1. URBAN DOMAIN SDN BHD (CO. NO.: 652499-P) 2. PINS OSC & MAINTENANCE SERVICES SDN BHD (In Liquidation) (CO. NO.: 723800-A) 1. PERAK INTEGRATED NETWORK SERVICES SDN BHD (COMPANY NO: 522474-U) 2. PERAK COMMUNICATION TECHNOLOGY SDN BHD (COMPA

1. URBAN DOMAIN SDN BHD (CO. NO.: 652499-P) 2. PINS OSC & MAINTENANCE SERVICES SDN BHD (In Liquidation) (CO. NO.: 723800-A) 1. PERAK INTEGRATED NETWORK SERVICES SDN BHD (COMPANY NO: 522474-U) 2. PERAK COMMUNICATION TECHNOLOGY SDN BHD (COMPA

The pleaded facts and evidence did not establish the requisite dishonest intent or that debts were incurred with no prospect of payment; the audited statement acknowledged the dispute and uncertainty as to quantum, mere non‑provision and subsequent dividend payments do not, without more, constitute carrying on business with intent to defraud; plaintiffs lacked sufficient particulars as to the alleged knowing participation of former directors and auditors; Urban Domain lacked locus standi. Accordingly the s.540 claims disclosed no reasonable cause of action and were struck out.

Citation
WA-22NCC-481-10/2020 (Mahkamah Tinggi)
Parties
1st Plaintiff: Urban Domain Sdn Bhd; 2nd Plaintiff: PINS OSC & Maintenance Services Sdn Bhd (In Liquidation); 1st Defendant: Perak Integrated Network Services Sdn Bhd (PINS); 2nd Defendant: Perak Communication Technology Sdn Bhd (PCT); 3rd Defendant: Iwan Che Wan bin Che Ismail; 4th Defendant (former Director): Wannis Che Wan bin Abdullah Fadzil @ Abdullah Fattah; 5th Defendant (former Director): Zadey Che Wan bin Abdullah Fadzil; 6th Defendant: Che Ismail bin Che Wan Mohd Yusop; 7th Defendant (auditor): Ng Weng Sum (Partner, SJ & Co PLT); 8th Defendant (auditor): Lim Sau Jong (Partner, SJ & Co PLT); 9th Defendant: Maxis Broadband Sdn Bhd; 10th Defendant: Celcom Axiata Berhad; 11th Defendant: U Mobile Sdn Bhd; 12th Defendant: Digi Telecommunications Sdn Bhd; 13th Defendant: YTL Communications Sdn Bhd; 14th Defendant: Sapura Research Sdn Bhd; 15th Defendant: Webe Digital Sdn Bhd; 16th Defendant: Telekom Malaysia Berhad
Court
High Court
Jurisdiction
Malaysia
Judgment Date
9 March 2021
Case Number
WA-22NCC-481-10/2020 (Mahkamah Tinggi)
Procedural Posture
Companies Act Claim for Fraudulent Trading (section 540); Derivative Action Collateral Proceedings / Strike‑out Applications Heard; Grounds of Judgment Disposing Enclosures 68, 70 and 84 (judgment Dated 5 April 2021)
Outcome
The suit is struck out and dismissed as against the PINS Defendants, the 4th and 5th Defendants (former directors) and the 7th and 8th Defendants (auditors); Enclosures 68, 70 and 84 allowed with costs.
Legal Topics
Fraudulent Trading (s.540), Derivative Action, Locus Standi, Striking Out for Disclosure of Cause of Action, Accounts and Inquiry, Directors' Liability, Auditors' Responsibility, Dividend Declarations
Source Language
Malay/English
Company Law Civil Procedure Insolvency & Creditors' Remedies Corporate Governance Auditing Law Fraudulent Trading (s.540) Derivative Action Locus Standi +5 more

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Parties

Urban Domain Sdn Bhd

1st Plaintiff

PINS OSC & Maintenance Services Sdn Bhd (In Liquidation)

2nd Plaintiff

Perak Integrated Network Services Sdn Bhd (PINS)

1st Defendant

Perak Communication Technology Sdn Bhd (PCT)

2nd Defendant

Iwan Che Wan bin Che Ismail

3rd Defendant

Wannis Che Wan bin Abdullah Fadzil @ Abdullah Fattah

4th Defendant (former Director)

Zadey Che Wan bin Abdullah Fadzil

5th Defendant (former Director)

Che Ismail bin Che Wan Mohd Yusop

6th Defendant

Ng Weng Sum (Partner, SJ & Co PLT)

7th Defendant (auditor)

Lim Sau Jong (Partner, SJ & Co PLT)

8th Defendant (auditor)

Maxis Broadband Sdn Bhd

9th Defendant

Celcom Axiata Berhad

10th Defendant

U Mobile Sdn Bhd

11th Defendant

Digi Telecommunications Sdn Bhd

12th Defendant

YTL Communications Sdn Bhd

13th Defendant

Sapura Research Sdn Bhd

14th Defendant

Webe Digital Sdn Bhd

15th Defendant

Telekom Malaysia Berhad

16th Defendant

Procedural Posture

Companies Act Claim for Fraudulent Trading (section 540); Derivative Action Collateral Proceedings / Strike‑out Applications Heard; Grounds of Judgment Disposing Enclosures 68, 70 and 84 (judgment Dated 5 April 2021)

Legal Issues

  1. 1 Whether non‑provision in audited accounts and payment of dividends amounted to carrying on business with intent to defraud creditors under s.540 Companies Act 2016
  2. 2 Whether former directors and auditors were 'knowingly party' to fraudulent trading
  3. 3 Whether the pleadings contained sufficient particulars to maintain a s.540 claim

Ratio Decidendi

The pleaded facts and evidence did not establish the requisite dishonest intent or that debts were incurred with no prospect of payment; the audited statement acknowledged the dispute and uncertainty as to quantum, mere non‑provision and subsequent dividend payments do not, without more, constitute carrying on business with intent to defraud; plaintiffs lacked sufficient particulars as to the alleged knowing participation of former directors and auditors; Urban Domain lacked locus standi. Accordingly the s.540 claims disclosed no reasonable cause of action and were struck out.

Court Disposition

The suit is struck out and dismissed as against the PINS Defendants, the 4th and 5th Defendants (former directors) and the 7th and 8th Defendants (auditors); Enclosures 68, 70 and 84 allowed with costs.

Orders

  • Entire suit struck out and dismissed as against Perak Integrated Network Services Sdn Bhd, Perak Communication Technology Sdn Bhd, Iwan Che Wan bin Che Ismail, Che Ismail bin Che Wan Mohd Yusop, Wannis Che Wan bin Abdullah Fadzil @ Abdullah Fattah and Zadey Che Wan bin Abdullah Fadzil, and auditors Ng Weng Sum and...
  • Enclosures 68, 70 and 84 allowed