Shakib Bin Abu Bakar Banafee v 1. ) Awh International Logistics Sdn Bhd (JA-22NCC-67-10/2023)

1.

AHMAD AKID BIN NOOR AZLEE … PLAINTIF-PLAINTIF SHAKIB BIN ABU BAKAR BANAFEE ... DEFENDAN (Didengar bersama) DALAM MAHKAMAH TINGGI MALAYA DI JOHOR BAHRU DALAM NEGERI JOHOR DARUL TAKZIM, MALAYSIA NO. WRIT: JA-22NCC-67-10/2023 SHAKIB BIN ABU BAKAR BANAFEE … PLAINTIF S/N sK4quTkf3EiqQuc1UqJMSw

AWH INTERNATIONAL LOGISTICS SDN BHD (No. Syarikat: 1052381-A)

2.

AHMAD AKID BIN NOOR AZLEE ... DEFENDAN-DEFENDAN (Dalam Tindakan Asal) AWH INTERNATIONAL LOGISTICS SDN BHD (No. Syarikat: 1052381-A) … PLAINTIF SHAKIB BIN ABU BAKAR BANAFEE … DEFENDAN (Dalam Tindakan Tuntutan Balas) GROUNDS OF JUDGMENT (Enclosure 30 in Suit 67) S/N sK4quTkf3EiqQuc1UqJMSw

There are two (2) cases being heard together before this court namely JA-22NCC-37-05/2023 (“Suit 37”) and JA-22NCC-67-10/2023 (“Suit 67”).

For ease of reference, parties will be referred as they are named and positioned in Suit 67 since the present grounds of judgment concern with Enclosure 30 which is filed under Suit 67.

Suit 67 in essence is a minority oppression action where it was alleged by the Plaintiff (“P”) that the 2nd and 3rd Defendants (“D2” and “D3”) being the only directors and majority shareholders of the 1st Defendant (“D1”) were said to have carried out D1’s affairs in a manner which evinced a clear departure from the standard of fair dealing which P as shareholder is entitled to expect.

Suit 37 on the other hand concerns a claim by D2 and D3 against P for a declaration principally that P was holding shares in D1 as a mere trustee of D2. Brief facts of the case

The following brief facts are based on the affidavits filed by parties in respect of Enclosure 30 and P’s Amended Statement of Claim dated 05.01.2024. S/N sK4quTkf3EiqQuc1UqJMSw

P and D2 were acquainted since on or about 2011 whereby both are businessmen.

D1 is a company incorporated on or about 02.07.2013 whereby there are four shareholders holding 1 share each (representing 25% of authorized share capital) namely Mohd Nasir, Abdul Wahab Bin Abdul Majeed, Norhayati Binti Ahmad and Nor Hafizah Binti Sabtu.

It is P’s contention that Mohd Nasir, Abdul Wahab and Nor Hafizah are D2’s proxies.

It is also P’s contention that while D2 is not a registered shareholder or a director of D1, at all material times D1 is operated and managed by

On 12.08.2014, Noor Hafizah’s shares were transferred to D3 while the remaining shareholders remain the same.

On or about the year 2015, D1 caused 99,996 units of new shares to be issued. S/N sK4quTkf3EiqQuc1UqJMSw

P then subscribed to 30,000 unit of shares on D2’s invitation and subsequently became a shareholder of D1. At about the same time, Norhayati transferred her shares to Abdul Wahab.

As a result of the above, P claims that as of 12.02.2015, the shareholding of the various parties consists of Mohd Nasir (10%), Abdul Wahab (20%), P (30%) and D3 (40%). Abdul Wahab subsequently transferred half of his shares to one Hanifah who then became a 10% shareholder in D1.

D1 on 17.04.2017 issued 150,000.00 new shares which were all allotted to D3. As a result of this, the shareholding of the various parties consists now of Mohd Nasir (4%), Abdul Wahab (4%), P (12%), D3 (76%) and Hanifah (4%).

P also alleged that on or about 2018, D2 started transferring shares of D1 registered in the names of his proxies into his own name. As a result, as of November 2018 until present, D1’s shareholders consist of P (25%), D2 (60%) and D3 (15%).

In essence, Enclosure 30 is P’s application to move this Court for an interim injunction against D1, D2 and D3 from implementing the S/N sK4quTkf3EiqQuc1UqJMSw member’s resolution passed on 13.12.2023 and the draft director’s resolution which concerns the transfer of D2’s and D3’s shares in D1 to another company known as AWH Group Sdn Bhd where D2 and D3 are the shareholders.

