KUALA LUMPUR, 26 MAY, 2011: The Maju Institute of Education Development has withdrawn its RM100 million suit against its chairman, Datuk Seri S Samy Vellu, and seven trustees.
High Court Judge Datuk Abdul Aziz Abdul Rahim granted MIED’s application for leave to withdraw its suit over alleged mismanagement which it claimed caused the education arm of the MIC to incur losses.
The suit was withdrawn today after former MIC Youth chief A Vigneswaran, who initiated it, was appointed to sit on the MIED board as observer for one year from May 12.
According to the settlement agreement, in consideration of Vigneswaran’s fulfilling his obligations, the board shall appoint Vigneswaran, who is also MIED member, to sit on the board as observer.
It also stated that MIED shall implement a one year order to stop blacklisting MIED students to enable them to repay their loan, the interest to be fixed at four percent and the repayment to start from the date of their employment or six months after their graduation.
The MIED board was also to stop a scheduled procedure for study loan approvals, and to appoint Deloitte Corporate Solutions Sdn Bhd as the Management Consultants/Management Accountants for MIED as well as to adhere to full disclosure of major transactions and matters relating to MIED at board meetings.
The institute filed the writ of summons after High Court Judicial Commissioner Mah Weng Kwai on June 14 last year allowed Vigneswaran’s application to name MIED as the plaintiff in its proposed suit against the trustees.
Vigneswaran had sought the court’s permission to initiate the suit under Section 181A of the Companies Act 1965.
This section of the Act requires a company seeking to be a plaintiff in a suit to first get the court’s permission.
In the suit filed on July 5, last year, he named Samy Vellu, his successor, Datuk G Palanivel, Tan Sri M Mahalingam, Tan Sri Dr T Marimuthu, Tan Sri Dr S K Ampikaipakam, Tan Sri Dr Karnail Singh Nijhar, Tan Sri K Kumaran and Tan Sri G Vadiveloo and audit firm Kumpulan Naga.
Today Justice Abdul Aziz recorded a settlement agreement reached between the trustees and Vigneswaran in the presence of lawyers representing all the parties.
Counsel Datuk David Gurupatham and A.Vasanthi are representing MIED, counsel Gopal Srinivas is for Samy Vellu, Ampikaipakam and Vadiveloo while Prem Ramachandran is the lawyer for Mahalingam.
Gurupatham told reporters that his client withdrew the suit in the best interest of the Indian community so that MIED would be run in a transparent manner.
Vasanthi said the judge was pleased that settlement had been reached for the benefit of MIED, and granted the application to withdraw the suit with no legal costs.
In the suit, MIED claimed the defendants had breached fiduciary and statutory duties, and failed to discharge their responsibilities as trustees and auditors, which caused the institute to suffer huge losses.
It sought an injunction to restrain Samy Vellu from continuing to helm the institute, and asked that he (Samy Vellu) be stripped of his membership in MIED and that he return all monies or profits made from MIED, either by himself or through family members and close friends.
MIED also wanted a court order to make Samy Vellu compensate all the financial losses incurred by the institute in the time he had administered MIED as its chairman as well as special and general damages over the alleged losses, which it claimed totalled RM100 million.