Court grants leave under s 226(3) of the Companies Act 1965 for specific performance claims that cannot be adequately resolved in winding-up proceedings, emphasizing access to justice and legitimate disputes.

[1] This is an appeal against the decision of the High Court in which the learned judge dismissed an application by the appellant for leave to intervene and commence an action against the respondent under s 226(3) Companies Act 1965 .

[2] We heard the appeal and after due consideration to respective submissions of counsel, we allowed the appeal and now give our reasons.

Background Facts

[3] The respondent was wound up on 27 February 1989 and pursuant to an acquisition agreement dated 6 May 1999, Danaharta Urus Sdn Bhd (Danaharta) acquired the rights, title and interest of Bumiputra-Commerce Bank Berhad (BCCB) in the security documents relating to the credit facilities extended by BCCB to the respondent over the charged properties.

[4] In view of the discovery of the existence of an uncompleted and abandoned housing project belonging to the respondent, a settlement agreement was entered into on 18 January 2005 in respect of 121 lots of land in the abandoned housing project.

[5] The parties to that settlement agreement are Danaharta, BCCB as borrower, Segamat Kinisayang Supermarket Sdn Bhd and Sri Andil Trading & Development Sdn Bhd and the appellant. The purpose of that settlement agreement is to facilitate a sale and purchase agreement between Danaharta, the respondent and the appellant in which the appellant agreed to purchase the 121 lots of land for a consideration of RM3.5 million subject to terms and conditions in the sale and purchase agreement.

[6] A sum of RM350,000.00 being deposit of 10% of the consideration was paid by the appellant to Danaharta leaving a balance of RM3,150,000.00. To formalise the sale and purchase agreement, application was made to the Court by the respondent to sanction the sale and purchase agreement. Such sanction or consent was obtained from the High Court on 22 March 2005.

[7] However there were some typographic mistakes in the extracted Court order resulting in an application to the Court by the respondent to amend the order The amended Court order was finally obtained on 24 October 2005.

[8] The balance purchase price was to be paid on or before 5 September 2005 as per cl 2.3 of the sale and purchase agreement (completion date). No payment was made by the appellant on that date. Be that as it may, two extensions of the completion date were granted by the respondent and Danaharta and they were 20 May 2006 and 12 June 2006 on the condition that a sum of RM100,000.00 is to be paid by the respondent as consideration for the two extensions.

[9] No payment was made by the respondent on or before 12 June 2006,the result of which is that the respondent terminated the sale and purchase agreement through a letter dated 12 June 2006 issued by its solicitors.

[10] Subsequent to the aforesaid termination, the respondent on 24 December 2007 sold 90 of the 121 lots of land to Merit Shine Sdn Bhd. Full purchase price of the 90 lots of land had been paid in full to Danaharta through a wholly owned subsidiary of the Ministry of Finance, namely, Prokhas Sdn Bhd.

[11] Upon becoming aware of the sale to the 90 lots of land, the appellant commenced legal action in Johor Bahru against the respondent and Danaharta on 14 November 2008 via MT5-22-852-2008 (suit 852). The respondent applied to strike out the appellant's statement of claim under O 18 r 19 RHC on the ground that no leave had been obtained by the appellant pursuant to s 226(3) of the Companies Act 1965 . That application was sustained result