DALAM MAHKAMAH RAYUAN MALAYSIA [BIDANGKUASA RAYUAN] RAYUAN ... [DALAM MAHKAMAH TINGGI MALAYA DI KUALA

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    DALAM MAHKAMAH RAYUAN MALAYSIA

    [BIDANGKUASA RAYUAN]

    RAYUAN SIVIL NO. W-02(IM)-1888-09/2018

    ANTARA

    CIMB ISLAMIC BANK BERHAD ... PERAYU (BANK NO. 671380-H)

    DAN 1. WELLCOM COMMUNICATIONS (NS) SDN BHD ... RESPONDEN- [NO. SYARIKAT: 660201-P] RESPONDEN 2. RANGKAIAN MINANG (NS) SDN BHD [NO. SYARIKAT: 679292-U]

    [DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR] (BAHAGIAN DAGANG)

    SAMAN PEMULA: WA-28JM-1-07/2018

    Dalam perkara mengenai Wellcom Communications (NS) Sdn Bhd (No. Syarikat 660201-P) dan Rangkaian Minang (NS) Sdn Bhd (No. Syarikat 679292-U); Dan Dalam perkara mengenai pengurusan kehakiman dan perlantikan pengurus kehakiman yang dicadangkan menurut Seksyen 404 dan Seksyen 405 Akta Syarikat 2016; Dan

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    Dalam perkara mengenai Kaedah-Kaedah Syarikat (Mekanisme Penyelamat Korporat) 2018; Dan Dalam perkara mengenai Kaedah-Kaedah Mahkamah 2012.

    1. WELLCOM COMMUNICATIONS (NS) SDN BHD [NO. SYARIKAT: 660201-P] 2. RANGKAIAN MINANG (NS) SDN BHD [NO. SYARIKAT: 679292-U] … PEMOHON- PEMOHON]

    (Diputuskan oleh Yang Arif Dato’ Has Zanah Mehat di Mahkamah

    Tinggi Kuala Lumpur pada 30.8.2018)

    Coram:

    Hamid Sultan bin Abu Backer, JCA Hasnah binti Dato’ Mohammed Hashim, JCA

    Hanipah binti Farikullah, JCA

    Hamid Sultan Bin Abu Backer, JCA (Delivering Judgment of the Court)

    GROUNDS OF JUDGMENT

    [1] This is an appeal by the appellant against the decision of the High

    Court where the learned Judicial Commissioner, upon dismissing the

    respondents’ application under section 404 of the Companies Act 2016 (CA

    2016) for judicial management order; subsequently, upon the respondents

    making an application for a stay of the order, the learned Judicial

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    Commissioner granted an order to stay the order itself which refused the

    judicial management order. The appeal on the dismissal of the judicial

    management application is not before us. The appeal before us is limited to

    the stay of ‘no order’, related to the Originating Summons.

    [2] The stay is rather unusual and when we asked the respondents

    whether there is any judicial precedent to stay an order of dismissal of an

    Originating Summons (O.S.) or writ itself, learned counsel for the

    respondents was candid and informed us that there was none, but attempted

    to convince us that they had made the application based on the Court of

    Appeal’s decision in Ong Koh Hou @ Won Kok Fong v Da Land Sdn Bhd &

    Ors [2018] MLJU 778 (DA Land); [2018] 1 LNS 827.

    [3] After hearing the submission of the parties, we allowed the appeal and

    find it necessary to write this judgment to ensure that the DA Land judgment

    is not abused as it has nothing to do with stay of this nature. The stay in this

    case is unprecedented. The learned Judicial Commissioner also had not

    written the grounds of judgment for granting the stay.

