Siak Siong Construction Sdn Bhd v 1. ) Aj Corp Sdn Bhd (dalam Likuidasi) (BA-22NCvC-644-12/2018)

AJ CORP SDN BHD (dalam likuidasi) (No. Syarikat: 537803-V) [Didakwa sebagia Defendan Nominal Di dalam kapasitinya sebagai Pemegang Fidusiari terhadap haknya di bawah Kontrak Utama untuk kepentingan

2.

SELANGOR INDUSTRIAL CORPORATION SDN BHD (No. Syarikat: 71965-K) … DEFENDAN 27/06/2024 12:57:53 BA-22NCvC-644-12/2018 Kand. 140 JUDGEMENT (ENCLOSURE 106) [1] The following are the grounds of judgment of this Court in relation to the 1st Defendant’s application under Enc. 106 pursuant Order 33 Rule 2 of the Rules of High Court 2012. [2] Under Enc. 106, the 1st Defendant seeks for the determination of the following questions and reliefs arising therefrom:

(A) Whether the letter dated 21.9.2021 (Enclosure 74) from the Official Receiver and Liquidator to the Plaintiff’s solicitor for sanction to proceed with this action is invalid, ineffective and void because the Official Receiver and Liquidator does not have the authority to delegate his statutory duties and obligations to bring or defend proceedings in the name of a company that is wound up?

(B) Whether the termination of the Contract dated 26 March 2015 through Defendant 2’s letter dated 21 June 2017 is invalid, ineffective and void because the said termination letter was executed by the Chief Executive Officer of Defendant 2 and not the Dato’ Menteri Besar of Selangor as stipulated in the Contract?

(C) If the answer to Question A is in the affirmative, an order is issued to strike out the Plaintiff as a party in this action; alternatively.

(D) If the answer to Question A is in the affirmative, an order is issued that the sanction by the Official Receiver and Liquidator for the appointment of Messrs. Syalihah Tang & Partners to act as the Plaintiff’s solicitor is cancelled and set aside.

(E) If the answer to Question B is in the affirmative, an order that Defendant 2 (“PKNS”) is liable to pay damages to Defendant 1 (“D1”) to be assessed by the Judge or Registrar of this Honourable Court.

(F) That the Court's order for the filing of pre-trial cause papers be postpone until the final disposal of this Application;

(G) Interest on the judgment amount at the rate of 5% per annum from June 21, 2017 until full settlement;

(H) Costs; dan

(I) Such further relief as this Honorable Court deems just and equitable. [3] Enc. 106 was heard on 15.3.2024 with the decision reserved. On 29.3.2024, this Court delivered its decision on Enc. 106 with both Questions A and B answered in the affirmative. [4] Accordingly, the present suit by the Plaintiff was struck off as prayed for by D1. With reference, to the termination of the Contract dated 26 March 2015 through the PKNS’ letter dated 21 June 2017, this Court finds that the said termination letter which was executed by the Chief Executive Officer of PKNS and not the Dato’ Menteri Besar of Selangor as expressly required in the Contract is invalid, ineffective and void. [5] Dissatisfied with the above decision, the Plaintiff appealed by way of the requisite Notice of Appeal dated 25.4.2020. The following is this Court’s grounds of judgment in relation to the appeal by the Plaintiff. Introduction [6] The factual matrix forming the background of the case are set out below:

Circa 2014, PKNS appointed AJ Corp as a main contractor of a project called “Proposed Construction and Completion of 96 Units of Semi-Detached Houses (40’ x 80’) and Related Insfrastructure in Section 2A, Antara Gapi, Hulu Selangor, Selangor Darul Ehsan” (hereinafter “the Project”). The contract is evidenced by a Letter of Acceptance of Tender dated 9th June 2014.

On 26.3.2015, AJ Corp and PKNS entered into a Standard PWD Form 203A (Rev. 1/2010) Contract No. PKNS/IP/AG/KON-19/2013 (hereinafter “the Contract”) for the said Project.

Subsequently, AJ Corp appointed Siak Siong Construction Sdn Bhd (the Plaintiff in the original/main suit) as a principal subcontractor for the Project.

By a Court Order dated 5th of April 2017, AJ Corp was wound up and at that point in time, AJ Corp had completed 92% of the work under the Project.

Clause 51.2 of the Contract provides that, inter alia, a right for the Government to terminate the contract, if AJ Corp is wound up.

Clause 4.1 (b) of the Contract provides that the officer empowered to take action on behalf of the Government under the termination provision in Clause 51, is the Dato’ Menteri Besar Selangor.

On the 21st of June 2017, PKNS exercised its right and issued a letter of termination of the Contract (‘the said Letter of Termination’) enforcing the provisions of Clause 51.2 on the ground that the AJ Corp had been wound up. The said letter of termination was signed by the Chief Executive Officer of PKNS, instead of Dato’ Menteri Besar Selangor.

Subsequently, PKNS then awarded the completion of the Project to Selangor Industrial Corporation Sdn Bhd (the 3rd Defendant in the original/main suit).

Upon the termination of the Contract, PKNS made decisions, took actions and/ or omissions, among others, as follows: a. Forfeited AJ Corp’s Performance Bond; b. Deprived AJ Corp of the Retention Sums; c. Omitted to pay on approved Variation Orders; d. Omitted to honour Progress Claims; e. Omitted to pay AJ Corp on work completed or certified as undervalued and / or yet to be certified; f. Omitted to pay on Prolongation Costs the Delay Cost in respect of the instructions and/or variation work and extension of time to complete the Project following the extension of time that has been previously approved and/or which has not yet been approved at the time of the Termination; g. Made deductions for liquidated and ascertained damages; h. Omitted to reimburse AJ Corp for its materials on site which were taken by PKNS.

