XORIX SDN. BHD. (Penerima & Pengurus Dilantik) v 1. ) JARDIN PHARMA BERHAD (WA-22NCC-328-05/2024)

JARDIN PHARMA BERHAD [No. Syarikat: 202101017872 (1418172-K)]

DR. MARYAM AL-BATUL BINTI AZIZUDDIN (No. KP: 861210-43-5884)

YASIR AYEOP BIN AZIZUDDIN (No. KP: 930607-08-5129)

MUHAMMAD AL-A’THIQ BIN MARZUKI (No. KP: 850515-14-5155)

MARZUKI BIN H SALIM (No. KP: 530913-02-5551) … DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT A. Introduction [1] For the avoidance of confusion, the term “plaintiff” is used to refer collectively to Xorix Sdn Bhd (“Xorix”) and the receivers and managers (“R&Ms”) appointed over Xorix, while the term “Xorix” refers only to the company. [2] The plaintiff filed an application for an interim injunction (“Injunction Application”) to restrain the defendants from: a. Dealing with third parties to cancel, revoke or transfer a manufacturer’s license, and the registration status connected to the license, which the plaintiff claimed belong to Xorix; b. Carrying out activities on a property which the plaintiff claimed is used for Xorix’s business; and c. Removing assets from the property. [3] The court dismissed the Injunction Application, for the reasons set out below. B. Background Facts The parties [4] Xorix is a company incorporated in 2004, and is in the business of manufacturing pharmaceutical products. [5] The defendants are connected to Xorix in the following manner: a. The 1st defendant is a shareholder of Xorix. It was incorporated in 2021. It also manufactures and sells pharmaceutical products. b. The 2nd defendant is a shareholder and director of the 1st defendant, and a former director of Xorix. She was appointed as a director of Xorix on 3 August 2022, and resigned on 19 January 2024. c. The 3rd defendant is a shareholder and director of the 1st defendant. He is a former director of Xorix, and was its chief executive officer at the material time. He was appointed as a director of Xorix on 3 August 2022, and resigned on 14 August 2023. d. The 4th defendant is a former sole director of Xorix. He was appointed as a director of Xorix on 14 August 2023, and resigned on 4 March 2024. e. The 5th defendant is an existing sole director of Xorix, who was appointed on 19 January 2024. The defendants’ involvement in Xorix [6] It is not in dispute that Xorix had been facing financial difficulties, resulting primarily from its default of four financing facilities (“Facilities”) provided by Small Medium Enterprise Development Bank Malaysia Berhad (“SME Bank”) in 2006 and 2009. In 2015, SME Bank transferred all of its rights and interests in the Facilities to SMEB Asset Management Sdn Bhd (“SAM”), a wholly-owned subsidiary of SME Bank. [7] Following the default, in 2016, SAM obtained four judgments in default against Xorix in respect of the Facilities. [8] Xorix’s debt also includes outstanding rental payments due to Yayasan Pembangunan Usahawan Terengganu (“YPUT”) under a tenancy agreement executed between Xorix and YPUT (“First Tenancy Agreement”) on the tenancy of a property located at Lots 1, 2, 3 and 4, Kawasan Perindustrian Batu 7, 23000 Dungun, Terengganu (“Property”). The First Tenancy Agreement was terminated by YPUT on 30 April 2023, as Xorix had failed to settle its rental payments. [9] The defendants assumed responsibility over Xorix’s management in August 2022, to revive Xorix’s business. They claimed that in managing Xorix’s affairs, they had taken steps to regularise Xorix’s financial position, including providing funds to maintain Xorix’s business operations, negotiating with SAM to attempt to settle the Facilities, paying off Xorix’s debt to YPUT, and executing a new tenancy agreement dated 1 July 2023 with YPUT in respect of the Property (“New Tenancy Agreement”). [10] On 23 August 2023, after negotiations with SAM on the settlement of the Facilities failed, the R&Ms were appointed over Xorix, pursuant to the terms of debentures executed by Xorix for the grant of the Facilities. The defendants alleged that they were not made aware of the appointment of the R&Ms until the appointment took effect. [11] The plaintiff claimed the defendants had breached their fiduciary duties towards Xorix in withdrawing monies from Xorix’s accounts, removing items and charged assets from the Property, and executing a supply agreement, all without proper authorisation. [12] Following the appointment of the R&Ms, the plaintiff filed this action, seeking inter alia, declarations that the defendants had interfered with Xorix’s trade, were in breach of their fiduciary duties towards Xorix, and had conspired to injure Xorix. C. The Injunction Application [13] In the Injunction Application, the plaintiff sought to restrain the defendants from: a. Dealing with any related and connected parties on the cancellation and/or revocation of Xorix’s manufacturer’s license (MALLP20241420A) (“Manufacturer’s License”) issued by the National Pharmaceutical Regulatory Agency (“NPRA”) (first part of prayer (i)); b. Dealing with any related and connected parties on the transfer of Xorix’s status as a product registration holder (“PRH”) of products in the QUEST3+ system (second part of prayer (i)); c. Carrying out activities on the Property (prayer (ii)); and d. Removing machineries and/or appliances and/or products (“Assets”) located at the Property (prayer (iii)). [14] The Injunction Application is made under order 29 rule 1 of the Rules of Court 2012, which provides that: “(1) An application for the grant of an injunction may be made by any party to a cause or matter before or after the trial of the cause or matter, whether or not a claim for the injunction was included in that party's originating process, counterclaim or third party notice, as the case may be.” [15] The injunction sought in the Injunction Application is a temporary injunction, which may be granted by the court under section 51(1) of the Specific Relief Act 1950. Section 51(1) reads: “(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.” (emphasis added) D. Considerations and Findings Considerations for the grant of an interlocutory injunction [16] In Keet Gerald Francis Noel John v Mohd Noor Bin Abdullah [1995] 1 MLJ 193, the Court of Appeal held at page 206I that a judge hearing an application for an interlocutory injunction should undertake the following enquiries: “(1) he must ask himself whether the totality of the facts presented before him discloses a bona fide serious issue to be tried…

