318 Current Law Journal [2021] 2 CLJ

TAN KEEN KEONG v. TAN ENG HONG PAPER & STATIONERY A

SDN BHD & ORS AND OTHER APPEALS
FEDERAL COURT, PUTRAJAYA
TENGKU MAIMUN TUAN MAT CJ
AZAHAR MOHAMED CJ (MALAYA)
B
ZALEHA YUSOF FCJ
ZABARIAH MOHD YUSOF FCJ
MARY LIM FCJ
[CIVIL APPEALS NO: 02(f)-5-02-2017(P), 02(f)-6-02-2017(P),
02(f)-12-02-2017(P), 02(f)-13-02-2017(P) & 02(f)-14-02-2017(P)]
17 DECEMBER 2020 C

COMPANY LAW: Winding-up – Just and equitable ground – Whether affairs of

companies conducted in unfair, unjust and inequitable manner – Whether
non-compliance or breach of specific statutes by directors should be regularised by
provisions of statutes – Whether alleged contraventions of law must be examined D
against their specific intent and in context of s. 218 of Companies Act 1965 –
Whether violations of directors personally could be ascribed to companies
COMPANY LAW: Winding-up – Petition – Grounds of – Whether just and
equitable to wind up companies – Allegation of illegality pertaining to ‘family fund
and under counter-activities’ – Whether grievances of shareholder or contributory of E
company or of unhappy family member – Channelling of funds from company –
Whether a tax evasion issue – Whether petitioner’s real objective consistent with
grounds relied on – Whether winding-up order the proper remedy – Whether
winding-up order would cause irreparable damage to interests of other innocent
shareholders and creditors – Companies Act 1965, s. 218(1)(i) F

The petitioner moved three separate petitions to wind-up three companies:

(i) Tan Eng Hong Holdings Sdn Bhd (‘TEH Holdings’); (ii) Tan Eng Hong
Paper & Stationery Sdn Bhd (‘TEH Paper’); and (iii) Peace Centre Sdn Bhd
(‘PCSB’), part of a group of companies comprising at least 13 companies
owned by the Tan family, under s. 218(1)(f) and/or (i) of the Companies Act G
1965 (‘Act’) alleging that the directors had acted in their own interests rather
than in the interests of the members as a whole and that it was just and
equitable to wind-up the companies. The petitioner, Tan Choo Leong
(‘TCL’) and the other individual respondents cited in the three petitions were
shareholders of the companies while the fourth respondent, TSK, was a H
director in these companies and since 1999, their ‘deemed managing
director’. The petitioner contended that the three companies ought to be
wound up because their affairs had been conducted in an unfair, unjust and
inequitable manner by the persons in control of the companies. The
petitioner claimed that there was an agreement and understanding between I
the shareholders of TEH Holdings that it was a quasi-partnership based on
mutual trust and confidence as its business was carried on as a family
business. This agreement and understanding extended to TEH Paper and
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 319

A PCSB. He also claimed of the existence of a ‘family fund’, that monies of

TEH Paper and TEH Holdings and its subsidiaries had been siphoned into
this ‘family fund’ due to undercounter activities, and that the ‘family fund’
had been wrongfully used. His specific complaint against PCSB was that,
despite having low overheads, PCSB earned meagre rental incomes and had
B also not declared dividends. The petitioner stated that the expenses of the
other companies had been incorporated into PCSB’s, thus ‘hijacking’ its
profits. The petitioner claimed that these were all done to oppress the first
family which, through him, was the largest shareholder of PCSB. The
respondents, opposing the petitions, contended that the ‘family fund’ existed
C
even during the time when TCL’s father, Tan Seng Jin (‘TSJ’) was the
‘deemed managing director’ until his demise in 1999 and this role was then
assumed by TSK. The respondents further explained that this fund provided
for various allowances such as marriage expenses, scholarships, funeral
expenses and medical expenses. The main source of the fund was derived
from the sale of waste paper which were not declared by TEH Paper. Monies
D
for this fund were initially held in an account in the joint names of TCL’s
father and some other members from initially three of the Tan families. One
of the joint account holders was Tan Choo Keng, a brother of TCL. The
allegations of siphoning off monies by the current directors for their personal
gain was specifically denied. In 1992/1993, TEH Paper and PKM were
E raided by the Inland Revenue Department. In 1995, PKM was imposed a
penalty and in the following year, TEH Paper was similarly imposed with
a penalty. Both companies paid the penalties.
The High Court Judge (‘HCJ’), despite finding, inter alia, that the petitioner’s
evidence and those of his main witness, TCL, not credible and very much
F
wanting, allowed the petitions to wind-up TEH Paper and TEH Holdings.
The petition in respect of PCSB was, however, dismissed by the High Court.
The specific allegation of low market rentals was rejected for want of proof
whilst the complaint of non-declaration of dividends was dismissed on the
basis that this was a management decision and ‘very much’ up to the
G discretion of the Board of Directors of PCSB. The appeals by both the
petitioner and the respondents to the Court of Appeal were dismissed and the
decisions of the High Court were affirmed. Hence, the five appeals herein:
(i) three appeals, by the petitioner; and (ii) two appeals by TEH Holdings and
TEH Paper. A total of four questions were posed in this appeals, inter alia:
H (i) by the petitioner: (a) where there were applications to wind-up more than
one company in a group of family companies, was the conduct of the parties
to be tested separately in respect of each company or as a whole; and
(b) whether the principles governing an application made under s. 181 of the
Act are applicable to an application to wind-up a company under s. 218(1)(i)
I of the Act; and (ii) by the wound up companies: (a) whether a company could
be wound up by a ‘shareholder’ of the said company under s. 218(1)(i) of the
Act merely on the grounds of non-compliance or breach by the directors
(where no prosecution whatsoever was ever taken against the said company
320 Current Law Journal [2021] 2 CLJ

by the authorities in any court) of ss. 169, 364(2), 136 of the Act and ss. 199, A
200 and/or 193 of the Penal Code (‘PC’) and s. 114 of the Income Tax 1967
(‘ITA’), which if proven, can nonetheless be regularised by provisions of the
statutes by way of penalty/fine; and (b) whether a petitioner shall be allowed
with equitable relief under s. 218(1)(i) of the Act when the petitioner’s
truthfulness and credibility have been impugned by the Winding-Up Court. B

Held (allowing appeals by TEH Holdings and TEH Paper and setting aside
winding-up order of High Court; dismissing petitioner’s appeal)
Per Mary Lim FCJ delivering the judgment of the court:
(1) The ‘just and equitable’ ground is not dependent on the establishment of
C
insolvency although it is frequently relied on as an additional or
alternative ground; in fact, it is despite the company being solvent that
there are nevertheless satisfactory reasons for the court to form an
opinion and exercise its discretion that it is just and equitable to order
a winding-up. The term ‘just and equitable’ is not defined in the Act and
D
is not construed ejusdem generis; instead, it should be interpreted as
intended, has been and should continue to be, general. Before striking
down agreements, voiding arrangements or winding-up corporations, the
court must be satisfied that the illegality or the contraventions of law is
related to or bear sufficient nexus to the activities or business of the
company and/or for which the company was incorporated. (paras 38, E
39, 45 & 53)
(2) When dealing with alleged contraventions of law as a basis of nullifying
agreements, the particular legislation must always be carefully examined
before any final pronouncement made. A company may, where it is set
F
up with a view to ‘rob the public of so much money and put it into
(their) own pockets’, be wound up within the just and equitable ground
in s. 218(1)(i) of the Act. In the matter of liquidation of a corporate sole,
winding-up orders should only be granted where the cessation of
illegality complained of can only be achieved through or by the
dissolution of the company itself. On the facts of these appeals, none of G
the companies were formed with illicit purpose or intent of
circumventing any law, be it the Act, the ITA or the PC. The object and
activities of the TEH Paper and TEH Holdings and even PCSB were not
in question or under scrutiny. (paras 78 & 84-86)
(3) The HCJ had identified contraventions of ss. 136, 169, 171 and 364 of H
the Act; ss. 193, 199 and 200 of the PC and s. 114 of the ITA. Each
of these must be examined against their specific intent and in the context
of s. 218(1)(i) and s. 218(1) itself. The particular contraventions
prescribed under s. 218 of the Act, upon which a company may be
wound up, should not be expanded. The violations by TSK of the Act, I
were personally by TSK, whether as director or as an individual, and
were not those of or by TEH Paper and/or TEH Holdings. The wrongs
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 321

A of the directors could not, unless they fall within some ground in
s. 218(1), be ascribed to the companies themselves to thence form the
basis for the companies themselves to be wound up. The purported
wrongs under the ITA had been addressed and dealt with by the relevant
authorities; and where they have not, to be dealt with by those charged
B with the necessary jurisdiction; or as far as the petitioner was concerned,
for him, as a minority shareholder in both TEH Holdings and TEH
Paper, to file an action under s. 181 of the Act since the HCJ found that
his real complaint was of oppression and that he actually wanted his
shares bought out. (paras 87, 89, 91 & 92)
C (4) The contravention and/or illegality pertained to the ‘family fund and
under counter-activities’. The petitioner’s grievances in relation to the
wrongful or unfair usage of the family fund were the grievances of an
unhappy family member and not of a shareholder or contributory of any
company. The channelling of the funds from the company was a tax
D evasion issue which the company had to face and be penalised; and the
company had been penalised. These are material and relevant
considerations which must weigh with the HCJ in determining the
matter of contraventions and illegality. However, when the allegations
were examined, it was apparent that there was much uncertainty,
E
vagueness and a paucity of evidence vital to establish the very existence
of the particular contravention, wrong or illegality. It was unclear what
the ‘family fund’ was. The police report made by the petitioners and
TCL also did not bear any weight, especially, since the credibility of the
makers of the reports had been severely undermined. (paras 93, 94, 97-
101 & 106)
F
(5) TSK’s admission of ‘making mistakes along the way’ in the phone
message was far from amounting to an admission or confession of
contravention of any of the law or the laws identified by the High Court;
neither could any inference be drawn to that effect. TSK’s explanation
G
of the perceived admission and the circumstances of his actions were not
given proper and due consideration. TSK had refuted the allegations and
had explained that the use of the family fund had ceased upon the service
of the winding-up petitions. Much of the fund, which had existed and
was operated by TSJ during his tenure as the deemed managing director,
had since ceased, in which case, the complaints were stale and/or
H
undermined by laches, waiver and acquiescence. (paras 104 & 105)
(6) TEH Holdings and TEH Paper were wound up, not because how they
were run, but because of the court’s conclusions of illegality committed
by their directors, in particular TSK; a situation which factually was
I
tenuous and more so when the legal principles are applied. The
petitioner’s real objective was not consistent with the grounds relied on,
and the winding-up order was not the proper remedy in the
circumstances of the case. The winding-up order would cause
322 Current Law Journal [2021] 2 CLJ

irreparable damage to the interests of other innocent shareholders, A

creditors and the like; when the petitioner could seek his appropriate
remedy under the regime accorded to minority shareholders. It could
not be said that equity and justice should intervene to order the winding-
up of TEH Holdings and TEH Paper. Thus, the first question must be
answered in the negative. (paras 108, 113 & 114) B

(7) There was no record of any invocation of s. 18 of the Courts of

Judicature Act 1964, a protest or reservation, or even a request or
suggestion to the HCJ to rehear all or any part of evidence already given.
Instead, the HCJ who took over after the earlier judges had heard and
recorded 22 days of evidence over a span of two years went on to C
complete the trial after a total of 41 days, without incident. With such
strong and clear findings of credibility or lack of it, the presence of abuse
of process plus a rejection of evidence necessary to establish the grounds
relied on, and there being no other evidence available for the court to
form its opinion under s. 218(1)(i) based on the petitioner’s complaints, D
the proper course for the HCJ was to dismiss the petitions. Therefore,
the second question posed by the wound-up companies was also
answered in the negative. In the circumstances, the court declined to
answer the questions posed by the petitioner. (paras 117, 118, 120
& 121) E
Bahasa Melayu Headnotes
Pempetisyen memfailkan tiga petisyen berasingan untuk menggulung tiga
syarikat: (i) Tan Eng Hong Holdings Sdn Bhd (‘TEH Holdings’); (ii) Tan Eng
Hong Paper & Stationery Sdn Bhd (‘TEH Paper’); dan (iii) Peace Centre Sdn
F
Bhd (‘PCSB’), sebahagian daripada kumpulan syarikat yang terdiri daripada
sekurang-kurangnya 13 syarikat yang dimiliki oleh keluarga Tan, bawah
s. 218(1)(f) dan/atau (i) Akta Syarikat 1965 (‘Akta’) mendakwa bahawa
pengarah-pengarah telah bertindak untuk kepentingan sendiri dan bukan
untuk kepentingan ahli-ahli secara keseluruhan dan adalah adil dan saksama
untuk menggulungkan syarikat-syarikat tersebut. Pempetisyen, Tan Choo G
Leong (‘TCL’) dan responden-responden individu lain yang dinyatakan
dalam ketiga-tiga petisyen adalah pemegang-pemegang saham syarikat
tersebut manakala responden keempat, TSK, adalah pengarah dalam
syarikat-syarikat ini dan semenjak 1999, ‘pengarah urusan dianggap’ mereka.
Pempetisyen menghujahkan bahawa ketiga-tiga syarikat tersebut perlu H
digulung kerana urusan-urusannya dijalankan secara tidak adil, tidak wajar
dan tidak saksama oleh individu yang mempunyai kawalan syarikat-syarikat
tersebut. Pempetisyen menyatakan bahawa terdapat perjanjian dan
persefahaman antara pemegang-pemegang saham TEH Holdings bahawa itu
adalah perkongsian separa berdasarkan amanah dan keyakinan bersama I
kerana perniagaannya dijalankan sebagai perniagaan keluarga. Perjanjian dan
persefahaman ini dilanjutkan pada TEH Paper dan PCSB. Dia juga
menyatakan tentang kewujudan ‘dana keluarga’, bahawa wang TEH Paper
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 323

A dan TEH Holdings dan anak syarikatnya disalurkan ke dalam ‘dana keluarga’
ini kerana aktiviti-aktiviti salah, dan bahawa ‘dana keluarga’ digunakan
secara salah. Aduan khusus terhadap PCSB adalah bahawa walaupun
perbelanjaan adalah kurang, pendapatan sewaan yang diterima PCSB tidak
seberapa dan juga tidak mengisytiharkan dividen. Pempetisyen menyatakan
B bahawa perbelanjaan syarikat-syarikat lain digabungkan dengan PCSB,
dengan itu, ‘merampas’ keuntungannya. Pempetisyen menyatakan bahawa
kesemua ini dilakukan untuk menindas keluarga pertama, yang, melaluinya,
adalah pemegang saham terbesar PCSB. Responden-responden, menentang
petisyen, menghujahkan bahawa ‘dana keluarga’ wujud sebelum tempoh bapa
C
TCL, Tan Seng Jin (‘TSK’) menjadi ‘pengarah urusan dianggap’ sehingga
kematiannya pada 1999 dan kedudukannya kemudian diambil TSK.
Responden-responden selanjutnya menjelaskan bahawa dana ini diberi untuk
pelbagai elaun seperti perbelanjaan perkahwinan, biasiswa, perbelanjaan
kematian dan perbelanjaan perubatan. Sumber utama dana tersebut adalah
daripada jualan kertas yang dibuang yang tidak diisytiharkan oleh TEH
D
Paper. Wang dari dana ini pada asalnya disimpan dalam akaun atas nama
bersama bapa TCL dan ahli lain yang asalnya dari tiga keluarga Tan. Salah
seorang pemegang akaun bersama itu adalah Tan Choo Keng, abang TCL.
Dakwaan penyaluran keluar wang oleh pengarah-pengarah semasa untuk
kepentingan peribadi mereka dinafikan secara khusus. Pada 1992/1993,
E TEH Paper dan PKM diserbu oleh Jabatan Hasil Dalam Negeri. Pada 1995,
PKM dikenakan denda dan tahun berikutnya, TEH Paper juga dikenakan
denda. Kedua-dua syarikat telah membayar denda tersebut.
Hakim Mahkamah Tinggi (‘HMT’), walaupun mendapati, antara lain,
keterangan pempetisyen dan saksi utamanya, TCL, tidak boleh dipercayai
F
dan tidak mencukupi, membenarkan pempetisyen menggulung TEH Paper
dan TEH Holdings. Petisyen berkaitan dengan PCSB, walau bagaimanapun,
ditolak oleh Mahkamah Tinggi. Dakwaan spesifik sewaan pasar yang rendah
ditolak kerana tiada bukti sementara dakwaan kegagalan pengisytiharan
dividen ditolak atas alasan bahawa ini adalah keputusan pentadbiran dan
G ‘lebih’ merupakan budi bicara Lembaga Pengarah PCSB. Rayuan-rayuan
oleh pempetisyen dan responden-responden ke Mahkamah Rayuan ditolak
dan keputusan-keputusan Mahkamah Tinggi disahkan. Oleh itu lima rayuan
di sini: (i) tiga rayuan, oleh pempetisyen; dan (ii) dua rayuan oleh TEH
Holdings dan TEH Paper. Empat soalan dikemukakan dalam rayuan-rayuan
H ini, antara lain (i) oleh pempetisyen: (a) apabila terdapat permohonan-
permohonan untuk menggulung lebih daripada satu syarikat dalam
sekumpulan syarikat keluarga, sama ada tindakan pihak-pihak perlu diuji
secara berasingan berkaitan dengan setiap syarikat atau secara keseluruhan;
dan (b) sama ada prinsip yang mentadbir permohonan bawah s. 181 Akta
I digunakan untuk permohonan untuk menggulung syarikat bawah s. 218(1)(i)
Akta; dan (ii) oleh syarikat yang digulung: (a) sama ada syarikat boleh
digulung oleh seorang ‘pemegang saham’ syarikat tersebut bawah s. 218(1)(i)
324 Current Law Journal [2021] 2 CLJ

