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2019 MarsdenLR 1708
HIGH COURT MALAYA SHAH ALAM
GANAD MEDIA SDN BHD – Appellant
Versus
METRAMAC CORPORATION SDN BHD – Respondent
[Companies (Winding Up) No: BA-28NCC-412-08-2018]
Inability to pay debts is established when a party fails to demonstrate solvency or contest the indebtedness with sufficient evidence.
Headnote:The court analyzed the statutory provisions of s 466 (1)(a) of the Companies Act 2016 regarding winding up petitions indicating the Respondent's inability to pay debts confirmed by several Court Orders. The key issue was whether the Respondent could demonstrate solvency, but failure to provide satisfactory evidence led the court to determine the Respondent was 'unable to pay its debts.' Consequently, the court ordered the winding up of the Respondent company, stating, 'I ordered that the Respondent be wound up and costs incidental to the winding-up was to be taxed and paid out of the assets of the Respondent's company in favour of the Petitioner.'
| Table of Content |
|---|
| 1. winding-up petition and respondent's alleged inability to pay debts. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. establishment of commercial insolvency and burden of proof. (Para 7 , 8 , 9) |
Introduction
[1] This is a Petitioner's petition dated 2 August 2018 for an order winding up the Respondent company on the ground that the Respondent is unable to pay its debts.
Brief Facts
[2] There is no dispute that, there were several Court Order dated 31 May 2010 (Declaration Order), 18 September 2015 (Order for Assessment), 16 May 2017 (Order for including new evidence) and 6 September 2017 (Consent Order) entered against the Respondent. Thus, the Respondent is indebted to Petitioner in the sum of a sum of RM 7,425,792.67 as at 21 May 2018 as set out in the Notice of Demand pursuant to s 466 (1)(a) of the Companies Act 2016 .
[3] Nevertheless, the Respondent after 21 days from the service of the Notice of Demand dated 21 May 2018 still failed to pay its debts. The Petitioner then proceeded to file a winding-up petition against the Respondent.
[4] It is important to note that the Respondent has filed Notice of Intention to appear dated 18 September 2018 and Affidavit to oppose the petition dated 28 September 2018. The main reason for the Respondent to oppose to this petition is because there was an appeal to the High Court in Chamber against the Order of Assessment dated 18 September 2015 and the Petitioner has security in the sum of RM 2,793,644.87 deposited by Big Tree in its solicitor account based on the Stay Order dated 8 March 2016.
[5] The Petitioner stated that the Stay Order dated 8 March 2016 cannot be enforceable because the Respondent has failed to comply with terms of the Stay Order to deposit the sum RM 3,370,475.47 to its solicitor as stake holders within 21 days from the date of the order and the Court of Appeal had also dismissed the appeal against the Stay Order on 24 October 2016.
[6] The Petitioner further stated that The Respondent has also admitted in its affidavit at para 20 that the "Respondent has failed to comply with the terms of the conditional stay order dated 8 March 2016"
Findings
[7] It is a trite law that the term 'unable to pay its debts', is laid down in the case of Sri Hartamas Development Sdn Bhd v. MBF Finance Bhd , , wherein the test is one of 'commercial insolvency1 where it simply means that the respondent is unable to meet current debts when they fall due.
[8] Therefore, the burden is on the Respondent to prove its commercial solvency in the sense that its assets exceed its liabilities, (see the High Court case of BMC Construction Sdn Bhd v. Dataran Rentas Sdn Bhd , )
[9] In the present case, the Respondent has failed to state its assets and liabilities in its affidavit to show that the Respondent is a solvent company in order to disprove the presumption of the inability to pay its debts, in absence of a bona fide dispute, and Respondent has no justification for not paying the indebted sum to the Petitioner.
Conclusion