Both Siak Siong Construction Sdn Bhd, the Plaintiff in the main suit and AJ Corp, the Plaintiff in the counterclaim, claims damages for the same breach from the PKNS. Summary of D1’s grounds in support of the Enc. [7] D1’s grounds in support of Enc. 106 are as follows:

It is an undisputed fact that the Plaintiff was compulsorily wound up after this suit was commenced.

(ii) the sanction granted by Official Receiver on 21.9.2021 is invalid, ineffective and void because the Official Receiver does not have the authority to delegate his statutory duties and obligations to bring or defend proceedings in the name of a company that is wound up.

(iii) The said letter of termination by PKNS, was issued on the ground that the AJ Corp had been wound up.

(iv) Based on Clause 51.2 of the Contract, PKNS has the right to terminate the said contract in the event the contractor (Plaintiff) becomes insolvent.

The said letter of termination was issued in pursuant to Clause 51.2 of the Contract.

(vi) The said letter of termination was issued in pursuant to Clause 51.2 of the Contract.

(vii) The said letter of termination was issued by the Chief Executive Officer of PKNS. [8] In a nutshell, D1 contended as follows:

The Plaintiff and/or its solicitor has no locus standi to continue this suit. The principle in the case of Small Medium Enterprise Development Bank Malaysia Bhd v Oren Venture Sdn Bhd & Ors and another case [2022] 12 MLJ 247 on a liquidator’s power in a winding up by the court was referred. The D1 contends that a liquidator of a wound-up company does not have power to issue a sanction or delegate his power to bring or defend proceedings in the name of a company that is wound-up.

Clause 4.1(b) of the Contract, is stated in mandatory terms that Dato Menteri Besar of Selangor shall be the only person empowered to take action on behalf of the Government. By the word “shall”, the right to act cannot be exercised by any other officer, other than the Menteri Besar himself under Clause 51 of the Contract. Accordingly, PKNS is bound by the said provision. Summary of the Plaintiff’s submission in opposing Enc. [9] In opposing D1’s application, the Plaintiff took the following position:

By s 486(1)(a), the liquidator may, without the authority of the court or of the committee of inspection exercise any of the general powers in Part I of the 12th Schedule. Part I consists of items (a) to (I). Under item (a) of the 12th Schedule, a liquidator may ‘bring or defend any action or other legal proceedings in the name and on behalf of the company’.

The liquidator is not delegating the appointment of the solicitors to a former director of the wound-up company as held in Zaitun Marketing Sdn Bhd Bousted Eldred Sdn Bhd [2009] 3 MLRA 757 but on his own as the Plaintiff’s company has a stake in the claim against PKNS. Court’s Analysis and Findings [10] Having reviewed the case in its entirety, this Court agrees with the submission of D1’s solicitors that the Official Receiver i.e. the liquidator of the Plaintiff, has no locus standi nor power to issue a sanction to bring this present suit against D1 and PKNS. [11] In this regard, the Plaintiff’s submission premised on the provisions of S 486(1)(a) of the Companies 2016 is misconceived as Enc. is not a challenge on the liquidator’s power to appoint its present solicitors to take conduct of the case. To the contrary, Enc. seeks to challenge the powers of the liquidator to sanction the bringing of the suit. [12] At this juncture, it would be appropriate to remind the Plaintiff’s liquidator that a liquidator appointed by Court can only exercise the powers expressly conferred by him under Section 486(1)(a) of the CA read together with the 12th Schedule thereof. My reading of these provisions finds nothing expressly conferring the power to sanction the bringing of a suit in the name and on behalf of the company which can only be exercise by the winding up Court. (see S486(2) CA 2016 and the Court of Appeal decision in University of Malaya (University Malaya Medical Centre) v FBSM Ctech Sdn Bhd [2018] 8 CLJ 71). [13] As there was no sanction issued by the winding up Court for the Plaintiff to bring this action against D1 and PKNS, the present suit herein cannot be allowed to continue and was accordingly struck off. Conclusion [14] In the upshot, D1’s application vide Enc. 106 against the Plaintiff is hereby allowed with cost of RM 5,000-00. Dated 20th June 2024, ………………………………….. (MOHD FIRUZ BIN JAFFRIL) JUDGE HIGH COURT OF MALAYA AT SHAH ALAM Solicitors for the Plaintiff: Messrs. Syalihah Tang & Partners, No.106, 1st Floor, Jalan S2 D32, City Centre Seremban 2, 70300 Seremban, Negeri Sembilan. (No.Ruj : STP13/17/C/119/SSCSB) No.Tel : 06-6017268. Solicitors for the 1st Defendant: Messrs.Sukhwinder Singh N Mahinder Singh, No.6-3-2 (Level 2), Jalan Setia Prima Q, U13/Q, Section U13, Bandar Setia Alam, 40170 Shah Alam Selangor. No.Tel : 016-6002323. Solicitors for the 2nd Defendant: Messrs. Bhadarul Baharain & Partners, A1101, Pusat Dagangan Phileo Damandara 2, No.15, Jalan 16/11, Off Jalan Damansara, 46350 Petaling Jaya, Selangor.