The Defendants opposed enclosure 30.

This Court having heard parties on Enclosure 30 allowed an interim injunction against D1, D2 and D3 the effect of which was for D2 and D3 to restore or cause to restore a sum of RM20,000,000.00 disbursed to AWH Group Sdn Bhd to be remitted back into D1’s account pending the disposal of the present action.

Further, an interim injunction was also ordered against D2 to return the increased monthly director’s fee of RM150,000.00 per month paid by D1 to D2 since January 2023 till the date Enclosure 30 was allowed (11.11.2024). In other words, D2 was also injuncted from carrying out D1’s member’s written resolution dated 03.12.2023 relating to D2’s director fee and to maintain the status quo of D2’s director fee of RM74,000.00 pending disposal of the present action.

The Defendants’ have via Notice of Appeal dated appealed against this Court’s decision to the Court of Appeal. S/N sK4quTkf3EiqQuc1UqJMSw Events leading to filing of Enclosure 30

Enclosure 30 is predicated on events which transpired during D1’s Extra-ordinary General Meeting (“EGM”) held on 13.12.2023. Essentially, P sought to preserve or restore the state of affairs of D1 as they were immediately prior to D1’s EGM.

During the EGM, a majority comprising D2 and D3 via their respective proxies adopted six (6) resolutions.

For sake of completeness, the six resolutions has the following effect:-

Abolishing the Memorandum & Articles of Association of D1 and adopting a new constitution for D1 (“1st Resolution”);

The carrying out into effect of Related-Party Transactions involving companies related to D1 (“2nd Resolution”);

Selling of 600,000.00 shares belonging to D2 and 150,000.00 shares belonging to D3 to one entity known as AWH Group Sdn Bhd on a willing buyer-willing seller basis (“3rd Resolution”);

D1 to provide advancement loan and/ or investment to AWH Group Sdn Bhd for working/ business capital purposes (“4th

D2’s monthly director’s fee as managing director to be increased from RM74,000.00 to RM150,000.00 (“5th Resolution”); and S/N sK4quTkf3EiqQuc1UqJMSw

A member’s resolution to be adopted to implement the five (5) resolutions above (“6th Resolution”).

The six (6) resolutions above form the subject matter of Enclosure 30, which P sought to injunct.

The Defendants objected to Enclosure 30 and had among others submitted that the 3rd, 4th and 5th Resolutions have already been affected thus rendering Enclosure 30 redundant so to speak. P on the other hand maintains that this court could grant a restoration order in the form of a mandatory injunction in order to restore parties to their respective status quo.

This Court agrees with P on the power of this Court to grant a restoration order in the form of a mandatory injunction to restore the position of parties to their status quo.

Nevertheless, this Court still recognized that courts are generally slow in granting it since it has the effect of altering the status quo unless the circumstances warrant it. Reference to that can be made to Thomas M Heysek v Boyden World Corp [1989] 1 MLJ 219 where it was held that:- S/N sK4quTkf3EiqQuc1UqJMSw “Although the relief that is being sought by the defendant is interim in form, it is, in the circumstances of this case, mandatory in effect... It has the effect of altering the status quo rather than preserving it. Accordingly, a court should be slow in granting it.”.

Reference is also made to the source of such power under Section 50 of the Specific Relief Act 1950 which states: - “Preventive relief is granted at the discretion of the court by injunction, temporary or perpetual.”.

See further Section 51 Specific Relief Act 1950 which states: - “(1) Temporary injunctions are such as are to continue until a specified time, or until the further order of the court. They may be granted at any period of a suit, and are regulated by the law relating to civil procedure.

A perpetual injunction can only be granted by the decree made at the hearing and upon the merits of the suit; the defendant is thereby perpetually enjoined from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the plaintiff.”.

On what should be the guiding principles for an injunction of this nature reference is made to the English case of Shepherd Homes Ltd v Sandham [1970] 3 ALL ER 402 where it was held that: - “In a normal case the Court must, inter alia, feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted; and this is a higher standard than is required for a prohibitory injunction.”. S/N sK4quTkf3EiqQuc1UqJMSw

Reference is also made to Locabail International Finance Ltd v Agroexport [1986] 1 ALL ER 901 where the English Court of Appeal held that: - “... the statement of principle by Megarry J. in relation to the very special case of the mandatory injunction is not affected by what the House of Lords said in the American Cyanamid case. The matter before the court is not only an application for a mandatory injunction, but is an application for a mandatory injunction which, if granted, would amount to the grant of a major part of the relief claimed in the action. Such an application should be approached with caution and the relief granted only in a clear case.”.