Akta hanya atas alasan ketidakpatuhan atau pelanggaran oleh pengarah- A

pengarah (apabila tiada pendakwaan dimulakan terhadap syarikat tersebut
oleh pihak berkuasa di mana-mana mahkamah) bawah ss. 169, 364(2), 136
Akta dan ss. 199, 200 dan/atau 193 Kanun Keseksaan (‘Kanun’) dan s. 114
Akta Cukai Pendapatan 1967 (‘ACP’), yang jika dibuktikan, boleh
diselaraskan oleh peruntukan-peruntukan statut melalui denda; dan (b) sama B
ada pempetisyen boleh dibenarkan dengan relief ekuiti bawah s. 218(1)(i)
Akta apabila kebenaran dan kebolehpercayaan pempetisyen dipersoalkan
oleh Mahkamah Penggulungan.
Diputuskan (membenarkan rayuan-rayuan oleh TEH Holdings dan TEH
Paper dan mengetepikan perintah penggulungan Mahkamah Tinggi; C
menolak rayuan pempetisyen)
Oleh Mary Lim HMP menyampaikan penghakiman mahkamah:
(1) Alasan ‘adil dan saksama’ tidak bersandar pada pembuktian
ketidaksolvenan walaupun itu selalu dijadikan alasan tambahan atau
D
alternatif; sebenarnya, walaupun syarikat solven, terdapat alasan yang
memuaskan untuk mahkamah berpendapat dan melaksanakan budi
bicara bahawa adalah adil dan saksama untuk memerintahkan
penggulungan. Terma ‘adil dan saksama’ tidak ditakrifkan dalam Akta
dan tidak ditafsir secara ejusdem generis; sebaliknya, itu ditafsir seperti
yang diniatkan, telah dan wajar ditafsir secara umum. Sebelum E
membatalkan perjanjian atau menggulung syarikat, mahkamah mesti
berpuas hati bahawa ketaksahan atau percanggahan undang-undang
berkait dengan atau mempunyai kaitan yang mencukupi dengan aktiviti-
aktiviti atau perniagaan syarikat dan/atau sebab syarikat ditubuhkan.
F
(2) Apabila mempertimbangkan percanggahan undang-undang sebagai asas
membatalkan perjanjian-perjanjian tersebut, undang-undang tertentu
mesti diteliti dengan cermat sebelum apa-apa keputusan akhir dibuat.
Sebuah syarikat boleh, apabila ditubuhkan untuk ‘rob the public of so
much money and put it into (their) own pockets’, digulungkan dengan
alasan adil dan saksama dalam s. 218(1)(i) Akta. Dalam perkara G
likuidasi syarikat tunggal, perintah-perintah penggulungan hanya boleh
diberi apabila penghentian ketaksahan yang diadukan hanya boleh
dicapai melalui atau dengan pembubaran syarikat itu sendiri. Atas fakta
rayuan-rayuan ini, tiada satu pun syarikat-syarikat tersebut dibentuk
untuk tujuan atau niat haram memintasi undang-undang, sama ada Akta, H
ACP atau Kanun. Tujuan dan aktiviti-aktiviti TEH Paper dan TEH
Holdings dan juga PCSB tidak dipersoalkan atau dalam penelitian.
(3) Hakim Mahkamah Tinggi mengenal pasti percanggahan ss. 136, 169,
171 dan 364 Akta; ss. 193, 199 dan 200 Kanun dan s. 114 ACP. Setiap
satu perlu diteliti terhadap niat spesifik dan dalam konteks s. 218(1)(i) I
dan s. 218(1) sendiri. Percanggahan khusus yang diperuntukkan bawah
s. 218 Akta, yang membolehkan penggulungan syarikat, tidak
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 325

A sepatutnya diperluaskan. Pelanggaran Akta oleh TSK, adalah secara

peribadi oleh TSK, sama ada sebagai pengarah atau individu, dan bukan
sebahagian atau oleh TEH Paper dan/atau TEH Holdings. Salah laku
pengarah-pengarah tidak boleh, kecuali jika terangkum dalam s. 218(1),
berpunca daripada syarikat itu sendiri, dengan itu, membentuk alasan
B untuk syarikat itu sendiri digulungkan. Salah laku yang dikatakan bawah
ACP telah dipertimbangkan dan diputuskan oleh pihak berkuasa
relevan; dan yang belum, akan dipertimbangkan oleh pihak yang
mempunyai bidang kuasa sewajarnya; atau setakat yang melibatkan
pempetisyen, beliau, sebagai pemegang saham minoriti dalam TEH
C
Holdings dan TEH Paper, perlu memfailkan tindakan bawah s. 181 Akta
kerana HMT mendapati aduan sebenar adalah penindasan dan dia
sebenarnya mengkehendaki sahamnya dibeli habis.
(4) Percanggahan dan/atau ketaksahan adalah berkaitan dengan ‘dana
keluarga dan aktiviti-aktiviti salah laku’. Kilanan pempetisyen berkaitan
D dengan penggunaan dana keluarga secara salah atau tidak adil adalah
kilanan ahli keluarga yang tidak berpuas hati dan bukan oleh pemegang
saham atau penyumbang syarikat. Pengeluaran dana dari syarikat adalah
isu pengelakan cukai yang syarikat perlu hadapi dan didenda; dan
syarikat telah pun didenda. Ini adalah perkara penting dan relevan yang
E
perlu dipertimbangkan oleh HMT apabila memutuskan perkara-percara
percanggahan dan ketaksahan. Walau bagaimanapun, apabila dakwaan-
dakwaan tersebut dipertimbangkan, jelas terdapat ketidakpastian,
kesamaran dan kekurangan keterangan penting untuk membuktikan
kewujudan percanggahan, salah laku atau ketaksahan khusus itu. Tidak
jelas apa yang dimaksudkan dengan ‘dana keluarga’. Laporan polis yang
F
dibuat pempetisyen dan TCL juga tidak menyokong, khususnya, apabila
kebolehpercayaan pembuat laporan terjejas teruk.
(5) Pengakuan TSK ‘membuat kesilapan dalam penjalanan’ dalam mesej
telefon jauh daripada membawa maksud pengakuan berkenaan
G
percanggahan apa-apa perundangan atau undang-undang yang dikenal
pasti oleh Mahkamah Tinggi; tiada apa-apa inferens juga boleh dibuat
berkenaan dengannya. Penjelasan TSK tentang pengakuan yang
dikatakan dan hal keadaan tindakannya tidak dipertimbangkan
sewajarnya. TSK telah menafikan dakwaan tersebut dan menjelaskan
bahawa penggunaan dana keluarga telah dihentikan selepas penyerahan
H
petisyen penggulungan. Kebanyakan dana tersebut, yang wujud dan
dikendalikan oleh TSJ semasa tempohnya sebagai pengarah urusan yang
dianggap, telah luput, dengan itu, aduan tersebut adalah lapuk dan/atau
terjejas oleh kelengahan, pengecualian dan persetujuan.

I
326 Current Law Journal [2021] 2 CLJ

(6) TEH Holdings dan TEH Paper telah digulungkan, bukan kerana cara A
syarikat-syarikat itu diuruskan, tetapi kerana keputusan mahkamah
berkaitan ketaksahan yang dilakukan oleh pengarah-pengarahnya,
khususnya, TSK; satu keadaan yang secara fakta adalah kecil dan lebih-
lebih lagi apabila prinsip undang-undang diguna pakai. Tujuan sebenar
pempetisyen tidak konsisten dengan alasan yang disandarkan dan B
perintah penggulungan bukan remedi yang sesuai dalam keadaan kes ini.
Perintah penggulungan tersebut akan mengakibatkan kerugian yang tidak
boleh ditebus terhadap kepentingan pemegang-pemegang saham,
pemiutang dan yang lain yang tidak bersalah; apabila pempetisyen boleh
memohon remedi yang sewajarnya bawah rejim yang dibenarkan untuk C
pemegang saham minoriti. Tidak boleh dikatakan bahawa ekuiti dan
keadilan sepatutnya campur tangan untuk memerintahkan penggulungan
TEH Holdings dan TEH Paper. Oleh itu, soalan pertama mesti dijawab
secara negatif.
(7) Tiada rekod penggunaan s. 18 Akta Mahkamah Kehakiman 1964, protes D
atau keraguan, mahupun permintaan atau cadangan pada HMT untuk
semula kesemua atau mana-mana bahagian keterangan yang telah diberi.
Sebaliknya, HMT yang mengambil alih selepas hakim sebelumnya telah
mendengar dan merekodkan keterangan 22 hari sepanjang dua tahun dan
meneruskan untuk menyelesaikan perbicaraan selepas sejumlah 41 hari E
tanpa apa-apa halangan. Dengan dapatan yang kukuh dan jelas tentang
kebolehpercayaan atau ketiadaannya, kewujudan penyalahgunaan proses
serta penolakan keterangan yang perlu untuk membuktikan alasan-alasan
yang disandarkan dan tanpa apa-apa keterangan lain untuk mahkamah
membentuk pendapat bawah s. 218(1)(i) berdasarkan aduan
F
pempetisyen, perkara wajar untuk HMT adalah menolak petisyen-
petisyen tersebut. Oleh itu, soalan kedua yang dikemukakan oleh
syarikat-syarikat yang digulungkan juga dijawab secara negatif. Dalam
keadaan tersebut, mahkamah menolak untuk menjawab soalan-soalan
yang dikemukakan pempetisyen.
G
Case(s) referred to:
Asia Television Ltd & Anor v. Viwa Video Sdn Bhd & Other Cases [1984] 2 CLJ 80;
[1984] 1 CLJ (Rep) 72 FC (refd)
Beca (M) Sdn Bhd v. Tang Choong Kuang & Anor [1986] 1 CLJ 20; [1986] CLJ (Rep)
64 SC (refd)
Bell Group Finance (Pty) Ltd (In liq) v. Bell Group (UK) Holdings Ltd [1996] 1 BCLC H
304 (dist)
Chang Yun Tai & Ors v. HSBC Bank (M) Bhd & Other Appeals [2011] 7 CLJ 909 FC
(refd)
Charles Forte Investments Ltd v. Amanda [1963] 2 All ER 940 (refd)
Chow Kwok Chuen v. Chow Kwok Chi & Another [2008] 4 SLR 362 (refd)
Curragh Investments Ltd v. Cook [1974] 3 All ER 658 (refd) I
Daiman Development Sdn Bhd v. Mathew Lui Chin Teck & Another Appeal [1980] 1 LNS
180 PC (refd)
Datuk Ong Kee Hui v. Sinyium Mutit 1983] 1 MLJ 36 (refd)
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 327

A Ebrahimi v. Westbourne Galleries Ltd [1972] 2 All ER 492 (refd)

Foo Jong Wee & Ors v. Hj Afifi Hj Hassan [2016] 6 CLJ 696 CA (dist)
Gulf Business Construction (M) Sdn Bhd v. Israq Holding Sdn Bhd [2010] 8 CLJ 775
CA (refd)
Hj Afifi Hj Hassan v. Norman Disney & Young Sdn Bhd & Ors [2013] 1 LNS 339 HC
(refd)
B Holman v. Johnson [1775] 1 Cowp 341 (refd)
In Re London and County Coal Company [1866] LR 3 Eq 355 (dist)
JSC Bank of Moscow v. Kekhman [2014] BPIR 959 (refd)
Keng Soon Finance Bhd v. MK Retnam Holdings Sdn Bhd & Anor [1989] 1 CLJ 897;
[1989] 1 CLJ (Rep) 1 PC (refd)
Kin Nam Development Sdn Bhd v. Khau Daw Yau [1984] 1 CLJ 347; [1984] 1 CLJ
C
(Rep) 181 FC (refd)
Lai Kim Loi v. Datuk Lai Fook Kim & Co [1989] 2 CLJ 107; [1989] 1 CLJ (Rep) 61
SC (refd)
Lim Kar Bee v. Duofortis Properties (M) Sdn Bhd [1992] 3 CLJ 1667; [1992] 1 CLJ (Rep)
173 SC (refd)
D
Liputan Simfoni Sdn Bhd v. Pembangunan Orkid Desa Sdn Bhd [2019] 1 CLJ 183 FC
(refd)
Lori Malaysia Bhd v. Arab-Malaysian Finance Bhd [1999] 2 CLJ 997 FC (refd)
M A Clyde v. Wong Ah Mei & Anor [1970] 1 LNS 73 FC (refd)
Palaniappa Chettiar v. Arunasalam Chettiar [1962] 1 LNS 115 PC (refd)
Patel v. Mirza [2017] 1 All ER 191 (refd)
E Perak Integrated Networks Services Sdn Bhd v. Urban Domain Sdn Bhd & Anor
[2018] 5 CLJ 513 FC (refd)
Perennial (Capitol) Pte Ltd & Anor v. Capitol Investment Holdings Pte Ltd [2018] 1 SLR
763 (refd)
Randhir Singh Bhajnik Singh v. Sunildave Singh Parmar (The Administrator Of The
Estate Of K Surjit Kaur Gean Kartar Singh (Deceased)) [2019] 6 CLJ 771 CA (refd)
F Re A Company (No 005685 of 1988), ex p Schwarcz (No 2) [1989] BCLC 427 (refd)
Re Crigglestone Coal Co Ltd [1906] 2 Ch 327 (refd)
Re Goodwealth Trading Pte Ltd [1990] 1 LNS 127 HC (refd)
Re Investment Properties International Ltd 41 DLR (3d) 217 (refd)
Re Maud [2020] EWHC 974 (refd)
Re Migration Solutions Holdings Ltd; Brett v. Migration Solutions Holdings Ltd and Others
G [2016] EWHC 523 (refd)
Re Senson Auto Supplies Sdn Bhd [1987] 1 LNS 110 HC (refd)
Re Thomas Edward Brinsmead & Sons Ltd [1897] 1 Ch 45 (refd)
Re Tourmaline Ltd [2000] 4 HKC 348 (refd)
St John Shipping Corporation v. Joseph Rank Ltd [1956] 3 All ER 683 (refd)
Tahansan Sdn Bhd v. Tay Bok Choon [1984] 2 CLJ 224; [1984]1 CLJ (Rep) 383 FC
H (refd)
Tan Keen Keong v. Tan Eng Hong Holdings Sdn Bhd & Ors And Another Case
[2015] 1 LNS 1385 HC (refd)
Tay Bok Choon v. Tahansan Sdn Bhd [1987] 1 CLJ 441; [1987] CLJ (Rep) 24 PC (refd)
Tekun Nasional v. Plenitude Drive (M) Sdn Bhd & Other Appeals [2018] 8 CLJ 686 CA
(refd)
I
The Co-Operative Central Bank Limited (in receivership) v. Feyen Development Sdn Bhd
[1995] 4 CLJ 300 FC (refd)
Thong Foo Ching & Ors v. Shigenori Ono [1998] 4 CLJ 674 CA (refd)
328 Current Law Journal [2021] 2 CLJ

Thunder Cats Investment 92 (Pty) Ltd v. Nkonjane Economic Prospecting & Investments A
(Pty) Ltd 2014 5 SA 1 (refd)
Tien Ik Enterprises Sdn Bhd & Ors v. Woodsville Sdn Bhd [1995] 1 LNS 99 SC (refd)
Yango Pastoral Co Pty Ltd & Others v. First Chicago Australia Ltd & Others [1978] 139
CLR 410 (refd)
Zung Zang Holdings Sdn Bhd v. Zung Zang Trading Sdn Bhd [2019] 1 LNS 2272 CA
(refd) B

Legislation referred to:

