Yudishthiran A/L Doraisamy v 1. ) Sugumaran A/L Sinnasamy (WA-24NCC-653-12/2018)

SUGUMARAN A/L SINNASAMY

USAH RANI A/P SHANMUGAM

KAUSALIYA A/P SUGUMARAN

S. VIMALAN A/L SUGUMARAN

VIMAL AUTO-LINER SDN BHD

VIMAL BODYWORKS SDN BHD

VIMAL TRADING SDN BHD (COMPANY NO.: 189399-U) ...DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] The Plaintiff commenced this Originating Summons (‘Enclosure 1’) under Section 346 of the Companies Act 2016 (‘CA 2016’) for oppression and seeks, inter alia, the following reliefs:

A declaration that the 1st to 7th Defendants, or any one or more of them, whether jointly and/or severally are conducting the S/N QnlaMnidQEWF5y4y4AjpRw affairs of the 5th Defendant in a manner that is oppressive to and/or in disregard of the Plaintiff’s interest as a member of the 5th Defendant;

A declaration that the sole purpose of incorporation of the 6th Defendant was to further oppress the Plaintiff’s interest as a member of the 5th Defendant, by diverting the business relating to Honda body and paint business (“Body And Paint Business”) of the 5th Defendant to the 6th Defendant;

A declaration that the 1st and 2nd Defendants through the 7th Defendant, has been diverting profits from the 5th Defendant to the 7th Defendant;

A declaration that the 1st to 4th Defendants have breached their fiduciary duties owed to the 5th Defendant;

That the 1st to 4th Defendants do sell all their 510,000 ordinary shares of RM1.00 each in the 5th Defendant or representing 51% of the entire paid up capital of the 5th Defendant, whichever the case may be to the Plaintiff at a fair value (“Court Determined Price”) to be determined by this Court or an independent valuer (“Court Appointed Valuer”);

Further orders to facilitate the registration and transfer of the shares stated in (e) above;

An Order to direct and compel the 1st and 2nd Defendants to transfer the land known as Lot 301, Jalan Pegawai, Kangar, 01000 Perlis held under GRN 4520, Lot 301, Bandar Kangar, Negeri Perlis (‘the Vimal Land’) to the 5th Defendant within 45 days from the service of the sealed Order on the 1st and 2nd Defendants or their solicitors at their own costs and expense including but not limited to stamp duty and legal fees;

That the 1st, 2nd, 3rd, 4th, 6th and 7th Defendants are jointly and or severally liable to repay the following to the 5th Defendant which is to be assessed by this Court:

Any payment made towards the purchase and/or maintenance of the Rolls Royce bearing vehicle registration number KF 6;

(ii) Any secret profit made by 7th Defendant from the trade in business of the 5th Defendant;

(iii) All salaries paid to the 1st Defendant;

(iv) All secret profit or unauthorised commission paid to the 1st to 4th Defendants;

Damages to be assessed by this Court;

Interest at the rate of 5% per annum on the decreed sum from the date of Enclosure 1 until realisation and costs. S/N QnlaMnidQEWF5y4y4AjpRw [2] Parties have agreed to the cross-examination of affidavits following disputes of facts arising therefrom and that the contents of the affidavits together with the testimonies given by the deponents will be relied upon in support of their respective cases. Background Facts [3] The Plaintiff is a registered shareholder and director of the 5th Defendant. [4] The 1st Defendant is a Malaysian citizen and has an address for service at No. 2808-P, Taman Golf, Jalan Sultanah, 05250 Alor Setar, Kedah. The 1st Defendant is also commonly known as Dato’ K (‘Dato K’ or ‘the 1st Defendant’). [5] The 2nd Defendant is a Malaysian citizen and has an address for service at No. 2808-P, Taman Golf, Jalan Sultanah, 05250 Alor Setar, Kedah. The 2nd Defendant is the 1st Defendant’s wife. [6] The 3rd Defendant is a Malaysian citizen and has an address for service at No. 2808-P, Taman Golf, Jalan Sultanah, 05250 Alor Setar, Kedah. The 3rd Defendant is the 1st Defendant’s daughter. [7] The 4th Defendant is a Malaysian citizen and has an address for service at No. 2808-P, Taman Golf, Jalan Sultanah, 05250 Alor Setar, Kedah. The 4th Defendant is the 1st Defendant’s son. S/N QnlaMnidQEWF5y4y4AjpRw [8] The 5th Defendant (‘Vimal Auto’ or ‘the 5th Defendant’) is a company incorporated in Malaysia on 8.6.2005 and was subsequently awarded dealership for Honda motorcars by Honda Malaysia Sdn Bhd. Presently Vimal Auto has an authorised share capital of RM1,000,000-00 divided into 1,000,000 ordinary shares of RM1-00 each, of which 1,000,000 ordinary shares have been issued and fully paid up. Vimal Auto has a principal place of business located at Lot 301, Jalan Pegawai, Kangar, 01000 Perlis (‘Vimal Auto Office’). [9] The 6th Defendant (‘Vimal Body’ or ‘the 6th Defendant’) is a company incorporated in Malaysia on 20.3.2018. The 6th Defendant’s board of directors and shareholders consists of the 1st to 4th Defendants. [10] The 7th Defendant (‘Vimal Trading’ or ‘the 7th Defendant’) is a company incorporated in Malaysia on 14.11.1989. The 1st and 2nd Defendants are the shareholders and directors of Vimal Trading. [11] It is the Plaintiff’s contention that at all material times, the 2nd to 4th Defendants were acting under the instructions and or directions and or control of Dato K. [12] The Plaintiff and his father (‘PG Doraisamy’) are relatives of the 1st Defendant. [13] Vimal Auto was incorporated by the 1st and 2nd Defendants on 8.6.2006 with the intention of starting a Honda dealership, which S/N QnlaMnidQEWF5y4y4AjpRw was subsequently awarded to Vimal Auto by Honda Malaysia Sdn Bhd (‘Honda Malaysia’). [14] The 3rd and 4th Defendants subsequently got involved in Dato K’s ‘family business’. [15] Sometime in 2010, Dato K approached the Plaintiff and P.G. Doraisamy to invest in Vimal Auto to activate the Letter of Intent for Honda dealership that was issued, starting with the construction of Vimal Office on a piece of land jointly owned by Dato K and the 2nd Defendant held under GRN 4520, Lot 301, Bandar Kangar, Negeri Perlis (‘Vimal Land’). [16] The Plaintiff and PG Doraisamy contended that they agreed to make the investment after assurance was given that the Vimal Land will be transferred to 5th Defendant after construction of Vimal Auto Office is completed. [17] The Plaintiff had invested approximately RM4,000,000.00 into Vimal Auto. Thereafter, the Plaintiff was appointed as a director of Vimal Auto on 9.1.2012 and received 490,000 shares of RM1-00 each, which amounted to 49% of the total shares issued of Vimal Auto to formalise the Plaintiff’s entry into Vimal Auto. Vimal Auto was the first Honda 3S (Sales, Service and Spare parts) Centre in Perlis and first opened in early 2012. It is the Plaintiff’s contention that the Plaintiff would be handling the operations of Vimal Auto whilst the 3rd Defendant would be handling the finance and administration aspects of Vimal Auto. S/N QnlaMnidQEWF5y4y4AjpRw [18] Presently, the board of directors of Vimal Auto comprises the Plaintiff and the 1st to 4th Defendants and the shareholding structure of Vimal Auto is as follows: Shareholder Ordinary Shares (units) Plaintiff 490,000 1st Defendant 210,000 2nd Defendant 100,000 3rd Defendant 100,000 4th Defendant 100,000 [19] It is the Plaintiff’s case that the Plaintiff’s investment involves a mutual understanding and agreement between the Plaintiff and the 1st Defendant based on the following:

That the Vimal Land will be transferred to Vimal Auto;

That the Plaintiff would hold 49% shareholding in Vimal Auto;

That the Plaintiff would be in charge of the operation of Vimal Auto in the capacity of a Managing Director;

