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2020 MarsdenLR 2997
COURT OF APPEAL PUTRAJAYA
AZABAR HOLDINGS SDN BHD (IN LIQUIDATION) – Appellant
Versus
KUMARAPPAN @ THANNIRMALAI KM PALANIAPPAN & ANOR – Respondent
[Civil Appeal No: B-02(NCVC)(W)-777-04-2019]
The court held that land transfers made after a company's winding up are void under Section 223 of the Companies Act 1965, and the burden of proving fraud falls on the plaintiff.
Headnote:(A) Companies Act 1965 – Section 223 – Appeal against High Court dismissal of claim for fraudulent land transfer – Azabar contested validity of Powers of Attorney purportedly signed by company directors to show fraud. However, the High Court found the Powers of Attorney were not properly tendered as evidence – Court of Appeal determined that transfers occurred post-winding up and were void under s 223. (Paras 24, 32, 42, 47)
(B) Fraud – Burden of proof lies with plaintiff to establish authenticity of Powers of Attorney to support their allegations of fraud. (Paras 21, 29)
Facts of the case: Azabar, in liquidation, claimed D1 and D2 fraudulently transferred ownership of two parcels of land. The transfers occurred after winding up commenced, and were executed under disputed Powers of Attorney.
Findings of Court: The Powers of Attorney were inconclusively marked as identification documents and not accepted as evidence, undermining Azabar's case. The land transfers were established as void per s 223 CA 1965.
Issues: The court examined whether the purported transfers were valid given the winding-up status of Azabar, especially considering s 223 CA 1965 regarding property dispositions post-winding up.
Ratio Decidendi: The Court of Appeal ruled the High Court erred in dismissing the claim without addressing the implications of s 223 regarding the void status of the transfers made after winding-up. Additionally, the lack of evidence regarding the authenticity of the Powers of Attorney meant Azabar could not prove fraud.
Result: Azabar's appeal allowed; transfers declared null and void.
Introduction
[1] This is an appeal against the decision of the High Court at Shah Alam dated 28 March 2019 whereby the learned judge ("the judge") dismissed the plaintiff 's claim in Suit No BA-22NCVC-261-04-2017 ("Suit 261") after a full trial.
[2] The plaintiff in Suit 261 (appellant in the present appeal) is Azabar Holdings Sdn Bhd (in Liquidation) ("Azabar"). The defendants in Suit 261 (respondents in the present appeal) are Kumarappan @ Thannirmalai KM Palaniappan ("D1") and Devi Raman @ Raman Kutty ("D2"). For convenience, we shall refer to the parties as Azabar, D1 and D2 respectively. D1 and D2 shall be referred to collectively as "the defendants".
[3] On 16 December 2020, we allowed Azabar's appeal and granted the reliefs sought in the Writ and Statement of Claim dated 26 April 2017. We also ordered costs of RM20,000 against the defendants. This judgment explains why we allowed Azabar's appeal.
The Facts
[4] Azabar is a private limited company. They are involved in property development. Azabar was the registered owner of two parcels of land held under HSM 7328, PT No 19744, Mukim Sungai Buloh, District of Petaling, Negeri Selangor ("Lot 7328") and HSM 7300, PT No 19716, Mukim Sungai Buloh, District of Petaling, Negeri Selangor ("Lot 7300"). We shall refer to Lot 7328 and Lot 7300 collectively as "the lands".
[5] Azabar owed taxes to the Government of Malaysia ("the GOM"). The GOM filed a civil suit against Azabar and obtained judgment on 8 June 1998. The GOM then issued the statutory notice dated 12 October 1999 pursuant to s 218(2)(a) of the Companies Act 1965 (" CA 1965"). The amount outstanding under the judgment as at 8 October 1999 was RM5,176,611.91. Azabar did not settle the amount outstanding within 21 days as prescribed in the statutory notice, or at any time thereafter.
[6] The GOM then filed Shah Alam High Court Winding up Petition No: MT4-28-201-2000 ("Petition 201") to wind up Azabar. Petition 201 was based on Azabar's inability to pay its debts per s 218(1)(e) CA 1965. Azabar was wound up on 19 August 2002. The Official Receiver of Malaysia ("the ORM") was appointed as the provisional liquidator for Azabar.
[7] On 25 March 2013 one Kartar Singh A/L Gurchan Singh ("Kartar Singh") was appointed as the liquidator for Azabar. Kartar Singh was replaced by Mr Bala Krishnan A/L Ponniah ("Mr Bala") from M/s Moore Stephens Associates & Co who was appointed as the liquidator for Azabar on 19 February 2014.
[8] Mr Bala's appointment was done with the consent and/or agreement of the ORM and Azabar's creditors. Mr Bala discovered that the lands were fraudulently transferred to D1. D1 is a Malaysian citizen and was the donee of the Powers of Attorney. Essentially, the Powers of Attorney gave D1 the power to deal with and/or to transfer the lands to himself.
[9] Specifically, Mr Bala found that the lands had been transferred to D1 via Powers of Attorney which had been purportedly signed by the late Izzudin bin Osman ("Izzudin") (a director of Azabar) and Mr Lau Fook Meng ("Mr Lau"), the former General Manager and Company Secretary of Azabar. Izzudin died on 18 July 2010.
[10] D2 is an Advocate and Solicitor of the High Court of Malaya and practised under the name and style of M/s Devi Raman & Associates. D2's name and signature appear on the Powers of Attorney as the advocate and solicitor who purportedly witnessed the affixation of Azabar's common seal on the documents.
[11] Mr Bala lodged police reports on 17 April 2016 and 22 December 2016 with respect to the fraudulent land transfer. He also lodged caveats over the lands pursuant to s 323 of the National Land Code 1965 ("NLC").
[12] Mr Lau also lodged a police report dated 21 April 2017 stating, inter alia, that he did not execute the Powers of Attorney and that he did not know and had never met D1 or D2.
[13] Mr Lau also stated that there were no land transactions whereby Azabar had sold or transferred the lands to D1. The relevant part of Mr Lau's po
