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2021 MarsdenLR 3415
HIGH COURT MALAYA KUALA LUMPUR
AMBANK ISLAMIC BERHAD – Appellant
Versus
PROLINK MARKETING SDN BHD – Respondent
[Companies (Winding-Up) Petition No: WA-28NCC-1299-12/2019]
A winding-up petition is valid when a company is unable to meet current liabilities, irrespective of pending lawsuits against the petitioner for different claims.
Headnote:(A) Companies Act 2016 – Sections 465(1)(e), (h), 466(1)(a), 469(1)(c) – Winding up petition – The Petitioner applied for winding up of the Respondent due to non-payment of a final judgment debt. Court found that the Respondent failed to dispute the debt genuinely. (Paras 1, 17, 26)
(B) Winding up proceedings – Definition and nature – Winding up is sui generis, based on inability to pay debts, not execution. (Paras 21, 22)
Facts of the case: The Petitioner sought to wind up the Respondent due to its failure to pay RM15,470,245.98 under a judgment. The Respondent alleged ongoing contracts and new investors to prove solvency but failed to provide sufficient evidence. (Paras 1, 26)
Findings of Court: The Court found the Respondent unable to pay its debts and upheld the winding up petition. The judgment was not disputed, and the Respondent's claims of contracts and investments were speculative. (Paras 18, 26)
Issues: Clarification on whether the Respondent genuinely disputed the debt and the effect of pending litigation on the winding-up process. (Paras 1, 19, 20)
Ratio Decidendi: A winding-up petition is based on a company's inability to meet current liabilities, irrespective of pending litigation over other matters. The Respondent's inability was established by lack of evidence to counter the debt. (Paras 20, 26)
Result: Respondent given 5 months to settle debt, failing which it will be wound up.
JUDGMENT
(Enclosure 1)
[1] By way of winding up petition dated 5 December 2019 (Petition) the Petitioner, Ambank Islamic Berhad (Petitioner) had applied to this Court to wind up Prolink Marketing Sdn Bhd (Respondent) pursuant to s 465(1)(e) and (h) and 466(1)(a) of the Companies Act 2016 for the failure of the Respondent to settle the sum of RM15,470,245.98 under a final judgment (Judgment) obtained at the Kuala Lumpur High Court vide Suit No WA- 22M-253-04/2019 (Suit 253).
[2] The Respondent had filed an Affidavit in Opposition (AIO) on 24 January 2020 and had alleged inter alia as follows:
a) the Respondent's current situation was due to OCBC Bank (Malaysia) Berhad (OCBC) who had allegedly wrongfully and negligently breached the facility agreement which caused damage to the Respondent and that the Respondent had accordingly commenced Suit 253 as a result thereof
b) the Respondent had signed up new rice supply contracts and identified potential investors to be on board to assist the Respondent to overcome its financial crisis exhibit KC-1 and 2 of the Respondent's Additional Affidavit affirmed on 28 February 2020
c) the said alleged investments prove that the Respondent is moving forward and is solvent
d) the Respondent has pledged 8 lots of valuable industrial land (Securities) to the Petitioner valued at RM17 million and that the petitioner had initiated foreclosure proceedings but that the value of the said lands was fixed at only RM8,525,000
Background
[3] The Petition was fixed originally for hearing on 4 February 2020 and thereafter on 1 April 2020 which was postponed on the first occasion due to an interim stay order obtained by the Respondent on the Petition granted by another High Court, and on the next occasion due to the Movement Control Order in place.
[4] Thereafter the Respondent had on 15 June 2020 filed in this Court an application to adjourn the hearing of the Petition pending the outcome of the auction proceedings (Stay Application) in respect of the Securities which were charged to the Petitioner, referred to herein below.
[5] The hearing of the Petition was then further fixed for 23 June 2020 wherein on the said hearing date the Petitioner had seeked for an adjournment of the hearing of the Petition due to the Petitioner intending to file an affidavit in reply to the Stay Application filed by the Respondent.
[6] The Stay Application was then heard on 5 August 2020 after which it was dismissed by this Court and the Court proceeded to hear the respective counsels with regards the Petition on the same date and thereafter granted a conditional Order to wind up the Respondent pursuant to s 469(1)(c) of the Companies Act 2016 (Winding Up Order).
[7] The Respondent has since appealed on the Winding Up Order.
Petitioner's Submssions
[8] The Petitioner had submitted that the valuation of the Securities is a matter which should be dealt with in the High Court hearing the foreclosure proceedings and that there was no wrong, negligence or cheating as alleged.
[9] It was also submitted by the Petitioner that the foreclosure action is a different action which the Petitioner is entitled to commence as the Charge of the Securities.
[10] The Petitioner further submits that the alleged profits under the new contracts signed are purely speculative and that there is no concrete evidence that the said contracts or the investment agreements have been executed and that they are vague and doubtful.
[11] It is contended by the Petitioner that the statement of accounts referred to by the Respondent are up to the year 2016 only and that the management accounts up to 30 September 2018 are unaudited and which shows a negative RM37,630,327 with the liabilities of the Respondent exceeding its assets.
[12] The Petitioner also contends that Suit 253 is a separate matter and that the Petition herein has no relevance to the said Suit 253 and that in so far as the suit initiated by the Respondent against the Petitioner in Shah Alam High