Companies Act 1965 (repealed), ss. 130A, 136, 169, 171(1), 181, 211, 212, 213, 214,
215, 216, 217(1), 218(1)(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n),
219, 220, 221, 222, 223, 224, 225, 226, 227, 228, 229, 230, 231, 232, 233, 234,
235, 236, 237, 238, 239, 240, 241, 242, 243, 244, 245, 246, 247, 248, 249, 250, C
251, 252, 253, 254, 255, 256, 257, 258, 259, 260, 261, 262, 263, 264, 265, 266,
267, 268, 269, 270, 271, 272, 273, 274, 275, 276, 277, 278, 279, 280, 281, 282,
283, 284, 285, 286, 287, 288, 289, 290, 291, 292, 293, 294, 295, 296, 297, 298,
299, 300, 301, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 312, 313, 314,
315, 316, 317, 318, 364(2)
Companies Act 2016, s. 198(3), (7) D
Contracts Act 1950, s. 24(b)
Copyright Act 1969 (repealed), s. 6(1)(a)
Courts of Judicature Act 1964, s. 18
Evidence Act 1950, ss. 17, 31
Films (Censorship) Act 1952, ss. 9(2), 9A(2), 15(1)(a)
Housing Developers (Control and Licensing) Rules 1970, rr. 11(1), 17 E
Income Tax Act 1967, s. 114
National Land Code, s. 340(2)
Penal Code, ss. 193, 199, 200
Companies Act 1948 [UK], s. 407
Companies Act 61 of 1973 [Africa], s. 344(h) F
Insolvency Act 1986 [UK], s. 125(1)
Other source(s) referred to:
Augustine Paul, Evidence - Practice and Procedure, 3rd edn, pp 160, 317
Loh Siew Cheang, Corporate Powers and Accountability, 3rd edn, LexisNexis, 2018,
Chapter 29 G
Srimurugan Alagan, Law of Evidence – A Commentary, Sweet & Maxwell, 2020,
pp 96-99; 133-134
(Civil Appeals No: 02(f)-5-02-2017(P) & 02(f)-12-02-2017(P))
For the appellants - Gopal Sri Ram, Marcus Lee, Karluis Quek, Karin Lim Ai Ching,
Suppiah Arumugam, Ong Swee Long & Ong Kang Nyong; M/s Presgrave & Matthews H
For the respondents - Malik Imtiaz Sarwar, Esther Geetha Jayaraja, Alia Ilani Nasution
& Chan Wei June; M/s Chew Das & Jayaraja
(Civil Appeal No: 02(f)-6-02-2017(P))
For the appellant - Gopal Sri Ram, Marcus Lee, Karluis Quek, Karin Lim Ai Ching,
Suppiah Arumugam, Ong Swee Long & Ong Kang Nyong; M/s Presgrave & Matthews
I
For the 1st respondent - Tan Swee Cheng; M/s SC Tan
For the 2nd, 3rd, 4th & 5th respondents - Malik Imtiaz Sarwar, Esther Geetha Jayaraja,
Alia Ilani Nasution & Chan Wei June; M/s Chew Das & Jayaraja
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 329

A (Civil Appeals No: 02-13-02-2017(P) & 02-14-02-2017(P))

For the appellants - Malik Imtiaz Sarwar, Esther Geetha Jayaraja, Alia Ilani Nasution
& Chan Wei June; M/s Chew Das & Jayaraja
For the respondents - Gopal Sri Ram, Marcus Lee, Karluis Quek, Karin Lim Ai Ching,
Suppiah Arumugam, Ong Swee Long & Ong Kang Nyong; M/s Presgrave & Matthews

B [Editor’s note: Appeal from Court of Appeal; Civil Appeal No: P-02(A)-1418-09-2015
(overruled); For the High Court judgment, please see Tan Keen Keong v. Tan Eng Hong
Holdings Sdn Bhd & Ors And Another Case [2015] 1 LNS 1385 (overruled).]

Reported by S Barathi

C JUDGMENT
Mary Lim FCJ:
[1] The five appeals before us concern the law on winding-up of
companies on the ground that it is just and equitable under s. 218(1)(i) of the
D Companies Act 1965 to wind-up the target companies. Three appeals are
brought by the petitioner who did not succeed in winding-up all three
companies that he had targeted whilst two other appeals are by the two
companies that were wound up as a result of the petitions.
[2] A total of four questions are posed by the two sets of appellants in
E these appeals:
Petitioner’s appeals
Civil Appeals Nos.: 02(f)-5-02/2017(P) and 02(f)-6-02/2017(P)
& 02(f)-12-02/2017(P)
F (i) Where there are applications to wind-up more than one company
in a group of family companies, is the conduct of the parties to be
tested separately in respect of each company or as a whole having
regard to the decisions in Ebrahimi v. Westbourne Galleries Ltd [1972]
2 All ER 492 and DHN Food Distributors Ltd v. London Borough of Tower
Hamlets [1976] 3 All ER 462.
G
(ii) Whether the principles governing an application made under section
181 of the Companies Act 1965 are applicable to an application to
wind-up a company under section 218(1)(i) of the said Act having
regard to the decision of the Federal Court in Loh Sing Chee v. Numix
Engineering Sdn Bhd [2015] 5 MLJ 561.
H
Wound up companies’ appeals
Civil Appeals Nos.: 02(f)-13-02/2017(P) & 02(f)-14-02/2017(P)
(i) Whether a company could be wound up by a ‘shareholder’ of the
said company under section 218(1)(i) of the Companies Act 1965
I merely on the grounds of non-compliance or breach by the directors
(where no prosecution whatsoever was ever taken against the said
company by the authorities in any Court) of sections 169, 364(2),
330 Current Law Journal [2021] 2 CLJ

136 of the Companies Act 1965 and sections 199, 200 and/or 193 A
of the Penal Code and section 114 of the Income Tax 1967, which
if proven, can nonetheless be regularised by provisions of the
statutes by way of penalty/fine.
(ii) Whether a petitioner shall be allowed with equitable relief under
section 218(1)(i) of the Companies Act 1965 when the petitioner’s B
truthfulness and credibility have been impugned by the Winding-Up
Court.
Background Facts
[3] The full factual background which led to the winding-up of Tan Eng
Hong Paper & Stationery Sdn Bhd (TEH Paper) and Tan Eng Hong Holdings C
Sdn Bhd (TEH Holdings), the appellants in Civil Appeals Nos: 02(f)-13-02/
2017(P) and 02(f)-14-02/2017(P), and the dismissal of the winding-up
petition against Peace Centre Sdn Bhd (PCSB), may be found in the grounds
of decision of the learned judge at the High Court reported in Tan Keen Keong
v. Tan Eng Hong Holdings Sdn Bhd & Ors & Another Case [2015] 1 LNS 1385. D
For the purposes of these appeals, suffice that we summarise those facts as
thus.
Parties
[4] For ease of reference, we shall refer to the parties as they were at the E
High Court.
[5] The late Tan Boon Kak and his wife, Ong Chooi Tee, had six sons.
They also had daughters but they and their families are not involved in the
litigation before us. All six sons, whether themselves directly or their
families are however, involved. The learned High Court Judge referred to F
them collectively as the “Tan Families” and/or by reference to their position
in those six families.
[6] The second, third and fourth respondents are respectively, the third,
fifth and sixth sons. The fifth respondent is the eldest son of the deceased
second son. Because of the nature of the allegations and the role that he holds G
in the target companies, the fourth respondent and the sixth son, Tan Seng
Kow, shall be referred to by his initials, “TSK”.
[7] The petitioner, Tan Keen Keong @ Tan Kean Keong (petitioner) is
from the first family. In support of his petitions, the petitioner relied on
H
inter alia, the evidence of Tan Choo Leong (TCL) who is from the fourth
family. The petitioner and TCL are nephews of the second and third
respondents and of TSK, and cousins of the fifth respondent.
[8] Although TCL was not a party to any of the petitions, he testified for
the petitioner as PW4, one of nine witnesses called by the petitioner. He was I
described by the learned judge as having played “a key role during the trial
in terms of putting together the building blocks and advancing/articulating
the cases on behalf of the petitioner.” In fact, he together with his family
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 331

A were seen as the “directing minds behind the petition” and when the petition
against PCSB was dismissed, he was ordered to bear costs personally together
with the petitioner.
[9] The subject companies of three separate winding-up petitions, are part
of a group of companies comprising at least thirteen companies, owned by
B
the six Tan Families. TEH Holdings was incorporated on 8 November 1976.
It was then known as Tan Eng Hong Realty Sdn Bhd. In 1982, it underwent
a name change. Its principal object was for investment holdings and letting
of properties. TEH Paper was incorporated on 31 December 1982. It
manufactures paper and stationery. PCSB was incorporated on 12 April
C 1983.
[10] The petitioner, TCL and the other individual respondents cited in the
three petitions are shareholders of the subject companies while TSK is also
a director in these companies and since 1999, their “deemed managing
director”.
D
[11] The petitioner, the appellant in Civil Appeals Nos.: 02(f)-5-02/
2017(P), 02(f)-6-02/2017(P) and 02(f)-14-02/2017(P), moved three separate
petitions to wind-up the three companies, citing the same legal basis, that is,
s. 218(1)(f) and/or (i) of the Companies Act 1965. In substance, he alleged
that the directors had acted in their own interests rather than in the interests
E
of the members as a whole; and that it is just and equitable to wind-up the
companies. The petitioner relied on similar factual substratum for all three
petitions.
[12] According to the petitioner, these three companies ought to be wound
F up because their affairs had been conducted in an unfair, unjust and
inequitable manner by the persons in control of the companies. Specifically,
the petitioner alleged that:
(i) contrary to an agreement and understanding between the shareholders
of TEH Holdings that its business be carried on as a family business
G and as a quasi-partnership based on mutual trust and confidence with
each family having a representative decided solely by that family, he
had been denied his legitimate rights and expectations in TEH
Holdings;
(ii) the affairs of these companies had been conducted in an unfair, unjust
H and inequitable manner by the persons in control;
(iii) he had not been re-appointed as director after 1996;
(iv) he had been excluded from their management;
(v) he had not been paid any reasonable dividend;
I
(vi) TEH Holdings paid salaries, bonuses, allowances and other benefits to
the other families but not to him;
332 Current Law Journal [2021] 2 CLJ

(vii) the land belonging to the company had been let out at grossly A
undervalued rates;
(viii) directors, especially TSK, acted in their/his own interest(s) as
opposed to those of the companies;
(ix) financial affairs of TEH Holdings’ subsidiary, Perusahaan Konkrit B
Merdeka Sdn Bhd (PKM) were conducted in a wrongful and
non-transparent manner as evidenced by a penalty of RM2,334,550
imposed by the Inland Revenue Board in 1996;
(x) these companies were involved in “certain nefarious accounting
practices which have been described as ‘under-counter activities’ C
carried out to deceive the Inland Revenue Department (IRD) as to the
true income of TEH Paper and TEH Holdings and its subsidiaries”,
namely PKM and Perusahaan Konkrit Merdeka (KL) Sdn Bhd (PKM
(KL));
(xi) main assets of TEH Paper were destroyed in a fire; D

(xii) there was a breakdown of mutual confidence and good faith amongst
the Tan Families and its directors as well as amongst the shareholders.
[13] The petitioner claimed that there was an agreement and understanding
between the shareholders of TEH Holdings that it was a quasi-partnership E
based on mutual trust and confidence as its business was carried on as a
family business. This agreement and understanding extended to TEH Paper
and PCSB. He also claimed the existence of a “family fund”, that monies of
TEH Paper and TEH Holdings and its subsidiaries had been siphoned into
this “family fund” due to under-counter activities, and that the “family fund” F
had been wrongfully used.
[14] His specific complaint against PCSB was that despite having low
overheads, PCSB earned meagre rental incomes and had also not declared
dividends. The petitioner put this down as to how the expenses of the other
companies had been incorporated into PCSB’s, thus “hijacking” its profits. G
The petitioner claimed that these were all done to oppress the first family
which, through him, was the largest shareholder of PCSB.
[15] The petitions were opposed, to put it mildly, with the respondents
alleging:
H
(i) abuse of court process;
(ii) petitions were for collateral purpose;
(iii) selective prosecution in that one Tan Choo Keng of the fourth family,
TCL’s brother, was not cited as respondent in the petitions;
I
(iv) delay, waiver, acquiescence and/or limitation and laches;
(v) no quasi-partnership;
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 333

A (vi) no legitimate expectation to be director;

(vii) no legitimate right or expectation in the participation of the
management of the companies;
(viii) no dividend declared partly because of the uncertainty of shareholding
B within the petitioner’s family members;
(ix) rentals at discounted rate were not grossly undervalued while the
valuation report prepared was unsafe to be relied on;
(x) there was no “family fund” in PCSB;
C (xi) there was no destruction or loss of the corporate substratum;
(xii) it was not just and equitable to wind-up the companies.
[16] In relation to the “family fund”, the respondents explained that this
fund existed even during the time when TCL’s father, Tan Seng Jin (TSJ) was
D the “deemed managing director” until his demise in 1999 and this role was
then assumed by TSK. The respondents further explained that this fund
provided for various allowances such as marriage expenses, scholarships,
funeral expenses, medical expenses. The main source of the fund was derived
from sale of waste paper which were not declared by TEH Paper. Monies
for this fund were initially held in an account in the joint names of TCL’s
E
father and some other members from initially three of the Tan Families. One
of the joint account holders was Tan Choo Keng, a brother of TCL. The
allegations of siphoning off monies by the current directors for their personal
gain were specifically denied.

F [17] In 1992/1993, TEH Paper and PKM were raided by the Inland
Revenue Department. In 1995, PKM was imposed a penalty and in the
following year, TEH Paper was similarly imposed a penalty. Both companies
paid the penalties.
Decisions Of The High Court And Court Of Appeal
G
[18] After a lengthy trial with witnesses led by both the petitioners and the
respondents, the petitions to wind-up TEH Paper and TEH Holdings were
allowed whereas the petition to wind-up PCSB was dismissed. The learned
trial judge made specific findings in respect of the petitioner himself as well
as on the grounds relied on.
H
[19] In relation to the petitioner himself, the learned judge found that the
petitioner had locus standi to file the petitions given that he was a shareholder
in his own name; quite aside from holding shares on trust for members of
his family.
I [20] His Lordship, however, found the petitioner’s evidence and those of
his main witness, TCL, not credible and very much wanting. More
significantly, the learned judge found presence of abuse of process as the
334 Current Law Journal [2021] 2 CLJ

petitions were filed for a collateral purpose and on the instigation and funding A
by TCL and his mother; that the petitioner was a “mere tool”, “a mere proxy
for TCL and the fourth family”; that the real purpose behind the petitions
was “to get back their shares and the lands and to see that TSK resigned from
his position as deemed managing director.”
B
[21] As for the grounds relied on, the learned judge concluded that there
was no basis for the petitioner’s complaints with his questionable credibility.
In any case, the petitioner was not in the position to make his complaints,
particularly about being excluded from the management of the companies as
he was never in management to start with. According to the learned judge,
the companies were not quasi-partnerships; and any earlier intention had C
since been displaced by how the companies had evolved over the passage of
time. In the case of TEH Holdings, its shareholders were furthermore no
longer confined to members of the Tan families but included persons outside
the Tan families.
D
[22] The High Court was also disinclined to allow the petitions after
finding that there was “considerable and undue and inordinate delay” on the
petitioner’s part in moving the court for the petitions; finding his “lack of
education ... neutralised by the fact that he had sought legal advice in the
1990s. As such, his inaction for all these years right up to the time he filed
the petitions speaks heavily against him. His inaction is fatal.” (see para. 151). E
Citing Re Senson Auto Applies Sdn Bhd [1987] 1 LNS 110; [1988] 1 MLJ 326,
His Lordship inferred that the petitioner “had acquiesced to the state of
affairs” with the “inordinate and inexcusable” delay in “prosecuting his
complaints against the respondents”.
F
[23] Despite the above findings, the learned judge proceeded to allow the
winding-up petitions against TEH Paper and TEH Holdings holding that
these companies, directly or through their subsidiaries, had contravened the
Companies Act 1965, and through the use of the family fund, had committed
illegality. The High Court cited the Court of Appeal decision in Hj Afifi Hj
Hassan v. Norman Disney & Young Sdn Bhd & Ors [2013] 1 LNS 339; [2014] G
7 MLJ 738 in support. The petition in respect of PCSB was however,
dismissed after the learned judge found that the company was not engaged in
such activities. The specific allegation of low market rentals was rejected for
want of proof whilst the complaint of non-declaration of dividends was
dismissed on the basis that this was a management decision and “very much” H
up to the discretion of the board of directors of PCSB.
[24] Both the petitioner and the respondents appealed. On 7 June 2016, the
Court of Appeal dismissed all the appeals brought, affirming the decisions of
the High Court.
I
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 335

