Sharikat Sukma Kemajuan dan Perusahaan Sdn. Bhd. v Rei Holdings Sdn. Bhd. (JA-28NCC-17-01/2025)

This is the Applicant’s application vide Enclosure 38 for leave pursuant to section 486(2) of the Companies Act 2016 and/or Order 92 rule 4 of the Rules of Court 2012 to continue and pursue appellate proceedings in the Court of Appeal on behalf of the Respondent company, REI Holdings Sdn. Bhd., which has since been wound up.

The Applicant, Chee Yun Fong, is a contributory of the Respondent company. The Applicant seeks leave to proceed with Civil Appeals Nos. J-02(IM)(C)-3-01/2025 and J-02(IM)(C)-4-01/2025 which had been filed prior to the winding up order dated 26.03.2025.

The application is resisted by the Petitioner and supported in part by the submissions advanced on behalf of the Official Receiver, being the liquidator of the Respondent company. S/N cLVka5kjB0en9pzX0bJP3A

Having considered the cause papers, affidavits filed by parties, written submissions, authorities cited and oral submissions advanced before this Court, this Court dismissed the Applicant’s application with costs of RM10,000.00 to the Petitioner.

The Respondent company, REI Holdings Sdn. Bhd., was ordered to be wound up pursuant to the present winding up proceedings commenced by the Petitioner under sections 464(1)(b), 465(1)(e) and 466(1)(a) of the Companies Act 2016.

The Applicant, Chee Yun Fong, describes himself as a contributory of the Respondent company.

Following the winding up order made on 26.03.2025, the Official Receiver became the liquidator of the Respondent company.

The chronology of events leading to the present application is material in understanding the nature of the disputes between the parties and the context in which the Applicant seeks the relief prayed for. S/N cLVka5kjB0en9pzX0bJP3A

The evidence shows that the underlying dispute between the Petitioner and the Respondent company dates back to early 2020. The Petitioner had through its solicitors issued several letters of demand dated 10.02.2020, 11.03.2020 and 04.06.2021 claiming payment of outstanding sums amounting to RM39,350,388.48 for reclamation and sand transportation works allegedly completed at the request of the Respondent company.

Following partial payment of RM10,000,000.00 made by the Respondent in two separate transactions, there nevertheless remained an alleged outstanding balance of RM29,350,388.48.

On 29.05.2024, the Petitioner commenced legal proceedings against the Respondent company vide Johor Bahru High Court Civil Suit No. JA-22C-2-05/2024 to recover the said outstanding amount.

Subsequently, on 18.12.2024, the High Court allowed the Petitioner’s application for summary judgment pursuant to Order 14 of the Rules of Court 2012 and entered judgment against the Respondent company in the sum of RM29,350,388.48. The Respondent’s Defence and Counterclaim were simultaneously struck out. S/N cLVka5kjB0en9pzX0bJP3A

The Respondent thereafter filed two appeals to the Court of Appeal on 26.12.2024 against the decisions granting summary judgment and striking out the Defence and Counterclaim respectively.

Despite the filing of the appeals, no payment was made towards satisfaction of the judgment debt. Instead, the Respondent proceeded to file several applications seeking stay of execution.

In light of the Respondent’s failure to satisfy the judgment sum, the Petitioner commenced the present winding up proceedings against the Respondent company on 24.01.2025.

The chronology further reveals that the Respondent repeatedly sought postponements and stay applications in relation to the winding up proceedings and related appeals. Amongst others, applications for stay of execution were filed on 09.03.2025 and 10.03.2025 shortly before the hearing of the winding up petition fixed on 26.03.2025.

On 26.03.2025, this Court nevertheless allowed the winding up petition and ordered that the Respondent company be wound up. The Respondent’s application for an Erinford injunction was dismissed on the same day. S/N cLVka5kjB0en9pzX0bJP3A

Following the winding up order, the Applicant through his solicitors sought permission from the Official Receiver pursuant to section 486(1) of the Companies Act 2016 to continue with the Court of Appeal proceedings.

