1. Teck Yan Chan Sui Ko 2. The Mauritius Commercial Bank Ltd. AND

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1 MAURITIUS FREEZONE LOGISTICS LTD & ORS v TECK YAN CHAN SUI KO & ANOR 2012 SCJ 154 SCR No. 2730M and CO 2831M IN THE SUPREME COURT OF MAURITIUS (COMMERCIAL DIVISION) In the matter of : 1. Mauritius Freezone Logistics Ltd. 2. Sheik Mohammad Nageeb Eshan Maudarbocus 3. Sheik Mohammad Reshad Maudarbocus 4. Mrs. Bibi Maymoon Maudarbocus Applicants v. 1. Teck Yan Chan Sui Ko 2. The Mauritius Commercial Bank Ltd. Respondents In the presence of: 1. The Registrar of Companies 2. The Director General, Mauritius Revenue Authority Third Parties In the matter of: In the presence of: 1. Mauritius Freezone Logistics Ltd. (In Receivership) 2. Mr. Yuvraj Thacoor Applicants v. 1. Mr. Sheik Mohammad Nazeeb Eshan Maudarbocus 2. Mr. Sheik Mohammad Rashad Maudarbocus 3. Mrs. Bibi Mayemoon Maudarbocus 4. Mr. Musa Azad Hashim 5. Mrs. Fatimah Bibi Reshma Jaumeerbacus 6. Espace Transport Logistique Ltée. Respondents 1. Tech Yan Chan Sui Ko 2. The Registrar of Companies

2 Summary: This case concerns two applications concentrated upon a private company, Mauritius Freezone Logistics Ltd, in receivership. Both applications were heard jointly, with the material facts of these being extensive: inter alia, they questioned compliance of a Bank with the Companies Act 1984 and with the Code Napoleon, queried as to the extent to which Receiver/ Managers may interfere with the management of a company in liquidation, requested a stay of proceedings with regard to receivership, prayed for several injunctions and for the handing over of assets and monies to a Receiver/Manager. It is expedient to introduce the parties to each: Application 1: 1. Applicant No. 1, Mauritius Freezone Logistics Ltd. is a company registered in Mauritius in January Applicants No. 2, 3 and 4 are, together, shareholders and directors of Mauritius Freezone Logistics Ltd. 3. Respondent No. 1 is a Receiver/ Manager of Mauritius Freezone Logistics Ltd appointed by Respondent No. 2, The Mauritius Commercial Bank Ltd, with effect as from 16 th September Respondent No. 2 is a bank operating in Mauritius, which has granted facilities to Mauritius Freezone Logistics Ltd and which holds both fixed and floating charges over the assets of Mauritius Freezone Logistics Ltd. Application 2: 1. Applicant No. 1, Mauritius Freezone Logistics Ltd. is a company registered in Mauritius in January Applicant No. 2 is a Receiver/ Manager of Mauritius Freezone Logistics Ltd appointed by the Banque des Mascareignes. 3. Respondents No. 1 to 5 are, together, shareholders and directors of Mauritius Freezone Logistics Ltd.. 4. Respondent No. 6 is a company incorporated by Respondents No. 1 and 2. Numerous averments and contentions were made by the Applicants and Respondents in both applications. Out of these, the Court found that three issues had been raised: 1. Whether the Court will hear a contemnor, i.e. a party in contempt of Court; 2. Whether the first application was requesting the Court to sit on appeal of a judgment delivered by another Court;