A [25] There are no written grounds of decision from the Court of Appeal but
this is no impediment to the conduct of these appeals. The parties have also
decided to proceed with their respective appeals without any written
grounds.
Our Decision
B
[26] We propose to take the questions posed by the wound-up companies
first; our deliberations and answers to these appeals will have a direct bearing
on the questions posed by the petitioner. The questions posed concern the
correctness of the decisions to wind-up TEH Paper and TEH Holdings.
C Whether a company could be wound-up by a ‘shareholder’ of the said
company under section 218(1)(i) of the Companies Act 1965 merely on the
grounds of non-compliance or breach by the directors (where no
prosecution whatsoever was ever taken against the said company by the
authorities in any court) of sections 169, 364(2), 136 of the Companies Act
1965 and sections 199, 200 and/or 193 of the Penal Code and section 114
D of the Income Tax 1967, which if proven, can nonetheless be regularised
by provisions of the statutes by way of penalty/fine.
[27] As evidenced from what has been narrated above, the learned judge
had found everything that could conceivably be wrong with the petitions and
the petitioner, that the petitioner’s real intention was to obtain a shares buy-
E out; that he was there for a collateral purpose, posing as a front for the real
instigators of the petitions, namely TCL and his family; that there was abuse
of process; that he was not a credible witness; that he had slept on his rights;
and that in fact, had himself condoned the matters complained of and forming
the basis of the petitions. His Lordship had supported his findings from both
F the oral testimonies and the documentary evidence led; stating that
“ordinarily, these petitions would have been struck out and dismissed as
being an abuse of process.” Yet, in quite categorical terms, His Lordship
went on to pronounce that “there is a problem and it is to do with the issue
of illegality vis-à-vis TEH Holdings and TEH Paper.” And, from there,
G His Lordship considered the matter of illegality which led to the orders for
winding-up.
[28] The contraventions and illegality are discussed at paras. 198 to 234 of
the grounds under the sub-topic, “Illegality”. Now, what exactly are the
target companies alleged to have committed and which occasioned the
H learned judge to make strong remarks such as the “gross violation of the
provisions of the Companies Act 1965 and other laws”; “contravention of
inter alia the Companies Act 1965 and illegality”; “illegalities cannot be
sanitised or washed away by any form or extent of knowledge, acquiescence
or participation on the part of the petitioner or by TCK or his family
I members”; the “illegality cuts through these counter arguments”; that “once
illegality is proven or there is an admission as to illegality, then it matters
not whether the petitioner knew about it or not, except that perhaps it may
be relevant when it comes to the issue of costs”?
336 Current Law Journal [2021] 2 CLJ

[29] The answer to this poser may be found specifically at paras. 207 to A
211, 213, 217 to 219, 222 to 225, 227, 228, 230 to 234 of the judgment:
207. For present purposes, what is important is the indisputable fact that
illegality (family fund and under counter-activities) was carried out
in a most egregious and blatant manner and is in all probability, still
being carried out. One of the troubling issues is the role of an entity B
known as Centrum Piler Engineering of which TSK’s son was a
co-owner. The other owner or partner was Goh Chin Kooi.
Centrum Piler Engineering was a conduit for the siphoning of funds
and it ceased business very shortly after the petitions were served.
It was suggested for the petitioner that Centrum Piler Engineering
ceased business because the owners knew that they were involved C
in wrongdoing i.e. siphoning funds through PKM. This was denied.
They said that the co-owner of Centrum Piler Engineering, Goh
Chin Kooi was annoyed that Centrum Piler Engineering was
dragged into this litigation and so he wanted the business to cease.
However, Goh Chin Kooi did not give evidence.
D
208. Also, another entity was set up, namely Pen-concrete Sdn Bhd,
which remained ‘dormant’ but appeared to have a fixed deposit of
RM3,000,000.00. This raises suspicion as to whether these are also
part of the profits of TEH Holdings which were ‘parked’ in the
dormant company.
E
209. The Respondents maintain that TEH Paper/PKM have been
penalised by IRD and should not be penalised again by a winding
up order. It was said that those are matters of history which have
all been resolved. However, there is evidence that there were about
seven bank accounts through which the family fund was operated.
But, there is evidence of a second raid by IRD. However, the F
outcome of that raid was not made known to the court.
210. The entire bank statements for these family fund accounts could
have been, but were not produced. I am therefore compelled to draw
an adverse inference under section 114(g) Evidence Act 1950 against
the Respondents for the failure to produce these bank statements.
G
The failure to produce the bank statements suggests that the
Respondents have something to hide. In all likelihood these
accounts will show a different picture as to the amount of profits
that were and are still in these accounts. The inference which I have
made is that the under-counter activities have not ceased.
211. The fact that about a year after the petitions were served, H
resolutions were passed to cease the practice of channelling of
companies monies into the family fund, suggests that the practice
continued even after the petitions were served. Although after the
petitions were served, Centrum Piler Engineering ceased business,
another entity ‘SK Piles’ was formed. TSK and his son Kenny Tan
(DW6) were admittedly, the co-owners of SK Piles. I

…
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 337

A 213. As such, I am in agreement with the submissions made by counsel

for TSK that the illegal channelling or siphoning of companies
monies into the family fund is not to be equated with TSK or the
other Respondents helping themselves to the monies sitting in the
fund or in the accounts. But I will venture to state that it is an open
question as to whether there were defalcations of the type that is
B being alleged by the petitioner, but that will have to sic investigated
by another authority. For now, the issue is one of illegality and
whether it is just and equitable that TEH Paper and TEH Holdings,
should be wound up because of the illegality which has been
admitted. As stated earlier, the fact that the accounts of TEH Paper
and in the case of TEH Holdings, the consolidated accounts are
C
false, has been proven satisfactorily. This has various implications
from the perspective of breach of various statutory provisions, which
I will now turn to.
…

D 217. It has been established during the trial that there are serious
discrepancies in the audited accounts of TEH Paper and TEH
Holdings. The accounts of these companies are not fair and accurate
and they are also misleading as they do not reflect the funds that
were diverted or channelled into the under counter accounts. In
fact, the offices of TEH Paper and TEH Holdings (PKM) had been
E raided by the IRD for tax avoidance and penalties had been paid
to the IRD by the companies. There was also a second raid by IRD.
218. In the light of the manner in which the Second to Fifth
Respondents had conducted the two companies, especially in terms
of the preparation of accounts, the view I hold is that it is just and
equitable to wind up the companies so that a full and independent
F
investigation can be carried out in respect of the accounts of these
two companies …
219. In the circumstances, it became clear from TSK’s evidence that there
was a breach of section 169 of the Companies Act by the Second
to Fifth Respondents as the accounts of the two companies do not
G give a true and fair view of the state of affairs of the companies and
the directors of the companies are guilty of an offence pursuant to
section 171(1) of the Companies Act 1965 …
…
222. To the extent that the Second to Fifth Respondents have made
H
false statements pertaining to the accounts of TEH Paper and TEH
Holdings (through falsification of the accounts of PKM/PKM(KL)),
they may be guilty of an offence pursuant to section 364(2) of the
Companies Act.
223. In this regard, section 364(2) Companies Act 1965 provides that …
I
224. In this case, every time the accounts of the TEH Paper and TEH
Holdings were submitted, the Second to Fifth Respondents had
sworn Statutory Declarations to confirm the correctness of the
338 Current Law Journal [2021] 2 CLJ

accounts. Nevertheless, the Second to Fifth Respondents being the A

directors of these companies had sworn false statutory declaration
to confirm the correctness of the accounts of these companies
although they are fully aware that the accounts are not fair and
accurate and are in fact misleading. The declarations sworn by them
are deemed to be declarations referred to in sections 199 and 200
of the Penal Code. (See section 3 of the Statutory Declarations Act B
1960) which provides that ...
225. Therefore, the Second to Fifth Respondents would be liable to be
punished as if they had given false evidence pursuant to sections
199 and 200 of the Penal Code. Section 199 Penal Code provides
that … C
227. The other offence for which the Second to Fifth Respondents may
be liable is an offence under section 193 of the Penal Code which
provides …
228. The next significant offence is one which relates to tax evasion.
Here, the Second to Fifth Respondents have evaded taxes and/or D
assisted in the tax evasion and would be guilty of the offence
pursuant to section 114(g) of the Income Tax Act 1967…
…
230. The evidence at trial showed that the Second to Fifth Respondents
E
had used the funds of TEH Paper and TEH Holdings (through
PKM/PKM (KM)) to pay their income tax. This is expressly
prohibited under section 136 of the Companies Act 1965. This is
expressly prohibited under section 135 of the Companies Act 1965
which provides …
231. In the circumstances, there is grave misconduct by the Second to F
Fifth Respondents for their rampant illegal under counter activities
and also for swearing false declarations in confirming the
correctness of the accounts of the two companies even though they
knew that the accounts are inaccurate and not fair as it did not
reflect the under counter activities. Besides, the Second to Fifth
Respondents had also misappropriated the assets of the two G
companies and created fictitious documents to justify the accounts.
232. The taking of profits from a company in such circumstances is
patently a criminal offence of misappropriation. In Lai Ah Kau …
233. It was submitted for the petitioner that apart from their criminal
H
liability for the inaccurate and unfair accounts, the Second to Fifth
Respondents are also liable for breach of trust and fiduciary duties
for causing the company accounts to be misstated. See Walter Woon
…
234. It was submitted that in light of the illegal activities carried out by
the Second to Fifth Respondents, the court must act on and I
address the issue of illegality. This is not only to enforce the
petitioner’s rights but more importantly, to uphold the law. It is also
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 339

A submitted that on the ground of illegality alone, it is just and

equitable to wind up the companies as it would be in the interest
of the public to stop the under counter activities and uphold the law.
[30] The court then went on to discuss and apply the Court of Appeal’s
decision in Hj Afifi Hj Hassan v. Norman Disney & Young Sdn Bhd & Ors [2013]
B 1 LNS 339; [2014] 7 MLJ 738, that the court may wind-up a company where
illegality is shown notwithstanding knowledge or participation by the
petitioner and his witnesses and, amongst others, made the following
conclusions:
239. TSK also conceded that the channelling of company’s funds into a
C family fund violates Article 138 of the company’s M&A. TSK also
admitted that by having a “non company account” (i.e. family fund
account), there was “tax evasion” and “false accounting”
(See: TSK’s evidence on 18 November 2013 – Day 34 of the trial).
240. Further, TSK admitted that TEH Holdings financial statement are
D false because the accounts are false ...
241. In my view, the illegality (tax evasion and false accounting etc.) has
infected TEH Paper and TEH Holdings as well, although the main
conduit for illegality was PKM and PKM (KL) which are subsidiaries
of TEH Holdings. Since TSK has confirmed during cross-
examination that the financial statements of TEH Holdings are
E
“false”, it would be untenable for the Respondents to suggest that
TEH Holdings is unaffected or untainted by the illegality which has
been unreservedly and unequivocally admitted to by TSK during
cross-examination.
[31] According to the learned judge, “based on the issue of illegality, a term
F
which I have used generically to cover violations of various statutory
provisions discussed earlier, I find that it is not just appropriate but also
imperative that I should order the winding-up of TEH Paper and TEH
Holdings.”

G
[32] The various statutory provisions which were said to have been
contravened are:
(i) section 169 read with s. 171(1) of the Companies Act 1965 on the duty
of the directors to produce financial reports which are accurate and give
a true and fair view of the state of affairs of the companies;
H (ii) section 364(2) of the Companies Act 1965 where the directors made
false statements on the companies’ accounts;
(iii) section 136 of the Companies Act 1965 where the directors used
company funds to pay their income tax;
I (iv) sections 193 and 199 of the Penal Code where directors had sworn
statutory declarations to confirm correctness of accounts;
340 Current Law Journal [2021] 2 CLJ

(v) section 114 of the Income Tax Act 1967 where directors have evaded A
taxes and/or assisted in tax evasion.
[33] Ultimately, the learned judge wound up TEH Holdings and TEH
Paper because it was just and equitable to do so due to the presence of
illegality. The illegality was established through “admissions” by TSK
B
during cross-examination and in a phone text message from TSK to TCL on
2 July 2009 – that TSK “admitted that because of the under-counter activities
and siphoning of funds, the declarations that were made in relation to the
accounts for TEH Paper/TEH Holdings and the accounts themselves were
false”. Consequently, the learned judge opined that it was “fair to say that
the petitions vis-à-vis TEH Paper and TEH Holdings (through PKM as its C
subsidiary) are mired in contravention of, inter alia, the Companies Act 1965
and illegality); and that “these admissions would mean that there has been
gross violation of the provisions of the Companies Act 1965 and other laws.
In my view, these illegalities cannot be sanitised or washed away by any
form or extent of knowledge, acquiescence or participation on the part of the D
petitioner or by TCK or his family members” – see paras. 201 to 204.
The ‘Just And Equitable’ Ground
[34] The Companies Act 1965, an Act relating to companies has 374
sections organised into twelve Parts and within each Part, Divisions with
E
their particular provisions. Amongst others, the Act maps up the
incorporation of corporate soles, how companies are to be constituted, their
powers, shares, management and administration of companies, accounts and
audits etc., with Part X dedicated to winding-up. Part X comprised
ss. 211 to 318; from presentation of petitions for winding-up to the final
F
dissolution of the companies, including unregistered companies. These
appeals pertain to matters that arose at the first stage of the winding-up
process.
[35] Section 211 provides that companies may be wound-up either
voluntarily or by the court. Where it is on application to the court,
G
depending on the circumstances or ground(s) relied on, the petition may only
be presented by the persons set out in s. 217(1). Under s. 218(1), there are
fourteen grounds upon which a petition for winding-up may be moved, and
not all these grounds are related to solvency of the company:
Section 218. Circumstances in which company may be wound up by court. H
(1) The court may order the winding up if:
(a) the company has by special resolution resolved that it be wound
up by the court;
(b) default is made by the company in lodging the statutory report
I
or in holding the statutory meeting;
(c) the company does not commence business within a year from
its incorporation or suspends its business for a whole year;
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 341

A (d) the number of members is reduced in the case of a company

(other than a company the whole of the issued shares in which
are held by a holding company) below two;
(e) the company is unable to pay its debts;
(f) the directors have acted in the affairs of the company in their
B own interests rather than in the interests of the members as a
whole, or in any other manner whatsoever which appears to be
unfair or unjust to other members;
(g) an inspector appointed under Part IX has reported that he is of
opinion:
C
(i) that the company cannot pay its debts and should be wound
up; or
(ii) that it is in the interests of the public or of the shareholders
or of the creditors that the company should be wound up;

D (h) when the period, if any, fixed for the duration of the company
by the memorandum or articles expires or the event, if any,
occurs on the occurrence of which the memorandum or articles
provide that the company is to be dissolved;
(i) the court is of opinion that it is just and equitable that the
company be wound up;
E
(j) the company has held a licence under the Banking and
Financial Institutions Act 1989 or the Islamic Banking Act 1983,
and that licence has been revoked or surrendered;
(k) the company has carried on Islamic banking business, licensed
F business, or scheduled business, or it has accepted, received or
taken deposits in Malaysia, in contravention of the Islamic
Banking Act 1983 or the Banking and Financial Institutions Act
1989, as the case may be; or
(l) the company has held a licence under the Insurance Act 1996
and:
G
(i) that licence has been revoked;
(ii) Bank Negara Malaysia has petitioned for its winding up
under subsection 58(4) of the Insurance Act 1996; or
(iii) an order under paragraph 59(4)(b) of the Insurance Act 1996
H has been made in respect of it;
(m) the company is being used for unlawful purposes or any purpose
prejudicial to or incompatible with peace, welfare, security, public
order, good order or morality in Malaysia; or
(n) the company is being used for any purpose prejudicial to
I national security or public interest.
342 Current Law Journal [2021] 2 CLJ

[36] Only two grounds relate to the inability of the company to pay its A
debts – see ss. 218(1)(e) and (g). The rest of the grounds deal with compliance
issues (ss. 218(1)(b), (c), (d)), deliberate decisions to wind-up
(s. 218(1)(a) and (h)); complaints against the directors (s. 218(1)(f)); licensing
issues or breaches of specific legislation such as the Banking and Financial
Institutions Act 1989 (BAFIA), Islamic Banking Act 1983, Insurance Act B
1996 (s. 218(1)(j), (k), (l)) or where the company is used for unlawful
purposes (s. 218(1)(m) and (n)).
Where the company concerned is licensed under BAFIA or Insurance Act,
the petition may only be moved by Bank Negara Malaysia or the Registrar
of Companies – see ss. 217(1) read with 218(1). C