The evidence further shows that the Official Receiver had convened meetings of contributories and creditors on 29.07.2025. However, no resolution was passed authorising continuation of the appeals.

Thereafter, by letters dated 20.08.2025 and 29.08.2025, the Official Receiver maintained its position in declining permission for continuation of the appellate proceedings, citing amongst others concerns regarding the financial position of the Respondent company and absence of sufficient basis to continue the litigation.

Notwithstanding the above, the Applicant proceeded to file various further applications including the present application at Enclosure 38 filed on 28.10.2025 seeking leave of this Court under section 486(2) of the Companies Act 2016.

The chronology above demonstrates that the present application did not arise in isolation but forms part of a broader sequence of post-judgment and post-liquidation proceedings initiated following the grant of summary judgment and the subsequent winding up order against the Respondent company. S/N cLVka5kjB0en9pzX0bJP3A

The Applicant contends that the continuation of the appeals would be beneficial to the Respondent company and that the Official Receiver had failed or refused to continue the said appeals.

The Petitioner opposes the application principally on the grounds that:

the Applicant had failed to comply with the mandatory procedural requirements under section 486(2) of the

the application is procedurally defective and unsustainable;

the Applicant lacks proper basis to seek the relief prayed for; and

the proposed continuation of the appeals would not benefit the liquidation process and would instead prejudice the orderly administration of the winding up. ISSUES FOR DETERMINATION

The central issue before this Court is whether the Applicant, as a contributory of the wound-up company, should be granted leave to initiate proceedings under section 486(2) to effectively step into the shoes of the liquidator and continue litigation on behalf of the Respondent. S/N cLVka5kjB0en9pzX0bJP3A

The questions which arise for consideration by this Court are as follows:

Whether the Applicant has properly invoked section 486(2);

Whether the Applicant has complied with the mandatory procedural requirements governing such applications;

Whether this Court ought to exercise its discretion in favour of the Applicant;

Whether the continuation of the appeals would serve the interests of the liquidation and the body of creditors and contributories. APPLICABLE LEGAL PRINCIPLES

Section 486(2) of the Companies Act 2016 provides as follows: “The exercise by the liquidator in a winding up by the Court of the powers conferred by this section is subject to the control of the Court and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.”

It is clear from the statutory wording that section 486(2) confers supervisory jurisdiction upon the Court over the exercise or proposed exercise of powers by a liquidator in a compulsory winding up. S/N cLVka5kjB0en9pzX0bJP3A

However, the provision does not grant an automatic right to a contributory to usurp or substitute the role of the liquidator.

The statutory framework recognises that upon a winding up order being made, control over the company’s affairs and litigation ordinarily vests in the liquidator acting under supervision of the Court.

The rationale is self-evident. Once liquidation commences, the company’s affairs are no longer to be driven by individual stakeholders pursuing personal grievances or collateral objectives, but rather administered collectively for the benefit of creditors and contributories in accordance with insolvency principles. ANALYSIS OF THE COURT

A substantial portion of the Petitioner’s objections concern procedural non-compliance by the Applicant.

The Petitioner contends that the Applicant had improperly initiated the present application through a Summons in Chambers rather than by motion and that the application is therefore fundamentally defective. S/N cLVka5kjB0en9pzX0bJP3A

The Applicant, on the other hand, argues that the application falls within the category of matters that may properly be heard in Chambers pursuant to the Companies (Winding-Up) Rules 1972 and that any procedural defect is curable under rule 194 of the Companies (Winding-Up) Rules 1972 and Order 2 rule 1 of the Rules of Court 2012.

Rule 5 of the Companies (Winding-Up) Rules 1972 provides that certain specified applications are to be heard in open Court, whilst all other matters may be heard in Chambers.

Rule 7 further provides that applications in Court shall be by motion, whereas applications in Chambers shall be by summons.

