Back
1995 MarsdenLR 1272
COURT OF APPEAL KUALA LUMPUR
VIJAYALAKSHMI DEVI NADCHATIRAM – Appellant
Versus
JEGADEVAN NADCHATIRAM & ORS – Respondent
[Civil Appeal No: N-02-1-94]
[1] On 5 September 1989, Nadchatiram Realities (1960) Sdn Bhd was ordered to be compulsorily wound up by the High Court in Seremban (Companies Winding Up No 28-2-1988) on a creditor's petition by the Inland Revenue Department. The official receiver was appointed liquidator.
[2] On 22 March 1994, on an application by four contributories of the company (the first and second respondents together with Dr Mahadevan s/o Nadchatiram and Danapakia Devi d/o Nadchatiram) to "discharge the winding-up order and/or stay all proceedings in relation to the winding-up altogether", the High Court had ordered that the order to wind up the company dated 5 September 1989 and all proceedings under it be stayed altogether.
[3]Section 243(1) of the Companies Act 1965 reads:
243(1) At any time after an order for winding up has been made the Court may, on the application of the liquidator or of any creditor or contributory and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings either altogether or for a limited time on such terms and conditions as the Court thinks fit.
[4] There are similar provisions in the United Kingdom: see s 256(1) of the Companies Act 1948 and s l47(1) of the Insolvency Act 1986, (see Atkin's Court Forms (2nd edn), (1992 issue), Vol 10 p 384, note 1, where it says:
Until the Insolvency Rules 1986... came into force a winding-up order could not be rescinded after it had been drawn up. The only remedy was to apply for a stay: Re Intermain Properties Ltd [1986] BCLC 265. The Insolvency Rules 1986 R 7.47(1) provides that: 'every Court having jurisdiction under the Act to wind up companies may review, rescind, or vary an order made by it in the exercise of that jurisdiction'.
[5] There is no rule of practice or statutory provision in this country which is equivalent to the UK r 7.47(1) of the Insolvency Rules 1986) and in Australia: see s 243(1) of the Companies Act 1961, s 383 of the Companies Act 1981 and s 482 of the Corporation's Act 1989.
[6] The proper course is to stay proceedings under the winding-up order, and not to discharge it (Re Baxters, Ltd [1898] WN 60): Palmer's Company Precedents (17th edn) Part II, Winding -Up, at p 96. It is the practice not to rescind the winding-up order, but to stay proceedings under it (Re Baxters [1898] WN 60): Supreme Court Practice (1993) Vol 2 para 5220 at p 1618. See also Atkin's Court Forms (2nd edn), (1992 issue), Vol 10 p 46, and at p 386 Forms 111, 112 for the application and order.
[7] Once a winding-up order has been made, "Its descent into dissolution will be prevented only in the unusual event of the Court ordering either an indefinite stay of the winding-up proceedings or termination of the winding-up. The Court has inherent jurisdiction to grant a stay: Brinds Ltd v. Offshore Oil NL (No 2) [1985] 10 ACLR 242. Statutory jurisdiction to grant a stay or terminate is conferred by s 383 [Companies Act 1981] /s 482 [Corporations Act 1989]": Ford, Principles of Company Law, 5th edn (1990), [2207] at p 770.
[8] A winding-up order could not be discharged or rescinded after it had been made. The only remedy is to apply for a stay of proceedings under the winding-up order: see s 243(l) of the Companies Act 1965.
[9] The effect of an order to stay proceedings under the winding-up order altogether after a winding-up order has been made is a total discontinuance or termination of the winding up proceedings. In Jowitt's Dictionary of English Law, (2nd edn), Vol 2, under Stay at pp 1701, 1702, after stating that the term "stay of proceedings" can mean a total discontinuance of an action, it says this:
... but in strictness it is only accurate when a decree or judgment has been given, for in such a case the suit or action cannot be dismissed, because the Court has adjudicated on it, and therefore all that can be done is to stay proceedings under the decree or judgment.
[10] The appella
