Ahmad Fairuz JCA:

[1] This is a judgment under s 42(1) of the Courts of Judicature Act 1964 as the chairman of this court had retired by the time this judgment was arrived at. Accordingly the term "we" in this judgment refers to Dato' Abu Mansor, JCA (now Federal court judge) and Dato' Ahmad Fairuz, JCA (now Federal court judge).

[2] This is an appeal against the decision of the High court at Kuala Lumpur in granting injunctions against the appellants. The injunctions were applied for by the first and second respondents (R1 and R2) by way of summons-in-chambers dated 4 September 1997 (encl 31).

[3] On 22 July 1997, R1 and R2 (the petitioners) had presented a petition to wind-up the third respondent (R3). On 7 August 1997, the petitoners obtained an order to appoint provisional liquidators. R3 is a party to the petition. It was contended that R3 is largely a nominal party because the nature of the disputes giving rise to the petition and the appointment of the provisional liquidators are disputes which are purely between shareholders. The Board of Directors of R3, however, is in control of the shareholders who oppose the petition ie, the appellants. It was alleged that the appellants, as directors of R3 had engaged the firm of Messrs Raja, Darryl & Loh to act as the solicitors for R3 in relation to the petition. R3 had in fact taken active part in opposing the petition and the appointment of the provisional liquidators. This, according to the petitioners, would "incur great expense to" R3. Such expense would be "entirely unnecessary" in the light of the fact that the disputes are between shareholders (para 12 of the affidavit of R1 and R2 at p 179 of Appeal Record (AR)). It was also alleged that several shareholders had moved for an order discharging the appointment of the provisional liquidators whilst R3 had also made a similar application. The end result, according to the petitioners would be a duplicity of applications at the expense of R3 (para 14 of the affidavit of R1 and R2 at p 179 AR). For these reasons the petitoners feared that the funds and assets of R3 may be utilised to fund the opposition of the petition. Hence the application for the injunctions against the appellants (para 15 of affidavit of R1 and R2 at p 180 AR).

[4] The appellants deny that R3 is a nominal party. To them views of R3 ought to be taken into account at the hearing of the petition. They contend that costs of R3's legal representation is not a ground for the issuance of injunctions.

[5] Before us, counsel for the appellants argued that:

(a) a company's board of directors has residuary power to appoint solicitors to oppose the petition. On this issue, we were referred to the case of Sri Hartamas Development Sdn Bhd v. MBf Finance Bhd, [1991] 3 MLJ 325 wherein the Supreme court pointed out that the case of Re Union Accident Insurance Co Ltd [1972] 1 All ER 1105 held inter alia that "notwithstanding the appointment of the provisional liquidator and the general assumption by him of the company's powers the board still retained certain residuary powers which included authority to instruct solicitors and counsel to oppose the petition and if a winding-up order is made, to appeal against the order". The Supreme Count then quoted the following passage from the judgment of Plowman J at p 1113:

Clearly, for example, as I have already indicated, the power to instruct solicitors and counsel on the hearing of the winding-up petition is not a power which anyone could suggest has passed to the provisional liquidator and therefore the board retains it. If that is true in regard to the petition itself, it is, in my judgment, equally true of interlocutory proceedings which are such that it would not be appropriate for the provisional liquidator to give instructions on behalf of the company.

On the basis of these authorities, the learned counsel contended that with the injunctions, the residuary powers of the board would be restrained;

(b) the petitioner's allegat