsAlWl/OQ decision of Sahendran Suhendran JC in Novabrite Lighting Sdn Bhd v Emrail Sdn Bhd (Balaranee Construction proposed intervener) [2024] MLJU 2986.

In that case, Balaranee Construction had issued a winding-up notice dated 5-4- solicitors. Novabrite then filed a Judicial Management application on 8-4-2024 to appoint a Judicial Manager over the affairs of Emrail.

This would have then stopped Balaranee Construction from filing a winding-up petition against Emrail. However, Balaranee Construction was not aware of the Judicial Management application and had then proceeded to file a Winding-Up Petition on 6-5-2024. This filing is in breach of section 410 of the Companies Act. Novabrite suggests that this leave should not be granted as the Petition is void ab initio and cannot be rectified by a retrospective leave granted by the Court. It argues that the Companies Act did not provide such powers, and leave should have been sought before the Petition was filed. Having failed to S/N 8pcyk5IolEi9XmsAlWl/OQ obtain such leave, the Petition should not be entertained, and its right to wind up Emrail as a bona fide creditor should be refused. Essentially, Novabrite claims that the Petition is void ab initio and cannot be cured by a retrospective leave.

Sahendran Suhenrdran JC disagreed. He held that the fact that an action of a creditor that breaches section 410 of the Companies Act is not void ab initio but is voidable. Any such breaches may be remedied by an order granting leave to the creditor to proceed with its action either to (i) take steps to enforce a security or charge or (ii) even file any proceedings against the company. The moratorium is not absolute and is still such action if it finds that to do so would be appropriate based on the circumstances of each case.

The following was said by Sahendran Sugendran JC in that case:- S/N 8pcyk5IolEi9XmsAlWl/OQ The filing of Petition 249 in breach of the moratorium does not render it a nullity; it follows that there is nothing to prevent, as a matter of discretion, leave being granted nunc pro tunc under section 410(c) to validate Petition 249, see Governor and Company of the Bank of Ireland and another v Colliers International UK plc (in administration) and others

I have also considered the decision of the English Court in the above-cited case of Governor and Company of the Bank of Ireland and another v Colliers International UK plc (supra), a decision of Justice David Richards. In that case, the learned Judge had carefully gone through the plethora of authorities on the effect of an action such as the filing of proceedings or suits that breach mandatory provisions laid down by parliament that require leave of the Court.

In that case, Justice David Richards stated:- S/N 8pcyk5IolEi9XmsAlWl/OQ The decisions of the House of Lords in Seal and the Court of Appeal in Adorian required the court in cases such as the present to look beyond the language of the section to the entire context of the provision, its purpose, and the consequences of a decision as to its effect, with a general pre-disposition that the lack of prior permission should not render the proceedings a nullity.

Having regard to those considerations, there is little to support a conclusion that proceedings brought without the permission required by various provisions of the Insolvency Act are a nullity and much to support the contrary conclusion. The relevant consideration are precisely those relied on by the Court of Appeal in Adorian and by Lindsay J in Re Saunders, as well as the views taken in a large number of judgments in England, the rest of the United Kingdom and the Commonwealth reviewed in the latter case. S/N 8pcyk5IolEi9XmsAlWl/OQ

In addition to the consequences of holding that proceedings are a nullity, it is clearly relevant to have regard to the purpose of the provisions in the context of insolvency. It is important to note that the requirement for permission for the commencement of proceedings applies to insolvency proceedings under the control of the court: bankruptcy, winding-up by the court and administration. It does not apply to a company in creditors' voluntary winding-up. This suggests that the real purpose of these provisions is not so much the protection of creditors as the purpose identified by Black LJ in Boyd v Lee Guinness Limited: "This section is one of a series of provisions designed to ensure that when a winding-up order has been made by the court the whole of the task of supervising the collection and distribution of the company's assets should be committed to the winding-up court and, accordingly, that all proceedings having any S/N 8pcyk5IolEi9XmsAlWl/OQ bearing upon the winding-up of the company should remain under the supervision and control of that court." Given that purpose, it is hard to see why the court should not be permitted to grant retrospective permission if, in the circumstances, it is appropriate The same position is seen in a Northern Ireland case of Fulton v AIB Group (UK) PLC [2014] B.P.I.R 1169.

