A winding up petition can be filed without a judgment debt if the respondent cannot substantiate a bona fide dispute regarding the debt owed.

JUDGMENT

(Winding Up Without A Judgment Debt)

Kenneth St James J:

Prelusion

[1] This winding up Petition is on the grounds that the Respondent (R) is "unable to pay its debts" under s 465(1)(e) of the Companies Act 2016 ( CA ) and that "it is just and equitable" for R to be wound up under s 465(1)(h) of the .

[2] But this winding up Petition is not premised on a judgment debt. In other words, the Petitioner (P) is not petitioning to wind up R for R's inability to pay a judgment debt (which is a prima facie indisputable debt). This means that P has to demonstrate that even without a judgment in P's favour against R, R is nevertheless unable to pay its debts, particularly to P.

[3] Should this winding up Petition be allowed?

The Law

[4] P need not have a judgment in hand against R, to present a winding up Petition against R — Anjakan Rezeki Sdn Bhd v. UI Lead Sdn Bhd ( CA ).

[5] But before the Court will allow the Petition, there must be no bona fide dispute of the debt on substantial grounds. If R disputes the debt, R cannot merely assert that they "dispute the debt". The dispute must be genuine and substantive. R must demonstrate that the dispute against the debt is bona fide by producing "substantial and reasonable" grounds — BMC Construction Sdn Bhd v. Dataran Rentas Sdn Bhd ; 2001 MarsdenLR 1525 ; (HC).

[6] Needless to say, R must demonstrate the substantiality of the dispute against the debt by affidavit evidence produced in its affidavit(s) filed to oppose the Petition.

The Pertinent Facts

[7] The pertinent facts in this Petition, which are borne out by the evidence, are as follows. One — R was the main contractor of a development project to build a hotel in Ayer Keroh, Melaka. R appointed P as the subcontractor to perform construction works through ten letters of award (LOAs). Nine LOAs were dated 15 December 2012 and one was dated 28 August 2013.

[8] Two — R issued a letter dated 6 October 2016 to P with the subject matter "Letter of Undertaking for Payment Due" stating that R agreed "to make payment to" P the "sum of outstanding progress claim[s] amounting to RM864,218.63". In this "Letter of Undertaking for Payment Due", R further undertook "to procure funding and will provide [a] cash injection to cover all dues for the payment". I will refer to this RM864,218.63 as "the RM864K".

[9] Three — P issued to R a letter dated 19 October 2016 — a "Confirmation of Balance" — to ask R to confirm (verify) that the amount due from R to P was the same RM864K amount. This amount due was acknowledged and signed-off by R's director: Mohd Shafizal Abdul Hameed.

[10] Four — P issued a solicitor's formal demand (by letter dated 23 February 2017) for this RM864K. In response, R made seven payments to P, totalling RM193K, from April 2017 to January 2020. These payments left a balance of RM671,218.63 unpaid. P produced, in its Petition, the evidence of these payments. P also produced a Statement Of Account issued to R to verify these seven payments and to demonstrate the calculation arriving at the balance of RM671,218.63. I will refer to this RM671,218.63 amount as "the RM671K".

[11] Five — P served a statutory notice dated 3 November 2023 to R to pay the RM671K due within 21 days of service. If R failed to pay, R "shall be deemed to be unable to pay its debts" under s 466(1)(a) of the CA . The statutory notice was served on both R's business and registered addresses.

R's Arguments

[12] R mounts the following arguments to oppose the Petition.

1st Argument: P Did Not Acknowledge Receipt Of The Loas And Did Not Produce The Original Loas In This Proceeding

[13] First — R challenges the authenticity of the LOAs on the ground that P did not acknowledge the receipt of the LOAs. R also challenges the authenticity of the LOAs on the ground that the original LOAs were not produced in this winding up proceeding.

[14] I find R's argument to be superficial. The LOAs are R's own documents. R issued the LOAs under its letterhead. The LOAs were signed by it