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2021 MarsdenLR 1952
HIGH COURT MALAYA SHAH ALAM
SHEN YONG ENGINEERING WORKS SDN BHD – Appellant
Versus
DAMAI RESIDENCE SDN BHD & ANOR (ENCL 1) – Respondent
[Companies (Post Winding-Up) No: BA-28PW-54-04/2021]
Winding-Up Orders are valid unless set aside; inherent court powers cannot grant perpetual stays under the Companies Act 2016.
Headnote:(A) Companies Act 2016 – Sections 492 and 493 – Winding Up Orders – Application for termination and stay of Winding Up Order dismissed due to failure to satisfy required legal standards for both reliefs, with evidence of insufficient funds supporting winding-up remaining valid – Inherent court powers do not extend to granting a perpetual stay of winding up under current legislative framework. (Paras 27, 34, 36)
Facts of the case: The Applicant sought to terminate a winding-up order initiated against the Respondent, claiming jurisdictional issues with prior judgments and presenting their inability to settle debts.
Findings of Court: The court reaffirmed the validity of the winding-up order, stating the Respondent's insolvency, citing established legal precedents that support the decision's legality and enforceability.
Issues: The court addressed jurisdictional arguments related to prior decisions and the validity of the Winding-Up Order.
Ratio Decidendi: The court emphasized that existing orders are valid unless set aside by a superior court and that a permanent stay is not permissible under current laws.
Result: Application dismissed.
JUDGMENT
Introduction
[1] Enclosure 1 dated 19 April 2021 is a Notice of Motion filed by the Applicant / Contributory of Damai Residence Sdn Bhd ("Respondent") pursuant to s 493(1) the Companies Act 2016 for the following orders:
"(a) that the Order for the Winding Up of the Respondent dated 24 April 2019 and proceedings in relation thereto be terminated under 493 (1) the Companies Act 2016 and / or stayed perpetually under the Court's inherent jurisdiction;
(b) Costs of this application be costs in the winding up; and
(c) further or other relief as this Honourable Court thinks fit."
Factual Bcakground
[2] It is pertinent to set out briefly the chronology of events in order to appreciate the factual matrix of the case.
2.1 On 11 April 2018, an Adjudication Decision was granted against the Respondent for the sum of RM2,259,966,83.
2.2 On 8 June 2018, the Petitioner filed an application to enforce the Adjudication Decision under s 28 of the Construction Industry Payment and Adjudication Act 2012 in Shah Alam High Court High Court Originating Summon No BA-24C-41-06/2018.
2.3 On 3 August 2018, the Respondent filed application to set aside the Adjudication Decision under s 15 of the Construction Industry Payment and Adjudication Act 2012 in Shah Alam High Court High Court Originating Summon No BA-24C-63-08/2018.
2.4 On 8 October 2018, the Petitioner's application to enforce the Adjudication decision against the Respondent was allowed ("the Enforcement Order") and the Respondent's application to set aside the Adjudication Decision was dismissed ("the Setting Aside Order").
2.5 On 23 October 2018, the Respondent filed Notice of Appeal against the Enforcement Order ("the Enforcement Appeal") and the Setting Aside Order (the Setting Aside Appeal").
2.6 On 12 November 2018, the Respondent filed Notice of Application to stay the execution of the Enforcement Order ("the Stay Application").
2.7 On 4 December 2018, the Petitioner filed Winding Up Petition against the Respondent in Shah Alam High Court in BA-28NCC-666-12/2018.
2.8 On 1 March 2019, a Memoranda of Appeal filed by the Respondent in the Enforcement Appeal and the Setting Aside Appeal.
2.9 On 15 March 2019, the Stay Application was dismissed.
2.10 On 24 April 2019, a winding up order was granted against the Respondent.
2.11 On 14 May 2019, the Respondent filed Notice of Appeal against the Winding Up Order ("the Winding Up Appeal").
2.12 On 8 July 2019, the Respondents' contributories filed Notice of Motion to stay the Winding Up Order pending the determination of the Enforcement Appeal and the Setting Aside Appeal.
2.13 On 26 September 2019, the Notice of Motion by the Respondents' contributories was dismissed.
2.14 On 16 October 2019, the Respondents' contributories filed Notice of Appeal against the decision to dismiss their application.
2.15 On 16 June 2021, the Court of Appeal allowed the Respondents' contributories appeal to stay the Winding Up Order pending the determination of the Enforcement Appeal and the Setting Aside Appeal.
2.16 The Case Management for the three appeals was fixed on 17 June 2021 and the hearing was fixed on 25 August 2021.
2.17 The Appeals was adjourned by the Court of Appeal to enable the application to amend the Memoranda of Appeal.
The Relevant Section
[3] The laws applicable is as follows:
(i) Section 493 of the Companies Act 2016 reads:
"Power of Court to Terminate Winding up
493. (1) At any time after an order for winding up has been made, the Court may, on the application of the liquidator or of any creditor or contributory and on proof to the satisfaction of the Court that aii proceedings in relation to the winding up of the company ought to be terminated, make an order terminating the winding up of the company as the Court thinks fit.
(2) In making an order under subsection (1), the Court may take into consideration, but not limited to, the following facts:
(a) the satisfaction of the debts;
(b) any agreement by the liquidators, creditors, contributories and
