WA-22M-286-07-2020 (Mahkamah Tinggi)

WA-22M-286-07-2020 (Mahkamah Tinggi)

A liquidator of a wound-up company does not have statutory power to issue a 'sanction' or to delegate his power under Item (a) of the Twelfth Schedule of the Companies Act 2016 to permit another person (including a contributory or creditor) to bring, continue or defend proceedings in the name of the company; only the Court may grant leave/sanction to a creditor or contributory (typically after the liquidator has refused or is unable to act) and the JIM letters purporting to grant such sanction are invalid and inoperable.

Citation
WA-22M-286-07-2020 (Mahkamah Tinggi)
Parties
Plaintiff (suit WA 22 M 286 07/2020); Defendant (suit WA 22 M 102 05/2021): Small Medium Enterprise Development Bank Malaysia Berhad; Defendant (suit WA 22 M 286 07/2020); Plaintiff (suit WA 22 M 102 05/2021): Oren Venture Sdn Bhd; Defendant (suit WA 22 M 286 07/2020): Ida Harlina binti Ikhwan Nasir; Defendant (suit WA 22 M 286 07/2020): Sobri bin Ahmad; Defendant (suit WA 22 M 286 07/2020): Junaidy bin Abd. Wahab
Court
High Court
Jurisdiction
Malaysia
Judgment Date
4 March 2022
Case Number
WA-22M-286-07-2020 (Mahkamah Tinggi)
Procedural Posture
Civil (company Winding Up; Related High Court Suits) / Preliminary Issue Decided at Case Management (pre Trial)
Outcome
Preliminary issue determined: liquidator cannot issue a sanction or delegate the power under Item (a) of the Twelfth Schedule; JIM/PPP letters purporting to grant sanction are invalid; only the Court may grant sanction to a creditor or contributory.
Legal Topics
Liquidator Powers, Delegation of Statutory Powers, Sanction to Sue, Winding Up Procedure, Security for Costs
Source Language
Malay/English
Company Law Insolvency Law Civil Procedure Liquidator Powers Delegation of Statutory Powers Sanction to Sue Winding Up Procedure Security for Costs

Case Brief

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Parties

Small Medium Enterprise Development Bank Malaysia Berhad

Plaintiff (suit WA 22 M 286 07/2020); Defendant (suit WA 22 M 102 05/2021)

Oren Venture Sdn Bhd

Defendant (suit WA 22 M 286 07/2020); Plaintiff (suit WA 22 M 102 05/2021)

Ida Harlina binti Ikhwan Nasir

Defendant (suit WA 22 M 286 07/2020)

Sobri bin Ahmad

Defendant (suit WA 22 M 286 07/2020)

Junaidy bin Abd. Wahab

Defendant (suit WA 22 M 286 07/2020)

Procedural Posture

Civil (company Winding Up; Related High Court Suits) / Preliminary Issue Decided at Case Management (pre Trial)

Legal Issues

  1. 1 Whether a liquidator of a wound-up company can issue a sanction or delegate his power under Item (a) of the Twelfth Schedule of the Companies Act 2016 to any other person to bring or defend proceedings in the name of the company
  2. 2 Whether letters from Jabatan Insolvensi Malaysia (JIM) constituted a valid liquidator sanction
  3. 3 Whether the Court alone can grant leave/sanction to a creditor or contributory to litigate on behalf of a wound-up company

Ratio Decidendi

A liquidator of a wound-up company does not have statutory power to issue a 'sanction' or to delegate his power under Item (a) of the Twelfth Schedule of the Companies Act 2016 to permit another person (including a contributory or creditor) to bring, continue or defend proceedings in the name of the company; only the Court may grant leave/sanction to a creditor or contributory (typically after the liquidator has refused or is unable to act) and the JIM letters purporting to grant such sanction are invalid and inoperable.

Court Disposition

Preliminary issue determined: liquidator cannot issue a sanction or delegate the power under Item (a) of the Twelfth Schedule; JIM/PPP letters purporting to grant sanction are invalid; only the Court may grant sanction to a creditor or contributory.

Orders

  • The purported JIM letters/sanctions are declared invalid and inoperable
  • Further Case Management fixed for parties to decide next steps in both suits