This Court is also persuaded by P’s submission that Section 351 Companies Act 2016 supports his application for Enclosure 30. The provision reads: - 1) Where a person has engaged, is engaging or intends to engage in conduct that constituted, constitutes or would constitute-

a contravention of this Act;

an attempt to contravene this Act;

an attempt that aids, abets, advises or procures a person to contravene this Act;

an attempt to induce, whether by threats, promises or otherwise, a person to contravene this Act;

an attempt by which any person would be in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or

an attempt of conspiracy with others to contravene this Act, S/N sK4quTkf3EiqQuc1UqJMSw the Court may, on the application of the Registrar, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing.

If a person refused or failed, is refusing or failing, to do an act or thing that the person is required by this Act to do, the Court may, on the application of the Registrar or any person whose interests have been, are or would be affected by the refusal or failure to do that act or thing, grant an injunction, on such terms as the Court thinks appropriate, requiring the person who refused or failed, is refusing or failing, to do that act or thing.

The power of the Court to grant an injunction to restrain a person from engaging in conduct may be exercised whether or not-

it appears to the Court that the person intends to engage again or to continue to engage, in conduct of that kind;

the person has previously engaged in conduct of that kind; or

there is an imminent danger of substantial damage to any person if such person engages in a conduct of that kind.

The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised whether or not-

it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing;

the person has previously refused or failed to do that act or thing; or S/N sK4quTkf3EiqQuc1UqJMSw

there is an imminent danger of substantial damage to any person if such person refuses or fails to do that act or thing.

Where the Registrar applies to the Court for the grant of an injunction under this section, the Court shall not require the applicant or any other person to give an undertaking as to damages as a condition for the granting of an interim injunction.

Where an applicat ion for an injunct ion under subsection (1) or

has been made, the Court may grant an injunction by consent of all parties to the proceedings, if the Court determines it to be appropriate, whether or not the Court is satisfied that that subsection applies.

The Court may grant an interim injunction pending determination of an application under subsection (1) if in the opinion of the Court it is desirable to do so.

The Court may revoke or vary an injunction granted under subsection (1), (2) or (7).

In granting an injunction to restrain a person from engaging in particular conduct, or to require a person to do a particular act or thing, the Court may order that person to pay damages to any other person, either in addition to or in substitution of the grant of the injunction.

Section 351 Companies Act 2016 as reproduced above thus empowers this Court to grant an injunction against a party to prevent said party from engaging in conduct prohibited by the Companies Act 2016 or to carry out acts which are illegal. In Dato’ Chang Jong Yu & Ors v Kuala Ibai Property Sdn Bhd & Ors [2025] 6 CLJ 872 it was held by the Court of Appeal that: - S/N sK4quTkf3EiqQuc1UqJMSw “[82] In gist, the core elements under s. 351(1) of the CA 2016 primarily concern the occurrence or the future impending occurrence of contravention against the Companies Act 2016 in which the contravention (or the impending contravention) has affected (or shall affect) the interest of the applicant. [83] It is pertinent to note that the language employed in this provision is clearly intended to confer the court with a wide array and scope of authority to be vigilant of any form of contravention against the Companies Act 2016 notwithstanding whether the contravention had already occurred or had yet to occur. It was clear to us that this provision provides the ideal remedy against the likelihood of further obfuscation and dissipation of Ibaimas' lands by third parties (being the respondents) if in case Ibaimas' lands eventually falls into the hands of KIP in clear breach of the consent order (and in clear contravention of s. 486(2) of the CA 2016 ).”.

Thus, this Court is of the view that the test applicable to determine whether an interim mandatory injunction is to be granted is the same as that which applies for a prohibitory injunction with an additional element that P would have to show that his case has a higher probability of success. Such position of the law can also be found in ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd [2004] 4 CLJ 674 where it was held by the Court of Appeal that:- “We are here dealing with a mandatory injunction in terms in which it gives to the defendant at the interlocutory stage, the whole of the relief it claims under its counterclaim. So, once the mandatory injunction is granted, there is really no need for a trial on the issue of a trust. Keet Gerald was a case where the grant or refusal of an injunction at the interlocutory stage did not put an end to the action. The present is quite the opposite case. Hence, following Cayne v. Global Natural Resources Plc [1984] 1 All ER 245 and NWL Ltd v. S/N sK4quTkf3EiqQuc1UqJMSw Woods [1979] 3 All ER 614, it has become necessary to place a higher threshold in the defendant's path by requiring it to prove a case on merits before deciding whether the orders asked for should be granted.”. Whether Plaintiff has demonstrated higher probability of success

From the evidence produced through the affidavits filed, this Court is satisfied that P has successfully demonstrated a higher probability of success.

