Leave under s 263(2) of the Companies Act is necessary when a company is wound up; a prima facie case must be established for relief beyond liquidation proceedings.

[1] The appellants sought leave under s 263(2) of the Companies Act 1965 to commence proceedings against the respondent as the respondent was voluntarily wound up under s 254 of the on 20 May 2015. The application was opposed by the liquidators of the respondent. Leave was refused.

[2] At the appeal, we unanimously allowed the appeal and set aside the decision of the High COURT. Our reasons in full are set out below.

Brief facts

[3] Prior to being wound up, the respondent entered into an agreement dated 21 March 2011 wherein subject to various terms and conditions, the respondent agreed to sell to the 1st appellant two plots of lands for a total purchase consideration of RM3,312,000.00. In respect of the first piece, the respondent together with various individual owners were the registered proprietors of an undivided portion of land held under Geran 94160, Lot 5732, Mukim Batu, Daerah Kuala Langat, Negeri Selangor. Effectively, the respondent sold its shares representing 22.4163 acres to the appellants. This was known as the "bigger plot" and it was sold for RM218,550.60. The other plot, known as the "smaller plot" comprised 1.5837 acres of land held under Geran 50209, Lot 1870, Mukim Batu, Daerah Langat, Negeri Selangor. The respondent was the sole registered proprietor of this plot which it sold to the 1st appellant for RM3,093,449.40.

[4] Under the terms and conditions of the sale and purchase agreement, the respondent agreed to:

i. submit an application to sub-divide the bigger plot and ultimately see to the issuance of individual titles with the names of the appellants endorsed therein; and

ii. evict or remove all and any squatters or unlawful occupiers from the lands sold.

[5] There was also a temple sited on the bigger plot which the appellants alleged that the respondent agreed to relocate. These conditions were not fulfilled. The bigger plot remained un-sub-divided and some squatters remain on the affected plot. The appellants take the position that since a portion of the purchase monies paid were retained by solicitors then engaged by the respondent, the respondent had acknowledged its obligation to attend to the removal of squatters and the relocation of the temple.

[6] On 9 November 2012, the two plots were registered in the names of the appellants after full payment was affected. The bigger plot was registered in the name of the two appellants while the smaller plot was registered in the 1st appellant's name. The respondent remained the registered proprietor of 94837/470100 share of the bigger plot. Despite repeated requests from the appellants, the two conditions mentioned above and the matter of the temple remained unresolved. The appellants decided to sue the respondent for breach of contract seeking primarily an order of specific performance of these two obligations under the sale and purchase agreement. Because the respondent was wound up, though voluntarily, the appellants were required to obtain leave of the winding up COURT before commencing its claim. The three liquidators of the respondent opposed the application for leave. Two of the three liquidators are former directors of the respondent.

[7] On the matter of the squatters, the respondent denied owing any obligation as alleged and further contended that in any event, all squatters had already been removed. As for the relocation of the temple, the respondent also denied owing any obligation since this only arose after the appellants had taken possession of the lands. According to the respondent, it had since sold a further 7 acres of the bigger plot to a company known as "TS Land Management Sdn Bhd". The balance share of the bigger plot was said to be held by the respondent on trust for a Tamil school located on the plot. Given that the respondent was therefore no longer the registered proprietor of the two plots of land, the respondent argued that