JUDGMENT

Nallini Pathmanathan JC:

Decision

[1] The plaintiff ('Mirza') is a director and a 35% shareholder of the defendant ('the company). By this originating summons, Mirza applies to inspect the accounts of the company under s. 167(6) of the Companies Act 1965 . He was until recently the managing director of the company. The precise prayers sought in Mirza's application are that the 'accounting and other records' of the company be made available for inspection and examination. It is proposed that an approved auditor inspect and analyse the accounts of the company. Such findings are then to be made available to the company. The company strenuously opposes this application

[2] In his affidavit in support of the application Mirza explains that the purpose of the application is that he wishes to ascertain the veracity and quantum of the debt owed by the company to Carat Media Services Sdn. Bhd. ('Carat'). The majority of the Board of the company however have approved the repayment of this debt disputed by Mirza to Carat. Mirza explains that there are several transactions which he seeks to understand in its proper perspective in his capacity as a director. He maintains that he has had difficulty obtaining access to the accounts. There is an ongoing dispute between Mirza and the other directors and shareholders of the company and as a consequence a series of suits, no less than seven suits have been filed in different Kuala Lumpur High Courts. It is evident that there is a considerable degree of hostility between Mirza and the other directors and shareholders of the company.

[3] In further support of his application Mirza has included an undertaking from the proposed auditor to the effect that he will maintain the confidentiality of the records he examines and the report he ultimately produces. Mirza also undertakes to bear the costs of the auditor.

[4] The company disputes this application on the grounds that:

(i) Documents have in fact been made available to Mirza. Therefore there is no basis for this repeated request;

(ii) Mirza has acted in breach of his fiduciary duty as a director in that it is alleged that two cheques to Carat that were meant for the payment of a prior debt were utilized or authorized by Mirza to be used by Carat for 'booking' purposes, in other words for a future obligation rather than for a previously incurred debt;

(iii) An injunction sought in the course of these proceedings had been refused, inter alia on the grounds that there was no evidence that the debt owed by the company to Carat was unlawful. Accordingly it is contended that the request for documents here is superfluous;

(iv) If this order is granted, Mirza will utilize the information thus procured to commence further proceedings, which it is contended will be to the detriment of the company.

The Law

[4] The accounting and other records of a company of operations within Malaysia must be open to inspection by the directors at all times under s. 167(3) of the Companies Act 1965 ('CA') . The learned authors of Malaysian Company Law Principles & Practice by Chan & Koh (2nd edn) states as follows in relation to this section:

... The provisions in s. 167(3) and (4) operate as a declaration of the common law right of a company's director to personally inspect and take copies of accounts belonging to the company, because the right is essential to the director for the proper performance of his duties as a director. In the celebrated case of Edman v. Ross [1922] 22 SR (NSW) 351, 361 Street CJ made this remark:

The right to inspect documents and if necessary to take copies of them is essential to the proper performance of a director's duties, and though I am not prepared to say that the court might not restrain him in the exercise of this right if satisfied affirmatively that his intention was to abuse the confidence reposed in him and materially to injure the company, it is true nevertheless, that its exercise is, generally speaking, not a mater of discretion with