I am also of the opinion that the moratorium under section 410(b) of the Companies Act only operates from the time when the application for Judicial Management is filed until it is disposed of. If the said application is not successful or is withdrawn, then the moratorium ceases. It only freezes the right to enforce the charge and does not invalidate the powers held by any secured creditor.

Therefore, even if there is any breach of the said statutory moratorium, its effect will depend on the circumstances of each S/N 8pcyk5IolEi9XmsAlWl/OQ case. If the application is not successful or is withdrawn, then the said moratorium no longer exists, and the said enforcement of such security may proceed. Section 410 of the Companies Act did not state specifically that such enforcement of any security or even the enforcement of any action against the company will be void ab initio.

Such an approach can be seen in the application of section 11 of the UK Insolvency Act. I refer to the decision of the English Court in Euro Commercial Leasing Ltd v Cartwright & Lewis [1995] B.C.C 830. In that case, the company had retained the services of a firm of solicitors to act on certain matters. Before July 1993, account. A bill for work done was issued to the company for English Sterling 16,000.00. On 30-7-1993, an administration order was made against the company. The solicitors had obtained an opinion from the Law Society and, after writing to the administrators, decided to utilize the monies in the client account to offset the sums due to the firm. S/N 8pcyk5IolEi9XmsAlWl/OQ

The administrator then instituted proceedings to recover the monies under section 234(2) of the Insolvency Act 1986. The solicitors then, after obtaining a suggestion from the Deputy and applied to the High Court for leave to apply it in payment of their bill.

The issue before the High Court in that case is whether the decision to utilise the monies at the time when the administration order is in place is in breach of section 11(3)(c) of the Insolvency Act, and what would be the consequences of the said breach. Section 11(3)(c) is pari materia with our section 410 of the

During the period for which an administration order is in force

no resolution may be passed or order made for the winding up of the company;

no administrative receiver of the company may be appointed; S/N 8pcyk5IolEi9XmsAlWl/OQ (ba) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose

no other steps may be taken to enforce any security-purchase agreement, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose; and

no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid.

Evans-Lombe J on this issue stated that even if there is a breach of the said moratoria, the remedy lies in contempt proceedings and even damages, but does not render the act illegal or void in law:- S/N 8pcyk5IolEi9XmsAlWl/OQ 11(3)(c). The remedy for such breach, it is common ground, is a claim in damages. Plainly in the present case, there could be no damage resulting from such breach because, as is not in issue, the act complained of in respect of which damages would be sought had the effect of destroying what had been a previously impregnable position held by the solicitor respondents, in which they had a lien over property of their client, which s 1 would not have the effect of removing: see Bristol Airport pic v Powdrill [1990]

This can also be seen in Chung Khiaw Bank Ltd v Hotel Rasa Sayang Sdn Bhd & Anor [1990] 1 MLJ 356, where the Court held: the making of which is prohibited by statute expressly or by implication, shall be void and unenforceable unless the statute itself saves the contract or there S/N 8pcyk5IolEi9XmsAlWl/OQ are contrary intentions which can reasonably be read

As such, I find that a breach of section 410 of the Companies Act does not void the transaction at issue ab initio. The party in breach may seek leave to rectify the said error retrospectively as laid down in the above cases. The sale may even proceed if the Judicial Management process fails. Section 410 is only intended to freeze the affairs of the company pending the outcome of the judicial management application. It is not intended to stop all transactions indefinitely and render any technical breach unlawful and void.

In addition to the above, I must also consider the fact that the application for Judicial Management filed by the Plaintiff would have failed in any event. As I said earlier, even when the moratorium is in place, the Court retains a discretion to allow relief from the effects of the moratorium and allow for the enforcement of charges or security or even the filing of claims or enforcement of court orders. The paramount consideration in S/N 8pcyk5IolEi9XmsAlWl/OQ granting leave to creditors from the effect of the moratorium is whether such actions will derail the judicial management process or hinder the judicial manager to be appointed from performing his duties. See Re Sogo Department Stores (S) Pte Ltd (under Judicial Management) [2001] 2 SLR 556.

