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FEDERAL COURT JOHOR BAHRU
MOSBERT BERHAD (IN LIQUIDATION) – Appellant
Versus
STELLA DCRUZ – Respondent
[Civil Appeal No: 18 Of 1984]
[1] The material facts which give rise to this appeal are substantially the same as those in the Federal Court case of Mosbert Bhd (In Liquidation) v. Chatib Kari, [1985] 1 MLJ 162 and in giving the judgment of the Federal Court the Lord President has set out the relevant facts succinctly, so there is no need to repeat them here. Suffice to say that the two main issues connected with this appeal appear to have been raised and decided by the Johore Baru High Court, where Shankar J granted leave to both Chatib and Farland to commence proceedings against the Mosbert Bhd (In Liquidation) (hereinafter referred to as the appellant) under s 226(3) of the Companies Act 1965 and further made a Consent Order extending the validity of the respective caveats lodged by Chatib and Farland until the final disposal of the suits filed by them after the Official Receiver had agreed to it. The Official Receiver seemed to have resiled from this and took out a summons to set aside the Consent Order. When the learned judge dismissed the application there was an appeal to the Federal Court vide Civil Appeal Nos 7/84 and 75/84. In that appeal the Federal Court upheld the decision of the learned judge. Here the principal complaint of the appellant may be summarised into 2 main grounds of appeal. First, it was submitted that the learned judge was wrong in law in granting leave to D'Cruz Stella (f) (hereinafter called the respondent) to prosecute her claim against the appellant on an ex parte application pursuant to s 226(3) of the Companies Act 1965. Secondly, learned counsel argued that the private caveat lodged by the respondent was defective or void in that it purported to caveat the whole of the property when the caveator is only claiming an interest in a small portion thereof.
[2] Now s 226(3) reads:
"When a winding up order has been made or a provisional liquidator has been appointed no action or proceeding shall be proceeded with or commenced against the company except-
(a) by leave of the Court; and
(b) in accordance with such terms as the Court imposes."
[3] The question therefore arises whether "leave of the Court" should be obtained by way of (a) an ex parte summons-in-chambers or (b) inter partes summons. In re Western & Brazilian Telegraph Co v. Bibby (1880) 42 LT 821 Jessel MR was reported to have said that leave to commence an action against a company in liquidation should not be given on an ex parte application. No reason was given by the learned Master of the Rolls. But in our opinion, this practice of the Court should be adopted and followed for these reasons, viz, it cannot be disputed that the primary object of winding up is the collection and distribution of the assets of the company pari passu amongst unsecured creditors after payment of preferential debts. And the purpose of the statutory provision is to ensure that all claims against the company in liquidation which can be determined by the cheap and summary procedure available in a winding up are not made the subject of expensive litigation. The provision is designed to prevent unnecessary multiplicity of suits which may result in dissipating the assets of the company. It is for this reason that application under s 226(3) of the Companies Act 1965 should be made inter partes so that the summons could be served on the Official Receiver who should be heard before the discretion of the Court is exercised. Without hearing the Official Receiver the Court cannot be said to have exercised the discretion judicially.
[4] Although we agree with the submission of learned counsel for the appellant that leave under s 226(3) should not be given on an ex parte application we are constrained to point out that on a subsequent summons taken out by the appellant to set aside the Court order, the Official Receiver was represented by learned counsel at the hearing and addressed the Court on the merits of the application. On perusing the record of appeal we are satisfied that the lea
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