Case Update: Malaysia’s Court of Appeal Confirms Power to Set Aside a Winding Up Order

In the Court of Appeal’s grounds of judgment dated 10 August 2017 of Gan Bee San v Malayan Banking Berhad, the Court of Appeal allowed an appeal and set aside a winding up order. The decision confirms the growing list of appellate authorities where the Court has the inherent jurisdiction to set aside a winding up order. The brief facts are below.

Background Facts

The winding up order had been made before the Deputy Registrar and not before a Judge in open court. The winding up order reflected that it was made before the Deputy Registrar.

After the winding up order, a creditor applied to intervene in the High Court and to set aside the winding up order. In the meantime, the original petitioner applied to amend the winding up order in order to now show that the order had been made before the Judge. The Judge allowed this amendment.

Subsequently, the Judge dismissed the setting aside application finding, among others, that there should have been an appeal against the winding up order. The Judge held that there should not have been an application for setting aside.

On appeal, the Court of Appeal confirmed that the winding up order was made in breach of the winding up rules. The Court Appeal held that there was power under the Court’s inherent jurisdiction to order a setting aside of a winding up order. This is especially to remedy a wrong and to prevent an abuse of process.

Comments

This appellate authority has again confirmed a growing list of authorities that the Court continues to retain an inherent jurisdiction to set aside a winding up order. For example, see the earlier Court of Appeal decision in Sibu Slipway [2017] 1 MLJ 368. Such a power can be exercised where there has been a clear breach of the statutory winding up provisions. I had earlier written about the power to unwind a winding up.

The strict approach taken in the past was that a winding up order was made under the provisions of the Companies Act 1965 (and now the Companies Act 2016). This Act only allowed for the express power to stay a winding up order. There was no provision allowing for the setting aside of the order.

These appellate authorities have now confirmed that aside from the statutory provisions, the Court would still retain its inherent jurisdiction to set aside a Court Order where the circumstances are appropriate. Under the Companies Act 2016, there are now statutory provisions allowing for both the termination of a winding up as well as a stay of a winding up. It would appear that these new provisions will also exist alongside the Court’s inherent jurisdiction in ordering a setting aside of a winding up.

 

 

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2 thoughts on “Case Update: Malaysia’s Court of Appeal Confirms Power to Set Aside a Winding Up Order

  1. Gunaletchumi Alagan 23 November 2017 / 4:41 pm

    hi there the New Companies Act does not provide for the prescribed form on Section 493 neither does it state the procedure to terminate winding up order, it also doesn’t say application must be via notice of application or by way of a motion.What is your view on this and how can a person go about the procedure.

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    • Lee Shih 4 December 2017 / 12:51 pm

      The Companies Act 2016 only provides for the prescribed form under section 493 for lodging the court order for termination. This is found on the SSM website. The procedure for such termination would have to be governed generally under case law as well as the Winding Up Rules 1972. The winding up rules do not explicitly set out the procedure for termination (and neither does it set out the stay procedure), but I am of the view that the application can be made by way of Summons in Chambers under Rule 6 read together with Rule 7(2) of the Winding Up Rules.

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