KUALA LUMPUR (Aug 29): The High Court in Shah Alam has ruled in favour of Hartalega Holdings Bhd (KL:HARTA) in its lawsuit against Dr Danaraj Nadarajah, declaring that the former executive director had committed a breach of his fiduciary duties and his contract of employment.
The court also found that Danaraj had breached Section 317A of the Capital Markets and Services Act, which prohibits directors of a listed corporation from causing wrongful loss to the company, as well as Sections 213 and 218 of the Companies Act, which relates to the duties and responsibilities of directors, and the prohibition against improper use of the company's properties for self gain.
Following the decision, Hartalega said it will lodge complaints to the Securities Commission of Malaysia (SC) and the Companies Commission of Malaysia (SSM) against Danaraj.
"In view of the Honourable High Court’s findings of the breaches by the defendant of Section 317A of the Capital Markets and Services Act 2007, Section 213 and Section 218 of the Companies Act 2016, the company shall consult its solicitors on the next course of action in relation to lodging complaints to the SC and to SSM respectively," Hartalega said in a filing with Bursa Malaysia on Thursday.
The glove manufacturing group and two of its subsidiaries — Hartalega Sdn Bhd and Mun Health Product (India) Pvt Ltd — filed the civil suit against Danaraj in December 2020, accusing him of having set up a competing business using Mun Health Product's resources during his tenure with Hartalega.
According to Hartalega's 2019 annual report, Danaraj held the position of executive director from July 4, 2011. He was in charge of Hartalega’s subsidiaries in China and India, where he was also an equity partner. He resigned on July 1, 2020.
Shares of Hartalega closed three sen or 1.21% lower at RM2.45 on Thursday, giving the group a market capitalisation of RM8.4 billion. Year to date, the counter has dropped 24 sen or 8.92%.