VC George J:

An important question that arose in this matter was whether the Court had the power to restrain a party from petitioning the Court to wind up a company.

Tan Construction had sent a Companies Act s. 218(2) notice to Bina Satu Sdn. Bhd. (Bina) demanding the payment of a sum of RM64,811.18 said to be owing from Bina to Tan Construction for work done. Tan Construction's solicitors made it clear in the notice that it was a s. 218(2) notice and pointed out therein that if the amount demanded was not paid within 21 days Bina will be deemed to be unable to pay its debts and that appropriate action would be taken to have Bina wound up.

Bina thereupon took out this originating summons seeking an injunction restraining Tan Construction from instituting proceedings to wind up Bina. The originating summons was supported by the affidavit of one Hee Kon Ying who claims to be a director of Bina. Hee says that Tan Construction's claim appeared to be in respect of work done by them at a housing estate at Chaah, Johore. Hee says that the job had been contracted out by Bina to one Pann Marketing Co. Sdn. Bhd. and that if Tan Construction had completed that job it was not on the instructions of Bina. There never had been any contractual relations or at all between Tan Construction and Bina and accordingly even if Tan Construction had done or completed the job, their claim for work done should be against those who had employed them and not against Bina. Hee went on to say that his company is involved in a number of on-going projects as contractors the subject matter of which runs into millions and at the time of affirmation of his affidavit substantial sums of money were due to Bina in respect of those contracts. Further according to Hee, Bina had substantial financial facilities granted to them by their bankers. Hee says that the reaction of the bankers to the presentation of a winding up petition itself could ruin Bina. He contends that the harm the company would suffer before the petition is heard and disposed of would be immeasurable. Hee contended that the company was and is perfectly capable of meeting its liabilities and went on to contend that the demand for payment was misconceived and the taking of winding up proceedings is an abuse of the process of Court in that Tan Construction was aware that their claim was disputed. It was contended that the petition was being presented in order to pressurise the company into making payments (which it is not liable to pay) to avoid the drastic effects of the commencement of winding up proceedings.

When the originating motion came up for hearing in chambers, ex parte, an interim interlocutory injunction was granted to obtain until further order of Court and directions were given for the originating summons to be heard inter partes on 26 May 1987.

Before that date various other affidavits were filed.

On 26 May 1987 when the originating summons was recalled, Encik G.K. Sri Ram of Counsel appeared with Encik Muthu on behalf of Tan Construction and asked for enclosure (7) which was the application to set aside the interim injunction to be heard. However, what I did was to hear the originating summons itself which is enclosure (1).

Encik Sri Ram then took up a preliminary point. His contention was that the power of the Court to grant the injunction sought was not founded upon statute but on inherent jurisdiction which power had been excluded by statutory prohibition namely s. 54(b) of the Specific Relief Act 1950 (Revised 1974).

Section 23(2) of the Courts of Judicature Act 1964 provides confirmation that the Court continues to enjoy its inherent powers. This includes the power to restrain any abuse of its proceedings. A classic illustration of the abuse of Court proceedings is provided in Re A Company [1984] 2 Ch 349 where it was held that where a petition against a company is presented ostensibly for a winding up order but in reality for another purpose such as to bring pressure to