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2025 MarsdenLR 2799
COURT OF APPEAL PUTRAJAYA
MAJIDEE PARK AUTO SPARES & SERVICES SDN BHD & ANOR – Appellant
Versus
N THANAVATHY RAJAH & ANOR – Respondent
[Civil Appeal No: J-01(A)-408-07/2023]
The court ruled that all contributories and creditors need not support a liquidator's removal; the test is whether it serves the interests of those involved in the liquidation process.
Headnote:(A) Companies Act 2016 - Sections 232 and 482 - Liquidators - Removal of liquidator for lack of valid license and failure to perform duties diligently - The Court found the removal of a liquidator unjustified due to retrospective renewal of the license, and insufficient grounds for removal hence appeal allowed. (Paras 18, 19, 49)
(B) Judicial Standards - The performance standard expected of a liquidator requires acting diligently and complying with statutory obligations to expedite the liquidation process. (Paras 36, 52, 42)
Facts of the case:
The 2nd appellant was removed as liquidator due to non-renewal of his license and alleged delays in the liquidation process. The court held the removal unjustified following the retrospective renewal of his license.
Findings of Court:
The High Court's decision to remove the liquidator was overturned due to the return of his operational license and failure to serve notice to all interested parties.
Issues: Whether the removal of the liquidator was justified, and the requirements for support from contributories and creditors in such applications.
Ratio Decidendi: The court concluded that the removal was unwarranted under the circumstances, noting the license renewal and lack of adequate support from creditors or contributories were critical factors.
Result: Appeal allowed, order of removal set aside.
| Table of Content |
|---|
| 1. appeal concerning liquidator's removal (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. high court's reasons for liquidator removal (Para 8 , 9) |
| 3. respondent's preliminary objections (Para 10 , 11 , 12) |
| 4. validity of removal based on license status (Para 14 , 15 , 16 , 17) |
| 5. support for application to remove liquidator (Para 18 , 19 , 20 , 21) |
| 6. notice requirement for removal applications (Para 36 , 37 , 38 , 39) |
| 7. liquidator's duty and promptitude in actions (Para 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47) |
Introduction
[1] This appeal concerns the decision of Johor Bahru High Court given on 26 June 2023 in allowing the 1st respondent's application to remove the 2nd appellant as a liquidator of the 1st appellant.
[2] We heard the appeal on 17 October 2024 and thereafter adjourned our decision to deliberate on the arguments advanced by the parties.
[3] Having done so, we hereby give our decision below including the grounds thereof.
Background facts
[4] The 2nd appellant, Jayapalasingam a/l Kandiah was appointed as the liquidator of the 1st appellant, Majidee Park Auto Spares & Services Sdn Bhd ("the Company") pursuant to the Winding-Up Order granted on 1 February 2021.
[5] The 1st and 2nd appellants shall be collectively referred to herein as "the appellants" unless specified otherwise.
[6] The 1st respondent, N Thanavathy a/p Rajah was one of the directors of the Company. The other directors are Punithavathy N Rajah and Somas Kanda Rajah.
[7] As a result of the removal of the 2nd appellant as the liquidator of the Company, the High Court appointed the Director General of Insolvency (the 2nd respondent) as the Official Receiver.
The High Court's Decision
[8] In allowing the 1st respondent's application, the learned Judicial Commissioner ("JC") held as follows:
"[28] It is clear from the provision above, the 2nd Respondent has been disqualified to be appointed as liquidator once his licence has not been renewed. The 2nd Respondent did not offer any explanation for the failure to renew his license and did not apply for leave of the Court for him to continue to act as the liquidator for the 1st Respondent as provided in subsection 433(1) of Act 777.
[29] This ground alone will warrant the removal of the 2nd Respondent without having a need to consider the merits of this application. Therefore, I am of the view that the 2nd Respondent is no longer able to act as the liquidator of the 1st Respondent pursuant to para 433(1)(a) of Act 777. Thus, the 2nd Respondent must be removed as the liquidator of the 1st Respondent and be replaced by DGI pursuant to para 477(1)(e) of Act 777. The contention of the 2nd Respondent that there is no liquidator to be removed is devoid of merits as 2nd Respondent is appointed pursuant to the Court order dated 1 February 2021 and thus, it needs to be removed by the order of the Court.
[35] The 2nd Respondent then filed the Pre-Action Discovery application on 16 December 2022 in suit JA-24NCC-37-12/2022 against Punithavathy. I find that this application was filed after the Applicant's application (encl 33) for an order for the 2nd Respondent to prepare and make payment of the outstanding sum to the LHDN, being dismissed by the Court on 13 September 2022. The 2nd Respondent has taken approximately 1 year from the date of received SOA, to file the application. I find that the 2nd Respondent did not act within a reasonable period of time despite the 2nd Respondent's claim that the directors have delayed in providing the information requested.
[36] It is pertinent to note that the reason for the appointment of a liquidator is to speed up the liquidation process, to realize the assets of the company and to pay off the creditors and other dues before finally putting the company in dissolution within the reasonable time. The liquidator will be paid remuneration or salary pursuant to s 479 of Act 777. Therefore, the liquidator is expected to discharge their statutory duties by exercising a high standard of