having found that an issue has been disclosed that requires further investigation, he must consider where the justice of the case lies. 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 …

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 … Accordingly, the judge would be entitled to take into account all discretionary considerations, 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 in the event that he succeeds in establishing his claim at the trial …” (emphasis added) [17] Guided by Keet Gerald Francis (supra), I considered the facts of the present case, and found that: a. On the face of documentary evidence before the court, the facts of this case do not disclose any bona fide serious issue to be tried; b. The balance of convenience lies against allowing the Injunction Application; and c. Damages are an adequate remedy for the plaintiff in the event it succeeds in its claim at the trial of this action. [18] The finding is based on my assessment of each prayer sought by the plaintiff, as elaborated below. First part of prayer (i) of the Injunction Application: To restrain the defendants from dealing with any related and connected parties on the cancellation and/or revocation of the Manufacturer’s License [19] In the first part of prayer (i) of the Injunction Application, the plaintiff sought to restrain the defendants from dealing with any parties on the cancellation and/or revocation of the Manufacturer’s License. [20] The Manufacturer’s License is granted under the Control of Drugs and Cosmetics Regulations 1984 (“CDCR”), which are issued under the Sale of Drugs Act 1952 (“SDA”). Regulation 7(1) of the CDCR prohibits a person from manufacturing, selling, supplying, importing or administering products governed by the CDCR, unless the person holds the appropriate license issued under the CDCR. [21] The issuance of licenses is governed by regulation 12 of the CDCR. Regulation 12(1) provides as follows: “(1) The Director of Pharmaceutical Services may, subject to the provisions of these Regulations, issue any of the following licences subject to such conditions as he may impose:

a manufacturer's licence in Form 2 in the Schedule, authorising the licensee to manufacture the registered products in the premises specified in the licence and to sell by wholesale or supply the products;

a wholesaler's licence in Form 3 in the Schedule, authorising the licensee to sell by wholesale or supply the registered products from the address of the business premises specified in the licence;

a clinical trial import licence in Form 4 in the Schedule, authorising the licensee to import any product for purposes of clinical trials, notwithstanding that the product is not a registered product;

an import licence in Form 5 in the Schedule, authorising the licensee to import and sell by wholesale or supply the registered products from the address of the premises specified in the licence.” (emphasis added) [22] In Xorix’s case, the Manufacturer’s License is issued under regulation 12(1)(a) of the CDCR. It is important to note that under this regulation, Xorix was authorised by the Manufacturer’s License to manufacture its products (“Products”) in the premises specified in the Manufacturer’s License – which is the Property – and to sell or supply the Products. [23] The Manufacturer’s License is also subject to guidelines dated 1 May 2021, entitled “Garis Panduan Permohonan Lesen Pengilang, Lesen Mengimport dan Lesen Pemborong Produk Berdaftar” (“Guidelines”), issued by the Department of Malaysian Regulatory Pharmacist of the Ministry of Health. The Guidelines, issued under the SDA and the CDCR, set out requirements on licenses for the manufacturing, importation, supply and sale of pharmaceutical products, traditional medicine and health supplements. Part C1 of the Guidelines states as follows: “C1. SYARAT-SYARAT BAGI MEMOHON LESEN PENGILANG

Syarikat pemohon mestilah merupakan sebuah syarikat yang berdaftar di Malaysia;

(ii) Syarikat pemohon mestilah merupakan Pemegang Pendaftaran Produk (PPP) atau dilantik oleh PPP sebagai pengilang produk berdaftar (pengilang kontrak);

(iii) Produk yang ingin dikilang telah berdaftar dengan Pihak Berkuasa Kawalan Dadah (PBKD), Kementerian Kesihatan Malaysia (KKM);

