Judicial Management Order set aside due to failure to disclose material facts and status of a substantial creditor, affirming the necessity for transparency in ex parte applications.

Nadzarin Wok Nordin JC:

Enclosure 14

Preface

[1] By way of an application to intervene at encl 14 (encl 14) by the proposed intervener, TSK Hardware Sdn Bhd (PI), the PI had also applied to inter alia set aside the Judicial Management Order (JM Order) dated 9 July 2020 granted by this court to the Applicant, Twin Unitrade Sdn Bhd (Applicant).

[2] There is also before this court an application in encl 29 (encl 29) filed by the Applicant) for inter alia an order for an extension of time to serve the Applicant's Affidavit In Reply to encl 14 affirmed on 8 October 2020 which can be found at encl 23.

[3] The Judicial Manager, Dato Dr Shammuganathan a/l Vellathurai (JM) had also filed an application for order for an extension of time 60 days (EOT) from the date of the order for the JM to send a Statement of proposal to the creditors of the Applicant in compliance with s 420(1) of the Companies Act 2016 under encl 17 (encl 17) which has yet to be heard pending the decision of this court in encl 29 and 14.

Background Facts

[4] The Applicant is a private limited company having a business in Johor Bahru as builders and contractors.

[5] The PI had sold and delivered building materials to the Applicant amounting to RM350,929.71.

[6] As a result of the Applicants failure to pay the PI the materials supplied, the PI had commenced an action against the Applicant vide Sessions court Johor Bahru Writ No JA-B52NCC-227-12/2019 (Civil Suit).

[7] On 22 May 2020 the Applicant had filed an Ex Parte Orginating Summons (JM Application) for the Applicant to be placed under the judicial management of a Judicial Manager under s 405 of the Companies Act 2016 .

[8] The PI had obtained a judgment dated 9 June 2020 for the sum of RM524,105.92 (Judgment) against the Applicant vide a Summary Judgment application in the Civil Suit.

[9] On 9 July 2020 the Kuala Lumpur High court had granted order in terms for the JM Application (JM Order) and appointed the JM.

[10] Due to the failure of the Applicant to make payment towards the Judgment, the PI had also attempted to garnish the Applicant's Affin Islamic Bank account by way of an order of court dated 9 July 2020 but was informed by the JM via a letter dated 20 July 2020 that there was a JM Order in place.

[11] The PI then filed a proof of debt (POD) with the JM on 28 July 2020. To-date there has been no challenge by the Applicant as to the debt owed to the PI.

PI's Submissions

[12] The PI claims that it is a substantial creditor who holds more than 75% of the disclosed debts and that the Applicant's claim that it owes Antah Schindler via a Construction Industry Payment and Adjudication Act 2012 (CIPAA) decision for RM2,240,165.73 is unsubstantiated by any evidence and the same goes for the consent judgments allegedly recorded between the Applicant and Gala Performance Sdn Bhd for RM24,700 and JX Ply Sdn Bhd for RM10,000.

[13] The PI states that there is no delay in filing encl 14 as:

a) the Applicant did not divulge at the Civil Suit that they had applied for a JM Order;

b) the Applicant advertised the Notice for Application for the JM Order in the newspapers on 12 June 2020;

c) the Applicant remained silent on the JM Application despite being served with the Judgment on 23 June 2020 via service of the Judgment upon the Applicant's solicitors;

d) the PI was only made aware of the JM Order by way of a letter dated 20 July 2020; and

e) after filing their POD on 28 July 2020 and obtaining no response, the PI then filed encl 14 on 30 September 2020.

[14] The PI submits that it has the necessary locus standi to intervene in the proceedings before this court as it is a creditor by virtue of the Judgment.

[15] It is also submitted by the PI that the Applicant had failed to enclose any resolution which had approved the application for a Judicial Manager to be appointed over the company.

[16] The PI contends that the Applicant had failed inter alia to inform this court at the hearing of the JM Application that the PI had obtained the