Leave under s 226(3) of the CA is not required when the application is for security for costs in a defensive action against a company already in liquidation.

Introduction

[1] This case involves an application by the defendant for security for costs and payment into court of the arbitral sum awarded against the plaintiff following the latter's application to court for the setting aside of the arbitral award.

[2] At the conclusion of the hearing on 11 March 2016, I allowed the applications by the defendant. This judgment contains the full reasons for my decision.

Key Background Facts

[3] The defendant, as the claimant had initiated arbitration proceedings on 2 October 2012 under the Kuala Lumpur Regional Centre of Arbitration, ("KLRCA Arbitration") against the plaintiff respondent. The latter responded by filing a counterclaim against the defendant in the same KLRCA Arbitration.

[4] The defendant was successful in its application for security for costs where on 26 February 2013, the Arbitrator made an order that the plaintiff must provide security for the defendant claimant's costs in the amount of RM100,000.00 in respect of its counterclaim in the KLRCA Arbitration.

[5] On 3 September 2013, the plaintiff was wound-up by the High court on grounds of insolvency.

[6] The final award in the KLRCA Arbitration was decided by the Arbitral Tribunal on or around 21 July 2015, which was substantially in favour of the claimant defendant, whereby the plaintiff respondent was to pay the defendant the following sums pursuant to the award:

(a) the sum RM2,648,987.45;

(b) interest at the rate of 2.5% per annum from 2 October 2012 on the said sum of RM2,648,987.45 to 21 July 2015;

(c) interest at the rate of 5% per annum from 21 July 2015 on the said sum of RM2,648,987.45 until the date of full realisation; and

(d) costs of the KLRCA Arbitration in the sum of RM269,707.60.

[7] The plaintiff then filed originating summons (encl 1) dated 27 September 2015, applying to set aside the whole award made by the Arbitral Tribunal. This was subsequently followed by the plaintiff making an application on 2 November 2015 under encl 16 to have the originating summons amended by impugning only parts of the award which were unfavourable to the plaintiff.

[8] The defendant then filed the two applications in response to the plaintiff's challenge to the award; first, for security for costs (encl 8) and secondly for the payment into court the aforesaid sums made payable by the award (encl 9). These are the subject matter of the present proceedings before this court.

Evaluation And Finding By This court

[9] I shall deal with the key issues relevant to the two applications, in particular those raised by the parties, by first identifying them, then setting out in summarised fashion, the arguments of both parties, to be followed by my discussing the same and finally concluding by highlighting my findings on them.

[10] A primary issue raised by the plaintiff which in my view ought to be dealt with prior to examining the substantive applications is whether the defendant must first obtain leave of the winding-up court under s 226(3) of the Companies Act 1965 ("the CA ") before it could initiate the current proceedings under encls 8 and 9 against the plaintiff which has already been wound-up.

First Issue - Whether Section 226 (3) Leave Necessary To Pursue Applications Against The Plaintiff ?

[11] The plaintiff argues that these applications under encls 8 and 9 must fail since the defendant has failed to obtain the leave of the winding-up court pursuant to s 226(3) of the CA , which reads as follows:

"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"

[12] It is evident that the words "action o