Rule 194 further provides that proceedings shall not be invalidated merely by formal defects or irregularities unless substantial injustice has been caused which cannot be remedied by an order of Court.

Order 2 rule 1 of the Rules of Court 2012 similarly provides that procedural non-compliance ordinarily constitutes an irregularity and does not nullify proceedings.

This Court accepts the general proposition that procedural irregularities do not automatically invalidate proceedings. However, S/N cLVka5kjB0en9pzX0bJP3A the difficulty confronting the Applicant is not merely one of procedural form.

The Applicant seeks effectively to obtain leave to continue appellate proceedings in the name or interest of a company already under liquidation, notwithstanding the position taken by the liquidator.

This is not a routine procedural matter. The Court must therefore be satisfied not merely that the application is procedurally competent, but that there exists proper legal and factual justification for the extraordinary relief sought.

In the present case, this Court is not so satisfied. WHETHER THE APPLICANT HAS ESTABLISHED SUFFICIENT BASIS

The Applicant relies heavily on section 486(2) and contends that as a contributory, he possesses locus standi to invoke the supervisory jurisdiction of the Court over the liquidator.

Whilst that proposition is generally correct, the existence of standing does not automatically entitle the Applicant to the substantive relief sought. S/N cLVka5kjB0en9pzX0bJP3A

The Court retains an overriding discretion and must consider whether the proposed litigation genuinely serves the interests of the liquidation estate.

The authorities cited by parties consistently emphasise that liquidation proceedings are collective insolvency proceedings intended to ensure orderly administration of assets.

This Court further notes the Petitioner’s submission that section 486(2) of the Companies Act 2016 ought not to be invoked lightly by a contributory merely because the liquidator had declined to grant consent for continuation of proceedings.

The Petitioner relies on the decision in Ken Fui Man v Nihon Properties Sdn Bhd (Chay Kam Yuin, Applicant) [2022] MLJU 3543 in support of the proposition that judicial intervention against decisions of a liquidator is only warranted in limited and exceptional circumstances.

In particular, Nadzarin Wok Nordin J. (as he then was) held: “[19] I hold that the said Section 486(2) of the Companies Act 2016 is only to be invoked by any creditor or contributory by applying to the Court with respect to any exercise or proposed exercise of the Liquidator’s powers under the Twelfth Schedule S/N cLVka5kjB0en9pzX0bJP3A where the conduct of the Liquidator can be shown by the Applicant to be i. acting fraudulently ii. not being bona fide in his conduct iii. so unreasonable and absurd that no reasonable person would so act [20] Save for the above categories, this Court should not interfere with the decision of the Liquidator. I rely on Koh Huat Kwan v Pegawai Penerima (selaku pelikuidasi bagi Poh Mah Housing Development Sdn Bhd) & Ors [2015] 7 CLJ 16, where the Court of appeal in a judgment delivered by Vernon Ong JCA (as His Lordship then was) held in a case involving the similar section 236(3) and/or section 279 in the Companies Act 1965 that: “[15] At the outset, it is pertinent to note that the appellant’s application to set aside the consent order is predicated on s.236(3) and/or s. 279 of the CA 1965 which are as follows: Section 236(3) reads: The exercise by the liquidator of the powers conferred by this section shall be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers. Section 279 further provides as follows: Any person aggrieved by any act or decision of the liquidator may apply to the Court which may confirm S/N cLVka5kjB0en9pzX0bJP3A reverse or modify the act or decision complained of and make such order as it thinks fit. [16] We agree with the learned High Court Judge’s observation that the reference to the word “court” would mean the “Winding-Up Court” and any application arising out of any matter in the course of a winding-up should be referred to the Winding-Up Court. [17] By invoking either of the aforesaid sections of the CA 1965, the Winding-Up Court is only justified in interfering with the exercise of the powers, acts or decisions of the first respondent qua liquidator if the appellant can show that the conduct of the first respondent falls within the following categories: a) that the first respondent had acted fraudulently; or b) that the first respondent was not bona fide in his conduct; or c) that the conduct of the first respondent was so utterly unreasonable and absurd that no reasonable person would so act. (see Leon v. York-O-Matic Ltd [1966] 3 All ER 277; Harold M Pitman & Co v. Top Business Systems (Nottingham) Ltd [1984] BCLC 593; Abric Project Management Sdn Bhd v. Palmshine Plaza Sdn Bhd & Anor [2007] 7 CLJ 516; [2007] 3 MLJ 571) S/N cLVka5kjB0en9pzX0bJP3A [21] Applying the authority of Koh Huat Kwan (supra) herein, I find no arguable case for the Applicant to bring an action against the JMB under this section 486(2) of the Companies Act 2016 when the Applicant has not made out a case or proven to this Court that any of the categories mentioned in Koh Huat Kwan (supra) exists in the Motion before this Court.”

