Back
2025 MarsdenLR 4207
HIGH COURT MALAYA IPOH
RE: FAR ORIGIN SDN BHD
[Post-Winding Up Suit No: AA-28PW-40-03-2024]
Leave to commence proceedings against liquidators requires a prima facie case and demonstration of pecuniary loss. Previous adjudications on claims can bar relitigation under res judicata.
Headnote:(A) Companies Act 2016 - Section 206(3) - Liquidation proceedings - Applicant seeks leave to file claims against liquidator regarding improprieties and mismanagement in shareholding and assets; required to establish prima facie case and pecuniary loss for leave - Applicant alleged illegal share transfer and misappropriation; court found claims previously adjudicated and barred by res judicata. (Paras 1, 6, 10, 26)
(B) Leave to file action against liquidators - Court affirms need for leave as a prerequisite; ensures protection against vexatious claims to maintain an orderly winding-up process - Federal court established a prima facie case requirement and proof of financial harm essential for granting leave. (Paras 11-12, 18)
Facts of the case:
Applicant alleges liquidator's inaction on share mismanagement and improper asset transfers, claiming a prima facie case, requesting a Committee of Inspection and directorship in another company. Respondent argues lack of evidence for claims and that they were previously adjudicated. (Paras 2-4)
Findings of Court:
Applicant failed to meet legal threshold for leave to commence action; the court ruled each claim was baseless and previously settled under res judicata decisively. (Paras 10, 32)
Issues: Main issues include whether the applicant established a prima facie case and evidenced pecuniary loss, and if the formation of a Committee of Inspection was warranted. (Paras 1, 43)
Ratio Decidendi: Court reaffirmed stringent criteria for granting leave emphasizes that a prima facie case and demonstrated pecuniary losses are necessary to avoid interference in liquidation; past findings barred relitigation of the claims raised. (Paras 12, 31)
Result: Application for leave dismissed, costs awarded to the respondent. (Paras 57)
| Table of Content |
|---|
| 1. leave to commence proceedings against liquidator. (Para 1 , 2 , 3 , 4) |
| 2. respondent's opposition to applicant's request. (Para 5 , 6 , 7 , 8 , 9) |
| 3. legal precedents regarding leave to sue liquidators. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25) |
| 4. res judicata and applicant's failure to establish claims. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32) |
| 5. court's decision on proprietary claims regarding shoplots. (Para 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42) |
| 6. court's findings on necessity for committee of inspection. (Para 43 , 44 , 45 , 46 , 47 , 48 , 49) |
| 7. court’s ruling regarding directorship demands. (Para 50 , 51 , 52) |
| 8. discretion of the court in granting leave. (Para 53 , 54 , 55 , 56) |
Introduction
[1] The applicant ("Dato' Suki Mee") seeks leave to initiate proceedings against the liquidator of Far Origin Sdn Bhd ("FOSB"), for allegations of impropriety and mismanagement. In this respect, the applicant demands court intervention. However, the liquidator opposes the applicant's request for leave to commence proceedings against the liquidator, arguing that the applicant has failed to meet the legal threshold for such an application. The question for determination for this court is whether leave can be granted for the applicant to pursue legal action against the liquidator.
Background Facts
[2] The applicant alleges impropriety and mismanagement. The applicant complains that one of the contributories in FOSB, known as Toi Sin Fatt improperly increased his shareholding in FOSB to 315,000 shares and later transferred 11,000 shares to his wife, Ng Yok Fong, without making any payment. The applicant argues that this act was illegal and void, resulting in pecuniary losses to him. He contends that the shares were unlawfully issued and transferred without consideration, and the liquidator's confirmation on 28 February 2024 stating that no records of payment for these shares exist supports his claim. Based on this, the applicant asserts that the share transfers should be rectified and declared invalid.
[3] The applicant also argues that FOSB holds 26 shoplots as a bare trustee under an irrevocable power of attorney ("PA") on behalf of Arena Ria Sdn Bhd ("ARSB"), a company where the applicant holds a 40% share. The applicant claims that the assets belong to ARSB, and their distribution to FOSB's shareholders would constitute criminal misappropriation.
[4] Further, the applicant demands the formation of a Committee of Inspection ("COI") to investigate the alleged share improprieties and asset misappropriation, citing the liquidator's refusal as a failure of fiduciary duty. The applicant also seeks directorship in Puspa Sepakat Sdn Bhd., where FOSB is a substantial shareholder, alleging inaction from the liquidator on the matter. Based on these claims, the applicant asserts a prima facie case is established, invoking the court's power to intervene under s 206(3) of the Companies Act 2016 . The applicant prays for leave to commence proceedings to protect his contributory rights and prevent further losses to the company (FOSB).
Respondent's Submission
[5] The respondent opposes the applicant's request for leave to commence proceedings against the liquidator of FOSB on several grounds. Firstly, the respondent asserts that the applicant has failed to establish a prima facie case or demonstrate pecuniary loss to FOSB, as required under Ooi Woon Chee & Anor v. See Teow Chuan & Ors & Other Appeals ; [2012] 2 CLJ 501 . The allegations of impropriety in shareholding, specifically the issuance and transfer of 315,000 shares, were adjudicated during the winding-up proceedings, and the court of Appeal found no basis for the applicant's claims. Therefore, the respondent submits that the doctrine of res judicata bars this matter and cannot be revisited.
[6] Secondly, the respondent contends that the formation of COI is unwarranted. Most creditors and contributories opposed the C