[37] The petitioner relied on s. 218(1)(f) and (i) in all three petitions. From
the memorandum of appeal and from the questions framed, the ground under
s. 218(1)(f) is not pursued. We shall therefore confine our deliberations under
s. 218(1)(i), the just and equitable circumstance.
D
[38] The ‘just and equitable’ ground is not dependent on establishment of
insolvency although it is frequently relied on as an additional or alternative
ground; in fact it is despite the company being solvent that there are
nevertheless satisfactory reasons for the court to form an opinion and
exercise its discretion that it is just and equitable to order a winding-up. This
E
is to be distinguished from ‘rolling up’ a petition with say, a petition under
s. 181 of the Companies Act 1965; or not even specifying any ground –
see Lai Kim Loi v. Datuk Lai Fook Kim & Co [1989] 2 CLJ 107; [1989] 1 CLJ
(Rep) 61; [1989] 2 MLJ 290 SC.
[39] The term ‘just and equitable’ is also not defined in the Act. The ambit F
or scope of this ground was however discussed in the locus classicus of
Ebrahimi v. Westbourne Galleries Ltd [1972] 2 All ER 492; [1973] AC 360,
dealing with the English equivalent provision of our s. 218(1)(i). The wide
discretion in s. 218(1)(i) was confirmed in the Privy Council decision of
Tay Bok Choon v. Tahansan Sdn Bhd [1987] 1 CLJ 441; [1987] CLJ (Rep) 24;
G
[1987] 1 MLJ 433; and recently in the Federal Court’s decision of Perak
Integrated Networks Services Sdn Bhd v. Urban Domain Sdn Bhd & Anor [2018]
5 CLJ 513; [2018] 4 MLJ 1. See also Zung Zang Holdings Sdn Bhd v. Zung
Zang Trading Sdn Bhd [2019] 1 LNS 2272; [2019] MLJU 2063, CA.
[40] Prior to Ebrahimi, the term was interpreted narrowly. In Ebrahimi, H
that approach was rejected. Lord Wilberforce said:
There are two other restrictive interpretations which I mention to reject.
First, there has been a tendency to create categories or headings under
which cases must be brought if the clause is to apply. This is wrong.
Illustrations may be used, but general words should remain general and I
not reduced to the sum of particular instances. Secondly, it has been
suggested and urged upon us, that (assuming the petitioner is a
shareholder and not a creditor) the words must be confined to such
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 343

A circumstances as affect him in his capacity as shareholder. I see no warrant

for this either. No doubt, in order to present a petition, he must qualify
as a shareholder, but I see no reason for preventing him from relying upon
any circumstances of justice or equity which affect him in his relations
with the company, or, in a case such as the present, with the other
shareholders. (emphasis added)
B
[41] In Ebrahimi, the just and equitable ground was applied in a
quasi-partnership situation; where the Privy Council explained that the basis
allowed the court to subject the exercise of legal rights by one party to
equitable considerations such that it makes the insistence on those legal rights
or the exercise of such rights, unjust or inequitable; and “that the only just
C
and equitable course was to dissolve the association”. Because of this, it is
often mistakenly argued that the ‘just and equitable’ ground can only be
deployed in quasi-partnerships or where at least one of the factors or elements
identified in Ebrahimi is established.

D [42] Fortunately, this argument was rejected in Tien Ik Enterprises Sdn Bhd
& Ors v. Woodsville Sdn Bhd [1995] 1 LNS 99; [1995] 1 MLJ 769 where the
Supreme Court agreed with the High Court’s interpretation of the judgment
of Lord Wilberforce in Ebrahimi that “…It is not essential and therefore not
a condition that before the Ebrahimi principles can be applied, the elements
or at least one of the elements mentioned by Lord Wilberforce must be
E
present. To interpret in the way contended by the learned counsel would be
putting something in the judgment which is not there.” We add that the
equitable considerations in Ebrahimi were intended only as illustrations of
circumstances where the just and equitable ground may apply. This ground
is of wide and general import and it is met by sufficiency of context, facts
F and circumstances available for the trial judge to form the requisite opinion.
[43] Similar views have also been expressed in Foo Jong Wee & Ors v. Hj
Afifi Hj Hassan [2016] 6 CLJ 696; and in other jurisdictions – see
Re Migration Solutions Holdings Ltd; Brett v. Migration Solutions Holdings Ltd
and Others [2016] EWHC 523; Re A Company (No 005685 of 1988), ex p
G
Schwarcz (No 2) [1989] BCLC 427; Re Tourmaline Ltd [2000] 4 HKC 348;
Re Goodwealth Trading Pte Ltd [1990] 1 LNS 127; [1991] 2 MLJ 314; Chow
Kwok Chuen v. Chow Kwok Chi & Another [2008] 4 SLR 362; Thunder Cats
Investment 92 (Pty) Ltd v. Nkonjane Economic Prospecting & Investments (Pty) Ltd
2014 5 SA 1 (SCA). The Court of Appeal of Singapore in Chow Kwok Chuen
H decisively rejected the proposition that Ebrahimi “was only to be applied in
situations of quasi-partnership”; while the Supreme Court of South Africa
opined in Thunder Cats Investment 92, on the interpretation of its equipollent
provision as follows:
A winding-up on this basis ‘postulates not facts but only a broad
I conclusion of law, justice and equity, as a ground for winding-up’. The
subsection is not confined to cases which were analogous to the grounds
mentioned in other parts of the section. Nor can any general rule be laid
344 Current Law Journal [2021] 2 CLJ

down as to the nature of the circumstances that had to be considered to A

ascertain whether a case came within the phrase. There is no fixed
category of circumstances which may provide a basis for a winding-up on
the just and equitable ground. In Sweet v. Finbain it was said:
The ground is to be widely construed; it confers a wide judicial
discretion, and it is not to be interpreted so as to exclude matters B
which are not ejusdem generis with the other grounds specified in
s. 344. The fact that the courts have evolved certain principles as
guides in particular cases, or examples of situations where the
discretion to grant a winding-up order will be exercised, does not
require or entitle the court to cut down the generality of the words
“just and equitable”. C

[44] More significantly, the Supreme Court added “s. 344(h) gave the court
a wide discretion in the exercise of which certain other sections of the Act
had to be taken into account.” The breadth of application of the just and
equitable ground was also discussed in Gulf Business Construction (M) Sdn Bhd
v. Israq Holding Sdn Bhd [2010] 8 CLJ 775; [2010] 5 MLJ 34 where the Court D
of Appeal set out a non-exhaustive list illustrating how this ground may be
met:
[23] What is just and equitable would vary from case to case. Thus, a
company may be wound up where it is just and equitable that the
company should be wound up. So many reasons can be advanced to wind E
up a company under the just and equitable principle, and the following
illustrations would suffice:
(a) where the substratum of the company has gone (Galbraith v. Merito
Shipping Co Ltd 1947 SC 446; Re Kitson & Co Ltd [1946] 1 All ER 435
(CA); Re Mediavision Ltd [1993] 2 HKC 629; Re Season Auto Supplies F
Sdn Bhd [1988] 1 MLJ 326 and Re Goodwealth Trading Pte Ltd [1991]
2 MLJ 314);
(b) where the company’s main object for its existence has lapsed (In re
Haven Gold Mining Company (1881-82) 20 Ch D 151 (CA); In re
German Date Coffee Company (1881-82) 20 Ch D 169 (CA); In re Red
G
Rock Gold Mining Co Ltd (1889) 61 LT 269 (CA); In re Palace
Restaurants Limited [1914] 1 Ch 492 (CA); and Re Baku Consolidated
Oilfields Ltd [1944] 1 All ER 24);
(c) where the principal object of setting up the company can no longer
be achieved (Re Perfectair Holdings Ltd [1990] BCLC 423);
H
(d) where the company’s only business is ultra vires the company
(In re Crown Bank (1890) 44 Ch D 634);
(e) where the company is carrying on business at a loss and the
remaining assets of the company are insufficient to pay its debts
(In re Wey and Arun Junction Canal Company (1867) 4 LR Eq 197;
I
In re Diamond Fuel Company (1879) 13 Ch D 400 (CA) and Re Great
Northern Copper Mining Co of South Australia Ltd Ex p The Co (1869)
20 LT 347);
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 345

A (f) where there is no reasonable hope of ultimate profit for the

company (Davis & Co Ltd v Brunswick (Australia) Ltd; Brunswicke-Balke-
Collender Co and Brunswick Radio Corporation [1936] 1 All ER 299 at
309 (PC));
(g) where the relationship of the parties in the company has broken
B down irretrievably (Re Chynchen Associates Ltd [1987] 1 HKC 311);
(h) where there is a lack of confidence among the shareholders that
threaten the very existence of the company (Re San Imperial Corp Ltd
(No. 2) [1980] 1 HKC 463);
(i) where the winding up of the company would open the door to
C investigate the misconduct of the directors or promoters of the
company (In re General Phosphate Corporation; In re Northern Transvaal
Gold Mining Company; In re Delhi Steamship Company [1895] 1 Ch 3;
In re Bleriot Manufacturing Aircraft Company (Limited) (1916) 32 TLR
253; In re The Newbridge Sanitary Steam System Laundry Ltd (1917)
1 IR 67 and In re The Varieties Limited [1893] 2 Ch 235).
D
[24] The list is endless. It is not exhaustive.
(emphasis added)
[45] The term ‘just and equitable’ is thus not construed ejusdem generis;
instead it should be interpreted as intended, has been and should continue to
E be, general. How or when it would be just and equitable to wind-up a
company is necessarily a fact-sensitive exercise, its parameters and
application largely dependent on perspective and context; the breadth of this
statutory jurisdiction is actually illustrated through the many case scenarios
or context and should never be read down or narrowly. As opined in Chow
F Kwok Chuen, “Ultimately, whether equity should intervene must necessarily
depend on the justice of the case”.
[46] See helpful discussions on this circumstance in Chapter 29 of Corporate
Powers and Accountability (3rd edn, LexisNexis, 2018) by Loh Siew Cheang.

G
[47] TEH Holdings and TEH Paper were wound up because the learned
judge had found illegality and contraventions of several laws; that it was just
and equitable to do so under such conditions. And, this was despite
disbelieving the petitioner and his witness and after finding that the petitions
were an abuse of court process. Putting aside these matters for a moment,
dealing just with the matter of illegality, we would say that given the expanse
H
of the ‘just and equitable’ ground, it is certainly wide enough to encompass
illegality and contraventions of the law as the basis for winding-up a
company which is complicit in such illegality. That is not to say that
illegality ipso facto results in winding-up.

I
[48] In the first place, this was not the basis of complaints in any of the
petitions. The complaints were really footed under s. 218(1)(f) with (i) to
re-emphasise the complaint, that in the particular factual circumstances of
346 Current Law Journal [2021] 2 CLJ

s. 218(1)(f), it would be just and equitable that TEH Holdings, TEH Paper A
and PCSB be wound up. All those complaints however, were rejected by the
learned judge; the issue of illegality and its factual basis are entirely those of
the learned judge.
[49] Although the court acts where there is illegality, it must be where it
B
is ex facie and where facts in relation to the illegality or contraventions are
uncontroverted. The court will not hesitate to wade in when there is such
ex facie illegality as it will never lend its aid to “a man who founds his cause
of action on an immoral or an illegal act” (ex dolo malo non oritur actio), first
propounded by Lord Mansfield in Holman v. Johnson (1775) 1 Cowp 341 in
a claim brought by a plaintiff seeking to enforce a contractual debt from a C
defendant to whom he had sold tea. The contract of sale was completed in
Dunkirk and the defendant smuggled the tea back to England where such
contracts were then prohibited. In rejecting the defendant’s argument that the
plaintiff was not entitled to enforce the contract, Lord Mansfield explained
that the principle evolved not to assist a defendant who is a party to such D
contract but because of the general principles of policy.
[50] Our courts, without exception, have always set their face against
illegality, even if it is not pleaded. This is readily seen in a firm line of
authorities including Lim Kar Bee v. Duofortis Properties (M) Sdn Bhd [1992]
3 CLJ 1667; [1992] 1 CLJ (Rep) 173; [1992] 2 MLJ 281; Thong Foo Ching E
& Ors v. Shigenori Ono [1998] 4 CLJ 674; [1998] 4 MLJ 585; subscribing to
a view in Keng Soon Finance Bhd v. MK Retnam Holdings Sdn Bhd & Anor
[1989] 1 CLJ 897; [1989] 1 CLJ (Rep) 1; [1989] 1 MLJ 457 where the Privy
Council inter alia held:
It is well established as a general principle that the illegality of an F
agreement sued upon is a matter of which the court is obliged, once it
is appraised of facts tending to support the suggestion, to take notice
ex proprio motu and even though not pleaded (see e.g. Edler v. Auerbach) for
clearly, no court could knowingly be party to the enforcement of an
unlawful agreement.
G
[51] However, it must not be forgotten that it is a matter of good policy and
proper administration of justice that a clear divide exists between the law of
crimes and the law of civil penalties and remedies; the applicable burden and
standard of proof are obviously different let alone the right to prefer a charge
for the various offences identified by the court in these appeals. This is an H
important aspect that appears to have escaped the attention of the learned
judge, and which was highlighted recently in Liputan Simfoni Sdn Bhd
v. Pembangunan Orkid Desa Sdn Bhd [2019] 1 CLJ 183; [2019] 4 MLJ 141.
This court noted the view expressed by Lord Toulson in Patel v. Mirza [2017]
1 All ER 191, SC, where His Lordship cited Devlin J in St John Shipping
I
Corporation v. Joseph Rank Ltd [1956] 3 All ER 683 when warning ‘of the
danger of overkill and whether public policy is well served by driving from
the seat of judgment everyone who has been guilty of a minor transgression’:
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 347

A [108] The integrity and harmony of the law permit – and I would say
require – such flexibility. Part of the harmony of the law is its division of
responsibility between the criminal and civil courts and tribunals. Punishment for
wrongdoing is the responsibility for the criminal courts and, in some instances,
statutory regulators. It should also be noted that under the Proceeds of
Crime Act 2022 the State has wide powers to confiscate proceeds of crime,
B whether on a conviction or without a conviction. Punishment is not generally
the function of the civil courts, which are concerned with determining private rights
and obligations. The broad principle is not in doubt that the public interest requires
that the civil courts should not undermine the effectiveness of the criminal law; but
nor should they impose what would amount in substance to an additional penalty
disproportionate to the nature and seriousness of any wrongdoing. ParkingEye is a
C
good example of a case where denial of claim would have been
disproportionate. The claimant did not set out to break the law. If it had
realised that the letters which it was proposing to send were legally
objectionable, the text would have been changed. The illegality did not
affect the main performance of the contract. Denial of the claim would
D
have given the defendant a very substantial unjust reward. Respect for the
integrity of the justice system is not enhanced if it appears to produce
results which are arbitrary, unjust or disproportionate. (emphasis added)
[52] We can only re-emphasise this point. The civil courts when
determining private disputes including petitions to wind-up a company by
E
one of its shareholders ought not to conflate any supposed wrong-doings of
its directors with those of the company itself giving rise to potential issues
of double jeopardy if the civil courts were to impose penalty or mete out
orders addressing the wrong-doings; more so when one examine the terms of
s. 218 itself. We will return to this aspect shortly.
F [53] But, for now, there is also another critical factor which appears to have
been overlooked by the learned judge, and that is before striking down
agreements, voiding arrangements or winding-up corporations, the court
must be satisfied that the illegality or the contraventions of law is related to
or bear sufficient nexus to the activities or business of the company and/or
G
for which the company was incorporated. Not all breaches of statutory
requirements resound in winding-up a company even if the breach attracts
criminal sanctions; otherwise there will be chaos in commerce and business.
This was cautioned by the Supreme Court in Beca (M) Sdn Bhd v. Tang
Choong Kuang & Anor [1986] 1 CLJ 20; [1986] CLJ (Rep) 64; that “Not every
breach of a statutory prohibition would render an agreement illegal or void
H
though such breach may attract criminal penalty”.
[54] The relevant statute complained of must be carefully examined, its
purpose or object determined, before the court can conclude one way or
another if the contract, act or deed in question is invalidated by such
I
contravention. By way of illustration, take the case of a director who is
incompetent to fill such role by reason of insolvency (as in the case of an
undischarged bankrupt) or perhaps has a criminal conviction involving
348 Current Law Journal [2021] 2 CLJ

bribery, fraud or dishonesty. See s. 130A of the old Companies Act 1965 and A
now s. 198 of the Companies Act 2016 (Act 777). It will be noted that any
person who contravenes s. 198 is under s. 198(7) “commits an offence and
shall, on conviction, be liable to imprisonment for a term not exceeding five
years or to a fine not exceeding one million ringgit”. Is the company where
such persons are its directors thereby to be wound up by reason of such B
contravention? We say not. Even s. 198(3) of the Companies Act 2016
provides that such “disqualified persons” may be appointed or hold office as
a director, with leave of the official receiver or the court.
[55] We find support for this view in Curragh Investments Ltd v. Cook [1974]
3 All ER 658, a case where the purchaser of land was resisting a completion C
of sale on the ground that the seller company was not registered in Great
Britain as required under s. 407 of the Companies Act 1948 where Megarry
J opined:
... I accept of course, that where a contract is made in contravention of
some statutory provision then, in addition to any criminal sanctions, the D
courts may in some cases find the contract itself is stricken with illegality.
But for this to occur there must be sufficient nexus between the statutory
requirement and the contract. If the statute prohibits the making of
contracts of the type in question, or provides that one of the parties must
satisfy certain requirements (e.g. by obtaining a licence to registering some
E
particulars) before making any contract of the type in question, then the
statutory prohibition or requirement may well be sufficiently linked to the
contract for questions to arise of the illegality of any contract made in
breach of the statutory requirement. But it seems to me a far cry from that
to the breach of statutory requirements which are not linked sufficiently
or at all to the contract in question. There are today countless statutory
F
requirements of one kind or another, yet I cannot believe that an
individual or a company who is in breach of any of these requirements
(for example, under the Factories Act) is thereby disabled from making a
legal contract for the sale of land or validly entering into covenants for
title. To take an example that was mentioned in argument, I do not think
that it could seriously be contended that every contract made by an G
English company, whether for the sale of land or otherwise, is illegal, if
when it is made, the company is liable to prosecution and fine for failing
to comply with some provision of the Act of 1948, for example, for not
filing its annual returns in due time. Such a doctrine, for which I can see
no justification, would result in chaos. If in the present case I assume
that the vendor is in demonstrable breach of sections 407 and 416, I am H
still quite unable to see how this provides any ground for contending that
the covenants for title that the vendor must give will be impaired by
illegality. The breach of the law and the covenants for title seem to me
to be wholly unconnected. (emphasis added)
[56] This sufficient connection or nexus aspect as enunciated in Curragh I
Investments was also adopted in Liputan Simfoni (supra) para. 123 (CLJ);
para. 115 (MLJ):
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 349