That used motor vehicles offered to Vimal Auto by customers would be referred to Vimal Trading first;

That the Plaintiff and the 1st Defendant would work towards procuring on behalf of Vimal Auto the body and paint business from Honda Malaysia’ (‘Body and Paint S/N QnlaMnidQEWF5y4y4AjpRw Business’). This Body and Paint Business consist of the following works:

Spraying and painting of Honda motor vehicles;

(ii) Maintenance and repair of Honda motor vehicles; and

(iii) Restoring damaged Honda motor vehicles. (Collectively referred to as the ‘Verbal Agreements’) [20] It is the Plaintiff’s contention that whilst Vimal Auto accepts trade-in of used motor vehicles towards the purchase of new Honda motor vehicles, these used motor vehicles would be referred to Vimal Trading first, vide a verbal agreement between Dato K and the Plaintiff. If Vimal Trading refuses to buy the said used motor vehicle, it would then be referred to other used motor vehicle dealers. Vimal Trading would then pay for the used motor vehicles and the proceeds would then form the “trade-in amount” to be used towards the purchase of a new Honda motor vehicle. [21] The working relationship between Dato K and the Plaintiff was initially good. Due to this, most of the dealings with one another were done verbally. However, this relationship started to deteriorate sometime around June 2017 and the situation has gotten worse after. [22] There were inconsistencies in the financial management of Vimal Auto. Before the first Annual General Meeting (‘2018 AGM’) of Vimal S/N QnlaMnidQEWF5y4y4AjpRw on 9.1.2018, the Plaintiff had numerous disagreements with Dato K and his family. The disagreements between Dato K and the Plaintiff caused a lot of frictions within Vimal Auto and it was even brought up to Honda Malaysia. [23] On or about 7.6.2017, P.G. Doraisamy and the Plaintiff met up with Mr. Perumal, the authorised representative of the auditors of Vimal Auto, namely Messrs. Selva and Associates (‘Perumal’) and Mr. Balamurugan A/L Tanga Rajoo of Messrs Bptrend Advisory Sdn Bhd (Company No. 1016317-D), the Company Secretary of Vimal Auto (‘Balamurugan’ or ‘the Company secretary’). [24] At the meeting, the Plaintiff informed both Perumal and Balamurugan of his wish to transfer some of his shares to his wife and sister. At the same time, the Plaintiff further pointed out to both Perumal and Balamurugan that there is a discrepancy in the Annual Report as the paid up capital recorded was only RM1,000,000-00, whereas the Plaintiff had contributed approximately RM 4,000,000- 00 in cash and Dato K and his family have contributed assets and cash worth approximately RM5,200,000-00. [25] Thereafter, there were email correspondence between Balamurugan and the Plaintiff relating to the proposed transfer of shares. In the course of this, Balamurugan forwarded the 2015 and 2016 AGM Annual Return Forms (Board Resolution) on the Audited Accounts of Vimal Auto for the years ending 2015 and 2016. The Plaintiff discovered that his signature had been forged and voiced his concerns to Balamurugan and Perumal, which fell on deaf ears. S/N QnlaMnidQEWF5y4y4AjpRw [26] Following the discovery of such forgery, the Plaintiff suspected that the 1st to 4th Defendants (as the controlling faction of Vimal Auto) were abusing their power to the detriment of Vimal Auto. The Plaintiff then voiced his concerns during the 2018 AGM. [27] During the 2018 AGM, the Plaintiff raised the following issues and grievances:

Financial irregularities in Vimal Auto’s financial records and statements;

Diversion of Vimal Auto’s business;

Abusive and oppressive conduct towards the minority faction of Vimal Auto;

Refusal to transfer shares; and

Obstruction of duties and exclusion from management. [28] At that material time, the Plaintiff was not aware that his signatures were forged on some of Vimal Auto’s resolutions. [29] On 12.2.2018, the Plaintiff informed the directors of Vimal Auto and Balamurugan that the Plaintiff had engaged Mr. Gabriel Teo Chun of Messrs GTC Consulting Sdn Bhd (‘GTC’), an independent auditor, to review and inspect Vimal Auto’s records, accounts and statements at Vimal Auto Office. GTC had affirmed an affidavit

Purchase of a luxury motor vehicle under the name of 1st Defendant, a Rolls Royce Ghost bearing registration No.

Irregular commission payments to Directors and unapproved persons;

Irregular payments for the benefit of the 1st Defendant;

Irregular Accounting Entries; and

Inconsistent documentation to cover the 1st to 4th Defendants actions. The Law Relating to Oppression [31] It is trite that the Plaintiff bears the burden to prove his case. [32] Section 346 (1) of the Companies Act reads as follows: S/N QnlaMnidQEWF5y4y4AjpRw “(1) Any member or holder of a debenture of a company or, in the case of a declared company under Part IX, the Minister, may apply to the Court for an order under this section on the ground —

that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or holders of debentures including himself or in disregard of his or their interests as members, shareholders or holders of debentures of the company; or

that some act of the company has been done or is threatened or that some resolution of the members, holders of debentures or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or holders of debentures (including himself).” [33] There is plethora of case law on the application of section 346 of the Companies Act 2016 [previously section 181 of the Companies Act

In Gue See Sew & Ors v Heng Tang Hai & Ors [2020] MLJU 46, I had referred to the established authorities and stated thus: ‘[55] The guiding principles in determining oppression under the statutory provision has been well established in various cases. The landmark case is Re Kong Thai Sawmill (Miri) Sdn Bhd [1978] 2 MLJ 227 in which the Privy Council at p 229A held: “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 S/N QnlaMnidQEWF5y4y4AjpRw entitled to expect before a case of oppression can be made (Elder v. Elder & Watson Ltd.): 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 it at naught the proper company procedure (per Lord Clyde in Thompson v. Drysdale). [Emphasis added] [56] The Federal Court in Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Construction (M) Sdn Bhd & Anor [2010] 6 CLJ 721, while dealing with s.181 of the Companies Act 1965, stressed that the underlying theme of the section is ‘unfairness’: “[25] Therefore, in order to succeed in its petition pursuant to s. 181 the petitioner has to establish and ‘must eminently be determined according to the facts’ of this case that the affairs of the company are being conducted or that the powers of the directors are being exercised in an oppressive manner or in disregard of its interests, or to its prejudice some unfairly discriminatory or prejudicial act of the company has been done or threatened, or that some resolutions of the members, debenture holders or any class of them has been passed or is proposed to be passed. [26] In other words s.181 permits judicial remedy on four categories of conduct, namely, oppressive conduct, conduct in disregard of interests, unfairly discriminatory conduct or prejudicial conduct. S/N QnlaMnidQEWF5y4y4AjpRw [27] It may also be noted that from the wordings of s.181 its basic theme is ‘unfairness’. However, unfairness ‘does not mean that the court can do whatever the individual judge happens to think fair. The concept of fairness must be applied judicially and the content which it is given by the courts must be based upon rational principles. “The court... has a very wide discretion, but it does not sit under a palm tree”. (See: O’Neil v. Philips [1999] 2 All ER 961). [29] “the term ‘disregard of interests’ is to be understood to mean ‘unfair disregard’ while ‘oppression’ denotes an ‘unfairly prejudicial conduct’ which means a conduct ‘departing from standards of fair dealing and a violation of conditions of fair play’. But ‘a member of a company will not ordinarily be entitled to complain of unfairness unless there has been some breach of the terms on which he agreed that the affairs of the company should be conducted’. And ‘trivial or technical infringements of the articles were not intended to give rise to petitions under s. 459’. [Emphasis added.] [34] Re Kong Thai Sawmill (Miri) Sdn Bhd & Ors v Ling Beng Sung

