Concurrent petitions under ss 181 and 218 of the Companies Act constitute multiplicity of proceedings and abuse of court process.

[1] This is an application by the respondent for the striking out of a windingup petition filed by the petitioners against the respondent on the ground of multiplicity of proceedings and an abuse of process. I heard the application on 2 August 2016 and allowed the same at the conclusion of the proceeding and gave the key and broad reasons for the decision. This judgment contains the full reasons for my decision, which includes analysis on the validity of concurrent proceedings under ss 181 and 218 of the Companies Act 1965 .

Key Background Facts

[2] On 20 April 2016, the petitioners commenced proceedings under s 181 of the Companies Act 1965 ("the CA ") vide KLHC OS No: WA- 24NCC-164-04-2016 against, inter alia, the respondent, contending that the affairs of the company are being conducted or the powers of its Directors are being exercised in a manner oppressive to the petitioners and certain acts of the company had unfairly discriminated against or are otherwise prejudicial to the petitioners. The petitioners prayed for an order, inter alia, that an injunction be issued to restrain an adjourned extraordinary general meeting ("EGM") of the respondent intended to approve the allocation of 350,000 shares in the respondent, and also included the prayers for the shares of the petitioners in the respondent company to be bought, and for the respondent be wound up and a liquidator be appointed. The s 181 proceedings were registered in and are now pending before the Kuala Lumpur High Court NCC2.

[3] On 25 May 2016, the petitioners applied for an interlocutory injunction in respect of the s 181 proceedings to restrain the EGM of the respondent. On 6 June 2016, the High Court (NCC2) in the s 181 proceedings heard and dismissed the petitioners' said application for interlocutory injunction.

[4] On 15 June 2016, the petitioners proceeded to file a winding-up petition here in this Court (NCC1) under s 218(1)(f) and 218(1)(i) of the CA . The petitioners in essence referred to substantially the same facts as those set out in the s 181 proceedings and contended that the respondent ought to be wound up based on just and equitable grounds which they attributed to the allegation of the disappearance of the substratum and the main objective of the respondent company, as well as to the deadlock in its management.

Key Contention Of Parties

[5] The principal issue to be determined is whether the filing of a winding-up petition and a minority oppression proceedings at about the same time based on substantially the same set of facts constitute a multiplicity of proceedings and thus an abuse of the process of the Court. The parties in dispute take a diametrically opposite stance on this important point of law concerning the validity of concurrent proceedings under s 181 and s 218 of the CA .

[6] The respondent on the one hand submits that the winding-up petition is not bona fide and amounts to a multiplicity of proceedings. It is an abuse of Court's process for the petitioner to have filed this s 218 petition based on the same or substantially the same set of facts as those in the s 181 proceedings.

[7] The petitioners on the other hand, contend that they are entitled to file two proceedings, one under s 181 and another under s 218 at or about the same time and based on the same or substantially the same set of facts, primarily relying on the High Court's decision in The Lyn Country Sdn Bhd v. EIC Clothing Sdn Bhd & Anor, [1997] 4 MLJ 198 which was applied in Teh Chin Chuan & Anor v. Chuan Hong Co & Ors; [1999] 5 MLJ 459.

[8] It is common ground and not disputed that the winding-up petition is based on substantially the same facts relied on