1. ) Dato' Ler Cheng Chye (Pelikuidasi-pelikuidasi Bagi Pustaka Efektif Sdn. Bhd. (Dalam Likuidasi)) 2. ) LUM TUCK CHEONG (PELIKUIDASI-PELIKUIDASI BAGI PUSTAKA EFEKTIF SDN. BHD. (DALAM LIKUIDASI)) 1. ) ATURAN PRISMA SDN BHD 2. ) ABD RAHMAN

1. ) Dato' Ler Cheng Chye (Pelikuidasi-pelikuidasi Bagi Pustaka Efektif Sdn. Bhd. (Dalam Likuidasi)) 2. ) LUM TUCK CHEONG (PELIKUIDASI-PELIKUIDASI BAGI PUSTAKA EFEKTIF SDN. BHD. (DALAM LIKUIDASI)) 1. ) ATURAN PRISMA SDN BHD 2. ) ABD RAHMAN

The court held that the arbitration agreement in the PAM Contract remains valid and survivable despite Pustaka's liquidation and that the dispute over set-off falls within the arbitration clause; accordingly a mandatory stay under s10 AA 2005 was granted as to the 1st defendant. Proceedings against the 2nd–6th defendants (non-parties to the arbitration) were directed to proceed to trial, with the court exercising case-management to avoid injustice and duplication.

Citation
WA-22NCC-378-06/2024 (Mahkamah Tinggi)
Parties
Plaintiff (liquidator): DATO’ LER CHENG CHYE; Plaintiff (liquidator): LUM TUCK CHEONG; 1st Defendant (employer / Main Contractor): ATURAN PRISMA SDN BHD; 2nd Defendant (director): ABD RAHMAN BIN HARUN; 3rd Defendant (director): MAZLAN BIN MD ZAIN; 4th Defendant (director): CHAI CHEE SENG; 5th Defendant (chief Financial Officer): GOH LIK SIN; 6th Defendant (director): YAAKOB BIN NORDIN
Court
High Court
Jurisdiction
Malaysia
Judgment Date
16 January 2025
Case Number
WA-22NCC-378-06/2024 (Mahkamah Tinggi)
Procedural Posture
Writ Summons (civil) / Interlocutory Judgment on Stay Application (stay Granted as to 1st Defendant; Trial Directed Against 2nd–6th)
Outcome
Stay granted as to 1st defendant (Aturan Prisma Sdn Bhd); proceedings against 2nd–6th defendants to proceed to trial
Legal Topics
Stay of Proceedings, Arbitrability, Set Off, Directors' Liability, Fraudulent Trading, Survival of Arbitration Clause on Liquidation, Concurrent Proceedings Management
Source Language
Malay/English
Arbitration Insolvency Company Law Civil Procedure Contract Law Stay of Proceedings Arbitrability Set Off +4 more

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Parties

DATO’ LER CHENG CHYE

Plaintiff (liquidator)

LUM TUCK CHEONG

Plaintiff (liquidator)

ATURAN PRISMA SDN BHD

1st Defendant (employer / Main Contractor)

ABD RAHMAN BIN HARUN

2nd Defendant (director)

MAZLAN BIN MD ZAIN

3rd Defendant (director)

CHAI CHEE SENG

4th Defendant (director)

GOH LIK SIN

5th Defendant (chief Financial Officer)

YAAKOB BIN NORDIN

6th Defendant (director)

Procedural Posture

Writ Summons (civil) / Interlocutory Judgment on Stay Application (stay Granted as to 1st Defendant; Trial Directed Against 2nd–6th)

Legal Issues

  1. 1 Whether an arbitration agreement remains valid if one party becomes insolvent
  2. 2 Whether the arbitration agreement is contrary to the objectives of the insolvency regime or public policy under s4 and/or s10 Arbitration Act 2005
  3. 3 Whether a stay should be granted when co-defendants are not parties to the arbitration agreement

Ratio Decidendi

The court held that the arbitration agreement in the PAM Contract remains valid and survivable despite Pustaka's liquidation and that the dispute over set-off falls within the arbitration clause; accordingly a mandatory stay under s10 AA 2005 was granted as to the 1st defendant. Proceedings against the 2nd–6th defendants (non-parties to the arbitration) were directed to proceed to trial, with the court exercising case-management to avoid injustice and duplication.

Court Disposition

Stay granted as to 1st defendant (Aturan Prisma Sdn Bhd); proceedings against 2nd–6th defendants to proceed to trial

Orders

  • Stay of proceedings against 1st defendant Aturan Prisma Sdn Bhd (stay ordered on 16-01-2025)
  • Plaintiffs to pay costs of RM 20,000 to 1st defendant subject to allocator