2 MLJ 227 is the leading authority on the principles pursuant to s.181 of the Companies Act 1965 (now Section 346 of the Companies Act 2016). Lord Wilberforce, in delivering the advice of the Privy Council, held as follows at paragraphs 228 and 229: “This section can trace its descent from s 210 of the United Kingdom Companies Act 1948 which was introduced in that year S/N QnlaMnidQEWF5y4y4AjpRw in order to strengthen the position of minority shareholders in limited companies. It also resembles the rather wider s 186 of the Australian Companies Act 1951. But s 181 is in important respects different from both its predecessors and is notably wider in scope than the United Kingdom section. In sub-s

(1)(a) it adds disregard of the interests of members, etc to oppression as a ground for relief in this respect making explicit what was already inherent in the section (see Re HR Harmer Ltd [1959] 1 WLR 62 at p 75). It introduces a new ground in sub-s

(1)(b) and, most importantly, in sub-s (2), which sets out the kinds of relief which may be granted, it provides for ‘remedying the matters complained of’ and states as a specific type of relief that of winding-up of the company. Their Lordships consider it important that courts applying s 181 should do so according to its terms and its purpose and should not regard themselves as necessarily bound by United Kingdom decisions, which are based upon a different section, and in some cases restrictive. The same applies, though with less force, to reliance upon Australian decisions upon s 186.” [35] The Plaintiff is also guided by the case of Ebrahimi v Westbourne Galleries Ltd & Ors [1972] All ER 492 where Lord Wilberforce, at page 499-500, pointed out that the words “just and equitable” connotes: “… a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That S/N QnlaMnidQEWF5y4y4AjpRw structure is defined by the Companies Act and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The ‘just and equitable’ provision does not, … entitle one party to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way.” [36] The case of Ebrahimi was applied in Malaysia in the Privy Council case of Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 MLJ 433. [37] The principles in Ebrahimi were further affirmed in the Federal Court case of Jet-Tech Materials Sdn Bhd & Anor v Yushiro Chemical Industry Co Ltd & Ors and another appeal [2013] 2 MLJ 297 that: “[30] The scope of the oppression petition under s 181 of the CA was recently discussed by this court in Pan Pacific Construction Holding Sdn Bhd v Ngiu Kee Corp (M) Bhd & Anor [2010] MLJU 269; [2010] 6 CLJ 721, where Richard Malanjum CJ (Sabah and Sarawak) held that: Therefore, in order to succeed in its petition pursuant to s 181 the petitioner has to establish and 'must eminently be determined according to the facts of the case that the affairs of the company are being conducted or that the powers of the directors are being S/N QnlaMnidQEWF5y4y4AjpRw exercised in an oppressive manner or in disregard of its interest, or to its prejudice some unfairly discriminatory or prejudicial act of the company has been done or threatened, or that some resolutions of the members, debenture holders or any class of them has been passed or is proposed to be passed. It may also be noted from the wording of s 181 its basic theme is 'unfairness'. However unfairness does not mean that the court can do whatever the individual judge happens to think fair. The concept of fairness must be applied judicially and the content which it is given must be based upon rational principles. The court … has a very wide discretion, but it does not sit under a palm tree (see: O'Neil v Philips [1999] All ER 961). [31] Applying what was stated by Lord Hoffman in O'Neill and this court in Pan Pacific Construction Holdings Sdn Bhd v Ngui Kee Corp (M) Bhd & Anor, we hold the view that the principle laid down by Ebrahimi may be applied to the oppression provision of s 181 of the CA.” [38] The word ‘oppressive’ was defined in Re Harmer Ltd [1958] 3 All ER 689 to mean ‘burdensome, harsh and wrongful’. Jenkins LJ in the same case at page 700 cited with approval the following pronouncement of the Lord President, Lord Cooper, in Elder v Elder & Watson Ltd [1952] SC 49 in an appeal from Scotland to the House of Lords: “… the essence of the matter seems to be that the conduct complained of should at the lowest involve a visible departure S/N QnlaMnidQEWF5y4y4AjpRw from the standards of fair dealing, and a violation of the conditions of fair play on which every shareholder who entrusts his money to a company is entitled to rely. …” [39] Have briefly stated the law on oppression, it is necessary to now consider the facts giving rise to the complaints by the Plaintiff and determine if the same amounts to oppression of the Plaintiff by the 1st to 4th Defendants as the majority shareholders of Vimal Auto. Purchase of Rolls Royce [40] It is not disputed that the Rolls Royce was purchased under the 1st Defendant’s personal name but paid by Vimal Auto. From GTC’s findings of Vimal Auto’s secretarial records, there was and is no such resolution to approve the purchase of the Rolls Royce. GTC found two resolutions dated 18.5.2015 and 20.5.2015 that purportedly granted legitimacy for the purchase of the Rolls Royce, with both resolutions containing the Plaintiff’s signature. From the GTC Report, the Trust Deed and Resolution relating to the Rolls Royce was dated earlier than the Trust Deed and Resolution relating to the Rolls Royce’s previous registration number. No explanation was proffered for the discrepancy. [41] Following the GTC Report, the Plaintiff had engaged Mr. Lim Yok Chaw (‘LYC’), a handwriting expert, to analyse the Plaintiff’s signatures in the resolutions that were made available to the Plaintiff. LYC had affirmed an affidavit pursuant to Order 40A of the Rules of S/N QnlaMnidQEWF5y4y4AjpRw Court 2012 at Enclosure 51, reaffirming his duty as an expert towards this Court as well as to exhibit his qualifications. [42] LYC had then prepared a report on 19.11.2018 (‘Signature Report’) explaining his methodology and examination of the disputed signatures of the Plaintiff, with his conclusions summarised as follows:

the Plaintiff’s signatures had been forged on 18 occasions, which were most probably of different authorship than that of the specimens provided by the Plaintiff; and