3 3. Whether directors possess the locus standi to represent a company in receivership. 1. Should the Court hear a contemnor? The Court considered the cases submitted by Counsel for the Applicants and Respondents, along with the matter of Chan Sui Ko v Mauritius Freezone Logistics Ltd. and Ors [2006 SCJ 38], wherein an order was made against Mauritius Freezone Logistics Ltd, to give to the Receiver/Manager all the assets of Mauritius Freezone Logistics Ltd. and to refrain from restraining him in any way whatsoever in the performance of his cognate duties. The Court found that the first application, which was entered on the 27 th February 2008 was nothing but a rehashing of issues which had been raised by the present applicants when they were respondents in the 2006 case, referred to supra. It was held by the Court that it was clear that Applicants nos. 2 and 3 are in contempt of an order of the Court and that the Court would not follow the argument of Counsel for the applicants that there would be no contempt until those applicants had been found guilty. The Court relied on the following cases to reach its decision: Mauritius Freezone logistics Ltd. v The Director General Mauritius Revenue Authority and anor. [2008 SCJ 198] where it was stated: A person who deliberately flouts Court orders cannot expect to obtain the protection of the Court the more so when the protection sought rests on the equitable jurisdiction of the Court. The Court will not permit its institution to be abused with the obvious design of stifling the proper application and respect of the law. Hadkinson v Hadkinson [1952] P.285, where Lord Justice Romer said that an order of a court of ompetent jurisdiction must be obeyed, even if it is irregular or even void, until it is discharge. M v Home Office ( WLR 73), where it was held that a decision, even if it was bad, had to be complied with until and unless it had been quashed. X Ltd v Moorgan-Grampian (Publishers) Ltd. ( AC 1) where Lord Bridge of Harwich stated that certainly in a case where a contemnor not only fails wilfully and contumaciously to comply with an order of the court but makes it clear that he will continue to defy the court s authority if the order should be affirmed on appeal, the court must, in my opinion, have a discretion to decline to entertain his appeal against the order.. Mauritius Freezone logistics Ltd. v The Director General Mauritius Revenue Authority and anor [2008 SCJ 198], where it was held that despite the fact that there were orders from the Court, the applicants were proceeding on their course of acting in contempt of the several orders in relation to the cases at the time.

4 The Court thus concurred with the statement made in Mauritius Freezone logistics Ltd. v The Director General Mauritius Revenue Authority and anor [2008 SCJ 198] referred to above and held that in the present case, in view of the continuous wilful refusal to obey a court order which had been affirmed on appeal, the contemnors had been shown to have made an abuse of the process of the court using all means as mounting frivolous and vexatious applications in order to frustrate the duties of the Receiver/Manager. In the circumstances, the Court exercised its discretion not to hear the Applicants. 2. Is the Application asking the present Court to sit on Appeal of a judgment already delivered by another Court? The Court noted that in a previous case bearing CN 2538/2005 the same point as raised in the present application was raised as a defence by Applicants No. 2 and 3. The decision in CN 2538/2005 was appealed against by the same Applicants and was dismissed on the 5th March In that judgment, the Appellate Court found nothing wrong in the appointment of the Receiver/Manager. The Court held that it was clear that the present application was asking the Court to hear again issues which had already been affirmed on appeal and that the present application was nothing but a frivolous application and an abuse of the process of the Court to which the Supreme Court must put an end. 3. Can directors represent a company in receivership? The Court considered the case of Hawkesberry Development Co. Ltd. v Landmark Finance Pty. Ltd. [ NSWR 782], which had also been considered in Delphis Bank. v The Honourable Prime Minister of Mauritius and Ors. [2002 SCJ 193] regarding the residual powers of directors of a company in receivership. In the said case, Street J held that although the directors did have residual powers and duties with regard to the company s internal domestic structure even when the company is in receivership, a valid receivership and management will ordinarily supersede, but not destroy the company s own organs through which it conducts its affairs. The capacity of those organs to function bears an inverse relationship to the validity and scope of the receiver and management. It was also mentioned that the directors would presumably also have the right to challenge acts of a validly appointed receiver on the grounds of excess of authority or misfeasance on his part but regarding the receiver s agency scope. The Court did not follow this line of reasoning. To reach its decision, the Court relied on the following judgments: Lascomme Ltd. v UDT High Court [ ], where it was held that the powers of the directors should not be used in any manner which interferes

5 with the receiver s ability to deal with or dispose of the assets charged with the debenture. Delphis Bank (in Receivership) v The Honourable Prime Minister of Mauritius and Ors. [2002 SCJ 193], it was held that the terms of the receivership charge conferred exclusive powers on the Receiver and Manager to enter legal proceedings on behalf of the company and that the directors had no authority to overstep their residual powers to lodge an application in the name of the company in receivership without the consent of the Receiver and Manager. The Court, hence, found that it is clear that the directors cannot, without the authorization and consent of the Receiver/Manager, initiate any action which interferes with the Receiver/Manager s powers to deal with and dispose of the assets given by the company as security for the charges. The Court held, however, that the directors and shareholders may apply to the Court to be able to act in lieu of the Receiver/Manager if the latter fails to take actions in the interest of the company in receivership. In the present case, no such leave was asked. A company in receivership cannot be represented by the directors without leave of the Receiver/Manager or the Court, under section 170 of the Companies Act.