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2023 MarsdenLR 457
HIGH COURT MALAYA KUALA LUMPUR
NFC CLOTHIER SDN BHD – Appellant
Versus
LIAN YIT ENGINEERING SDN BHD & ORS – Respondent
[Orginating Summons No: WA-22NCVC-787-12-2021]
Liquidators cannot delegate their powers without proper authority, and the court retains oversight of their actions under the Companies Act 2016.
Headnote:(A) Companies Act 2016 - Section 486(1) & (2) - Rules of Court 2012 - Order 92 Rule 4 - Liquidation proceedings - Plaintiff sought declaration that Surendran S Subramaniam is not entitled to act on behalf of the defendant in this suit - Court found insufficient evidence of authority for Surendran and the legal firm to represent the defendant - Costs awarded against Surendran. (Paras 1, 6.1, 11.1, 12.1)
(B) Liquidator's powers - The liquidator must exercise powers within legal parameters and cannot delegate authority to a creditor or contributory without proper sanction - The court retains control over the exercise of liquidator's powers. (Paras 10.1, 10.4.1, 12.2)
Facts of the case:
The plaintiff sought to restrain Surendran from acting on behalf of the defendant company, which was in liquidation, and challenged the authority of the legal firm Messrs Amirtha VS & Co to represent the defendant. The plaintiff argued that the Official Receiver did not have the power to delegate authority to Surendran. (Paras 1, 3.1, 6.6)
Findings of Court:
The court found that the Official Receiver failed to provide evidence of the sanction allowing Surendran to act, thus ruling in favor of the plaintiff's application. (Paras 11.1, 12.1)
Issues: The key issues included the authority of Surendran to act for the defendant and the validity of the legal firm's representation. (Paras 6.1, 10.1)
Ratio Decidendi: The court held that a liquidator's powers are not to be delegated without proper authority and that the Official Receiver must act within the scope of their legal powers. (Paras 10.1, 12.2)
Result: Application allowed, with costs awarded against Surendran.
| Table of Content |
|---|
| 1. plaintiff seeks declaration against surendran's authority. (Para 1 , 2) |
| 2. background facts of d1's liquidation and agreements. (Para 3 , 4) |
| 3. plaintiff's claims and arguments regarding surendran's role. (Para 5 , 6) |
| 4. arguments presented by parties regarding authority and legal standing. (Para 7 , 8 , 9) |
| 5. legal standards governing liquidator's powers. (Para 10) |
| 6. court's observations on procedural issues and evidence. (Para 11 , 12) |
Introduction
[1] The plaintiff applied in encl 70 and supported by an affidavit in encl 71, to seek a declaration that one Surendran S Subramaniam (IC No: 690907-10-6243) - (Surendran) is not entitled to act on behalf of the 1st defendant (D1) in this suit under s 486(1) & (2) Companies Act 2016 ( CA 2016) and/or under O 92 r 4 of the Rules of Court 2012 and/or under the inherent jurisdiction of this Court and other related prayers.
[2] On 1 March 2023, after perusing the cause papers and hearing the submissions of the respective Counsels, I allowed the following prayers in encl 70:
(a) A declaration that Surendran S Subramaniam (IC No: 690907-10-6243) is not entitled to act on behalf of D1 in the present case:
(b) The legal firm of Messrs Amirtha VS & Co is disqualified or restrained from acting as solicitor for D1 or creditors of D1 in the present case;
(c) That any lawyers of the legal firm of Messrs Amirtha VS & Co, including Ms Amirtha Valli Sinniah, are restrained from conducting or advising D1 in the present case and/or in any manner whatsoever taking up Counsel or solicitor work for D1;
(d) That the Notice of Appointment of Solicitor dated 28 September 2022 filed under encl 53 and any purported consent that the Official Receiver of D1 gives for the appointment of Messrs Amirtha VS & Co to act as the solicitor of D1 or the creditors of D1 is revoked and set aside;
(f) The cost of this application is borne by D1 and/or Surendran S Subramaniam (IC No: 690907-10-6243, as a creditor for D1) to the plaintiff.
2.1 Costs of RM3,000.00 was awarded against Surendran, to be paid within 30 days from the date of this Order.
2.2 Dissatisfied, D1 filed two separate notices of appeals against that decision. I prepared one judgment for the appeals as it concerns similar facts. My reasons are as follows:
Salient Facts
[3] The full trial of this suit is still pending before this Court, and the brief facts observed from the pleadings (without going to the merits of this suit) are as follows:
3.1 D1 is a company placed in liquidation by the Kuala Lumpur High Court on 18 September 2013 (Company Winding-up No: 28NCC-101-02/2013), with the Official Receiver (Insolvency Office KL branch) appointed over the affairs of D1.
3.2 The Kuala Lumpur Company Winding-up Court approved the plaintiff to pursue this action against D1 on 6 May 2021 (Post Company Winding-up No: WA-28PW-50-02/2021).
3.3 The subject matter of dispute between the plaintiff and D1 are:
3.3.1 Prior to being wound up on 18 September 2013, D1 entered into:
(a) A Sale and Purchase Agreement (SPA-1) on 14 September 2007; and
(b) A Supplementary Agreement (SPA-2) on 18 October 2012.
With the plaintiff over the sale and purchase of a piece of leasehold land held under Dokumen Hakmilik Individu No Pajakan Negeri 53400 (dahulunya dikenali sebagai PN 42426 dan H.S.(D) 111872 P.T.126) Lot 9 Sekseyn 92A, Bandar Kuala Lumpur, Negeri WP Kuala Lumpur, (the said land) together with an office cum warehouse building erected on it (the said building), free from encumbrances with vacant possession subject to terms and conditions set out in the agreement (collectively referred to as the said property).
3.3.2 The plaintiff first sued D1 on 4 July 2008 seeking specific performance of SPA-1 in KL HC Civil Suit No: S1-22-736-2008 (suit 736):
(a) A Consent Order was recorded on 18 January 2012, where a specific performance order on SPA-1 was granted subject to terms and conditions contained in SPA-2.
(b) The plaintiff was, at all material times, ready