    Preliminaries

    [4] The respondents in the instant case, had filed a judicial management

    order application on 6-08-2018. The effect of filing of the judicial

    management application means it effectively stops anybody from filing any

    action against the respondents for a period of six months and/or as the court

    may order. The filing itself in a way starts a moratorium not to sue the

    company. It is a strong weapon for the company to resist any form of claim

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    against the company and a benevolent provision for creditors, etc. to appoint

    judicial managers to protect their interest in a company which may not be

    able to pay and/or satisfy their obligations. The said section 404 of CA 2016

    states that:

    “Application to Court for a company to be placed under judicial management

    and for appointment of a judicial manager

    404. An application for an order that a company should be placed under a judicial

    management and for an appointment of a judicial manager may be made to the

    Court by the company or its creditor if the company or its creditor considers that

    (a) the company is or will be unable to pay its debts; and

    (b) there is a reasonable probability of rehabilitating the company or of preserving

    all or part of its business as a going concern or that otherwise the interests of

    creditors would be better served than by resorting to a winding up.”

    [5] The other relevant sections to appreciate the effect and consequence

    of the judicial management order is found in section 405 to 411 of CA 2016.

    Even though section 405 emphasises inability to pay debts and the making

    of the order will salvage the company as a whole or partly; there is also

    another element added into it for the court to grant the order when an

    element of public interest requires to do so. The said section 405 of CA 2016

    read as follows:

    “Power of Court to make a judicial management order and appoint a judicial

    manager

    405. (1) Where a company or its directors, under a resolution of its members or

    the board of directors, or a creditor, including any contingent or prospective creditor

    or all or any of those parties, together or separately, makes an application under

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    section 404, the Court may make a judicial management order in relation to the

    company if—

    (a) the Court is satisfied that the company is or will be unable to pay its

    debts; and

    (b) the Court considers that the making of the order would be likely to

    achieve one or more of the following purposes:

    (i) the survival of the company, or the whole or part of its

    undertaking as a going concern:

    (ii) the approval under section 366 of a compromise or

    arrangement between the company and any such persons as

    are mentioned in that section;

    (iii) a more advantageous realisation of the company's assets

    would be effected than on a winding up.

    (2) Upon hearing the application for a judicial management order, the Court

    may dismiss the application or adjourn the hearing conditionally or unconditionally

    or make an interim order or any other order that the Court thinks fit.

    (3) Any judicial management order made under subsection (1) shall direct that

    during the period in which the order is in force, the affairs, business and property

    of the company shall be managed by a judicial manager appointed by the Court.

    (4) The costs and expenses of any unsuccessful application for a judicial

    management order made under this section shall, unless the Court otherwise

    orders, be borne by the applicant and, if the Court considers that the application is

    frivolous or vexatious, the Court may make such orders to redress any injustice

    that may have resulted as the Court thinks just and equitable.

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    (5) Nothing in this section shall preclude a Court—

    (a) from making a judicial management order and appointing a judicial

    manager if the Court considers the public interest so requires; or

    (b) from appointing, after the making of an application for a judicial

    management order and on the application of the person applying for

    the judicial management order, an interim judicial manager, pending

    the making of a judicial management order, and such interim judicial

    manager may be the person nominated in the application and may

    exercise such functions, powers and duties as the Court may specify

    in the interim order.

    (6) A judicial management order shall not be made in relation to a company

    after the company has gone into liquidation.

    (7) For the purposes of this Subdivision, "property" in relation to a company

    includes money, goods, things in action and every description of property, whether

    real property or personal property, and whether in Malaysia or elsewhere, and also

    obligations and every description of interest whether present or future or vested or

    contingent arising out of or incidental to property.

    (8) The definition in section 466 of "inability to pay debts" shall apply for the

    purposes of this section as it applies for the purposes of Subdivision 7 of Division

    1 of Part IV.”

    [6] This regime does not allow ex-parte orders to be made unlike the

    previous section 176 of CA 1965, but requires the application to advertise as

    well as serve on interested person such as receiver, etc. of debenture

    holders. The said section 408 of CA 2016 read as follows:

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    “Notice of application for judicial management order

    408. (1) When an application for a judicial management order is made to the

    Court, the applicant shall cause the notice of the application -

    (a) to be advertised in one widely circulated newspaper in Malaysia in

    the national language and one widely circulated newspaper in

    Malaysia in the English language; and

    (b) to be given —

    (i) to the company, in a case where a creditor is the applicant;