TETUAN KRISH MANIAM & CO v Sarawak Cable Berhad PENCELAH 1. ) Leader Cable Industry Bhd (Dalam Likuidasi) 2. ) Universal Cable (M) Berhad (Dalam Likuidasi) 3. ) MAHMUD ABU BEKIR TAIB PIHAK TERKILAN 1. ) Hong Leong Islamic Bank Berhad 2. ) AmBank (M) Berhad 3. ) LIM SIN HAN

Case Significance

A judicial-management decision engaging the court's supervisory jurisdiction under section 414(5) of the Companies Act 2016 and the Quistclose trust analysis, addressing whether funds in an interim Judicial Manager's hands are held on trust for secured creditors or form part of a distressed company's general assets.

This High Court decision in the Commercial Division at Kuala Lumpur arises from a judicial management proceeding brought under the corporate rescue provisions of the Companies Act 2016 (sections 404 to 430). The applicant, the law firm Tetuan Krish Maniam & Co, had filed an originating summons seeking a judicial management order against the respondent, Sarawak Cable Berhad, a financially distressed company that was its former client. The originating summons was never heard on its merits, but an interim Judicial Manager was appointed on 9 July 2024. Two applications fell to be decided: the interim Judicial Manager's application for directions, invoking the court's supervisory jurisdiction in section 414(5) of the Companies Act 2016, on the utilisation of a sum of money in his hands; and the applicant's application for leave to discontinue the originating summons. Secured creditors, including two banks, together with two subsidiaries in liquidation and a director as proposed interveners, participated in the proceedings. A central question was whether the monies held by the interim Judicial Manager were impressed with a trust in favour of the banks, in particular a Quistclose-type trust of the kind explained in Barclays Bank Ltd v Quistclose Investments Ltd and applied in PECD Bhd (In Liquidation) v AmTrustee Bhd, such that they could not be treated as general assets of the company. The Court dismissed the interim Judicial Manager's application for directions and allowed the applicant leave to discontinue, ordering that the Balance Retention Sum be paid into the Escrow Account within three days and that the applicant bear the costs of the discontinued action. The global costs orders were RM30,000 for the banks and RM10,000 for the subsidiaries as proposed interveners, with no order as to costs for the director who did not press his claim. The Court was satisfied that the retained sum answered the very question posed by the interim Judicial Manager's application for directions and could properly be dealt with within the orders made on the discontinuance.