JUDGMENT

Ramly Ali J:

[1] These grounds of judgment are in respect of the 4th defendant's application (vide encl. 39) for determination on points of law and/or facts as a preliminary issue before the trial of the present action pursuant to O. 33 of the Rules of High 1980 .

[2] The points to be determined by this Court (as preliminary issues before trial) are:

(i) whether the plaintiff is a creditor under s. 304(1) of the Companies Act 1965 ; and

(ii) If the answer to the above is in the negative, whether the plaintiff has locus standi to bring this action against the 4th defendant pursuant to s. 304(1) of the same Act .

Factual Backgrounds

[3] The plaintiff, in the present action, is seeking a declaration under s. 304(1) of the Companies Act 1965 :

(a) that the 2nd, 3rd and 4th defendants conducted the business of the 1st defendant with intent to commit fraud on the plaintiff who was a creditor of the 1st defendant;

(b) that the 2nd, 3rd and 4th defendants as directors of the 1st defendants with knowledge conducted the business of the 1st defendant to commit fraud on the plaintiff who was a creditor of the 1st defendant; and

(c) that the 2nd, 3rd and 4th defendants are personal liable jointly and severally to the plaintiff for the sum of RM2,939,687.25.

The plaintiff is claiming RM2,933,687.25 and interest and costs against all the defendants.

[4] The chronology of events leading up to the present action by the plaintiff against all the defendants are as follows:

(i) On 11 March 1996, the plaintiff and the 1st defendant entered into an agreement whereby the 1st defendant is to prepare and supply application software for Contract Management for Sale and Purchase and for Managing Foreign Exchange/Spread Accounting Contracts. The contract sum is RM144,000 (the 1st agreement);

(ii) On 29 April 1998, the 2nd agreement was entered into between the plaintiff and the 1st defendant for Rapid Application Planning and Prototyping (RAPP) System for a total of 8 modules for a contract sum of RM650,000 ie, 3 initial modules at RM250,000 and the remaining 5 modules option to purchase at RM400,000 (the 2nd agreement);

(iii) On 28 May 1998 the 3rd agreement was entered into between the plaintiff and the 1st defendant in respect of Integrating Software where the defendant is to maintain the system for five years from the date of installation involving a total cost of RM250,000;

(iv) Amount paid by the plaintiff to the 1st defendant between 25 July 1996 to 27 January 1999 is RM333,687.25;

(v) On 7 May 1999, the 1st defendant went into voluntary liquidation;

(vi) On 22 May 2000, the present action was filed by the plaintiff against all the defendants.

[5] The plaintiff alleges that the 1st defendant has breached all the agreements as follows:

(i) The 1st defendant has failed to complete the Contract Management System in the time period allowed, ie, four weeks;

(ii) The 1st defendant has failed to complete the System for Managing Foreign Exchange and Spread Accounting and Management Information System for Sales and Purchases;

(iii) The 1st defendant has failed to complete works under RAPP Agreement;

(iv) The 1st defendant has failed to complete the System Integration;

(v) Eventhough the Agreement between the plaintiff and the 1st defendant was not completed the 1st defendant went into voluntary liquidation on 7 May 1999;

(vi) The 1st defendant has not todate forwarded software source codes to the plaintiff; and

(vii) The 1st defendant has failed to maintain the system for a five years period from the date of installation (installation has not been completed).

[6] The plaintiff, in instituting this action alleges that it is a creditor of the 1st defendant, ostensibly on the basis that the 1st defendant is liable to the plaintiff for breach of contract.

[7] The 4th defendant disputes that the plaintiff is a creditor of the 1st defendant. Nor can it qualify even as a "contingent creditor". The 4th defendant contends that the plaintiff does not have the locus standi to institut