The decision in Ken Fui Man (supra) emphasised that the Court would only interfere with the conduct or decision of a liquidator where the applicant is able to demonstrate that the liquidator:

acted fraudulently;

acted mala fide;

acted in a manner so unreasonable or absurd that no reasonable liquidator would have acted in such manner.

It is further observed that the statutory supervisory jurisdiction of the winding up Court is not intended to permit contributories or creditors to routinely substitute their own commercial or litigation preferences for that of the liquidator entrusted with administration of the liquidation estate.

This Court respectfully agrees with the aforesaid principles. S/N cLVka5kjB0en9pzX0bJP3A

In the present case, the Applicant has not demonstrated any credible evidence that the Official Receiver had acted fraudulently, mala fide, arbitrarily or in a manner so unreasonable as to justify judicial intervention under section 486(2) of the Companies Act 2016.

On the contrary, the material before this Court shows that the Official Receiver had considered the financial position of the Respondent company, the viability of continuing the appeals, and the absence of sufficient funds within the liquidation estate before declining to grant the approval sought by the Applicant.

The Applicant’s dissatisfaction with the decision of the Official Receiver, without more, is plainly insufficient to invoke the supervisory jurisdiction of this Court to override the liquidator’s decision.

This Court is therefore unable to conclude that the threshold laid down in Ken Fui Man (supra) has been satisfied in the present case.

The Applicant’s affidavits and submissions largely assert dissatisfaction with the Official Receiver’s decision or position regarding continuation of the appeals. S/N cLVka5kjB0en9pzX0bJP3A

However, dissatisfaction alone is insufficient. The Court must be satisfied that the liquidator acted improperly, irrationally, mala fide, or in a manner plainly detrimental to the liquidation estate.

No such evidence has been established before this Court. WHETHER THE PROPOSED APPEALS BENEFIT THE LIQUIDATION

Another critical consideration is whether continuation of the appeals would realistically benefit the Respondent company and its stakeholders collectively. The Applicant asserts that the appeals possess merit and should therefore be pursued.

However, this Court notes that no detailed merits analysis of the proposed appeals has been placed before this Court sufficient to justify judicial intervention against the liquidator’s position.

The Applicant essentially invites this Court to permit continuation of potentially costly litigation based largely on assertions that the appeals ought to proceed. This Court is unable to accede to such invitation. S/N cLVka5kjB0en9pzX0bJP3A

In insolvency proceedings, the Court must be astute not to permit liquidation assets or processes to be consumed by speculative or collateral litigation lacking clear demonstrated benefit to the estate.

The Official Receiver, as liquidator, bears statutory responsibility to assess whether litigation ought reasonably to be pursued having regard to prospects, costs, risks and interests of creditors generally.

This Court ought not lightly substitute its own view for that of the liquidator absent compelling circumstances. No such compelling circumstances exist here.

