JUDGMENT

Dr. Zakaria bin Mohd Yatim J:

In this petition the petitioners are applying, under s. 181 of the Companies Act 1965 , for an order in terms of the following prayers:

(a) that the second, third and fourth respondents be removed forthwith as directors of the first respondent; (b) that an approved company auditor (other than the present auditor of the company) be appointed to examine the accounts and records of the first respondent from the date of incorporation and to prepare proper accounts and a report for the shareholders; (c) that the second, third, fourth and fifth respondents do pay to the first respondent all sums found to be due and owing by them with interest as appropriate; (d) that the second, third, fourth and fifth respondents do purchase the shares of the first or second petitioner; (e) such further or other orders as may be just; (f) that the petitioners may have liberty to apply; or (g) alternatively, that the first respondent be wound up.

The grounds upon which the application is made are mismanagement of the affairs of the company that is the first respondent, oppressive conduct and disregard of the interest of the petitioners.

Mr. Anantham, Counsel for the petitioners submitted that the petitioners' complaint of mismanagement, oppressive conduct and disregard of the interest of the petitioners was as follows:

(a) no proper accounting; (b) misappropriation by directors of company funds; (c) unauthorised disposal of assets of the company by directors; (d) tax mismanagement; (e) loss of assets; and (f) absence of dividend.

On the question of no proper accounting, Mr. Anantham submitted that the 1981 accounts of the company were only submitted to the general members of the company for consideration in 1986 and even this were unaudited accounts. The audited accounts of the first respondent for the year 1981 were only submitted to the first respondent in 1987 for its approval. According to Mr. Anantham, the 1981 accounts were tabled only after the first petitioner despatched letters through his solicitors demanding sight of the accounts of the company.

Counsel for the respondents did not dispute the delay in submitting the audited accounts. He said the delay was due to the high volume of transactions and the conversion from the manual system of accounting to a computerised system. He referred to the affidavit of the second respondent affirmed on 15 May 1989 (Enclosure 9). In paragraph 12 of the affidavit the second respondent averred,

I am to state that the delay in finalising the 1st respondent's account from 1981 to 1985 was due to a high volume of accounting transactions caused by the rapid growth of the 1st respondent. To accommodate the same the first computerised accounting system was used to handle the accounts. However the same could not cope with the accounts creating some problems rendering to further delay. It took some time for the problem to be rectified and finally in 1984 a bigger and faster computerised system was installed.

The delay was further explained in paragraph 11 of the affidavit of the second respondent affirmed on 19 September 1989 (Enclosure 12). Paragraph 11 of that affidavit stated,

Your respondent denies the 1st petitioner's claim that he was instrumental in getting the directors to keep the accounts up to date when he sent his legal representative to the AGM in 1986. If he has read the directors' reports in the related years, he would have known that the delay in having the accounts ready for audit was due to the insufficient capacity of the Company's computer to handle the fast growing volumes of transactions of the Company's business in the late seventies and early eighties. When the new computer system, which was much more powerful, was installed in 1984, the accounts were immediately processed year by year as soon as the computer accounting software was running smoothly. This is evidenced from Exhibit "CSS-1" p. 10 of the said affidavit. The accounts for the year