(iv) Syarikat pemohon beroperasi di premis (termasuk premis stor), yang sah dan dilesenkan oleh Pihak Berkuasa Tempatan (PBT);

Syarikat pemohon mesti mempunyai premis pengilang (termasuk premis stor) yang memenuhi keperluan Amalan Perkilangan Baik (GMP) dan Amalan Pengedaran Baik (GDP) yang ditetapkan oleh Pihak Berkuasa Kawalan Dadah (PBKD),

(vi) Syarikat pemohon mesti mempunyai seorang Ahli Farmasi Berdaftar yang mempunyai Lesen Racun Jenis A (borong) jika mengendalikan produk Racun Berjadual.” (emphasis added) [24] From the requirements imposed in the CDCR and the Guidelines, a holder of a manufacturer’s license must manufacture products in the premises specified in the license. [25] However, in view of the termination of the First Tenancy Agreement on 30 April 2023, Xorix does not occupy the Property and therefore does not have any premises to manufacture the Products. Further, under the New Tenancy Agreement, the Property is rented by the 1st defendant, and is occupied by the 1st defendant and/or its subsidiary, Jardine Manufacturing Sdn Bhd (“JMSB”). [26] In this regard and taking into account the requirements in the CDCR and the Guidelines, Xorix cannot be the holder of the Manufacturer’s License. [27] The fact that Xorix no longer holds the Manufacturer’s License was confirmed by a search conducted using the QUEST3+ system, an online platform administered by the NPRA for the regulation of products and the process of licencing under the NPRA. The status of licensees may be verified through this system, and a search conducted by the defendants revealed that Xorix is not the holder of any manufacturer’s license under the NPRA. During the hearing of the Injunction Application, counsel for the plaintiff had also confirmed that Xorix is no longer the holder of the Manufacturer’s License. [28] It is also in evidence that it is JMSB that now holds the manufacturer’s license (MALLP20241825), which was issued by the NPRA in connection with the Property. [29] With the finding that Xorix no longer holds the Manufacturer’s License, it would follow that the first part of prayer (i) of the Injunction Application, to restrain the defendants from dealing with any related and connected parties on the cancellation and/or revocation of the Manufacturer’s License (which in any event is no longer in effect), would be academic and redundant. Second part of prayer (i) of the Injunction Application: To restrain the defendants from dealing with any related and connected parties on the transfer of Xorix’s status as the PRH of the Products [30] In the second part of prayer (i), the plaintiff is seeking an order to restrain the defendants from dealing with any related and connected parties on the transfer of Xorix’s status as the PRH of the Products. [31] When a license is issued by the NPRA, the entity receiving the license, with the right to register and market a specific product, is recognised as a PRH. The PRH is the official registrant of a product, as reflected in the QUEST3+ system. Thus, Xorix was the PRH for the Products under the Manufacturer’s License. [32] The court notes that by a sale and purchase agreement of products, dossier and registration dated 10 January 2023 (“SPA”), Xorix sold 17 of its Products to the 1st defendant for the sum of RM200,000. The amount of RM200,000 was paid by the 1st defendant to Xorix on the date of the execution of the SPA. Thus, the Products are now owned by the 1st defendant. [33] Clause 2(a) of the SPA provides that the status of the PRH and manufacturer of the 17 Products shall remain with Xoris until such time as the 1st defendant wished to transfer the PRH and/or the manufacturer status to any other party. Clause 2(b) goes on to provide as follows: “b. Should Jardin express a desire to transfer the PRH of the products, Xorix agrees to facilitate such a transfer to the entity or individual designated by Jardin. Xorix commits to effectuating this transfer within a period not exceeding 30 days from the date of Jardin's request.” (emphasis added) [34] With the execution of the SPA and the payment of the consideration due under the SPA by the 1st defendant to Xorix, I find that Xorix’s PRH status has since then been held by Xorix on trust for the 1st defendant. Further, under clause 2(b) of the SPA, Xorix is obliged to facilitate the transfer of the PRH to the 1st defendant or any person designated by the 1st defendant. The plaintiff is therefore not entitled to enforce any right Xorix may have had over the PRH status and the Products. [35] Thus, I find that the plaintiff does not have any right to restrain the 1st defendant from dealing with the Products, or with the PRH status in respect of the Products, as sought in the second part of prayer (i) of the Injunction Application. Prayer (ii) of the Injunction Application: To restrain the defendants from carrying out activities on the Property [36] Under prayer (ii) of the Injunction Application, the plaintiff is seeking to restrain the defendants from carrying out activities on the Property. [37] It is important to highlight that after the First Tenancy Agreement was terminated by YPUT due to Xorix’s failure to make rental payments to YPUT, the 1st defendant executed the New Tenancy Agreement with YPUT on 1 July 2023, in respect of the Property. [38]