The Applicant relies on Small Medium Enterprise Development Bank Malaysia Berhad v Oren Venture Sdn Bhd & Ors and another case [2022] 12 MLJ 247. That authority concerns broader principles relating to procedural irregularities and justice-oriented interpretation of procedural requirements.

This Court accepts that procedural rules should not ordinarily defeat substantive justice. However, the present matter does not turn solely on technical non-compliance.

The substantive difficulty remains that the Applicant has failed to establish why this Court should override the liquidator’s position and S/N cLVka5kjB0en9pzX0bJP3A permit continuation of appellate proceedings in circumstances where the company is already under compulsory winding up.

Justice in insolvency proceedings extends beyond the interests of a single contributory. The Court must consider the interests of creditors, orderly liquidation administration and efficient resolution of the winding up process.

This Court is not persuaded that granting the present application would advance those objectives. WHETHER THE APPLICATION IS AN ABUSE OR COLLATERAL

The Petitioner further argues that the present application constitutes an attempt to circumvent the consequences of the winding up order and to continue collateral litigation despite the liquidation status of the Respondent company.

This Court finds considerable force in that submission.

The chronology demonstrates that the winding up order had already been made before the present application was pursued. S/N cLVka5kjB0en9pzX0bJP3A

Once liquidation intervenes, litigation strategy and decisions concerning continuation of proceedings properly fall within the liquidator’s domain subject to Court supervision.

The Court’s supervisory jurisdiction should not be transformed into a mechanism by which disgruntled stakeholders continue private litigation agendas in the company’s name.

That would defeat the collective nature of insolvency administration.

This Court is therefore not persuaded that the present application was genuinely directed towards advancing interests of the liquidation estate as a whole.

Even assuming the Applicant possesses standing to invoke section 486(2), the relief sought remains discretionary. The Applicant bears the burden of satisfying this Court that such discretion ought properly to be exercised in his favour.

Having considered the totality of circumstances, this Court is not satisfied that the Applicant has discharged that burden. S/N cLVka5kjB0en9pzX0bJP3A

The Court is particularly mindful that:

the Respondent company is already under compulsory liquidation;

the Official Receiver is statutorily entrusted with management of the liquidation estate;

the Applicant has not demonstrated clear impropriety or irrationality on the part of the liquidator;

the proposed continuation of the appeals has not been shown to confer clear benefit upon the liquidation estate; and

the continuation of litigation may further delay and complicate the winding up process.

These considerations weigh heavily against granting the relief sought.

For all the reasons stated above, this Court finds that the Applicant has failed to establish sufficient legal or factual basis to justify the grant of leave under section 486(2) of the Companies Act 2016. S/N cLVka5kjB0en9pzX0bJP3A

This Court further finds that:

the application is fundamentally unsustainable in substance;

the Applicant has failed to demonstrate compelling circumstances warranting judicial intervention against the liquidator’s position;

the proposed continuation of the appeals has not been shown to advance interests of the liquidation estate; and

the balance of justice and insolvency administration weighs against granting the relief sought.

Accordingly, Enclosure 38 is dismissed.

Costs of RM10,000.00 is awarded to the Petitioner. Dated: 26th May 2026 -sgd- …………………………………………. (BUDIMAN LUTFI BIN MOHAMED) JUDICIAL COMMISSIONER HIGH COURT, JOHOR BAHRU S/N cLVka5kjB0en9pzX0bJP3A Solicitors for the Petitioner : Dato’ Muhamad Hafazman and Norhazira binti Abu Haiyan : Messrs Tan Vincent & Co. : Johor Bahru, Johor Solicitors for the Respondent : M Manoharan, Khong Zhi Jian and Daryl Tan : Messrs Daryl Tan & Yow Partners : Subang Jaya Solicitors for the Applicant : M Manoharan, Khong Zhi Jian and Daryl Tan : Messrs Daryl Tan & Yow Partners : Subang Jaya S/N cLVka5kjB0en9pzX0bJP3A