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2014 MarsdenLR 121
HIGH COURT MALAYA SHAH ALAM
MOHD BAKRI @ BAKHARI MOHD NOOR – Appellant
Versus
KETUA PENGARAH INSOLVENSI BAGI ASET DAN LIABILITI SYARIKAT TABA SI.... – Respondent
[Originating Summons No: 24NCC-1-01/2014]
An application seeking to declare a company's dissolution void under Section 307 of the Companies Act must be made within two years and in the winding-up suit, supported by compelling evidence of the liquidator's failure.
Headnote:(A) Companies Act 1965 - Section 307 - Application for leave to file Originating Summons out of time - Court may declare the dissolution of a company void within two years after dissolution - Plaintiff alleges liquidation undervalued assets and unaddressed interests. (Paras 2, 3, 33, 43, 58)
(B) Jurisdiction - An application under Section 307 must be made in the winding-up suit - Discretion lies with the Court to allow time extension on justifiable grounds. (Paras 24, 36, 28)
(C) Liquidation duties - Liquidator must act with honesty, impartiality, and diligence in realizing company assets. (Paras 68, 69, 70)
Facts of the case:
The plaintiff filed to contest a dissolution order regarding a company with unaddressed financial interests, claiming undervalued asset sales by the liquidator. He was previously a director, now contesting his bankruptcy status.
Findings of Court:
The court found the plaintiff's application flawed as it was not filed in the correct jurisdiction and failed to present convincing evidence against the liquidator's actions.
Issues: Whether the plaintiff's filing was timely and the correctness of the asset sales.
Ratio Decidendi: The plaintiff's failure to timely contest the liquidator's actions and absence of compelling evidence mandates dismissal of the application.
Result: Plaintiff's application dismissed, with no order as to costs.
| Table of Content |
|---|
| 1. application for declaration of dissolution void. (Para 1 , 1 , 2 , 3 , 4) |
| 2. plaintiff's personal background. (Para 5 , 6) |
| 3. company's financial obligations and foreclosure. (Para 7 , 8 , 9 , 10 , 11 , 12) |
| 4. procedural matters in sales of company assets. (Para 13 , 14 , 15 , 16 , 17 , 18) |
| 5. dissolution of company and aftereffects. (Para 21 , 22) |
[1] The plaintiff's application, made pursuant to s 307 of the Companies Act 1965 (" CA 1965"), had sought for leave to file this Originating Summons out of time, and if granted, for an order:-
(a) that the dissolution order of Syarikat Taba Silver Sdn Bhd ("the company"), granted in the Shah Alam High Court Winding-Up Suit No 28-69-1992 on the 15 June 2010, be made void; and
(b) to reinstate the company in the register of the registered companies of Malaysia.
[2] Section 307 (1) CA 1965 states as follows:-
307 Power of Court to declare dissolution of company void
(1) Where a company has been dissolved the Court may, at any time within two years after the date of dissolution, on application of the liquidator of the company or of any other person who appears to the Court to be interested, make an order upon such terms as the Court thinks fit declaring the dissolution to have been void, and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved.
[3] In support of his application, the plaintiff contends the following:-
(a) That the disposal of the company's land by the defendant, was grossly undervalued; and
(b) The defendant had failed to pursue the company's interests in respect of the sale of Syarikat Malaysia Batik Handicraft Sdn Bhd's ("Malaysia Batik") shares, as the company owns 80% of the shares in the latter.
[4] In essence, the plaintiff contends that the company still has interests that were not, or have not been attended to satisfactorily.
The Salient Facts
The Plaintiff
[5] The plaintiff claims to have founded the company back in 1978. He was also a former director and shareholder of the company.
[6] He was adjudged a bankrupt through a bankruptcy suit at the Kuala Lumpur High Court, in suit no 29-615-1991. He claims that he is no longer a bankrupt, and that he has the locus standi to commence this suit.
The Company
[7] The company was wound-up pursuant to a petition by Affin Finance Berhad on 8 October1992, at the Kuala Terengganu High Court, in Companies Winding-Up No 28-8-1991. The defendant was appointed the liquidator. On the same day, the suit was transferred to the Shah Alam High Court, and registered as MTSA 28-69-1992 ("the winding-up suit").
[8] The company owned a piece of land in Pasir Mas, Kelantan. This land was charged to Bank Pertanian Malaysia ("the bank") in 1988, as security for a loan given to the company. The loan then was for RM750,000.
The Foreclosure Proceedings And The Land
[9] The company failed to honour its obligation towards the loan. The bank commenced foreclosure proceedings at the Kota Bharu High Court sometime in 1995, and obtained an order for sale on 9 July 1995.
[10] The bank was not inclined to proceed with an auction. It had instead, sought the defendant's consent to sell the land by way of private treaty, to a company called Galeri Tani Sdn Bhd ("Galeri Tani"), as the latter had offered to buy the land for RM800,000.
[11] At first, the defendant was not keen on the bank's proposal, as the bank had already obtained an order for sale. The defendant subsequently acquiesced to the bank's repeated request.
[12] The bank proceeded to file an application to annul the order for sale in April 1997. This application was allowed on the 12 May 1997.
[13] The defendant then filed an application through a summons in chambers dated 6 September 1997, for consent to sell the land to Galeri Tani for RM800,000. In the application, the defendant named itself as an applicant, the bank as the first respondent, and Galeri Tani as a second respondent.
[14] In its application, the defendant claims that the offer by G