Firstly, there is the issue concerning the loan of RM 20 Million that was granted by D1 to AWH Group Sdn Bhd styled as a loan agreement when the latter is controlled by both D2 and D3.

D2 and D3 having a necessary interest in AWH Group Sdn Bhd voted for the 4th Resolution which concerns the alleged loan agreement. This raises a question of conflict of interest on the part of D2 and D3 vis-a vis AWH Group Sdn Bhd directly contravening Section 225 (1) Companies Act 2016 which reads: - “(1) Subject to the provisions of this section, a company, other than an exempt private company, shall not-

make a loan to any person connected with a director of the company or of its holding company; or

enter into any guarantee or provide any security in connection with a loan made to such person by any other person.”. S/N sK4quTkf3EiqQuc1UqJMSw

In my view, the 4th Resolution has a result of causing a misappropriation of D1’s funds to an entity controlled by D2 and D3 and thus could amount to oppression under the law. Refer to Chiew Sze Sun & Anor v Cast Iron Products Sdn Bhd & Ors [1994] 1 CLJ 157 (High Court):- “The shareholders have naturally suffered as a result of this mismanagement of the financial affairs of the first respondent by the respondents. With regard to the allegation that the sum of RM375,000 was misappropriated by the fifth defendant, I am satisfied that it is not a baseless allegation. The respondents were aware of the misappropriation of funds by the fifth defendant. In paragraph 17 of his affidavit (enclosure 9) the second respondent averred that the fifth respondent was removed as director of the first respondent after the other directors had investigated in respect of the said sum by checking the accounts. He said that the fifth respondent was confronted with the matter and the fifth respondent made a verbal promise to pay the said sum within a short period of time. The fifth defendant did not fulfil his promise and he was accordingly dismissed. No claim was made against the fifth defendant to recover the money until six years after the misappropriation of the funds. From the conduct of the respondents, I find that they were acting to protect the fifth respondent rather than in the interest of the first respondent and its shareholders.”.

Secondly, the usage of the RM20 Million received by AWH Group Sdn Bhd was to pay for D2 and D3’s shares in D1 which now belongs to AWH Group Sdn Bhd. This, in the view of this Court, contravenes Section 123 Companies Act 2016 which reads: - “(1) Unless otherwise provided in this Act, a company shall not give any financial assistance, whether directly or indirectly and whether by means of a loan, guarantee or the provision of security or otherwise, S/N sK4quTkf3EiqQuc1UqJMSw for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for-

any shares in the company; or

in the case where the company is a subsidiary, any shares in its holding company, or in any way purchase, deal in or lend money on its own shares.

Unless otherwise provided in this Act, a company shall not give financial assistance directly or indirectly for the purpose of reducing or discharging the liability, if-

a person has acquired shares in the company or its holding company; and

the liability has been incurred by any person for the purpose of the acquisition of the shares.”.

Section 123 Companies Act 2016 (and its predecessor Section 67 Companies Act 1965) is intended to protect assets of the company against misuse and dissipation and to protect the creditors of the company. Refer to Ingit Tibrewal & Anor v Devi Meyyammai Ramanathan & Ors [2020] 1 LNS 955 (High Court): - “[48] The prohibition against the use of the company's assets to finance the purchase of its own shares is rooted in the maintenance of capital of the company for the protection of the company's creditors and to protect the company's assets against misuse and dissipation by directors and controlling shareholders.”. S/N sK4quTkf3EiqQuc1UqJMSw

Thirdly, P has demonstrated a visible departure from standards of fair dealing and violations of fair play conditions in the dissipation of D1’s assets which was carried out as a result of the adoption of the 2nd to 5th Resolutions at the EGM on 13.12.2023. The said resolutions concerned with the RM20 Million loan disbursed to AWH Group Sdn Bhd which was then used by the latter to purchase D2 and D3’s shares in D1, and when there is an increase in D2’s remuneration to RM150,000.00 as managing director of D1.