A [123] In Patel, the English Supreme Court had the opportunity to evaluate
the state of the common law in respect of illegality in contracts, as found
on the maxim of Lord Mansfield in Holman v. Johnson [1775] 1 Cowp 341
that ‘no court will lend its aid to a man who founds his cause of action
upon an immoral or illegal act’ and the ‘reliance principle’ as stated in
Bowmakers Ltd v. Barnet Instruments Ltd [1944] 2 All ER 579 and Tinsley
B v. Milligan [1993] 3 All ER 65. In that case, the principal issue was whether
a party to a contract to carry out an illegal activity was precluded from
recovering money paid under the contract from the other party under the
law of unjust enrichment. At p. 220 of the report, Lord Toulson had this
to say:
C [101] That is a valuable insight, with which I agree. I agree also
with Professor Burrows’ observation that this expression leaves
open what is meant by inconsistency (or disharmony) in a
particular case, but I do not see this as a weakness. It is not a
matter which can be determined mechanistically. So how is the
court to determine the matter if not by some mechanistic process?
D In answer to that question I would say that one cannot judge
whether allowing a claim which is in some way tainted by illegality
would be contrary to the public interest, because it would be
harmful to the integrity of the legal system, without (a) considering
the underlying purpose of the prohibition which has been transgressed,
(b) considering conversely any other relevant public policies which may be
E rendered ineffective or less effective by denial of the claim, and (c) keeping in
mind the possibility of overkill unless the law is applied with a due sense
of proportionality. We are, after all, in the area of public policy. That trio
of necessary considerations can be found in the case law.
...
F
[109] The courts must obviously abide by the terms of any statute,
but I conclude that it is right for a court which is considering the
application of the common law doctrine of illegality to have regard
to the policy factors involved and to the nature and circumstances of the
illegal conduct in determining whether the public interest in preserving the
G integrity of the justice system should result in denial of the relief claimed. I
put it in that way rather than whether the contract should be
regarded as tainted by illegality, because the question is whether
the relief claimed should be granted.
(emphasis added)
H [57] We, too, agree that this trio of considerations – the purpose of the
statute; whether any other policy may be undermined or disaffected and the
need to exercise some measure of restraint, is necessary and should always
be weighed before striking down commercial contracts or as in the case of
these appeals, winding-up of corporations on the ground of illegality even if
I there are criminal penalties involved in the contraventions. After all, we are
in the area of public policy, a term which is not statutorily defined under the
Companies Act 1965 or even the Contracts Act 1950. These tests are amply
illustrated in Liputan Simfoni. Citing Lori Malaysia Bhd v. Arab-Malaysian
350 Current Law Journal [2021] 2 CLJ

Finance Bhd [1999] 2 CLJ 997; [1999] 3 MLJ 81; and The Co-Operative A
Central Bank Limited (in receivership) v. Feyen Development Sdn Bhd [1995]
4 CLJ 300; [1995] 3 MLJ 313, the Federal Court added that case law “seems
to suggest that the courts should be slow to find illegality and strike down
commercial transactions”. See also Tekun Nasional v. Plenitude Drive (M) Sdn
Bhd & Other Appeals [2018] 8 CLJ 686; [2018] 4 MLJ 567, applying Lori, B
Co-operative Central Bank Ltd (In Receivorship) v. Feyen Development Sdn Bhd
and the High Court of Australia’s decision in Yango Pastoral Co Pty Ltd &
Others v. First Chicago Australia Ltd & Others [1978] 139 CLR 410.
[58] Liputan Simfoni concerned competing claims between an innocent
landowner and a purchaser of land which was the subject matter of a C
fraudulent transaction under s. 340(2) of the National Land Code. The facts
were these.
[59] An imposter company managed to get the land office to issue a
replacement title on the pretext of having lost the original. The original was
D
with the plaintiff, the respondent at the Federal Court, at all time. The
imposter company sold the land to the second defendant on 23 January 2006
for RM680,000. After it was registered as owner, the second defendant sold
the land to the appellant (first defendant), for RM900,000 on 25 August 2006
with an additional RM870,000 stated as for earthworks. On 25 September
2006, just before completion of the sale, the imposter company entered a E
private caveat alleging that the second defendant had not settled the full
purchase price. On 28 December 2006, the second defendant presented a
notice to withdraw the caveat together with a memorandum of transfer. On
21 February 2009, the imposter company urged the land office to enter a
Registrar’s caveat on the ground that its caveat was removed without its F
knowledge. As a result, the appellant (first defendant) could not be registered
as the owner.
[60] Meanwhile, the respondent owner of the land upon finding its land
being cleared did a land search and learnt of the various transfers and
registrations. The respondent made a police report denying any sale and G
stating that the original issue document of title was still in its possession.
Proceedings then ensued which led to the removal of the Registrar’s caveat
upon an application by the second defendant. Unfortunately, the respondent
was never enjoined as party to nor notified of the removal proceedings. After
the application was allowed by the court, the appellant (first defendant) was H
registered on 11 February 2010 as owner, with effect from the date of the
original presentation in December 2006.
[61] On 7 September 2012, the respondent entered a private caveat but the
land office who was cited as the third defendant removed it upon learning
that the respondent’s director who attested the relevant documents in support I
was a bankrupt at the relevant time. In February 2013, the respondent sued
seeking for, inter alia, declarations that the transfers of the land are void ab
initio and for a restoration of title to the land.
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 351

A [62] The respondent’s claim was allowed by the High Court and confirmed
by the Court of Appeal. The High Court found, inter alia that the appellant’s
sale and purchase agreement was void ab initio for violating s. 24(b) of the
Contracts Act 1950 as it had the effect of evading the payment of real
property gains tax on the undeclared profit and the payment of stamp duty
B on the additional consideration for earthworks.
[63] The High Court had relied on Thong Foo Ching & Ors v. Shigenori Ono
(supra) and Palaniappa Chettiar v. Arunasalam Chettiar [1962] 1 LNS 115;
[1962] 1 MLJ 143 in holding that an agreement depriving the Government
of its revenue was illegal and unenforceable as it was contrary to public
C policy. The Federal Court noted that in Thong Foo Ching, the respondent
who was a foreigner had been advised by solicitors that the purchase of two
pieces of land required the approval of the foreign investment committee, as
set down in the Government’s ‘guidelines for the regulations of acquisitions
of assets, mergers and takeovers’. This meant incurring additional payment
D of taxes and stamp duty. To circumvent the guidelines, two separate
agreements were executed leading to loss of revenue from real property gains
tax and stamp duty for the Government.
[64] At first instance, the High Court inter alia held that the question of
illegality did not arise by the mere execution of the two agreements. The
E Court of Appeal disagreed, holding that the two agreements “if allowed to
be enforced, would defeat Act 169 and Act 378”; that is, the Real Property
Gains Tax Act 1976 and the Stamp Act 1949 respectively. This, in turn,
would fall within the ambit of s. 24(b) of the Contracts Act 1950. The Court
of Appeal cited Datuk Ong Kee Hui v. Sinyium Mutit [1983] 1 MLJ 36 where
F the Federal Court inter alia held that “... the arrangement between the
respondent and his party in the matter of his remuneration and resignation
is illegal and the illegality is not only with regard to its performance but in
its very inception, such arrangement is therefore void ab initio and the parties
are outside the pale of the law.”
G [65] Similarly, in Palaniappa Chettiar, the father had transferred to his son
40 acres of rubber land that he had newly purchased. This was to avoid
controls emplaced under the Rubber Regulations (No. 17 of 1934) which
would have otherwise applied to his total holdings of over 100 acres. When
the son subsequently refused to execute a power of attorney in respect of the
H 40 acres so that the father could sell the land, the father sued seeking a
declaration that the son held the 40 acres on trust for him and that the land
should be retransferred back to him. The claim was dismissed on the
principle of ex turpi causa non oritur actio. This was affirmed by the Privy
Council.
I [66] The Federal Court recognised that there had been instances where the
court had refused to invalidate contracts on the ground of illegality. In
Kin Nam Development Sdn Bhd v. Khau Daw Yau [1984] 1 CLJ 347; [1984]
352 Current Law Journal [2021] 2 CLJ

1 CLJ (Rep) 181; [1984] 1 MLJ 256, and Chang Yun Tai & Ors v. HSBC Bank A
(M) Bhd & Other Appeals [2011] 7 CLJ 909, to invalidate the relevant
contracts; and in Asia Television Ltd & Anor v. Viwa Video Sdn Bhd & Other
Cases [1984] 2 CLJ 80; [1984] 1 CLJ (Rep) 72; [1984] 2 MLJ 304, even on
a grant of an Anton Piller order related to a claim for infringement of
copyright. B

[67] In Kin Nam Development, the Federal Court upheld the validity of the
sale and purchase agreements for the sale of houses after finding that there
was nothing illegal about the consideration or object of such agreements
under s. 24 of the Contracts Act 1950 although the developer “may well be
guilty of an offence under r. 17 for contravening r. 11(1) of the Housing C
Developers (Control and Licensing) Rules 1970”. This was after the Federal
Court found that those “Rules do not affect the validity or otherwise of the
contracts which the developer has signed with the purchasers.” This
approach was again adopted thirty years later in Chang Yun Tai where the
issue was whether the financing agreements related to the purchase of the D
properties were also void for illegality and/or contrary to public policy
where the sale and purchase agreements were themselves illegal and/or
contrary to public policy. In this regard, this court citing Kin Nam
Development held that the financing agreements were valid despite such
illegality: E
[27] It is to be noted there is no illegal object or consideration under the
financing agreement. It strains credulity to suggest that the consideration
or object of a loan facility to advance money to the appellants to enable
them to purchase the agreements is unlawful. This is unlike providing
financing for the purchase of illegal drugs or illegal arms. The object or
consideration of the SPA for the sale of the apartments is also not F
unlawful.
[68] The approach is applied even in respect of interlocutory applications.
In Asia Television, the High Court had granted an Anton Piller order to the
appellants who claimed copyright in certain films in video cassette form,
G
something popular then in the 80s. Cassettes, documents and various other
documents were seized from the respondent’s premises under the order. On
an inter partes hearing, the order was set aside when it was shown that the
appellants did not have certificates of approval for their publication of such
films as required under s. 9(2) of the Films (Censorship) Act 1952 in which
case, the appellants did not acquire any copyright under the Copyright Act H
1969 in the films to begin with. Under s. 15(1)(a), it is an offence for which
a penalty has been prescribed, to exhibit, sell, hire or distribute any film if
a certificate is not issued under s. 9(2) or 9A(2). The Federal Court disagreed,
finding that the non-compliance or infringement of the Films (Censorship)
Act 1952 did not inhibit the operation of s. 6(1)(a) of the Copyright Act 1969 I
on the acquisition of copyright.
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 353

A [69] Eusoffe Abdoolcader FJ, speaking for the court said:

The correlation between the two legislative enactments must in our view
depend on whether there is a nexus between them. Mr. Davidson agrees
in answer to a question we put to him that such nexus is a necessary
prerequisite and that the burden is on the respondents to establish this
B as between the two Acts, In Curragh Investments Ltd v. Cook [1974] 1 WLR
1559 it was held that for a contract to be illegal as being made in
contravention of some statutory provision there has to be a sufficient
nexus between the statutory requirement and the contract, and that where
statutory requirements were not linked sufficiently, or at all, to the
contract no question of its illegality arose.
C
…
On a careful examination of the relevant and requisite statutory
provisions and a consideration of any interplay between them we can find
no sufficient nexus such as would satisfy the test laid down in Curragh
Investments Ltd v. Cook (supra). There is no prohibition in either of the Acts
D which would preclude the appellants from acquiring copyright if they are
otherwise qualified although they may be in breach of the provisions of
the Films (Censorship) Act which is concerned only with criminal liability
and provides a penalty for breach of its relevant provisions. If it were
otherwise so as to result in the defeasance of the appellant’s rights under
the Copyright Act in this case, then it would be equally logical to deprive
E
a person of his rights under that court if he commits an offence of strict
or vicarious liability, such as for instance an offence under the excise laws,
without any intention or mens rea.
In the light of the matters we have adumbrated we accordingly find that
non-compliance with the provisions of the Films (Censorship) Act does
F not affect the acquisition of copyright under the Copyright Act. Any
infringement of the provisions of the former Act attracts the criminal
penalty provided for therein, but if this were also to result in defeating
the appellants’ rights under the Copyright Act the implications in the
matter of economic loss would far exceed the penalty imposable for
contravening the censorship requirements of the earlier Act. As we have
G pointed out there is no express or implied prohibition linking the
respective requirements of the two statutes and accordingly no nexus to
justify reading them conjunctively and importing the requirements of one
as a condition precedent to the operation of the other.
[70] Going back to Liputan Simfoni, the two legislations involved were the
H Stamp Act 1949 and the Real Property Gains Tax 1976; and the Federal
Court examined their respective purpose, whether such object had been
compromised by or in the appellant’s SPA before concluding in the negative:
[125] Having carefully considered the authorities cited by the parties, we
are inclined to agree with the contention of learned counsel for the first
I defendant that the second SPA is not void. We agree with the view that
the courts should be slow in striking down commercial contracts on the
ground of illegality. The compliance with the Stamp Act 1949 and the Real
354 Current Law Journal [2021] 2 CLJ

Property Gains Tax 1976 are not the prerequisite for the second SPA to A
be enforceable. There is no prohibition under the two Acts to preclude the
first defendant from acquiring rights to the subject land. The Stamp Act
1949 provides a penalty for breach of its provisions. Similarly, under the
Real Property Gains Tax Act 1976 there are penalties for breach of its
provision. In addition, it is provided that tax due and payable may be
recovered by the Government by civil proceeding as a debt to the B
Government. The object of the two Acts is to raise revenue. There is
therefore no sufficient nexus such as would satisfy the test laid down in
Curragh Investment Ltd. The first defendant’s infringement of the two Acts
therefore did not prevent it from suing on the contract which is legal.
[71] This approach of examining the object or purpose of the relevant C
legislation before invalidating an agreement or arrangement is not new. As
seen from Liputan Simfoni; it was already applied in Kin Nam and even
earlier in Beca (M) Sdn Bhd (supra). Beca is yet another authority of how the
intent of legislation needs to be carefully examined before ruling on the issue
of illegality. This was a case on the enforceability of a provisional agreement D
to purchase three units of flats where the unlicensed developer collected
deposits or booking fees in excess of what was allowed under the then
Housing (Control and Licensing of Developers) Rules 1980 (HDR 1980)
made under the Housing (Control and Licensing of Developers) Enactment
1978 (the Enactment). The Sessions Court at Kota Kinabalu found the
E
provisional agreement to be valid. Although the developer’s appeal was
dismissed on another ground, the High Court had held the provisional
agreement to be illegal. It is in this respect that we find the deliberations of
the Supreme Court relevant to these appeals.
[72] Agreeing with the Sessions Court, the Supreme Court held inter alia F
that in considering the effect of breaches of the HDR 1980 on the provisional
agreement, it was necessary to consider the object of the agreement, whether
the Enactment and/or the HDR 1980 prohibited the making of such
agreements; that the court should be slow to imply and infer any statutory
prohibition and should only do so where the implication is clear:
G
... Whether an agreement is implicitly forbidden depends upon the
construction of the statute, and for this purpose no one test is decisive.
Persons who deliberately set out to break the law cannot be expect to be
aided in a court of justice. It would be a different matter when the law
is unwittingly broken. An agreement for the sale of say, frozen food, is
not to be considered to be illegal or void merely because the premises in H
which the frozen food is sold does not comply with the law. We recognise
that each case must be decided by reference to the relevant statute.
[73] After examining the case authorities and the intent of the statute, the
Supreme Court concluded that consensus of authorities suggested that the
contravention of any of the Rules only rendered the developers liable to a I
penalty but did not invalidate any agreement entered into by the developers
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 355