that the Plaintiff’s signatures had been reproduced on 12 occasions by way of “cut and paste” and “print” means or by way of “scanned and print” means. [43] The Defendants had not engaged any experts to rebut the reports made by GTC and LYC. [44] It is the Plaintiff’s case that the 1st to 4th Defendants had colluded and acted in concert to sign those resolutions and forged the Plaintiff’s signature, to approve the said trust deeds to legitimise the purchase of the Rolls Royce. This wrongful purchase of the Rolls Royce constitutes a major plank of the Plaintiff’s case for oppression. [45] In response, the Defendants contended that the purchase of the Rolls Royce, even if the same was not authorised by the Plaintiff and based on an invalid directors’ resolution, in law, constitutes a S/N QnlaMnidQEWF5y4y4AjpRw wrong against Vimal Motor and does not affect the Plaintiff’s position qua shareholder of the company. In other words, Vimal Auto is entitled to take appropriate action against them for breach of directors’ duties for the unauthorised purchase. [46] To be sure, the purchase of the Rolls Royce is a substantial expenditure for Vimal Motor. The Rolls Royce was purchased for a sum of RM 865,000.00 sometime in May 2015 when the net profit for the financial year ended 31.5.2015 of Vimal Auto was RM 1,492,341.00. [47] Whilst I accept that the Plaintiff was aware of the purchase of the Rolls Royce by the 1st Defendant at the material times, it is not entirely clear from the evidence that the Plaintiff was made aware that the purchase was made using the company’s funds. [48] In the first place, it did not appear that the decision to purchase was ever brought up at any Vimal Auto’s Board of Directors’ meetings at all. The Plaintiff’s signature in the purported circular Board Resolution dated 18.5.2015 approving the purchase has turned out to be forged. In fact, the said circular resolution was never forwarded to the Plaintiff for his signature at all. [49] Further, the purchase of the Rolls Royce is said to be a benefit to the 1st Defendant as a director and as Chairman of Vimal Auto. Such benefits ought to have been approved by the members at a General Meeting. There is no dispute that no such resolution was ever tabled, discussed and or approved. S/N QnlaMnidQEWF5y4y4AjpRw [50] To my mind, the sting of the Plaintiff’s complaint lies with the manner in which the 1st Defendant went about procuring the purchase of the Rolls Royce. This was not a case where the majority shareholders and directors had used their majority votes at a proper meeting to prevail over the Plaintiff’s minority vote for the purchase of the Rolls Royce. Instead, this is a case where the Defendants had completely disregarded the Plaintiff’s right to even raise his objection to the purchase. It was a unilateral decision on the part of the majority shareholders to bestow the benefit of the Rolls Royce on the 1st Defendant. By the time the Plaintiff came to know of the company’s purchase of the Rolls Royce, the act had already been committed. There is no dispute that the Rolls Royce was used exclusively by the 1st Defendant. [51] Not only was the Rolls Royce purchased in the personal name of the 1st Defendant, all the original documents for the car were kept at the 1st Defendant’s office. No satisfactory reasons were offered for the same. [52] There is no notation at all in Vimal Auto’s audited accounts for the year ended 31.5.2015 alluding to the purchase of the Rolls Royce by the company, let alone that it was purchased and registered in the 1st Defendant’s name. There was also no mention that the 1st Defendant was to hold the car in trust for the company. Indeed, the Trust Deed that was executed by the 1st Defendant was not even made known to the Plaintiff. In short, the purchase was made surreptitiously. S/N QnlaMnidQEWF5y4y4AjpRw [53] In response, the Defendants pointed to the Plaintiff’s undue delay in complaining about the purchase of the Rolls Royce. Whilst the purchase was made in May 2015, the Plaintiff only raised his complaint that his approval was never procured sometime in January 2018 during the Annual General Meeting on 9.1.2018. The Defendants contended that this delay suggests that the complaint is a mere afterthought. [54] With respect, the audited financial statement for the year ended 31.5.2015 was only completed sometime in November 2015. Further, there was never any physical Annual General Meeting of Vimal Auto where the said audited financial statement for the year ended 31.5.2015 was presented to the shareholders. In any case, as alluded to above, the said financial statement did not explicitly state that the company had purchased the Rolls Royce. [55] Indeed, there is no evidence showing that the Plaintiff had knowledge during the period from May 2015 to January 2018 that the car was purchased using the company’s funds. Further, the fact that there was purportedly in existence the circular resolutions dated 18.5.2015 (P1) and 20.5.2015 (P2) was only made known to the Plaintiff sometime in early 2018. In this connection, the Plaintiff had promptly lodged a police report when he discovered that his signature was forged. [56] In this regard, during cross-examination by counsel for the Plaintiff on 24.12.2021, Balamurugan produced his secretarial book containing the original copies that were not provided to the Plaintiff S/N QnlaMnidQEWF5y4y4AjpRw for inspection. There were 9 resolutions that were not signed by the Plaintiff, despite the same being referred to in the Signature Report as being signed. Further, there were 9 other resolutions that were not signed by the Plaintiff as well that were not referred to in the Signature Report. These resolutions were not circulated to the Plaintiff. [57] In the Chan Choon Ming v. Low Poh Choon & 4 Ors [1995] 1 CLJ 812 V C George J. (as his Lordship then was) dealt with a situation where the Plaintiff, a director of the fourth defendant company, complained that by several Art. 90 resolutions signed by a majority of the directors of the fourth defendant company, the second and third defendants were appointed as directors of the company and a certain number of shares were transferred in their favour from the first defendant. Subsequently, an extraordinary general meeting was convened where another Art 90 resolution was passed by the majority of the directors to remove the plaintiff from the board of directors. Of the several resolutions passed, only the last had been circulated to or otherwise brought to the plaintiff's attention or knowledge prior to the resolutions being made. The plaintiff in an originating summons action prayed for a declaration that the appointment of the directors were null and void and consequential and other orders sought were granted. More specifically, His Lordship said: ‘.. In my judgment to make Art. 73 meaningful and to give effect to the collective responsibility of the board, although all that is required for an effective Art. 90 resolution is that it be signed by the majority, it must be taken as implied that every member of S/N QnlaMnidQEWF5y4y4AjpRw the board has to have the resolution circulated to him or her before it can be accepted as a directors' resolution. Which is why in board room parlance, an Art. 90 type of resolution is usually referred to as a circular resolution. Each of the said resolutions, notice of which was not given to the plaintiff, is, in my judgment, ineffective’. [58] In Dato' Raja Azwane Bin Raja Ariff v Dato' Man Bin Mat And Anor [2010] MLJU 850, Lee Swee Seng JC (as his Lordship then was) held: - ‘In this regard there is much merit in what is stated in Company Law (2nd Ed, 1997) by Walter Woon at p 216: Even if the articles allow a circular resolution to be effective when signed by the majority, notice of the resolution must still be given to all directors. Otherwise a cabal of controlling directors could do things without the knowledge of the rest of the board, a situation fraught with danger for the company.’ [59] In our case, the provisions requiring distribution of circular resolutions to the Plaintiff and securing his signatures in respect thereto were blatantly ignored and brought to naught by the majority directors. [60] Whilst it has not been proven who had in fact forged the Plaintiff’s signatures, what is painfully obvious during the cross examination of the 1st to 4th Defendants is the fact that none of them had expressed concern over the forgery and demanded an explanation S/N QnlaMnidQEWF5y4y4AjpRw from Balamurugan in respect of the same. It would be naïve to accept that the Defendants had no hands in the forged signatures. There is no reason for Balamurugan and or his staffs to forge the Plaintiff’s signatures at all. [61] To my mind, the Defendants’ unilateral action in purchasing the Rolls Royce using the company’s funds coupled with forging of the Plaintiff’s signatures are acts that were perpetrated with the intention to benefit only themselves at the expense of and in absolute disregard of the Plaintiff’s interest as minority shareholder of Vimal Auto. Exclusion from management and abusive conduct towards Plaintiff [62] Sometime in December 2017, the Plaintiff was reprimanded by the 1st Defendant when the Plaintiff was looking at documents and accounts of Vimal Auto. The 1st Defendant informed the staff of Vimal Auto that the Plaintiff was not allowed to have copies of Vimal Auto’s documents and accounts. In fact, the 1st Defendant has requested Honda Malaysia to stop all communication with the Plaintiff. [63] The Plaintiff said that he has been excluded from the management of the 5th Defendant in breach of the Verbal Agreements. [64] There is clear evidence that instructions were given by the 3rd Defendant to Honda Malaysia to cease communication with the Plaintiff. For all operational matters, Honda Malaysia was instructed S/N QnlaMnidQEWF5y4y4AjpRw to communicate directly to Vimal Auto’s sales manager and service manager and copied to the 3rd Defendant. This continues till to the present day. [65] The contention was that the Plaintiff had stopped coming into the office of Vimal Auto since 2018. As such, the 3rd Defendant testified that this justifies the decision to cut all communication from Honda Malaysia to the Plaintiff. However, no evidence was adduced to show that there was complaint from Honda Malaysia that the Plaintiff had not responded to its communication. [66] In addition to the communication from Honda Malaysia, the Plaintiff was also excluded from receiving updates of Vimal Auto’s performance from the accounts clerk. The pertains to the number of cars booked, the number of cars serviced, the number of car insurance cover notes issued, month-to-date and daily service centre sales records. Such updates to the Plaintiff ceased since 26.1.2018. In fact, the company managers of Vimal Auto were even instructed not to pick the Plaintiff up or drop him off at the Alor Setar Airport when he had to travel for official company matters. [67] The 3rd Defendant did not dispute that the Plaintiff had raised his objections to the various actions taken denying him access to the company’s accounts, records and books and instruction to the company staff not to communicate with him. She did not dispute that the Plaintiff had not received any response at all to his complaints. Her justification for excluding the Plaintiff from the communication loops and access to information was simply that the Plaintiff had S/N QnlaMnidQEWF5y4y4AjpRw stopped coming to work and that ‘he should have call and ask me about it’. The 1st Defendant also did not deny the claims made by the Plaintiff about his exclusion from the management of the company. All attempts by the Plaintiff to have his rights to management restored had come to naught. [68] It is my finding that the aforesaid is in breach of the Oral Agreements between the Plaintiff and the 1st Defendant that he would be in charge of the operation of Vimal Auto in his capacity as the Managing Director. Although the 1st Defendant has maintained that the Plaintiff was never the Managing Director of Vimal Auto, nevertheless, there are ample press reports where the Plaintiff was described as the Managing Director of Vimal Auto, lending support to the Plaintiff’s claims. [69] Quite apart from the Plaintiff’s exclusion from the management of the company, the paid-up capital of Vimal Auto remains stated as RM 1,000,000.00 notwithstanding that in fact, the Plaintiff has contributed approximately RM4,000,000-00 into Vimal Auto in the form of the construction costs for the Vimal Auto Office erected on the Vimal Land. According to the Plaintiff, the 1st to 4th Defendants have contributed approximately RM5,200,000-00 in the form of the Vimal Land. [70] In this regard, it is the Plaintiff’s contention that the Plaintiff and his father had agreed to make the monetary investment in Vimal Auto on the assurance that the Vimal Land will be transferred to the 5th S/N