In this regard, reference is made to Re Kong Thai Sawmill (Miri) Sdn Bhd & Ors v Ling Beng Sung [1978] 2 MLJ 227 where it was held by the Privy Council that: - “Secondly, for the case to be brought within s. 181(1)(a) at all, the complaint must identify and prove "oppression" or "disregard". The mere fact that one or more of those managing the company possess a majority of the voting power and, in reliance upon that power, make policy or executive decisions, with which the complainant does not agree, is not enough. Those who take interests in companies limited by shares have to accept majority rule. It is only when majority rule passes over into rule oppressive of the minority, or in disregard of their interests, that the section can be invoked. As was said in a decision upon the United Kingdom section there must be a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect before a case of oppression can be made (Elder v. Elder & Watson Ltd. 1952 SC 49): their Lordships would place the emphasis on "visible". And similarly "disregard" involves something more than a failure to take account of the minority's interest: there must be awareness of that interest and an evident decision to override it or brush it aside or to set at naught the proper company procedure (per Lord Clyde in Thompson Drysdale 1925 SC 311, 315). Neither "oppression" nor "disregard" need be shown S/N sK4quTkf3EiqQuc1UqJMSw by a use of the majority's voting power to vote down the minority: either may be demonstrated by a course of conduct which in some identifiable respect, or at an identifiable point in time, can be held to have crossed the line.”.

In addition, the RM20 Million styled as “loan agreement” has also raised other concerning issues such as the “agreement” is not stamped, is unsecured and is only due and payable after 20 years with an automatic extension of 6 months. To worsen the matter, there is also no supporting documents justifying for the “loan” in the first place, thus difficult to fathom from the facts in what manner does this “loan agreement” benefits D1.

On the part of P on the other hand, the uncertainly that shrouded over the loan agreement would certainly had affected D1’s financial position and may cause to a certain extent diminishing of the overall value of D1’s shares in their aggregates. Issue of balance of convenience

On the issue of balance of convenience, reference is made to Sivaperuman v Heah Seok Yeong Realty Sdn Bhd [1979] 1 MLJ 150 where it was held by the Federal Court that: - “In order to be able to grant an interlocutory injunction, the court does not have to be satisfied that if the case went to trial on no other evidence than is before the court on the hearing of the application for interlocutory relief, S/N sK4quTkf3EiqQuc1UqJMSw the plaintiff would be entitled to a permanent injunction in the same terms as that sought in the interlocutory proceedings. Where damages would be an adequate remedy, no interlocutory injunction should normally be granted, but if there is doubt as to the adequacy of damages, the question of the balance of convenience arises, and although it might not be improper to take into account, as one of the many varying factors relevant to this question, the relative strength of each party's case, this should be done only on the basis of facts disclosed by the affidavit evidence as to which there is no credible dispute, without embarking on anything resembling a trial of the action. When an interlocutory injunction is sought, the balance of convenience will be the overriding consideration.”.

Based on the facts and circumstances of the case, this Court is of the view that the balance of convenience is for an interim injunction being granted in P’s favour.

The reasons being firstly, there would be great difficulty on the part of P to trace the funds misappropriated from D1 if no injunction is in place thus frustrating P should there be transactions that are unreachable and/ or untraceable in the future.

Secondly, great hardships would also befall on P who would be required to amend his claim with a view to pierce the veil of incorporation of the relevant entities dealing with D1 and AWH Group Sdn Bhd if the status quo is not restored. Substantial amendments and re-amendments would also be necessary to be made by P in his pleadings in order to meet any S/N sK4quTkf3EiqQuc1UqJMSw possible tactical maneuvers posited by D2 and D3 to avoid legal consequences while hiding the corporate veil.

Finally, and most importantly, any damage to the Defendants (if any) would be minimal as the restoration of funds back to D1 benefits the latter with D2 and D3 still in control of D1.

As such, since P’s grievances appear to have centered on the financial position of D1, thus the status quo of D1 prior to the resolutions passed must be maintained pending the disposal of Suit 67.

Based on the reasons as adumbrated above, Enclosure 30 is allowed in parts as explained in the above with costs of RM8,000.00 to be paid by the Defendants to the Plaintiff subject to payment of allocator fee. Dated: 3rd September 2025 t.t. …………………………………………. (NOOR HISHAM BIN ISMAIL) Judge High Court, Johor Bahru S/N sK4quTkf3EiqQuc1UqJMSw Solicitors for the Plaintiff : CK Lim with Damien Chan and Ian Hannibal M/s Damien Chan, Hannibal & Ng Chambers Kuala Lumpur Solicitors for the Defendants : Arthur Wang Ming Way with Nurfahrina binti Ab Rahim M/s Arthur Wang, Lian & Assoc. Kuala Lumpur S/N sK4quTkf3EiqQuc1UqJMSw