The Liquidator must seek court approval for any actions affecting stakeholders' rights, and failure to do so constitutes a breach of statutory duty, rendering the agreement void.

Introduction

[1] This is my judgment in respect of the application by Dato' Chang Jong Yu and four others ("the applicants") vide encl 1. The application is brought pursuant to ss 351, 461, 482(b), 486(2), and 510 of the Companies Act 2016 (" CA 2016") seeking declaratory and injunctive reliefs against the Liquidator of Ibaimas Sdn Bhd (In Liquidation) ("the company"). At the heart of the application is a Turnkey Construction Agreement dated 28 March 2023 entered into between the Liquidator and a third party, Kuala Ibai Property Sdn Bhd ("KIP").

Factual Background

[2] The company is in liquidation. The applicants are contributories or parties with proprietary claims over 33 parcels of land in Kuala Nerus, Terengganu, which are the subject matter of pending litigation in Suit 172 and Suit 166. Despite these ongoing disputes, the Liquidator entered into a Turnkey Construction Agreement with KIP for the development of the said lands.

[3] The applicants allege that this agreement was executed without consulting stakeholders or seeking directions from the court, and that it prejudices their rights. They contend that the Liquidator's actions amount to a breach of duty and seek to restrain the implementation of the agreement.

[4] KIP is not named as a party to the application but was served with the cause papers and has filed detailed written submissions in opposition. KIP maintains that it is a bona fide third party and would be adversely affected by the declarations sought.

Parties' Submissions

[5] The applicants contend that the Liquidator acted irregularly in entering into the Turnkey Agreement without obtaining the court's sanction or consulting interested stakeholders. They emphasise that the land parcels involved are under active litigation, and that the Liquidator's decision to enter into a development arrangement during the pendency of those suits was both imprudent and prejudicial.

[6] They argue that the Liquidator has not demonstrated how the Turnkey Agreement would enhance the value of the estate, benefit creditors, or take into account the disputed nature of the assets. The applicants highlight that KIP is merely a third party with no proprietary interest in the land, and that no prejudice arises to KIP if the Liquidator is restrained. The applicants submit that the court has supervisory jurisdiction under ss 461 and 486(2) to review the Liquidator's acts and that they are entitled to reliefs by virtue of being contributories.

[7] The Liquidator, in response, asserts that he acted within his statutory authority to preserve and realise company assets. He denies any breach of duty, pointing out that the company is insolvent and that the Agreement was made in the interest of the general body of creditors. He contends that the applicants have not established any proprietary interest in the lands and argues that they have no legal basis to interfere with the Turnkey Agreement.

[8] KIP appears as an aggrieved party, maintaining that the declarations sought will adversely affect its contractual rights. KIP asserts that it was not implicated in any wrongdoing and that it entered into the Turnkey Agreement in good faith.

[9] Issues for Determination:

i. Whether leave of court is required to bring this application;

ii. Whether the court has jurisdiction to grant the declaratory and injunctive reliefs sought;

iii. Whether the application is defective for failure to