QnlaMnidQEWF5y4y4AjpRw Defendant after the construction of the office building on the Vimal Land. [71] According to the Plaintiff, for the Plaintiff’s investment of approximately RM 4,000,000-00 into Vimal Auto towards the construction of the Vimal Auto Office, the Plaintiff received 49% of the shares of the company. The Defendants in turn would hold 51% of the shareholdings in Vimal Auto in return for contributing the Vimal Land into the company. [72] During oral submissions, learned counsel for the Defendants maintained that the Vimal Land does not constitute asset of the 5th Defendant and contended that the Plaintiff has not established on the balance of probabilities the claim that the Defendants had agreed that the Vimal Land shall be injected to the 5th Defendant as the 1st to the 4th Defendants’ capital contribution for their 51% shareholdings in the 5th Defendant. [73] According to counsel for the Defendants, the Plaintiff’s payment of the construction costs for the Vimal Auto Office was the consideration for the 1st and 2nd Defendants’ agreement to transfer their shares constituting in total 49% of the shareholding of the 5th Defendant. That was the value that the 1st and 2nd Defendant had ascribed to the 49% shares at the material time. [74] The consequent of the aforesaid is that both the Vimal Auto Office and the Vimal Land would belong to the 1st and 2nd Defendants. S/N QnlaMnidQEWF5y4y4AjpRw [75] To my mind, it simply does not make commercial sense for the Plaintiff to have agreed to an arrangement where the 1st to 4th Defendants would be the majority shareholders of Vimal Auto without them contributing anything at all to the capital of the company. In fact, as stated, not only would the 1st and 2nd Defendants continue to be owners of the Vimal Land, they would also be owners of the Vimal Auto Office. This would effectively mean that the 1st to 4th Defendants would hold 51% of the shares in Vimal Auto without any injection of capital at all and with the added benefits of having acquired the Vimal Auto Office. [76] Further, notwithstanding the fact that the Vimal Land is registered in the names of the 1st and 2nd Defendants, Vimal Auto has never asked to make any rental payments for occupying the said land to run its business. Even though there were accounting entries created indicating rental payment obligations to Vimal Trading, it is conceded that such entries were not actual obligation to pay rentals but were created for ‘tax purposes’ only. In any event, the entries were for rentals to Vimal Trading and not to the 1st and 2nd Defendants who are the registered proprietors of the Vimal Land. [77] Significantly, there was no valuation of the shares of the 5th Defendant adduced by the 1st Defendant to justify to the Plaintiff that 49% of the shares of the 5th Defendant would be worth the sum of RM 4 million representing the construction costs for the Vimal Auto Office. It must be noted that at the time, the 5th Defendant had not even been offered the Honda dealership from Honda Malaysia and S/N QnlaMnidQEWF5y4y4AjpRw it had no another tangible asset of its own. All that it had was a Letter of Intent from Honda Malaysia. [78] I much prefer the testimony of Mr PG Doraisamy who came across as forthright and credible as a witness. I believe him when he said that the parties had agreed to equal contribution towards the venture with the Plaintiff contributing the costs for the construction of the Vimal Office and the 1st and 2nd Defendants contributing the Vimal Land. His testimony was not seriously challenged. [79] Accordingly, I am inclined to accept the Plaintiff’s testimony that the Verbal Agreements do in fact provide for the Vimal Land to be transferred to the company, Vimal Auto. [80] It follows then that the refusal to transfer or cause to transfer the Vimal Land by the 1st and 2nd Defendants has clearly unfairly prejudiced the Plaintiff as the minority shareholder of Vimal Auto. Diversion of Vimal Auto’s business [81] It is the Plaintiff’s case that when the working relationship between the 1st Defendant and the Plaintiff were good, as part of the Verbal Agreements, there were plans for Vimal Auto to secure from Honda Malaysia the Body and Paint Business. However, at that point in time, the Plaintiff and the Defendant were unable to proceed with the Honda Malaysia’s initiative for a mini facility. From that point in time from May 2014 to March 2016, the Plaintiff had liaised with the relevant departments in Honda Malaysia on behalf of Vimal Auto. S/N QnlaMnidQEWF5y4y4AjpRw [82] Subsequently on 5.6.2016, Vimal Auto had purchased a land in Changlun, Kedah, held under GRN 127932, Lot 2535, Pekan Napoh, Daerah Kubang Pasu, Negeri Kedah (‘Lot 2535’). This land was purchased with the Body and Paint Business in mind for Vimal Auto. [83] However, on or about March 2017, the Plaintiff discovered an unsigned letter prepared by the 1st Defendant addressed to Honda Malaysia for his proposal to open a 2S (service and motor vehicles spare parts) and Body and Paint Centre, to be opened in Kedah. This letter was prepared without the Plaintiff’s knowledge and without any discussion nor resolution passed. Previously, the 1st Defendant and the Plaintiff both worked on the proposals to Honda Malaysia, as stated in the preceding paragraphs. [84] The Plaintiff then found a letter dated 28.7.2017 from Honda Malaysia that was addressed to Vimal Auto solely, approving its application and granting Vimal Auto a Body and Paint Business in Changlun, Kedah, pending the submission of further documents to Honda Malaysia. Further, it was discovered that the proposed site on 3 lots of land for the Body and Paint Business are owned jointly by the 2nd and 4th Defendants. This is similar to the initial arrangement for Vimal Auto, with Vimal Auto Office constructed on land owned by the 1st and 2nd Defendants personally. The proposed site, although also located at Changlun is different from the Lot 2535 in Changlun that was purchased by Vimal Auto for the purpose mentioned above. S/N QnlaMnidQEWF5y4y4AjpRw [85] The Plaintiff was then informed by Vimal Auto’s staff that the 1st Defendant had incorporated a new company, namely, the 6th Defendant (‘Vimal Bodyworks’), without his knowledge. From the SSM search of Vimal Bodyworks, its composition of shareholders is similar to Vimal Auto save and except the Plaintiff is excluded. The 1st to 4th Defendants are members of Vimal Bodyworks. This is no mere coincidence, as this shows the 1st to 4th Defendants’ intentions to divert the Body and Paint Business from Vimal Auto. [86] The Plaintiff contends that the 1st to 4th Defendants had used Vimal Auto’s success as a platform to apply for a new dealership to divert business to the detriment of the minority faction of Vimal Auto. The land forming the 1st Defendant’s proposal to Honda Malaysia is situated directly opposite of the Lot 2535 which Vimal Auto purchased previously for the Body and Paint Business. [87] It is the Plaintiff’s case that the 1st to 4th Defendants have completely disregarded the Plaintiff’s interest and discriminated the Plaintiff by diverting the Body And Paint Business away from Vimal Auto. The 1st to 4th Defendants’ actions in agreeing to the incorporation of Vimal Bodyworks shows that the 1st to 4th Defendants have discriminated and committed acts that are prejudicial to the Plaintiff. [88] I find merits in the Plaintiff’s complaint. [89] It can hardly be disputed that the application to Honda Malaysia for the Body and Paint Business was an application made by Vimal Auto and premised on the performance of the company as an S/N QnlaMnidQEWF5y4y4AjpRw authorised Honda 3S Centre. That this is so is plain from the aforesaid undated letter discovered by the Plaintiff above. [90] By all account, Vimal Auto was keen to secure the Body and Paint Business from Honda Malaysia. To this end, it had purchased a piece of land, Lot 2535 at Changlun for this purpose. [91] Accordingly, the Defendants’ action in setting up Vimal Bodyworks sometime in March 2018 to conduct the Body and Paint Business in place of Vimal Auto is a clear diversion of a business opportunity of the company to one that is owned exclusively by the 1st to 4th Defendants. This is a complete disregard of the Plaintiff’s interest as a shareholder of Vimal Auto. [92] There is no evidence of any discussions at any Board of Directors’ meetings of Vimal Auto where it was proposed that the Body and Paint Business offered by Honda Malaysia to Vimal Auto would be undertaken by any entity apart from the company. [93] The 1st Defendant testified that he had used Vimal Bodyworks to undertake the Body and Paint Business because the Plaintiff was not prepared to invest further money into Vimal Auto and that the relationship between the Plaintiff with the 1st to 4th Defendants were strained at the time. [94] In the first place, no documentary evidence was adduced in support of the allegation that the Plaintiff did not want to invest further. In fact, there is no evidence that Vimal Auto was not financially capable S/N QnlaMnidQEWF5y4y4AjpRw of undertaking the Body and Paint Business without additional investments from its shareholders at all. There is no evidence that Vimal Auto could not procure the necessary financing from the banks, even if additional funding were needed. [95] In any case, even if it is true that the Plaintiff had not agree to inject further monies into Vimal Auto, it certainly does not mean that the 1st to the 4th Defendants are entitled to undertake the business opportunity of Vimal Auto for their exclusive benefits at the expense of the company. [96] Similar to the purchase of the Rolls Royce, the decision to incorporate Vimal Bodyworks to undertake the Body and Paint Business in place of Vimal Auto was made without consulting the Plaintiff and in total disregard of his interest as a shareholder of the company. Irregular Accounting Entries [97] Pursuant to the GTC Report, the 5th Defendant had recorded rental expenditures in the audited accounts for the financial year ended 31.5.2014 for RM33,00.00, 31.5.2015 for RM36,000.00and 31.5.2016 for RM36,000.00. [98] It was discovered through the investigation that the rental expenditures were created by recording them as liability owing to the 7th Defendant. The rental for financial year ended 31.5.2016 was S/N QnlaMnidQEWF5y4y4AjpRw subsequently reversed in financial year ended 31.5.2017 with no such sum accrued for that year (2017). [99] Moreover, there was an accounting entry of an exorbitant management fee of RM210,000-00 to the 7th Defendant for the financial year ended 31.5.2015. [100] There was no supporting documentation created for those rental and management fee. When GTC inquired about them, the 3rd Defendant informed GTC that they were created for “tax purposes”. [101] The preliminary conclusion made by GTC was that the “liabilities appears irregular and true intentions of the creator may be seeking repayments in future years.” [102] To my mind, these accounting entries are baffling and no reasonable and satisfactory explanation was proffered by the Defendants. The attempt to simply whitewash the entries by alluding to the fact that these entries were reversed after 2 years and that there were never ‘actual payments’ for such entries begged the questions why the entries were made in the first place. [103] If indeed the entries were made for ‘tax’ purposes as contended by the 3rd Defendant, why did the company cease such practice in 2017? More significantly, why were rentals made payable to Vimal Trading instead of the 1st and 2nd Defendants who are the registered owner of the Vimal Land? If indeed, the 1st and 2nd Defendants were genuinely entitled to charge rental and there was a positive tax S/N QnlaMnidQEWF5y4y4AjpRw purpose in charging the same, why did the Defendants have to create the fictitious rental arrangement with Vimal Trading instead? [104] Similar questions may be raised with regards to the charging of ‘management fee’ by Vimal Trading. What prompted the Defendants to reverse such entries in 2017 and to cease recognising such expense thereafter? [105] Significantly, there is no evidence to show that these ‘transactions’ were discussed with the Plaintiff prior to the company recording the same in its accounting records. Neither was the Plaintiff consulted when the decision was made to reverse the entries and to cease from recognising the same. [106] It certainly does not escape notice that these ‘reversals’ and cessation to continue recognising the entries occurred in 2017 when the Plaintiff began to make enquiries into the company’s accounts. [107] The aforesaid merely fortifies my view that the affairs of Vimal Auto were being conducted by the majority directors of the company in a manner that is prejudicial and or disregard of the Plaintiff’s interests. Refusal to Transfer Shares [108] On 9.6.2017 and 21.6.2017, the Plaintiff had sent 2 emails to Vimal

