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

j-02imncvc-775-05-2023 Court of Appeal (Mahkamah Rayuan) 26 February 2026 • J-02(IM)(NCvC)-775-05/2023 • 34 min read

12 cases cited (4 SG, 8 foreign)

Catchwords

allegations of undue preference, premised on voluntary settlements said to have been made without valuable consideration and not in good faith - fraudulent preference - application for a validation order in respect of a payment rendered void as the payment was made after the presentation of the winding-up petition. - (i) the distinct statutory requirements governing undue preference as opposed to fraudulent preference; (ii) whether proof of a dominant intention to prefer remains a necessary element for fraudulent preference; (iii) the scope of the recognised exceptions where payments are made under genuine commercial pressure to avert the imminent collapse of the company; (iv) the scope of the directors’ duties and (iv) the circumstances in which the court may properly grant validation of payments otherwise void against the liquidator. - Companies Act 1965 (“CA 1965”) - Insolvency Act 1967 (“IA 1967”).

Practice Areas

allegations of undue preference, premised on voluntary settlements said to have been made without valuable consideration and not in good faith

Judges (3)

Ahmad Kamal bin Md. Shahid Coram Azhahari Kamal bin Ramli Coram Ong Chee Kwan Delivered

Counsel (7)

R. Jayabalan Firm Raj Shankar Firm Jayabalan a/l Raman Kutty Counsel Respondent Mohamed Shah Reza Counsel Respondent Raj Shankar a/l Rajahram Counsel Appellant Tan Legend Counsel Respondent Tina Francis Counsel Appellant

Parties (2)

CEMERLANG COKE INDUSTRIAL Sdn Bhd Respondent MEGAFEST Sdn Bhd (DALAM LIKUIDASI) Appellant

Case Significance

MEGAFEST SDN BHD (DALAM LIKUIDASI) v CEMERLANG COKE INDUSTRIAL SDN BHD is a Court of Appeal (Mahkamah Rayuan) decision dated February 26, 2026 (citation: j-02imncvc-775-05-2023). <p>Megafest Sdn Bhd (in liquidation) brought five related appeals involving allegations of undue preference, fraudulent preference, and a validation order for payments made after the winding-up petition. The key issues included the distinction between undue and fraudulent preference, whether a dominant intention to prefer was proven, and the scope of directors' duties. The Court of Appeal allowed Appeals 765, 761, and 764, dismissed Appeal 763 except for RM50,000 in post-petition payments, and a The panel comprised Ahmad Kamal bin Md. Shahid, Azhahari Kamal bin Ramli and Ong Chee Kwan, with Ong Chee Kwan delivering the judgment. Counsel appearing: Jayabalan a/l Raman Kutty (counsel for respondent), Mohamed Shah Reza (counsel for respondent), Raj Shankar a/l Rajahram (counsel for appellant), Tan Legend (counsel for respondent), Tina Francis (counsel for appellant).

Summary

Megafest Sdn Bhd (in liquidation) brought five related appeals involving allegations of undue preference, fraudulent preference, and a validation order for payments made after the winding-up petition. The key issues included the distinction between undue and fraudulent preference, whether a dominant intention to prefer was proven, and the scope of directors' duties. The Court of Appeal allowed Appeals 765, 761, and 764, dismissed Appeal 763 except for RM50,000 in post-petition payments, and allowed Appeal 775.

What was the outcome of MEGAFEST SDN BHD (DALAM LIKUIDASI) v CEMERLANG COKE INDUSTRIAL SDN BHD?

<p>Megafest Sdn Bhd (in liquidation) brought five related appeals involving allegations of undue preference, fraudulent preference, and a validation o...