Generally, a secured creditor will not be deprived of the fruits of its security if its enforcement will not impair the judicial manager from performing his duties. This can be seen in the decision of Nicholls LJ in Re Atlantic Computer Systems Plc [1992] Ch 505, where he stated:- assist the company, under the management of the administrator, to achieve the purpose for which the administration order was made. If granting leave to a lessor of land or the hirer of goods (a 'lessor') to exercise his proprietary rights and repossess his land or goods is unlikely to impede the achievement of that S/N 8pcyk5IolEi9XmsAlWl/OQ

The same position can be seen in Metro Nominees (Wandsworth) (No.1) Ltd v Rayment [2008] B.C.C 40, where the English Court stated:- creditor seeks to exercise a proprietary right that is unlikely to impede the achievement of the purpose for which the administration is being pursued, then

Surely then this Court must consider whether the Judicial Management application would even pass the threshold laid down under section 409 of the Companies Act. I reproduce the said section for ease of reference:-

Subject to subsection 405(5), the Court shall dismiss an application for a judicial management order if it is satisfied that

a receiver or receiver and manager referred to in subparagraph 408(1)(b)(ii) has been or will be S/N 8pcyk5IolEi9XmsAlWl/OQ appointed; or (b) the making of the order is opposed by a secured creditor.

There is therefore no likelihood that the said Judicial Management application would have been approved in any event. This fact is clear, and the Plaintiff would have known that the said application is bound to fail. More so when the 3rd Defendant had indicated that it was not agreeable to the Judicial Management application sought by the Plaintiff directors in the 5 previous applications, and there are no reasons shown that this 6th application would have been agreed to by the 3rd Defendant.

As such, it is patent that the Judicial Management application filed by the Plaintiff was bound to fail from the start. There was already in place a Receiver and Manager appointed over the company by the 3rd Defendant. This was known by the directors of the Plaintiff, and they have not chosen to challenge the said appointment. There was no other option available to the Court to even allow the said judicial management application as the 3rd S/N 8pcyk5IolEi9XmsAlWl/OQ Defendant had appointed a Receiver and Manager in place before the Judicial Management application was filed.

On the issue of whether the sale and purchase agreement dated 12-12-2024 constitutes a step or part of the steps that fall foul of section 410(b) of the Companies Act, I find that it does. The intention of the statutory moratoria is to ensure that the assets of the company, including those secured by a charge or other form of security such as a debenture, are not sold or disposed of to enable the proposed plan to come to fruition. This would therefore mean that any action by the Receiver and Manager to sell the assets that have been charged and now crystallized by the terms of the debenture may fall foul technically under section 410(b) of the Companies Act.

Nonetheless, as I said, this may have been a technical breach, but it does not mean that the sale and purchase agreement will be void ab initio. This will depend still on the outcome of the Judicial Management process as seen in the cases referred to earlier, and even such a technical breach may only lead to a S/N 8pcyk5IolEi9XmsAlWl/OQ potential claim for damages for any losses suffered by the company or contempt of Court proceedings against the Receivers and Managers. It does not automatically invalidate the sale and purchase agreement.

Therefore, I summarize my findings on the issue concerning whether the sale and purchase agreement breaches section 410 of the Companies Act and whether it is a void transaction that justifies the restraining orders sought as follows: -

The Receivers and Managers, the 2nd Defendant, did commit a technical breach of section 410 of the Companies Act when they entered into the sale and purchase agreement with the 1st Defendant dated 12-12-2024.

(ii) The sale and purchase dated 12-12-2024 constitutes a

(iii) This breach does not render the said sale and purchase agreement void ab initio as suggested by the Plaintiff. During the period when the said Judicial Management S/N 8pcyk5IolEi9XmsAlWl/OQ application is in place, the sale and purchase agreement is frozen pending the outcome of the Judicial Management application.

