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2024 MarsdenLR 3277
HIGH COURT MALAYA PULAU PINANG
PUBLIC BANK BERHAD – Appellant
Versus
GMP MASYHUR SDN BHD – Respondent
[Originating Summons No: PA-24FC-176-05/2020]
A dissolved company lacks locus standi to maintain an appeal, as it ceases to exist and has no legal rights.
Headnote:(A) Companies Act 2016 - Sections 550 and 554 - Locus standi of a dissolved company to maintain an appeal - A company struck off the Register ceases to exist and loses legal rights - The court ruled that the defendant had no locus standi to pursue the appeal due to its dissolution. (Paras 6, 8, 14)
(B) Legal standing - The issue of legal standing is a threshold issue and should be determined as a preliminary point - The court emphasized that a dissolved company cannot maintain legal proceedings. (Paras 16)
Facts of the case:
The plaintiff bank sought to auction a property charged by the defendant company, which had defaulted on a loan and was subsequently struck off the Register of companies. (Paras 1-4)
Findings of Court:
The court found that the defendant company, being dissolved, lacked the legal capacity to pursue its appeal. (Paras 14-15)
Issues: The main issue was whether the defendant had the locus standi to appeal after being struck off the Register of companies. (Para 6)
Ratio Decidendi: The court concluded that a dissolved company no longer exists as a legal entity and thus cannot maintain an appeal. (Para 14)
Result: Appeal struck out.
JUDGMENT
(Locus Standi To Maintain An Appeal)
Prelusion
[1] The Plaintiff bank (P) obtained an Order For Sale to auction the subject property that the Defendant company (D) charged to it. The charge was the security given to P for giving banking facilities to D.
[2] D appealed to the Court Of Appeal against the Order For Sale. The Court Of Appeal dismissed the Appeal and sustained the Order For Sale.
[3] P then proceeded to get an Order For Directions to auction the subject property, on a particular date and at a particular reserve price. D appeals against this Order For Directions.
[4] At the hearing of D's Appeal, the fundamental issue of whether D has the requisite locus standi (legal standing) to pursue its Appeal was raised. Does D have the locus standi to be heard and to proceed? And what is to become of the Appeal?
Chronology Of Pertinent Facts
[5] I set out here a chronology of the facts and proceedings pertinent to this Appeal-
(1) December 1996 — D charged the subject property (Geran Hakmilik 23040, Lot No. 420, Mukim 03, Daerah Seberang Perai Selatan, Negeri Pulau Pinang) (Property) as a security for a loan given to D.
(2) September 2010 — D (with other related parties) entered into a Global Settlement Agreement (GSA) to settle their banking debts due to P. The GSA provides that if the parties who entered into this settlement with P, including D, default in making the scheduled repayments, P can declare it as an event of default, and proceed to enforce the securities given, including the charge over the Property.
(3) January 2018 — D (with the other parties) defaulted.
(4) November 2019 — P issued a Notice declaring an event of default.
(5) December 2019 — P issued a Notice to recall the outstanding loan from D.
(6) January 2020 — P issued a Notice Of Default With Respect To A Charge (known as a Form 16D Notice under the National Land Code 1965).
(7) May 2020 — P applied for an Order For Sale (to sell the Property and utilise the sale proceeds to satisfy D's outstanding banking debt).
(8) December 2021 (21 December 2021) — The Court granted the Order For Sale. D appealed against the Order For Sale to the Court Of Appeal.
(9) September 2022 (7 September 2022) — The Court Of Appeal dismissed D's Appeal ie affirmed the Order For Sale. D did not appeal further.
(10) March 2023 — P filed this proceeding to apply for an Order for directions to sell the Property, setting a reserve price for the auction and a date for the auction (Order For Directions).
(11) December 2023 (5 December 2023) — The Court (the Registrar) granted the Order For Directions. The reserve price was set at RM5 million, and the auction date was fixed for 6 February 2024.
(12) December 2023 (18 December 2023) — D appeals against the Registrar's Order For Directions, to the Judge in chambers. This judgment relates to this Notice Of Appeal To Judge In Chambers.
(13) July 2024 (19 July 2024) — D was struck off the Register of companies.
The Locus Standi Issue
[6] P raises an issue about D's locus standi (legal standing) to maintain this Appeal to Judge in chambers. locus standi is the right or capacity to appear in Court proceedings. P asserts that D has no locus standi to pursue this Appeal because D was struck off the Register of companies.
[7] Section 550 of the Companies Act 2016 ( CA 2016) provides that a company may be struck off the Register. Section 554 of the 2016 provides that the effect of a company being struck off the Register is that the company is dissolved.
[8] A company that is dissolved no longer exists. When a company is incorporated, it becomes a legal entity. As a legal entity, it can attain legal rights and incur legal liabilities. It can sue and it can be sued. But when a company is dissolved, it stops being a legal entity. It ceases to exist. It is extinguished. It no longer has any legal rights, as it no longer has any legal identity.
[9] Citing Justice Harmindar Singh Dhaliwal J (later FCJ), the "dissolution of a compan
