An irrevocable power of attorney survives a company's winding up, allowing secured creditors to sell property without violating statutory provisions.

Appeal

[1] In Shah Alam High Court Originating Summons No 24-248-97 dated 13 May 1997, the appellant-plaintiff ("the borrower") sought, inter alia, a declaration that the first respondent ("the bank") was not entitled to enforce its rights under the debenture dated 10 March 1984 ("the debenture") and to sell to the second respondent ("the purchaser") seven parcels of land held under Grant Nos 10672-10678, Lot Nos 143-149, Seksyen 14, Bandar and Daerah Klang, Selangor Darul Ehsan (collectively "the land").

[2] The High Court had dismissed with costs the borrower's originating summons. Hence, this appeal by the borrower. Submissions for all the parties herein were presented on 1 and 3 June 2010. Judgment was reserved. We have agreed to write separate judgments. This is my judgment.

Factual Background

[3]Vide letter of offer dated 16 September 1983, the bank gave an overdraft facility of RM1.5 million to the borrower. By way of security, the borrower charged the land to the bank under the National Land Code 1965 ("the NLC"). The overdraft facility was also secured by a debenture which incorporated in s 6.06 thereof a power of attorney in favour of the bank ("the PA"), for valuable consideration and expressed to be irrevocable.

[4] When the borrower defaulted, the bank demanded for payment from the borrower on 24 July 1987.

[5] On 29 September 1994, at the instance of one Automotive Corporation Sdn Bhd, the borrower was ordered to be wound up.

[6] On 22 March 1995, the bank gave notice of intention to sell the land to the borrower's directors and invited bids from them.

[7] On 28 April 1995, the bank issued a notice to the borrower, and took possession and control of the land.

[8] On 16 May 1995, the bank's solicitors gave notice to the borrower's solicitors stating that the bank would exercise its power to sell the land under the debenture.

[9] On 11 July 1995, the bank advertised for the sale of the land by tender. On 24 October 1995, the bank, as attorney appointed under the PA, entered into a sale and purchase agreement ("the SPA") with the purchaser for the sale of the land at RM1.9 million.

[10] On 17 July 1995, the borrower's shareholders, Lim Chong Lai and Lim Chong Bean, filed Shah Alam High Court Originating Summons No 24-704-1995 seeking to declare the sale of the land null and void. On 29 May 1996, that originating summons was dismissed with costs. The appeal by Lim Chong Lai and Lim Chong Bean against that decision was dismissed with costs by this Court.

Question For Determination

[11] Dato' Bastian Pius Vendargon of counsel for the borrower argued that the sale of the land pursuant to the PA contained in the debenture by the Bank to the purchaser when the borrower had been wound up was void, in view of s 223 of the Companies Act 1965 ("s 223") and the legal charge registered under the NLC. Support was sought in the judgment of the (then) Supreme Court in Kimlin Housing Development Sdn Bhd v. Bank Bumiputra Malaysia Bhd & Ors, 1997 MarsdenLR 1646 .

[12] Mr Andrew Chiew Ean Vooi of counsel for the bank relied on the debenture, particularly the PA and responded that the sale of the land is not contrary to the NLC and the principles enunciated in Kimlin, supra. He stressed that the winding up order against the borrower does not affect the validity of the PA. He referred to:

(1) K Balasubramaniam (Likuidator Bagi Kosmopolitan Credit & Leasing Sdn Bhd) v. MBf Finance Bhd & Ors, 2005 MarsdenLR 2266 FC;

(2) "Powers of Attorney in Australia and