GROUNDS OF JUDGMENT

The Applicants filed an Ex-parte Originating Summons for a Scheme of Arrangement and Reconstruction under section 176(1) of the Companies Act.

2. The purpose of this application is obviously to allow the applicants to escape liquidation by seeking the required consent of the creditors forming the three-fourth in value of the creditors or class of creditors or members present and voting thereat either in person or by proxy and its subsequent approval by an order of Court, and the Court upon being satisfied, may then grant a temporary moratorium under section 176(10) restraining the creditors from proceeding in any action against the company unless with the leave of Court first had and obtained.

3. The question of importance therefore before the Court was a preliminary issue, and that was whether such an application ought to be commenced by an Originating Summons or by a Petition.

4. The counsel submitted that it has been the accepted practice in Malaysian Courts; relying on the case law : [2]

(i) ;Sri Hartamas Development Sdn. Bhd. vs.MBf Finance Bhd. (1990) 2 MLJ page 31;

(ii) ;Twenty First Century Oils Sdn. Bhd. vs. Bank of Commerce (M) Bhd. & Ors. (No.2) (1993) 2 MLJ page 353;

(iii) ;Re Kuala Lumpur Industries Bhd. (1990) 2 MLJ page 180;

where such applications were commenced by Originating Summons; on a format taken from Atkins Court Forms (2nd Edn.) Vol. 9 at page 47.

5. To my mind, notwithstanding the High Courts decisions - not having touched on the mode of commencement of the action; our Rules of High Court cannot be ignored on the substantive Rule of Law; as Order 5 of the Rules of High Court 1980 has specifically stated the modes of beginning proceeding in the High Court :-

Order 5 Rule (1) -

"Subject to the provisions of any written law and of these rules , civil proceedings .. be begun by writ, originating summons, originating motion or Petition . [3]

Order 5 Rule 4(1) reads :-

Except in the case of proceedings which by these rules or by or under any written law are required to be begun ... proceedings may be begun either by writ or by Originating Summons .. .".

6. Order 5, of the Rules of the High Court must now be read together with Order 88 (which touches on Companies Act 1965) Rule 2(1) which reads - "unless otherwise provided in the Act, and except in the case of the applications mentioned in rules 3, 4 and 5 , every (other) application under the Act must, in accordance with Order 5, rule 3, be made by Originating Summons.

7. Order 88 Rule 5 reads "The following applications under the Act must be made by Petition namely :-

(a) ;

(b) ;

(c) ;

(d) ;

(e) ;

(f) ; [4]

(g) ;Under section 176 of the Act to approve a compromise or arrangement between a company and its members or any class of them.

8. I am of the view, that the usage of the word "must " equates to the word "shall", a mandatory requirement giving the Court no discretion to treat the Originating Summons as begun, a mere irregularity, curable under Order 2; but a Nullity ab-initio ; as the Rules of Court; more particularly Order 88 Rule 5(3) must prima facie be obeyed and meticulously complied with, to avoid chaos and confusion in the conduct of such applications thereunder.

9. I accordingly struck off the Originating Summons of the applicants with liberty reserved to them to apply afresh, by a Petition .