1. ) MOHD YUNOS BIN MALEK 2. ) MOHD HASSAN BIN MADON 3. ) MOHAMMED OMAR BIN MADON v 1. ) ABDUL MAJID BIN MOHD ZIN 2. ) LEE LAI HUAT 3. ) MAJU CONSTRUCTION & DEVELOPMENT SDN BHD

Case Significance

Illustrates the grant of narrow interlocutory injunctive relief to preserve corporate governance pending trial, the court restraining a director from unilateral acts on the company's behalf and from relying on a disputed share issuance, notwithstanding pleas of res judicata, section 54(a) of the Specific Relief Act 1950 and the rule against interfering in internal management.

This High Court decision concerns an application for an interlocutory injunction in a corporate-governance dispute, to restrain a director from acting unilaterally on behalf of a company pending trial. The company's only substantial asset was a development agreement with a plantation company over land in Johor, and the plaintiffs and the first defendant were its directors and shareholders, the plaintiffs asserting that they were the true majority. The plaintiffs alleged that the first defendant had procured the issuance of a large block of new shares in his own favour without a valid board resolution and without their knowledge, diluting their collective shareholding from about 82.5% to 17.5%, and that he had separately proposed, without consulting them, a settlement and sale and purchase arrangement with the plantation company that would prejudice the company, including withdrawing its damages-assessment claim. The validity of the share issuance and the disputed settlement were the subject of the main action. Applying the established three-limb test for interlocutory injunctions, the court found a serious question to be tried as to whether the first defendant had acted ultra vires by excluding a co-director from corporate decision-making, that the balance of convenience and justice favoured interim restraint, and that preserving the status quo required preventing unilateral corporate acts while not undoing any concluded compromise. It held that neither res judicata, nor section 54(a) of the Specific Relief Act 1950, nor the principle of non-intervention in internal management barred the narrow relief sought. The court accordingly allowed the application in part, restraining the first defendant from taking any unilateral step to give effect to any agreement or settlement on the company's behalf without the co-director's concurrence, and from exercising the disputed shares to pass or vote on resolutions, while preserving any settlement already concluded, with costs in the cause. The judgment illustrates the grant of narrow injunctive relief to preserve corporate governance pending trial.