A and the buyers; that there was no distinction between provisional agreements
and other agreements, that such agreements were valid and binding but
voidable at the behest of the buyers:
The appellants as developers should know that they could not carry on
the business of housing development unless they had obtained a licence.
B Yet, they acted as if they had the necessary licence by collecting deposit
from and entering into the provisional agreement with buyers who had
no reason to doubt the bona fide of the developers. The buyers could not
be expected to know that the developers had no licence at the time. It
would be expecting too much of the buyers to say that they ‘had the
means of discovering the truth with ordinary diligence’ to quote the words
C of s. 19 of the Contracts Act 1950 ...
Having regard to the scope and purpose of the Enactment and the Rules
made thereunder, they are clearly made for the benefit of a class of
people, namely, the house buyers. The duty of observing the law is firmly
placed on the housing developers for the protection of the house buyers.
D Hence, any infringement of the law would render the housing developers
liable to penalty on conviction. Although the developers have to comply
with a number of statutory requirements we are unable to find anything
in the Enactment or the Rules which would invalidate an agreement or
contract as a result of any breach of the Enactment or the Rules. On the
facts of this case we are of the view that the transaction is valid until it
E is avoided. The buyers had elected to avoid the agreement and claimed
for the return of the deposit.
... So the avoidance of the agreement would cause inconvenience and
injury to innocent members of the public. To declare the agreement
binding but voidable at the instance of the buyers would provide no
F incentive to the developers to do any act before obtaining a proper licence.
[74] It is interesting to note that in Beca, the Supreme Court had cited
Daiman Development Sdn Bhd v. Mathew Lui Chin Teck & Another Appeal
[1980] 1 LNS 180; [1981] 1 MLJ 56 where the Privy Council similarly
examined the then Housing Developers Control and Licensing Rules 1970,
G made under the Housing Developers (Control and Licensing) Act 1966, to
see if the Act or the Rules contained any provisions invalidating contracts
which did not comply with the Rules.
[75] In Daiman Development, the respondent purchaser had moved the court
for an order of specific performance to compel the appellant developer to
H complete the sale to him of a semi-D house at the price appearing in the
“booking pro-forma”. The sale was made before the relevant building plans
had been approved, a fact which the respondent purchaser was aware of at
the time of signing the booking pro-forma and payment of a booking fee. The
appellant developer increased the purchase price after the approval was
I obtained and when the purchaser refused to pay the increased price, the
appellant informed the purchaser that it would cancel the booking and return
356 Current Law Journal [2021] 2 CLJ

the booking fee. The purchaser went to court to compel the developer to A
complete the sale under the booking pro-forma. The appellant’s main defence
was an absence of contract as the formal contract had yet to be signed.
[76] The High Court, Federal Court and the Privy Council spoke almost
with one voice in allowing the purchaser’s claim and ordering specific
B
performance, recognising the “booking pro-forma was a firm contract”.
[77] The Privy Council, however took the point on the application of the
HDA and HDR further after noting that the Federal Court had concluded that
the appellant “was bound by the rules” and “only details may be inserted
into the further agreement”; that the provisions in the pro-forma allowed
C
variation in two specified respects: price and size of subject land. After
examining the HDA and the HDR, Sir Garfield Barwick, delivering the
judgment of the court said as follows:
Rule 17 provides that contravention by a licensed housing developer of
any of the rules shall be an offence and render the developer liable on D
conviction to a fine or, for a second or subsequent offence, a fine or
imprisonment or both. Nothing in the rules expressly purports to
invalidate a contract which does not comply with the provisions of the
rules.
The rules impose no penalties on a purchaser who enters into a contract
which does not conform to the requirements of the rules. Clearly, r 12 E
does not exclude the possibility of the contract of sale containing terms
and conditions other than such as are designed to effectuate the
requirements of the rules. Rule 12 requires a contract to contain within
its terms the stipulated provisions. It is observable that r. 12 does cover
much of the relationship of vendor and purchase in relation to the
F
purchaser and is mandatory so far as the appellant is concerned.
[78] It is thus, quite evident that the same consistent approach has been
adopted and applied when dealing with alleged contraventions of law as a
basis of nullifying agreements, that the particular legislation must always be
carefully examined before any final pronouncement may be properly made. G
[79] Thus far we have examined the position of the effect, implication and
impact of contraventions in the context of agreements entered into between
contracting parties where one party has approached the court for redress. Is
the position any different when that complaint becomes the ground for
liquidating a corporate sole which is solvent and for which the other grounds H
in s. 218 of the Companies Act 1965 have been expressly rejected? More
particularly, in the context of the present appeals, where the winding-up of
the solvent company is ordered by the court in the purported exercise of its
discretion under the “just and equitable” ground in s. 218(1)(i) of the
Companies Act 1965 due to the presence of illegality or contraventions of I
law.
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 357

A [80] Aside from citing the basic principle that the court should act when
confronted with illegality, the learned judge had relied on the High Court
decision of Hj Afifi Hj Hassan v. Norman Disney & Young Sdn Bhd & Ors [2013]
1 LNS 339; [2014] 7 MLJ 738 as warranting that exercise of discretion, that
a company may be wound up on the just and equitable ground where there
B is illegality – see paras. 235 to 237. That decision was affirmed on appeal
and leave to appeal to the Federal Court was allowed on the question of
whether a litigant who is in pari delicto to the illegal act complained of may
be treated as an exception on the general principle in Holman v. Johnson
[1775] 1 Cowp 341. It is the decision on the winding-up on the just and
C
equitable ground due to illegality that is of focus here.
[81] With respect, this decision is not authority for the proposition that the
court may wind-up a company on the ground of illegality or contraventions
of law without more. On the contrary, had the case been examined carefully,
it would become readily apparent that the Court of Appeal was in fact
D applying principles as discussed above – see Foo Jong Wee & Ors v. Hj Afifi
Hj Hassan [2016] 6 CLJ 696.
[82] The learned Judicial Commissioner in that case had wound up the
company, Norman Disney & Young Sdn Bhd after being satisfied that “the
carrying on of business by the company is illegal and in breach of the
E statutory requirements of the Registration of Engineers Act 1967”; the only
issue was whether the petitioner, who was party to the illegality should be
‘assisted’ by the court. The facts there show that the company, an engineering
consultant firm based in Australia, through a restructuring exercise, an
“elaborate scheme” involving the execution of no less than nine agreements,
F all with the object of allowing the Australian company, to retain voting
control over the company set up on our shores, through the use of power of
attorney. As explained by the Court of Appeal:
By that arrangement, on the face of the register the company became a
Bumiputera majority company and the company appeared to comply with
G the REA 1967 since all shareholders were Malaysian professional
engineers.
[83] The reality was otherwise. Amongst the grounds moved for winding-
up the company was the allegation that there was “deception and
misrepresentation by the directors of the company to the authorities, clients
H and public by presenting the company as owned and controlled by a
Bumiputera.” The Court of Appeal affirmed the decision of the High Court,
agreeing with the respondent that “a contract which is designed to
circumvent a statute and to deceive a public authority is illegal in nature”
(para. 14); that “conducting business in this country through ‘Ali Baba’ type
I of companies is without doubt illegal as being contrary to public policy”
(para. 15); that a winding-up will be ordered “where a company was formed
to carry out fraud, or to carry on an illegal business”; that is, fraud in
inception or what was referred to as a “bubble company” (para. 28).
358 Current Law Journal [2021] 2 CLJ

[84] We have no reason to disagree with that approach and that a company A
may, where it is set up with a view to “rob the public of so much money
and put it into (their) own pockets” be wound up within the just and equitable
ground in s. 218(1)(i) of the Companies Act 1965. As opined by Sir W Page
Wood VC in In Re London and County Coal Company [1866] LR 3 Eq 355:
[the company] is a mere contrivance, under the guise of an agreement for B
the advantage of the company, to plunder the public to this extent. In that
state of things, it is expedient alike for the public, the petitioner, and these
gentlemen themselves, who have paid not the least regard to justice and
propriety, that the company should be at once abolished.
[85] We would add that in the matter of liquidation of a corporate sole, C
winding-up orders should only be granted where the cessation of illegality
complained of can only be achieved through or by the dissolution of the
company itself, that there is no other avenue or recourse available but to
wind-up the company in order to stop the illegality. This is also apparent
from In re London and County Coal Company (supra) where Wood VC had D
remarked that “the parties might find a more beneficial mode of
extinguishing it than through the medium of a winding-up order”; however
His Lordship agreed to “extinguish” the “wretched concern” and went on to
pronounce that “a winding-up order I shall make”. See also Re Thomas
Edward Brinsmead & Sons Ltd [1897] 1 Ch 45, 406, a company which was E
initiated to perpetuate a fraud by passing off its products as those of John
Brinsmead & Sons who were renowned piano makers.
[86] On the facts in these appeals, none of the companies were formed with
illicit purpose or intent of circumventing any law, be it the Companies Act
1965, Income Tax Act 1967 or the Penal Code. Furthermore, it was not the F
suggestion of the petitioner or the families that he fronted, and it would be
highly improper to attempt to change his stance midstream to claim
otherwise just because the learned judge had found the alleged contraventions
to be matters of concern that His Lordship could not ignore. The object and
activities of the TEH Paper and TEH Holdings and even PCSB are not in G
question or under scrutiny; and this is materially different from the position
in Foo Jong Wee & Ors v. Hj Afifi Hj Hassan, In re London and County Coal
Company and Re Thomas Edward Brinsmead & Sons Ltd. This important point
appears to have escaped the attention of the learned judge and the Court of
Appeal which affirmed the decision on appeal. Where companies are
H
fraudulently established and are themselves engines of fraud, their continued
existence must be immediately apprehended. Winding-up, though draconian,
is necessary in order to put an end to that unlawfulness. And, it is in that
sense that the court will not hesitate to act.
[87] In the context of these appeals, three statutes were identified by the
I
learned judge, namely Companies Act 1965, Income Tax Act 1967 and the
Penal Code to have been violated. Each of these must be examined against
their specific intent and in the context of s. 218(1)(i); and against s. 218(1)
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 359

A itself. While the learned judge cited the relevant provisions, His Lordship did
not ask himself the necessary question of intent and sufficiency of nexus or
what we had earlier referred to as the trio considerations.
[88] The learned judge had identified contraventions of ss. 136, 169, 171
and 364 of the Companies Act 1965; and ss. 193, 199 and 200 of the Penal
B
Code and s. 114 of the Income Tax Act 1967. The provisions of the Penal
Code and the Income Tax Act are actually related to the contraventions of
the Companies Act 1965. Section 169 read with s. 171(1) of the Companies
Act 1965 concerns the duty of the directors to produce financial reports
which are accurate and give a true and fair view of the state of affairs of the
C company; s. 364(2) deals with where the directors made false statements on
the companies’ accounts; and s. 136 is where the directors used company
funds to pay their income tax.
[89] In relation to these contraventions, the court should take into account
the provisions of s. 218(1) and the other provisions of the Companies Act
D
1965; as well as the intent of the Companies Act 1965. In the context of
winding-up, s. 218 has already prescribed the particular contraventions
under the Companies Act 1965 upon which a company may be wound up.
These grounds should not be expanded. Where the ground is an allegation
of contravention(s) of the Companies Act 1965 itself, there are already
E ss. 218(1)(b), (c) and (d). These are express provisions on the specific type
or nature of contraventions of the Companies Act 1965 that would merit a
winding-up. Had it been the intention that any or all contraventions of the
Companies Act 1965 would warrant a winding-up, there would have been
some express provision to that effect. Instead, selected contraventions were
F identified and there are good reasons for such provisions. Sections 218(1)(b),
(c) and (d) are where the statutory reports are not at all lodged or the statutory
meetings even held; where the company does not even commence business
within a year after its incorporation or has suspended its business for a whole
year; or where its members has fallen below two in number.
G [90] These are prescribed situations where it would be just and equitable
to wind-up such companies and the court should always be slow to import
into the just and equitable ground the right to wind-up a company for
contraventions of other provisions of the Companies Act 1965 unless such
contraventions can be co-related with any of the other grounds in s. 218(1).
H On the part of the petitioner, it is too late and we agree with learned counsel
for TEH Holdings and TEH Paper that since he had pursued his complaints
under limbs (f) and (i), he cannot now re-characterise his petitions.
[91] Accepting for a moment that there are violations by TSK of the
Companies Act 1965 as identified by the learned judge, the contraventions
I are by TSK personally, whether as director or as an individual, and are not
those of or by TEH Paper and/or TEH Holdings. Again, these companies
were properly set up and they carry on legitimate businesses. The wrongs of
360 Current Law Journal [2021] 2 CLJ

the directors cannot, unless they fall within some ground in s. 218(1), be A
ascribed to the companies themselves to thence form the basis for the
companies themselves to be wound up. That would amount to ‘an overkill’;
almost deploying a “sledgehammer remedy” to deal with matters outside the
intent of s. 218(1) – see Tahansan Sdn Bhd v. Tay Bok Choon [1984] 2 CLJ
224; [1984] 1 CLJ (Rep) 383; [1985] 1 MLJ 58. B

[92] The just and equitable jurisdiction must be exercised carefully and
judiciously, with special regard for the irreversible and drastic nature of a
winding-up as a court-ordered remedy (see Perennial (Capitol) Pte Ltd & Anor
v. Capitol Investment Holdings Pte Ltd [2018] 1 SLR 763. Not only are there
more moderate remedies available, the purported wrongs under the Income C
Tax Act 1967 have been addressed and dealt with by the relevant authorities;
and where they have not, to be dealt with by those charged with the necessary
jurisdiction; or as far as the petitioner is concerned, for him, as a minority
shareholder in both TEH Holdings and TEH Paper, to file an action under
s. 181 of the Companies Act 1965 since the learned judge found that his real D
complaint was of oppression and that he actually wanted his shares bought
out.
[93] Factually, there are also grave concerns on the existence of the
illegalities. As gathered from the above portions of the grounds of judgment,
the contravention and/or illegality pertain to the “family fund and under E
counter-activities”; how monies from the family companies are “siphoned
off” for these purposes and, for some of the directors to pay and/or evade
tax. However, when the allegations are examined, it readily becomes
apparent that there is much uncertainty, vagueness and a paucity of evidence
vital to establish the very existence of the particular contravention, wrong or F
illegality.
[94] Take first the “family fund and/or under counter activities”,
described sometimes as “family account” or “reserve fund” and putting aside
the matter of admissions for a moment, it is actually unclear what the “family
fund” is. This is apparent from the judgment where His Lordship himself G
described the “dealings vis-à-vis the family fund and under counter activities”
as “obscure and murky”; that “there was a marked secrecy about the
details”; and even referring to it as “the elusive fund”. So much so that “right
until the end of the trial, hardly anything was revealed” about both the fund
and/or under counter activities; whether as to its “size … and frequency of H
payout etc.” (see paras. 202, 206). The fund appears to comprise monies
from proceeds of the sale of waste paper which should have properly gone
into the companies’ books but were instead, diverted into the fund and used
by family members for anything from weddings to funerals, education and
just about any other activity or occasion of such nature. I
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 361

A [95] The learned judge further stated “emphatically that the family fund/
under counter activities do not appear to be a new phenomenon and are
likely than not they were in existence during the tenure of the late TSJ who
was the deemed managing director of the Tan Eng Hong Group of
Companies. He was the autocratic leader of the group and was involved in
B the running of the family fund and the under counter activities.” TSJ was the
late father of TCL.
[96] As far as the oral testimonies of the petitioner and his witnesses on
these matters are concerned, the learned judge disbelieved them. This is
amply explained in the judgment and we do not propose to repeat them; nor
C disturb those findings; more so when the same had been affirmed on appeal.
These findings of fact were reached after the learned judge had carefully and
painstakingly evaluated their evidence for credibility, consistency, veracity
and reliability; and on all fronts, their evidence was extremely wanting.
[97] That then leaves the details of the fund and the commission of the
D
contraventions/illegality to documentary evidence. The documentary
evidence comprised the police reports made by the petitioner and TCL, and
the affidavits affirmed by TSK and the SMS sent by TSK to TCL.
[98] The police report made by the petitioner on 28 July 2009 is of little
assistance (pp. 8 - 10 CBD):
E
3. We are in possession of some documentary evidence which show
that the money belonging to one or more of the above 3 companies
may have been dishonestly siphoned off to certain accounts of
individual directors of the companies and/or diverted to the said
directors’ personal accounts thereby depriving the companies and its
F shareholders the money which is rightfully theirs.
4. The directors who may have acted dishonestly in siphoning off and/
or diverting the money belonging to the company are as follows:
(a) Tan Seng Choo
G (b) Tan Seng Kiat
(c) Tan Seng Kow
(d) Tan Kin Seng
Tan Choo Keng, one of the directors of Tan Eng Hong Paper &
H Stationery Sdn Bhd can assist the police in their investigation.
5. As a result of the siphoning off and/or diversion of the companies’
money, based on the available documentary evidence, the
companies have lost an estimated sum of about RM1.5 million each
year.
I 6. Tan Seng Kow, the Group Managing Director has sent an SMS to
Tan Choo Leng, a director of one of the above 3 companies and
a shareholder of Tan Eng Hong Holdings Sdn Bhd, wherein he
362 Current Law Journal [2021] 2 CLJ

