MEGAFEST SDN BHD (DALAM LIKUIDASI) CEMERLANG COKE INDUSTRIAL SDN BHD

MEGAFEST SDN BHD (DALAM LIKUIDASI) CEMERLANG COKE INDUSTRIAL SDN BHD

For undue preference claims the correct twilight period is two years and payments to directors/insiders without documentary support or valuable consideration are void and recoverable; for fraudulent preference a dominant intention to prefer is an essential element under s293 CA 1965 read with s53 IA 1967, and bona fide commercial pressure to avert winding-up can negate such intention; the date of giving of security (eg post-dated cheques) is the operative date for preference; validation under s223 CA 1965 requires benefit to general creditors or good faith sufficient to justify preferential payment and was not established for the post-petition cheque in this case.

Citation
J-02(IM)(NCvC)-775-05/2023 (Mahkamah Rayuan)
Parties
Appellant: Megafest Sdn Bhd (In Liquidation); Respondent: Sivanantham a/l Muthu Karpan; Respondent: Lim Kui Yong; Respondent: Lim Kwee Gee; Respondent: Lim Thian Hock; Respondent: Ketua Pengarah Insolvensi selaku wakil dan pengurus dan penerima estet Lim Thian Hock (Dalam Kebankrapan); Respondent: Cemerlang Coke Industrial Sdn Bhd; Petitioner: Malayan Banking Berhad
Court
IM
Jurisdiction
Malaysia
Judgment Date
27 February 2026
Case Number
J-02(IM)(NCvC)-775-05/2023 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal (consolidated) / Court of Appeal Judgment on Conjoined Appeals From High Court
Outcome
Appeals J-02(NCvC)(W)-765-05/2023, J-02(NCvC)(W)-761-05/2023 and J-02(NCvC)(W)-764-05/2023 allowed; Appeal J-02(NCvC)(W)-763-05/2023 dismissed except claim for RM50000 allowed; Appeal J-02(IM)(NCvC)-775-05/2023 allowed (Validation set aside). Orders for repayment, interest and costs as specified below.
Legal Topics
Undue Preference, Fraudulent Preference, Validation of Post Petition Dispositions, Directors' Duties, Winding Up, Voidable Transactions
Source Language
Malay/English
Company Law Insolvency Law Bankruptcy Civil Procedure Undue Preference Fraudulent Preference Validation of Post Petition Dispositions Directors' Duties +2 more

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Parties

Megafest Sdn Bhd (In Liquidation)

Appellant

Sivanantham a/l Muthu Karpan

Respondent

Lim Kui Yong

Respondent

Lim Kwee Gee

Respondent

Lim Thian Hock

Respondent

Ketua Pengarah Insolvensi selaku wakil dan pengurus dan penerima estet Lim Thian Hock (Dalam Kebankrapan)

Respondent

Cemerlang Coke Industrial Sdn Bhd

Respondent

Malayan Banking Berhad

Petitioner

Procedural Posture

Civil Appeal (consolidated) / Court of Appeal Judgment on Conjoined Appeals From High Court

Legal Issues

  1. 1 Whether payments within two years constitute void voluntary settlements (undue preference) under s52 IA 1967 read with s293 CA 1965
  2. 2 Whether fraudulent preference requires proof of a dominant intention to prefer under s53 IA 1967 read with s293 CA 1965
  3. 3 Whether commercial pressure/settlement to avert winding-up negates dominant intention

Ratio Decidendi

For undue preference claims the correct twilight period is two years and payments to directors/insiders without documentary support or valuable consideration are void and recoverable; for fraudulent preference a dominant intention to prefer is an essential element under s293 CA 1965 read with s53 IA 1967, and bona fide commercial pressure to avert winding-up can negate such intention; the date of giving of security (eg post-dated cheques) is the operative date for preference; validation under s223 CA 1965 requires benefit to general creditors or good faith sufficient to justify preferential payment and was not established for the post-petition cheque in this case.

Court Disposition

Appeals J-02(NCvC)(W)-765-05/2023, J-02(NCvC)(W)-761-05/2023 and J-02(NCvC)(W)-764-05/2023 allowed; Appeal J-02(NCvC)(W)-763-05/2023 dismissed except claim for RM50000 allowed; Appeal J-02(IM)(NCvC)-775-05/2023 allowed (Validation set aside). Orders for repayment, interest and costs as specified below.

Orders

  • Judgment for repayment by Lim Thian Hock of RM2513924.00 to Megafest Sdn Bhd (In Liquidation) with interest at 5% per annum from 19-04-2023 until full realisation; costs fixed at MYR20000.00 (here and below) subject to allocator
  • Judgment for repayment by Sivanantham a/l Muthu Karpan of RM178344.15 to Megafest Sdn Bhd (In Liquidation) with interest at 5% per annum from 19-04-2023 until full realisation; costs fixed at MYR20000.00 subject to allocator