That the Plaintiff wished to transfer some of his shares to his wife, Heymah Chaloraju and to his sister, Dhayalini P.G. Doraisamy.

In the annual report, the paid-up capital is only RM 1,000,000.00, whereas the Plaintiff have paid approximately RM 4,000,000.00 into Vimal Auto while the 1st to 4th Defendants have paid approximately RM 5,200,000.00 into Vimal Auto. However, these are not reflected in the financial statements of Vimal Auto. [109] The Plaintiff claimed that the 1st Defendant has unreasonably refused the Plaintiff’s request to transfer his shares to his wife and sister. [110] To be sure, the Articles of Association of Vimal Auto provides: ‘1. The regulations in Table A in the Fourth Schedule to the Act shall apply except so far for those as specified or contained therein in these Articles’ [111] In the Table A, article 20 stipulates: ‘Subject to these regulations any member may transfer all or any of his shares by instrument in writing in any usual or common form or in any other form which the directors may approve. The instrument shall be executed by or on behalf of the transferor and the transferor shall remain the holder of the shares transferred S/N QnlaMnidQEWF5y4y4AjpRw until the transfer is registered and the name of the transferee is entered in the register of members in respect thereof.’ [112] Thus, there is no restriction in the Articles of Association of Vimal Auto for any member to transfer his or her shares. It is also not the contention of any party before this Court that there is a written document dealing with a member’s desire to transfer his or her shares to another. [113] Notwithstanding the aforesaid, the 1st Defendant contended that the Plaintiff was brought into Vimal Auto for a specific purpose, namely, at the request of the Plaintiff’s father to involve him in the business of selling motor vehicles sometime in early 2012. For this reason, it is the 1st Defendant’s position that the arrangement was only to allow the Plaintiff into the business and no one else. There was no agreement to permit other members of the Plaintiff’s family to be members of Vimal Auto. The aforesaid agreement was made between the 1st and 2nd Defendants and the Plaintiff and does not involve Vimal Auto. [114] Based on the aforesaid ground, the 1st Defendant contended that this dispute, is at all, is a private matter between the shareholders and does not fall under matters pertaining to the affairs of the company capable of giving rise to a claim for oppression. [115] With respect, I do not share the same view. S/N QnlaMnidQEWF5y4y4AjpRw [116] Firstly, there is no evidence that the Plaintiff’s shares in Vimal Auto are subject to any transfer restrictions at the time these shares were issued by the company to the 1st and 2nd Defendants. Neither is there any evidence that restrictions to transfer these shares were made as a condition for the transfer of the shares by the 1st and 2nd Defendants to the Plaintiff in exchange for the Plaintiff’s investment in the company. [117] Secondly, as stated above, the Articles of Association of Vimal Auto expressly provides for the right of the members of the company to transfer their shares. [118] Thirdly, contrary to the assertion of the 3rd Defendant, the Plaintiff’s request to transfer his shares to his wife and sister would not result in the dilution of the Defendants’ shareholding in Vimal Auto at all. The Defendants would continue to remain as the majority shareholders and would still maintain control over the Board of Directors of the company. [119] Hence, it seems to me that the 1st to the 4th Defendants have not acted reasonably to the Plaintiff’s request to transfer his shares to his wife and his sister. The refusal appears to have been motivated by the Defendants’ desire to confine the members of Vimal Auto to just the 1st Defendant’s family with the Plaintiff as the only ‘outsider’. [120] The refusal to permit the Plaintiff to transfer his shares is directly related to his interest as a shareholder of Vimal Auto and cannot be S/N QnlaMnidQEWF5y4y4AjpRw treated as anything else but a brazen disregard of the Plaintiff’s interest as a minority shareholder of the company. [121] Whilst I would readily accept that some of the aforesaid complaints constitute wrongs featuring both corporate wrongs and personal wrongs, it is my judgment that the cumulative effects of the wrongs display a systemic abuse by the majority shareholders of Vimal Auto in the management of the company’s affairs with wanton disregard to the interest of the Plaintiff as minority shareholder which occasioned serious commercial unfairness to him. [122] The alleged complaints above by the Plaintiff to my mind satisfy the test that there is a visible departure from the standard of fair dealing and or fair play. The Plaintiff has been made to submit to the overbearing actions on the part of the 1st to the 4th Defendants. They have made conscious decisions to override or brush aside the proper company procedure so that the opportunity for the Plaintiff to protect and or exert his minority interest is disregarded. [123] The existence of the tendency and propensity to oppress the Plaintiff as minority shareholder has been established and it continues to exist at the time of the proceedings as demonstrated from the unrepentant attitude of the Defendants during the cross examination – the 3rd Defendant insisting that there was a directors’ resolution approving the purchase of the Rolls Royce when in fact none had been produced, the 4th Defendant’s insistence that the Trust Deeds in respect of the Rolls Royce are reflected in the audited financial statement when that was clearly not the case, S/N QnlaMnidQEWF5y4y4AjpRw [124] A derivative action would not bring to end the Plaintiff’s grievances in this case as the majority shareholders will only devise other means to continue managing the affairs of Vimal Auto disregarding his interests and with the view to benefit themselves only. [125] In arriving at my conclusion, I have not relied on the Plaintiff’s complaints with regards to the purported irregular trade in value for used cars brought in by the customers and the purported claims for the questionable commissions and payments made to third parties. This is because I am not persuaded that these complaints justify a finding of oppressive conduct as contended. For, completeness, I set out below my reasons for rejecting the same. Irregular Trade in Value [126] The 1st Defendant, Dato K, had also breached his fiduciary duty as a director of Vimal by sanctioning the alteration and tampering of the trade-in figures at Vimal Auto’s expense. [127] As Honda car dealer, the 5th Defendant is prohibited from officially dealing with any form of used cars. It was common practice for the 5th Defendant’s car salesmen to deal directly with used car dealers to assist its customers to dispose off their ‘trade in’ motor vehicles. The used car dealer would then pay the 5th Defendant for the used car and the sum is treated as a down payment for the new car from the 5th Defendant. S/N QnlaMnidQEWF5y4y4AjpRw [128] During the course of GTC’s investigation, GTC discovered irregularities with regards to the trade in practice of the 5th Defendant with Vimal Trading. Particularly, there were discrepancies between the actual trade in values for the motor vehicles and the subsequent amounts reflected in the 5th Defendant’s records. [129] With regards to this complaint, it seems to be that even if this Court were to accept GTC’s report relating to the discrepancies to the trade in payments, this will result in Vimal Auto sustaining the loss and not the Plaintiff. Even then, the 3rd Defendant had testified that the company. Vimal Auto would still ultimately benefit from the absorption of such ‘losses’ as the increased sales arising from such practice had enable the company to meet its monthly sale target which in turn would earn incentives from Honda Malaysia. [130] In any case, neither GTC nor the Plaintiff has produced any evidence to suggest that the trade-in prices offered by the 7th Defendant was below the market price for such vehicles to show that such practice by Vimal Auto was intended specifically to benefit the 7th Defendant to the detriment of the company. [131] Accordingly, I see no merits in this complaint by the Plaintiff. The practice of absorbing the differences between what the customers had insisted as the trade in value for their used car and what the 7th Defendant was prepared to pay is purely a domestic commercial judgment of Vimal Auto. This Court will not interfere in such business decisions based on the established ‘business judgment’ rule. S/N QnlaMnidQEWF5y4y4AjpRw Irregular commissions and payments paid [132] The Plaintiff also relied on certain irregular and or questionable commissions paid by the 5th Defendant. [133] There were findings made on various commission payments made, which include to 3 directors and one Mr Sattiyppiriyan. Reference was made to the following:

