Company, 2 shareholders ordered to pay RM1.08mil over failed investment

A company and two of its substantial shareholders have been ordered to pay RM1.08 million to two investors after the High Court struck out their defence for failing to comply with an order to produce documents.

Judicial commissioner Asmadi Hussin ordered Energy Eco Bhd, Daud Bakar and Norliza Tajudin to pay the amount jointly and severally to Borneo Eduexcel Sdn Bhd and Geomatika Sabahedu Sdn Bhd.

The court also ordered that interest and general damages be assessed, and awarded costs of RM20,000.

The two plaintiffs had invested RM1 million in Energy Eco under a shareholder advance agreement in April 2024, which purportedly provided for an 8% return within six months.

But when the six-month period ended, the company failed to repay the principal and promised return.

The plaintiffs subsequently sued the company and the two individuals, alleging negligence and fraudulent misrepresentation, including claims that Norliza and Daud had represented that Energy Eco was licensed to collect deposits or investment funds.

The defendants denied liability, arguing that the investment was subject to risks, and that Energy Eco was insolvent and, therefore, had no obligation to pay dividends or profits.

However, the court found the defendants had failed to comply with a discovery order issued on May 25, requiring them to produce documents including bank statements, details of account signatories, lists of business expansion projects, and management accounts.

The defendants said the documents could not be produced because they had been seized by the Malaysian Anti-Corruption Commission in January.

Asmadi rejected this as a reasonable explanation, saying the defendants could have obtained copies of the documents from their auditor or company secretary.

He also noted that not all the documents had been seized by MACC.

The seized bank statements covered 2022 and 2023, while the discovery order sought documents from 2024 onwards.

Asmadi said the defendants had also failed to seek an extension of time to comply with the order.

He said letters to MACC seeking the documents were only produced in an additional affidavit after the plaintiffs had applied to strike out the defence and the affidavits and submissions had been exchanged.

He described the move as a late effort made about four months after the discovery order, adding that the defendants had given no reasonable grounds for failing to comply with it.

Lawyers Hariharan Tara Singh and Tan Eng Seng represented Borneo Eduexcel Sdn Bhd and Geomatika Sabahedu Sdn Bhd, while Nyat Kai Wen appeared for Energy Eco Bhd, Daud and Norliza.

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