(Tan Seng Kow) had admitted that he has siphoned off the money A
belonging to one of the subsidiaries of Tan Eng Hong Holdings Sdn
Bhd called Perusahaan Konkrit Melaka Sdn Bhd.
7. I request the police authorities to investigate into this matter
thoroughly and if there is evidence of any criminal breach of trust
or other criminal wrongdoing on the part of the persons named B
above, to prosecute them.
8. We are prepared to produce and supply the documents in our
possession which show such dishonest acts or wrongdoing as stated
above. Tan Choo Leong, who is an accountant, is prepared to assist
the police in this matter.
C
[99] A substantially similar report made by TCL over a year later, on
21 August 2010 (pp. 22 - 24 CBD) is equally unhelpful. In that report, TCL
complained of TSK “instructed his staff on 16 July 2009 to destroy the
accounting records of the company. As a result, I have lodged a police report
… Tan Seng Kow has admitted in his fourth affidavit of the respondents D
affirmed by him on 11 August 2009 that he had destroyed the files.”
[100] TCL denied knowledge of the “family fund” or “family account” set
up and ran by his late father, and further alleged in the police report that the:
... so-called family account is a mere eye-wash as in the recent EGM of
the company held on 29.7.2010, I, as a family member, director and E
shareholder of the company requested the directors to produce the so-
called family account for inspection. However, they refused to accede to
my reasonable request. As a result it is now confirmed that they have
siphoned off funds for their own benefit and it has been declared as an
illegal aid at the said EGM. Tan Seng Kow’s claim (as stated above) that
F
he was entitled to profit sharing in Perusahaan Konkrit Melaka Sdn Bhd
is a mere excuse to siphon off funds as he himself has confirmed in the
recently held EGM of the company that there was no resolution or
sanction of the shareholders/directors to approve such profit sharing.
I have no knowledge of the illegal and wrongful acts done by the directors
named above. I did not consent to the same nor participated in the same. G
I also did not expressly or impliedly authorise the, to do so.
I am of the opinion that what had been done by the 4 directors amounts
to criminal breach of trust. I request the police authorities to conduct a
thorough investigation into this report and to take such action as provided
under the law against anyone who has/have committed any criminal act H
complained of. I am prepared to supply to the police authorities all the
relevant documents in my possession in relation to this report.
[101] We find these reports bearing the same weight as their oral
articulations; that is, none, especially since the credibility of the makers of
these reports has been severely undermined. I
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 363

A [102] As for the documentary evidence, these too, are not free of problems.
The documents said to support the court’s findings of contravention are
TSK’s affidavit and SMS (phone message – paras. 201 to 203).
[103] The phone message is set out at para. 201 and having looked at it, we
cannot see how it yields an admission “of his folly”:
B
I admit I make mistakes along my way because I felt I deserve more for
my entireness effort in pursuing excellence in my work. I did try to cover
my large amount of pcb and supposedly entitled profit sharing by taking
some steel purchases. I should have done it openly but choose different
way. This is the mistake I have to regret for my life. Sorry.
C
Please work out a nicer exit plan to allow me to complete the recovery
plan for TEH. After all, TEH is too much of my life and let me see it
running at full force, my parting wish. After that, we can work out an
amicable solution to allow me to do what I know best. Please keep this
message confidential. I feel relieve after this confession. Sorry again.
D [104] The admission in the phone message of TSK is an admission of
“making mistakes along the way”, that he had evaded tax in the way he had
taken his share of profits. And, it is only an admission because TSK uses the
word “admit” himself. That is, however, far from amounting to an admission
or confession of contravention of any of the law or the laws identified by the
E High Court; neither can any inference be drawn to that effect – see s. 17 of
the Evidence Act 1950 which deals with admissions and confessions; the
distinction between the two is important in law and in their effect. See also
Evidence - Practice and Procedure (3rd edn) by Augustine Paul, pp. 160, 317;
Law of Evidence – A Commentary (Sweet & Maxwell 2020) by Srimurugan
F Alagan; pp. 96-99; 133-134. Furthermore, admissions under s. 31 of the
Evidence Act 1950, “are not conclusive proof of the matters admitted, but
they may operate as estoppels under the provisions hereinafter contained”.
As explained in M A Clyde v. Wong Ah Mei & Anor [1970] 1 LNS 73; [1970]
2 MLJ 183, and also Randhir Singh Bhajnik Singh v. Sunildave Singh Parmar
(The Administrator Of The Estate Of K Surjit Kaur Gean Kartar Singh (Deceased))
G
[2019] 6 CLJ 771; [2018] 7 AMR 237; [2018] 12 MLJ 166; an admission
“cannot be regarded as conclusive, and it is open to the person who made
it to explain it away…”. If it was not explained, then it may amount to
evidence against the person by whom it was made.

H [105] TSK had explained the perceived admission and the circumstances of
his actions; and as pointed out by learned counsel for the companies, those
explanations were not given proper and due consideration. In this respect,
we have also had a look at TSK’s affidavits and we agree with his counsel
that TSK’s explanations have not been taken into consideration. TSK had
refuted the allegations and had explained that the use of the family fund had
I
ceased upon service of the winding-up petitions; that much of the fund which
had existed and was operated by TSJ during his tenure as the deemed
managing director (mid-1990s, a fact which was acknowledged by the
364 Current Law Journal [2021] 2 CLJ

learned judge) had since ceased in which case, the complaints were stale and/ A
or undermined by laches, waiver and acquiescence. In fact, the shareholders
of TEH Paper and TEH Holdings had resolved at an EGM on 29 July 2010
to cease these practices but the petitioner and TCL’s family had voted against
it – see RCB pp. 220-227.
B
[106] TSK had further explained that the “fund had nothing to do with the
companies and that any wrongful usage (which is denied) do not give rise to
grievances against the company or any of the group companies but only
against the individuals concerned – in their capacity as the directors of the
company. By the same token, the petitioner’s grievances in relation to the
wrongful or unfair usage of the family fund were the grievances of an C
unhappy family member and not of a shareholder or contributory of any
company”. TSK also explained that the “operation of the family fund had
no relation to the running of the company. The channelling of the funds from
the company was a tax evasion issue which the company had to face and be
penalised”; and the company had been penalised. Further, when TSK said D
that the fund belonged to the family and not to the companies, he meant that
it was entrusted to certain family members to manage the fund. In our view,
these are material and relevant considerations which must weigh with the
learned judge in determining the matter of contraventions and illegality.
[107] In any event, His Lordship himself was not convinced on the E
allegations of TSK helping himself to the monies of the companies. At
para. 213, His Lordship held that he was “not entirely convinced that TSK
had illegally taken a 10% profit sharing as TCL’s minutes of the meeting of
the second generation on 4 July 2009 suggests that TSK was entitled to 10%
profit sharing”. Consequently, it was erroneous for the learned judge to then F
proceed to rely on the so-called admissions of TSK to found the existence
of contraventions and illegality which formed the premise for the justifiable
and equitable winding-up of TEH Holdings and TEH Paper.
[108] At best, as was observed by the learned judge, “this phone message
taken together with TSK’s admissions during cross-examination, speaks G
volumes about the egregious way in which TEH Paper and TEH Holdings
(and its subsidiaries) were run”. But, TEH Holdings and TEH Paper were not
wound up because of how they were run. These companies were wound up
because of the court’s conclusions of illegality committed by their directors,
in particular TSK; a situation which factually is tenuous and more so when H
the legal principles are applied.
[109] A final word before we leave this first question. The learned judge had
also found it just and equitable to wind-up TEH Holdings and TEH Paper
so that “a full and independent investigation can be carried out in respect of
the accounts of these two companies”. His Lordship had cited Company Law I
Powers and Accountability by Loh Siew Cheang and William MF Wong;
Kerby Lau in support. The writers had relied on the English Companies
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 365

A Court decision of Bell Group Finance (Pty) Ltd (In liq) v. Bell Group (UK)
Holdings Ltd [1996] 1 BCLC 304 for their proposition that “Where the affairs
of the company have been managed in a confusing way giving rise to grave
suspicion or doubt as to the bona fide of transactions, a winding up order may
be made on the just and equitable ground to enable a full and independent
B investigation to be carried out”.
[110] Having sighted Bell Group, we find that the case is distinguishable in
that the petitioner there had specifically sought for the winding-up of Bell
Group (UK) Holdings Ltd on the ground that the company was unable to pay
its debts and that it was just and equitable that it should be wound up.
C Illegality was not alleged. The respondent opposed the petition on the ground
inter alia that it had no assets. Chadwick J was in no doubt that the company
could still be wound up even though it had no assets and “where the only
purpose of the order would be to enable an investigation to take place into
the company’s affairs”; given that “the book value of some £353m are
D estimated to have nil realisable value.” His Lordship found that s. 125(1) of
the Insolvency Act 1986 “enjoins the court not to refuse a winding-up order
on the ground only that the company has no assets. Lack of assets cannot by
itself be a ground for refusing an order if there is some other reason to make
one.
E [111] Loh Siew Cheang in Corporate Powers and Accountability (3rd edn Lexis
Nexis, 2018) referred to earlier, has since cited the Bell Group decision in
addition to the case of Re Investment Properties International Ltd 41 DLR (3d)
217; an authority for the exercise of discretion to wind-up on the just and
equitable principle where the organisation of the company is through a series
F of confusing and highly suspicious transactions such that voting control was
compromised. Those are not the factual allegations in these petitions; neither
are they the reasons for the winding-up orders.
[112] The decision in Bell Group, as was that in Re Crigglestone Coal Co Ltd
[1906] 2 Ch 327 were cases where winding-up orders were made so as to
G provide the machinery for ascertaining whether the company had any assets;
and this was seen as being advantageous to the unsecured creditors or to
provide a reasonable probability or even a reasonable possibility of
advantage to the unsecured creditors. This seems to be the recent approach
of the English Courts – that the courts need to be satisfied that there is a
H reasonable possibility of a benefit resulting from the winding-up order before
granting the same – see JSC Bank of Moscow v. Kekhman [2014] BPIR 959,
[2015] 1 WLR 3737, paras. 63 & 110; and Re Maud [2020] EWHC 974 (Ch)
at paras. 114 to 117.
[113] Both TEH Paper and TEH Holdings have assets and the investigations
I contemplated by the learned judge was to examine the accounts. With the
huge factual and legal concerns already discussed, we do not find the orders
proper. Particularly too when the petitioner’s real objective was not
366 Current Law Journal [2021] 2 CLJ

consistent with the grounds relied on, and as expressed in Charles Forte A
Investments Ltd v. Amanda [1963] 2 All ER 940, the winding-up order was
really not the proper remedy in the circumstances of the case. The winding-
up order would cause irreparable damage to the interests of other innocent
shareholders, creditors and the like; when the petitioner could seek his
appropriate remedy under the regime accorded to minority shareholders. B
There are more moderate remedies available, some have already been meted
out such as those taken by the Department of Inland Revenue.
[114] With all these compelling reasons, it cannot be said that equity and
justice should intervene to order the winding-up of TEH Holdings and TEH
Paper. We, thus, find that the first question must be answered in the negative. C

Whether a petitioner shall be allowed with equitable relief under section

218(1)(i) of the Companies Act 1965 when the petitioner’s truthfulness
and credibility have been impugned by the Winding-Up Court.
[115] The credibility of the petitioner was severely undermined and
D
quartered by the learned judge who found him not to be a witness of truth,
that he was a tool for TCL and the fourth family, and that the petitions were
filed for a collateral purpose and an abuse of process. His witnesses did not
fare any better, especially TCL. This is readily apparent throughout the
judgment of the High Court which findings of fact and result were
unanimously affirmed by the Court of Appeal. There are suggestions from E
counsel for the petitioner that the learned judge was not entitled to reach such
findings as His Lordship did not hear or see “the man who was the target of
criticism. His reliance on the note made by his predecessor is nihil ad rem
because the impression made by a witness on one trier may not be the same
as that made upon the mind of another trier of fact.” F

[116] In the first place, we, as the third trier of the law, cannot and will not
disturb findings of fact. More so, where those findings of fact have been
affirmed on appeal. In any event, we do not find the concerns of the
petitioner founded having examined the records of appeal and having gone
through the whole grounds, very carefully. The deliberations and reasoning G
of the learned judge must be appreciated and understood holistically; and
when that is properly done, there is no basis for the petitioner’s complaints.
Judges are quite frequently called upon to carry on conduct of trials, from
or at any stage of the trial. The judge is vested with discretion on how to deal
with evidence recorded to date; including recalling of witnesses, whether for H
the whole or any portion of evidence given – see s. 18 of the Courts of
Judicature Act 1964 which reads as follows:
18. (1) Every proceeding in the High Court and all business arising
thereout shall, save as provided by any written law, be heard and disposed
of before a single judge. I
 Tan Keen Keong v. Tan Eng Hong Paper
& Stationery Sdn Bhd & Ors
[2021] 2 CLJ And Other Appeals 367

A (2) Whenever any judge, after having heard and recorded the whole or
any part of the evidence in a proceeding, is unable through death, illness
or other cause to conclude the proceeding, another judge may:
(a) continue with the proceeding from the stage at which the previous
judge left it and:
B (i) act on the evidence already recorded by the previous judge; or
(ii) act on the evidence partly recorded by the previous judge and
partly by himself; or
(b) resummon the witnesses and recommence the proceeding.
C (3) Where the judge acts under subparagraph 2(a)(i) he may, either on his
volition or at the request of any party to the proceeding, recall any of the
witnesses as in respect of any part of the evidence already recorded, or
he may take their evidence afresh:
Provided that in respect of a criminal proceeding, the Court of
D Appeal and the Federal Court may, on appeal, set aside any
conviction had on evidence not wholly recorded by the judge
before whom the conviction was had if such court is of the opinion
that the accused had been materially prejudiced thereby, and may
order a new trial.
[117] There is no record of any invocation of s. 18, a protest or reservation,
E
or even a request or suggestion to the learned judge that His Lordship should
rehear all or any part of evidence already given. Instead, the learned judge
who took over after the earlier judges had heard and recorded 22 days of
evidence over a span of two years went on to complete the trial after a total
of 41 days, without incident.
F
[118] With such strong and clear findings of credibility or lack of it, the
presence of abuse of process plus a rejection of evidence necessary to
establish the grounds relied on, and there being no other evidence available
for the court to form its opinion under s. 218(1)(i) based on the petitioner’s
complaints, the proper course for the learned judge was to dismiss the
G
petitions. We can make no clearer conclusion than that as public policy and
the interests of justice will not be served for any equitable relief to still be
granted. On the contrary, these same considerations will require the court to
dismiss the petitions.

H [119] This is not to be confused with the situation where illegality or

contraventions of the law formed the basis of the petitioner’s petitions under
s. 218(1)(i), because it was not. Had that been the case, allegations that the
petitioner is either complicit or privy to such contravention or illegality have
not and will not deter the court, in appropriate cases, from granting the order
to wind-up because it is just and equitable to do so. The case law and
I
principles discussed earlier, have explained that the involvement of a
plaintiff, applicant or petitioner, is no impediment to the power of the court
to grant the appropriate relief even in such circumstances.
368 Current Law Journal [2021] 2 CLJ

[120] However, on the facts and circumstances in these appeals, and for the A
reasons already discussed in relation to the High Court’s conclusions on the
presence of illegality and the application of the correct principles, with the
compelling lack of evidence, we find that the petitions ought to have been
dismissed. We therefore answer this second question posed by the wound-
up companies, also in the negative. B

Questions Posed By The Petitioner

[121] Given our answers to the two questions posed by TEH Holdings and
TEH Paper, we do not find it appropriate or necessary to answer the two
questions posed by the petitioner. We therefore decline to answer the same.
C
Conclusions
[122] The two questions posed by TEH Holdings and TEH Paper are
answered in the negative with the result that we are of the firm view that the
learned judge and the Court of Appeal have fallen into plain error. We,
therefore unanimously allow the appeals by TEH Holdings and TEH Paper D
and the decisions of the High Court ordering the winding-up of these
companies are hereby set aside. We further unanimously dismiss the appeals
by the petitioner.