There was one payment totalling RM1,500 labelled as “commission” without details of the related vehicles sold;

There was a payment of RM500 as commission which appears to be related to motor vehicles sold by another staff;

There were two payments of RM200 and RM100 recorded in commission account but were described as “Travelling Allowance Jan’17” and “Salary by cash to pay affin bank loan” respectively; and

5 other payments totalling RM16,500; where the payments vouchers were missing. [134] The GTC Report made the following preliminary conclusions: ‘These payments appear irregular as Ms Kausaliya does not appear to receive much commission prior to this. It appears that S/N QnlaMnidQEWF5y4y4AjpRw in one occasion, Ms Kausaliya paid herself commission for motor vehicle sold by another colleagues [sic]. In addition to that, there is no Company’s approval to pay her “Travelling Allowance”. In two of the payments to Ms Kausaliya, it was proven that she basically signed the cheques to pay herself without and scrutiny of the payments by an independent party; thus, allowing a possible abuse of the position for her own benefit. The payment of “commission” to Sattiyppiriyan of RM2,000 appears irregular as he is a dispatch personnel. In addition to that, the payments of commission to directors were made without proper disclosure in the Company’s accounts and sanction by shareholders.’ [135] There were dubious payments made to one Vivek Agarwal and to Koperasi Pembangunan India Kedah Berhad.

The former was alleged to be for a website, however, it does not exist. Instead there is a website for Vimal Auto City.

