VC George J:

On 7 October 1989 by an ex parte originating summons the Kuala Lumpur Industries Bhd., Group of Companies (the group) obtained a s. 176(10) (of the Companies Act 1965) order whereby the plaintiffs in a number of pending proceedings against one or more of the members of the group were restrained except by leave of the Court from all further action or further proceedings against the members of the group the restraining order to be effective for a period of 2 months from the 7 October 1989.

It would appear that it was envisaged that a s. 176(1) (of the Companies Act 1965) order would within that 2 months be obtained. On 7 October a s. 176(1) application had not been filed.

MBF Finance Bhd. (MBF), is one such plaintiffs affected by the order of 7 October. On 2 November it filed its application encl. (9) in the Court file seeking to be given leave to intervene in the originating summons to move the Court to set aside the order of 7 October on the ground that the Court did not have the jurisdiction to make the order and that in any event the order should not have been made. Leave to intervene was given and I thereafter directed my mind to the application to set aside the order of 7 October.

The said two subsections of the Companies Act 1965 are as follows:

176(1) Where a compromise or arrangement is proposed between a company and its creditors or any class of them or between the company and its members or any class of them the Court may on the application in a summary way of the company or of any creditor or member of the company, or in the case of a company being wound up of the liquidator, order a meeting of the creditors or class of creditors or of the members of the company or class of members to be summoned in such manner as the Court directs.

176(10) Where no order has been made or resolution passed for the winding up of a company and any such compromise of arrangement has been proposed between the company and its creditors or any class of those creditors, the Court may, in addition to any of its powers, on the application in a summary way of the company or of any member or creditor of the company restrain further proceedings in any action or proceedings against the company except by leave of the Court and subject to such terms as the Court imposes.

On the jurisdictional point MBF's contention is that without there being a s. 176(1) application the Court has no jurisdiction to make a s. 176 (10) order. In any event unless there has been proposed a scheme of compromise or arrangement between the company and its creditors the Court has no jurisdiction to make a s. 176(10) order.

It is contended that there has been no such proposal. Mr. Song Soon Ong the senior manager of MBF in his affidavit in support of the application contends inter alia that there had not been any proposal of any scheme of compromise or arrangement made to any of the creditors and further what is exhibited as a scheme is not a scheme in which the general principles of it have been defined and as such and that in any event the scheme had not reached a stage where the Court would be justified in making a s. 176(1) order. He goes on to contend that the scheme the group has in mind is bound to fail. He questions the bona fides of the application suggesting that it was filed for a collateral purpose: to forestall the winding up of a hopelessly insolvent company.

I pause to note that in England they do not have the equivalent of our s. 176(10) . The Indian equivalent is not in pari materia with ours. In India it is expressly provided that the equivalent of a s. 176(10) application may be brought only after there comes into existence a s. 176(1) application. The Australian Act has provisions equivalent to our s. 176 in respect of which there has been judicial pronouncements.