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2025 MarsdenLR 3549
HIGH COURT MALAYA SHAH ALAM
RE: SKS FOAM (M) SDN BHD
[Post Winding Up No: BA-28PW-263-10/2023 & Companies Winding Up No: 28-535-12/2012]
The court ruled that an application for the removal of a liquidator must show compelling reasons, and reliance on incorrect statutory provisions renders the application legally unsustainable.
Headnote:(A) Companies Act 2016 - Sections 471 and 482(b) - Application for removal of liquidator - Applicants alleged failure of liquidator in duties, lack of transparency, and communication - Respondent contended lack of standing and misapplication of law - Court found application fundamentally flawed, lacking cause shown for removal under s 482(b) - Applicants did not demonstrate requisite locus standi or sufficient evidence of misconduct - Judicial intervention should be exercised sparingly to avoid disruption at final stage of liquidation process. (Paras 1-18)
Facts of the case:
The Applicants sought to remove the liquidator of SKS Foam (M) Sdn Bhd, claiming failure in duties and lack of communication. The Respondent opposed, arguing lack of standing and misapplication of law.
Findings of Court:
The application was deemed fatally flawed due to reliance on the wrong provision and lack of standing; no compelling reasons were established for removal of the liquidator.
Issues: The main issues were the applicability of the statutory provision for removal, the standing of the Applicants, and whether cause was shown for the liquidator's removal.
Ratio Decidendi: The court ruled that reliance on the incorrect provision rendered the application legally unsustainable, and mere dissatisfaction does not meet the threshold for removal of a liquidator under s 482(b).
Result: Application dismissed.
(Enclosure 1: Application For Leave To Remove Liquidator)
Introduction
[1] This is an application by the Applicants, Chua Yoke Lan and Lee Leng Leng, for the removal of the liquidator, Mohd Afrizan bin Husain, in the liquidation of SKS Foam (M) Sdn Bhd, purportedly pursuant to ss 471 and 482(b) of the Companies Act 2016 . The Applicants allege that the liquidator has failed in his duties, citing a lack of transparency, failure to hold meetings with contributories, and a failure to update them on the status of the liquidation.
[2] The Respondent opposes the application on the basis that the Applicants lack standing, that they have relied on an incorrect provision of law, and have failed to show cause for the removal of the liquidator, as required under s 482(b). It is also contended that the liquidation process is at its final stage and that removing the liquidator at this juncture would be disruptive and unnecessary.
[3] Upon careful consideration of the parties' submissions, the affidavit evidence, and the applicable legal principles, I find that the application is fatally flawed and must be dismissed. The reasons for this decision are set out below.
Issues For Determination
[4] This Court is called upon to determine the following issues:
(a) Whether the application is fatally defective by reason of being premised on the wrong provision of law ( Section 471 ).
(b) Whether the Applicants have the requisite locus standi to bring this application as contributories.
(c) Whether cause shown has been established for the removal of the liquidator under s 482(b).
(d) Whether the Court should exercise its discretion to intervene at this late stage of the liquidation process.
Analysis And Findings
Wrong Provision Of Law - Section 471
[5] The Applicants' reliance on s 471 is fundamentally flawed. Section 471 governs the requirement to obtain leave to initiate or continue legal proceedings against a company in liquidation. It is not applicable to the removal of a liquidator. The correct provision for removing a liquidator is s 482(b), which permits removal "on cause shown".
[6] The Respondent argued that no leave is required to apply for the removal of a liquidator, as such an application is supervisory in nature and falls within the inherent jurisdiction of the winding-up Court. The Respondent cited Liputan Canggih Sdn Bhd & Ors v. Chong Chuan Long & Another Appeal ; and Jagdis Singh Banta Singh & Anor v. Return 2 Green Sdn Bhd ; , which confirm that a misapplication of the statutory provision renders the application legally unsustainable.
[7] Applying these principles, the Applicants' reliance on s 471 is not a mere procedural flaw but a fundamental legal defect. The application is thus fatally defective and must be dismissed outright.
Locus Standi As Contributories
[8] The Respondent contended that the Applicants lack the requisite locus standi to bring this application. It is established law that to qualify as contributories, Applicants must demonstrate a substantial and direct interest impacted by the liquidator's conduct. The Respondent argued that the Applicants merely asserted genera! grievances without showing any direct prejudice or pecuniary loss.
[9] Case laws cited by the Respondent, including Ng Yok Gee & Anor v. Cti Leather Sdn Bhd; Metro Brilliant Sdn Bhd & Ors (Interveners) ; [2006] 7 MLJ 28; lay down the position that mere dissatisfaction with the liquidator's administration does not suffice. Concrete evidence of harm or prejudice is required. Here, the Applicants failed to meet this threshold.
[10] The Court finds that the Applicants' general complaints of administrative issues and lack of communication do not establish sufficient standing as contributories. Accordingly, the Applicants lack the requisite locus standi to maintain this application.
Cause Shown Under Section 482 (b)
[11] Even if the Applicants had standing, they failed to demonstrate cause shown under s 482(b). The allegations of miscond
