Mohd. Jemuri Serjan CJ (Borneo):

In the High Court the plaintiffs, Tang Eng Iron Works Co. Ltd. (respondents before us) took out an originating summons under O. 88 r. 2 of the Rules of the High Court 1980 in an application under s. 304(1) of the Companies Act 1965 seeking the following declarations:

(1) A declaration that the business of Har Lee Enterprise Sdn. Bhd. has been carried on with intent to defraud creditors of the defendants;

(2) A declaration that the said (1) Ting Ling Kiew and (2) Ting Ling Hoe shall be personally responsible without any limitation of liability, for all of the debts or other liabilities of the said Har Lee Enterprise Sdn. Bhd.;

(3) An order that the said (1) Ting Ling Kiew and (2) Ting Ling Hoe do repay to the plaintiffs the sum comprised in the Arbitration Award dated 20 May 1988, viz the sum of Malaysian Ringgit Four Million One Hundred And Sixty-Five Thousand One Hundred And Forty-Five And Cents Eighty (RM4,165,145.80) only together with interest thereon at the rate of 8% per annum from the date of the said Arbitration Award until the date of full and final settlement; cost of the plaintiffs and of the said Arbitration; costs of the Arbitration Award taxed at RM25,245.45; costs of the plaintiffs in originating summons No. KG. 156 of 1988 and judgment therein.

(4) Costs of the application; and

(5) Any further or other reliefs.

The learned Judge held that the provisions of s. 304 of the Companies Act 1965 were satisfied and accordingly made the order in terms of the originating summons. Hence this appeal.

The circumstances under which the application under s. 304(1) arose can be gathered from the facts as they were found by the High Court and from the affidavits of the parties in this case. Har Lee Enterprise Sdn. Bhd. (`HLE') was incorporated under the provisions of the Companies Act, 1965 on 9 December 1980 with a fully paid-up share capital of RM3,600,000 and has a registered office at Lot 219, Section 61, 1st Floor, Ban Hock Road, Kuching. By an agreement dated 5 April 1984 the 1st defendant (1st appellant before us) and one Yeh Hsin Tsan bought over all the shares of HLE for a sum of RM6.4 million of which RM100,000 each is to be paid by Yeh Hsin Tsan, Kueh Eng Mong and Ting Ling Hoe; RM4,100,000 is to be paid by the 1st appellant and the balance of RM2 million is to be paid in kind by the purchasers constructing, completing and conveying all the (7) parcels of office blocks located on the 8th floor of the Jade Tower Commercial Complex to the vendors. The 1st and 2nd appellants were appointed managing director and secretary of the board of directors respectively on 14 June 1984, the other director of HLE being Hoo Tung Kwong @ Robin Hoo, Chong Kia Hoi, Sim Kwan Meng and Ngu Bek Sing who resigned on 11 June 1985 and was succeeded by Kueh Eng Mong on the same date. HLE is the registered proprietor of a parcel of land situated at Jalan Tunku Abdul Rahman and known as Lot 276, Section 48 Kuching Town Land District containing an area of 1516, square meters which, however, is subject to a legal charge in favour of Bank Utama (M) Bhd. to secure a total loan of RM1,150,000. The said land is the only principal asset of HLE and valued at RM4,827,872 as at 31 December 1982. However, the value of the land had been fluctuating throughout the years and as at 1 January 1987 it was valued at RM10,201,833. There was a sharp down-turn in the value of the land when it was revalued at RM3,790,000 only as on 18 January 1988. The approval having been obtained from the relevant authorities for the erection of office commercial cum residential complex, to be known as Jade Tower Commercial Complex, comprising 17 storeys together with 3 basements, the respondents on l9 June 1984 entered into two building contracts with HLE for the construction and completion of foundation and basement works of the proposed Complex. A dispute arose between the respondents and HLE on the completion of the said works, and purs