(iv) The effect of the said technical breach of section 410 will depend on the facts of each case. In this case, the Judicial Management application is bound to fail due to section 409 of the Companies Act. As such, it cannot be said that the said breach renders the sale and purchase agreement void and cannot be acted upon by the Defendants.

The only remedies available to the Plaintiff for breach of section 410 of the Companies Act by the Defendants, if any, lie with an award of damages for any losses caused and even possibly contempt of court. This does not justify the restraining order sought by the Plaintiff.

Based on the above, I find that although the Plaintiff retain a residual power to challenge the decisions or actions of the Receiver and Manager where there exists issues of illegality as seen in Simpang Empat Plantation Sdn Bhd v Ali Tan Sri S/N 8pcyk5IolEi9XmsAlWl/OQ Abdul Kadir (supra), I do not believe that the facts of this case shows or justifies the imposition of any restraining order against the Defendants from completing the sale and purchase agreement dated 12-12-2024.

Despite the technical breach of section 410 of the Companies Act, I believe that the facts of this case show that, taking the case to its highest, the Plaintiff is only entitled to seek damages for the said breach if it can prove that the said breach committed by the Receivers and Managers had caused damages to the company. Therefore, I find that this is not a suitable case for the interlocutory remedies sought by the Plaintiff against the Defendants.

To be clear, I do find that there exists a bona fide claim based on the technical breach of section 410 of the Companies Act, but this only entitles the Plaintiff to damages. Thus, the order sought by the Plaintiff should not be granted in the circumstances of this case. The said Judicial Management application has since been withdrawn and no longer applies. S/N 8pcyk5IolEi9XmsAlWl/OQ

The Receivers and Managers remain validly appointed, and no application has been filed to challenge their position in the company. Therefore, I find that they should be allowed to complete the sale and purchase agreement to ensure that they fulfil their mandate following the terms of the Debenture that has been agreed to by the Plaintiff.

I do note that this Court should not at this stage make any final determination on the merits of the claim. However, this Court must still analyze the facts as seen in the pleaded case and disclosed in the affidavits and consider the applicable laws to determine whether the restraining order as sought by the Plaintiff should be allowed or not. The facts and the applicable law in this case do not lie in favour of granting the interlocutory injunction sought by the Plaintiff. I therefore rule as such.

I opine that as the Judicial Management application has been withdrawn, there is no further consideration for the retention of the said property to enable the Judicial Management process to take place, and the fact that breach of section 410 of the S/N 8pcyk5IolEi9XmsAlWl/OQ Companies Act only leads to claim for damages or contempt of court, then the balance of convenience lies in not granting the injunction sought by the Plaintiff. The Receivers and Managers should be allowed to proceed to complete the sale and purchase of the property to ensure that the terms of the Debenture and the terms of the facilities are complied with.

(iii) Other factors - Damages Adequate

Even if I am wrong on the above, it must be noted that even the Plaintiff has agreed and shown its intention to sell the said property to a third party, albeit at a higher price.

The evidence before me shows that the Plaintiff contends that the sale of the property based on the terms of the agreement is at an extremely low price compared to the valuation obtained, which states that the price should be about RM 300 million. S/N 8pcyk5IolEi9XmsAlWl/OQ

knight had indicated that it was willing to buy the said property at the price of about RM 160 million. This is not far off from the price secured by the Receiver and Managers of RM 145 million.

Therefore, even if I were to take the extreme case and agree that, eventually after trial, the sale was made at undervalue, the loss suffered by the Plaintiff could be calculated in monetary form, and the difference would be more than adequate to compensate the company for any losses suffered.

More so when the property at issue is only a commercial property and is leased out by the Plaintiff as part of its business. There is no special value that could be attributed to the said property. Even the Plaintiff is more than willing to sell it. This indicates that damages would be more than adequate to compensate the Plaintiff for any losses it may suffer because of the said breach by the Defendants. S/N 8pcyk5IolEi9XmsAlWl/OQ S/N 8pcyk5IolEi9XmsAlWl/OQ S/N 8pcyk5IolEi9XmsAlWl/OQ