View/Open - Research Commons - The University of Waikato

Act 1993 lists orders the court can make if a preference transaction is proven. The
types of orders described in the section generally reflect the restoration of the
position prior to the transaction in question.
The law on preference transactions in Malaysia is derived from section 320 of the
UK Companies Act 1948 and is embodied in section 293 of the 1965 Act. It states
any transaction under the section shall be voidable or void as it would have been
under the bankruptcy law. 63 It does not specify as to the type of remedy a court can
make under the section but the central importance underlying the section is that
where a debtor company has, at a relevant time, given a preference to any person, the
liquidator may apply to the court for an order to set aside the preference. 64
In order to determine the remedy under the section, reference needs to be made to the
provisions in the Bankruptcy Act 1967, namely sections 53A, 53B and 53C which
lay down procedure and law to be followed after a transaction is proven to be
fraudulent preference. 65 This is by virtue of these provisions in the Bankruptcy Act
1967 which are mutatis mutandis to section 293 Companies Act 1965. The remedy
available in section 53B(2) Bankruptcy Act 1967 is the right to recover the property
if it is still in the hands of the preferred creditor. If however, the property has been
resold to another person, the liquidator is entitled to proceeds of sale from the
preferred creditor. 66
63 See Lian Keow Sdn Bhd (in liquidation) & Anor v Overseas Credit Finance (M) Sdn Bhd & Ors
[1988] 2 MLJ 449.
64 Sime Diamond Leasing (M) Sdn Bhd v JB Precision Moulding Industries Sdn Bhd (In Liquidation)
[1998] 4 MLJ 569.
65 Lian Keow Sdn Bhd (in liquidation) & Anor v Overseas Credit Finance (M) Sdn Bhd & Ors [1988]
2 MLJ 449 at 457.
66 Lian Keow Sdn Bhd (in liquidation) & Anor v Overseas Credit Finance (M) Sdn Bhd & Ors [1988]
2 MLJ 449 at457; see also section 53B(2) of the Bankruptcy Act 1967.
322