The latter was a purported as a donation, which is irregular as the Company does not operate in Kedah. [136] The preliminary conclusion of GTC’s Report was that “[i]t appears that Dato’ Kumar may have used the Company’s fund for his personal use.” [137] On this head of complaints, the Plaintiff’s own witness, Mr Gabriel Teo had conceded during his cross examination that all employees S/N QnlaMnidQEWF5y4y4AjpRw of the 5th Defendant were permitted to earn commission for any sales of cars closed by them. This would include Mr Sattiyppiriyan who was the despatch worker with Vimal Auto. He was also authorised to cash substantial sums of money from the bank on behalf of the company. [138] Save that Mr Gabriel Teo had expressed his view that the payment of commission to Mr Sattiyppiriyan is ‘irregular’, there is nothing at all before this Court to suggest that he was merely used as a ‘means’ to siphon money from Vimal Auto. [139] In any case, these allegations of ‘irregularities’ have nothing to do with the Plaintiff’s interests as a shareholder of Vimal Auto. [140] Similarly, the payments made to one Vivek Agarwal and to Koperasi Pembangunan India Kedah Berhad which in the GTC Report were described as ‘dubious’ also do not have anything to do with the Plaintiff’s interests qua shareholder. There is also no evidence to suggest that any of the Defendants had benefitted from these payments. [141] Again, I see no merits in this head of complaints by the Plaintiff in support of his oppression claims. Conclusion [142] It is trite law that pursuant to section 346(2) of the Companies Act 2016 (supra), the Court has wide power to fashion any relief for a plaintiff who has been oppressed. S/N QnlaMnidQEWF5y4y4AjpRw [143] The Federal Court in Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd & Ors [2021] 3 MLJ 549 per Nallini Pathmanathan FCJ at paragraphs 136, 148 & 151 of the judgment held that pursuant to s 181(2) of the CA 1965 (the predecessor to 346(2) of the CA 2016) the court was empowered to make such order as it thought fit to bring an end to, or remedy, the matters complained of. The court was not bound by the reliefs sought by the petitioner or restricted to the reliefs mentioned in s 181(2) of the CA 1965 (s 346(2) of the CA 2016) but was at liberty to fashion the remedy in accordance with the factual matrix of the case. The remedy granted would depend on the complaint and the circumstances prevailing at the time of the hearing, not at the start of the proceedings. [144] In re Bird Precision Ltd [1986] 1 Ch 658 (English CA), it is said that pursuant to the wide discretion, the Court is obliged to grant the remedy sought by the claimant and the appropriateness of the remedy is to be determined at the date of hearing and not the date of the filing of the claim. [145] In Grace v Biagioli [2005] EWCA Civ 1222 at paras 73-75, the English Court of Appeal, among others, stated that ‘...The court is entitled to look at the reality and practicalities of the overall situation, past, present and future...’. [146] In the present case, the Plaintiff is asking for a relief of buy-out. However, it is him who want to buy out the 51% shareholding owned by the 1st to 4th Defendants, i.e the Plaintiff is seeking a minority buy-S/N QnlaMnidQEWF5y4y4AjpRw out order. He is also asking for the Vimal Land be transferred to the 5th Defendant. [147] Whilst the Court has jurisdiction to order a minority buy-out in the case of oppression, it is not the usual order made and the circumstances where the Courts have done so are limited. [148] In the case of Re Brenfield Squash Rackets Club Ltd [1996] 2 BCLC 184, the English High Court granted minority buy-out order because there was a clause under the shareholder agreement that if one of the shareholder is unable to pay its debts, he should be deemed to have given notice of its intention to sell all its shares to the other shareholders of the company [149] Similarly, in Re A Company (No 00789 of 1987); ex parte Shooter [1990] BCLC 384, the English High Court granted minority buy-out order as the company affairs had been conducted by the majority shareholder without any regard for formalities or legal obligations. The Court found that the majority shareholder was unfit to exercise such control of the company [150] In Oak Investment Partners XII, Limited Partnership v Boughtwood [2009] EWHC 176, the English Court of Appeal affirmed the High Court’s decision where a minority buy-out order was granted. The English Court of Appeal described the majority shareholder’s conduct as “damaging to the group and its business” and “seriously destructive of the group’s well-being” [see paragraphs 14 to 15 and 328 to 330]. S/N QnlaMnidQEWF5y4y4AjpRw [151] Again, in Lantsbuty v Hauser [2010] EWHC 390 at paragraphs 76, 80 83 and 97, the High Court held that any continued involvement of the majority shareholder in the running of the company carried ‘a serious risk to the public’, since he was ‘plainly not a fit person to hold the office of director in a limited liability company’. Thus, a minority buy-out order was granted. [152] Closer to home, the Singapore High Court in Koh Keng Chew and others v Liew Kit Fah and others [2016] SGHC 140 explained that a minority buyout order ought not to be available as a matter of course; it should be made only in exceptional situations. Any departure from that principle must be justified by wider considerations. In the context of a minority buy-out order under Section 216 of the Companies Act (Cap 50, 2006 Rev Ed), such justification exists where the majority shareholder is not fit to exercise control of the company in that allowing him to continue exercising control of the company would be damaging to the company or its business, or would pose a serious risk to the public. [153] Following the decisions cited above, I do not see any legal justification in the present case for making a minority buy out order. It has not been demonstrated that the majority shareholders are unfit to exercise control over Vimal Auto. Neither has it been shown that allowing them to run the business would pose a serious risk to the public. [154] Accordingly, given that the most appropriate relief in the circumstances is one that would avoid further oppression and unfair S/N QnlaMnidQEWF5y4y4AjpRw conduct, it is only fitting that the 1st to the 4th Defendants either jointly and or severally be ordered to purchase all of the Plaintiff’s shares in Vimal Auto. Only if they are unwilling or unable to do so, would the Plaintiff be entitled to purchase their entire shares in Vimal Auto. [155] Towards this end, the value of the shares of the company must take into consideration the value of the Rolls Royce and the Vimal Land and the Vimal Auto Office as assets of Vimal Auto. The valuation of the shares shall be based on the following procedure:

the Plaintiff and the 1st to 4th Defendants are to nominate one professional valuer each for the purpose of the appointment by the Court and such nomination shall be done within 14 days from the date of this Order;

that for the purpose of the valuation of the Plaintiff’s Shares, there shall be no discount for minority holding;

that the date of the valuation shall be the date of this Order;

that the independent valuer shall have unhindered access to all the books, records and financial information of the 5th Defendant wherever such may be kept and in whatever form and with whomsoever, including the auditor of the 5th Defendant, at any time and from time to time;

that the parties are entitled to appoint a professional adviser each who shall have the same right of unhindered access to all S/N QnlaMnidQEWF5y4y4AjpRw the books, records and financial information of the 5th Defendant wherever such may be kept and in whatever form and with whomsoever, including the auditor of the 5th Defendant, at any time and from time to time which bear upon the value of the Plaintiff’s Shares and the parties’ professional advisers shall have the right to make written representations to the independent valuer and/or the Court on matters which have bearing on the fair value of the Plaintiff’s Shares;

that the independent valuer shall complete the valuation exercise within 3 months from the date of this Order, which valuation shall treat the Vimal Land. Vimal Auo Office and the Rolls Royce as assets of the 5th Defendant. The independent valuer shall be at liberty to appoint a property valuer to value both the Vimal Land and the Vimal Auto Office and the costs for the same to be borne by the 5th Defendant;

that the independent valuer shall submit a valuation report to this Court and the parties’ solicitors within 3 months from the date of this Order for this Court final determination of the purchase price for the Plaintiff’s Shares;

that the valuation report shall contain reasons for valuation on the fair value of the Plaintiff’s Shares;

that the costs of the independent valuer shall be paid by the 5th

that the 1st to 4th Defendants whether jointly and or severally make full payment of the purchase price of the Plaintiff’s Shares at such price as determined by the Court within 14 days of such determination;

parties are at liberty to seek extension of time where necessary from the Court;

there be liberty to apply; [156] The 1st to the 4th Defendants to jointly and severally pay the Plaintiff the costs of this action fixed at RM 75,000.00 subject to allocator. Dated on the 13th day of September 2022 ONG CHEE KWAN J Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 COUNSEL:

Datuk Wong Rhen Yen together with Mr. Gary Ng Cheng Yip and

Mr. Balasubramaniam Selvam together with Ms Gunavathy Manikam, Dato' Sothinathan Sinna Goundar, Mr Athimulam dan Ms Pavitra Jagathison for Defendants Messrs. Sothi Bala & Associates (Kuala Lumpur)

Gue See Sew & Ors v Heng Tang Hai & Ors [2020] MLJU 46 2. Re Kong Thai Sawmill (Miri) Sdn Bhd & Ors v Ling Beng Sung

2 MLJ 227 3. Ebrahimi v Westbourne Galleries Ltd & Ors [1972] All ER 492 4. Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 MLJ 433 5. Jet-Tech Materials Sdn Bhd & Anor v Yushiro Chemical Industry Co Ltd & Ors and another appeal [2013] 2 MLJ 297 6. Re Harmer Ltd [1958] 3 All ER 689 7. Elder v Elder & Watson Ltd [1952] SC 49 8. Chan Choon Ming v. Low Poh Choon & 4 Ors [1995] 1 CLJ 812 9. Dato' Raja Azwane Bin Raja Ariff v Dato' Man Bin Mat And Anor [2010] MLJU 850

Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd & Ors [2021]

Re Bird Precision Ltd [1986] 1 Ch 658

Grace v Biagioli [2005] EWCA Civ 1222

Re Brenfield Squash Rackets Club Ltd [1996] 2 BCLC 184

Re A Company (No 00789 of 1987); ex parte Shooter [1990] BCLC 384

Oak Investment Partners XII, Limited Partnership v Boughtwood [2009] EWHC 176

Lantsbuty v Hauser [2010] EWHC 390

Koh Keng Chew and others v Liew Kit Fah and others [2016] SGHC 140

Section 346 of the Companies Act 2016

Section 181(2) of the CA 1965