a contributory. [8] And as applicant for a section 492 stay Order, they have to satisfy this Court that all the proceedings that relate to Shailo’s winding up “ought to be stayed”. What proceeding is stayed by a section 492 stay Order? [9] Here, the proceeding sought to be stayed is the liquidation process that is underway as a result of the winding up Order. [10] In fact, if and when a section 492 stay Order is made, the OR, as liquidator, must stop from doing any act on behalf of the wound up company: Shailo. The OR must stop any liquidation activity, any liquidation step, or any liquidation exercise. [11] For instance, the OR, as liquidator, must not enter into any contracts, must not perform any transactions, and cannot make any payments on behalf of Shailo. Page 5 of 7 What is the effect of a section 492 stay Order on Shailo (the company that is wound up)? [12] If a section 492 stay Order is made, can the wound up company: Shailo, who is in liquidation, continue to do business, continue to perform transactions, or enter into contracts? [13] The answer is yes. A section 492 stay Order puts a stop to the winding up Order, and the wound up company can resume to do business—American International Assurance Bhd v Coordinated Services L Design Sdn Bhd [2012] 1 MLJ 369 (CA); [2012] 1 AMR 149; [2012] 1 CLJ 506; [2012] 1 MLRA 50. [14] In American International Assurance (supra), the Court Of Appeal held— [19] The effect of an order staying winding up proceedings is that the winding up order becomes inoperative without being revoked (see Krextile Holdings Pty Ltd v Widows [1974] VR 689 at p 694). Proceedings are not ended by a stay though nothing can be done to pursue them without further court order (see Rofa Sport Management AG v DHL International (UK) Ltd [1989] 1 WLR 902). Tipping J, in Re Kim Maxwell Ltd [1992] 1 NZLR 69 once said that 'a permanent stay amounts in reality to a contradiction in terms: the winding up remains but is permanently stayed'. In other words, the effect of a stay order is that the winding up process comes to an end — the whole effect of the winding up ceases and the company can thereafter resumes [sic] the conduct of its business and affairs as if no winding up order existed (see Krextile Holdings Pty Ltd v Widows; The Law of Company Liquidation, (4th Ed) by Andrew R Keay). [emphasis mine] Page 6 of 7 [15] As such, if this Application is allowed and a section 492 stay Order is granted, the OR, as liquidator must stop their liquidation work, and the wound up company: Shailo can resume doing business, can enter into agreements (such as selling its property where the sale proceeds can be used to pay off debts due to its creditors), and can make payments to the relevant parties that it wishes to make payments to. [16] But the stumbling block for Shailo in this Application is that it is not one of the prescribed parties who are permitted to seek a section 492 stay Order. Only the OR, as liquidator, or a creditor, or a contributory can make an application for a section 492 stay Order. Shailo is not one of them. CONCLUSION [17] In conclusion, on the very ground that Shailo is not one of the parties who have the right to apply for a section 492 stay Order, I dismiss Shailo’s Application for a section 492 stay Order, with no Order as to costs. Dated: 20 October 2023 signed KENNETH ST JAMES Judicial Commissioner Penang High Court Page 7 of 7 Counsel/Solicitors For the Applicant: Hari Prassaad Rao [Messrs. Chandra Segaran (Pulau Pinang)] For the Respondent: Norliza binti Ali [Messrs. V.M. Mohan, Murugiah & Associates (Pulau Pinang)] For the Third Party: Rohaifiza binti Md Rodzi [Insolvency Department (Pulau Pinang)] Legislation referred to: