A judgment against an insured party binds the insurer, compelling payment irrespective of the insurer's objections; a valid judgment allows creditors to initiate winding-up proceedings.

Introduction

[1] The present appeal is against the decision of the learned High Court judge made on 27 May 2010, whereby the appellant's application for injunctive relief to restrain the respondent from filing a winding-up petition against it was dismissed with costs and at the same time, the ex parte injunction order earlier granted by the Court on 20 April 2010 was discharged.

Factual Background

[2] The appellant, being an insurance company, was at all material times the insurer of the motorcycle KN 6162 ridden by one M Sekar a/l Marimuthu which was involved in a road accident with the respondent, a pedal cyclist, on 11 May 1997.

[3] The respondent filed an action to recover damages against the said M Sekar a/l Marimuthu at the Sessions Court. Nevertheless, the Sessions Court dismissed the respondent's action with costs.

[4] The respondent appealed to the High Court against the said dismissal. The High Court had on 16 December 2009 allowed the respondent's appeal where it was held that the said M Sekar a/l Marimuthu was 100% liable for the accident. The High Court ordered the said M Sekar a/l Marimuthu to pay the respondent RM89,374.03 (for general and special damages).

[5] Being dissatisfied with the High Court's decision, the appellant then filed an application for leave to appeal to the Court of Appeal and such application was allowed by the Court of Appeal on 19 February 2010. The appellant then proceeded to file the notice of appeal on 1 April 2010.

[6] In the meantime, the appellant applied for a stay of execution at the High Court. The application was dismissed. The appellant then filed the same application for stay of execution at the Court of Appeal, and the said application is still pending.

[7] The appellant, as insurer of the said motorcycle, did not make payment to the respondent on the said judgment. The respondent then through her solicitors issued and served a notice under s 218(2)(e) of the Companies Act 1965 to the appellant (the 218 notice) on 25 March 2010.

[8] On 12 April 2010, the appellant applied for an ex parte injunction to restrain the respondent from proceeding with the presentation of a winding- up petition against the appellant in respect of the judgment sum claimed in the said 218 notice. The same was allowed by the High Court on 20 April 2010. At the same time, the appellant was ordered to pay the judgment sum into Court. The same has been complied with by the appellant.

[9] On 27 May 2010, on inter partes hearing of the injunction application, the learned judge dismissed the appellant's application and at the same time discharged the earlier ex parte order dated 20 April 2010.

[10] The appellant, being dissatisfied with the said decision now appeals to this Court.

Appellant's Contentions

[11] In the present appeal, the appellant raised inter alia the following contentions:

(a) the respondent had not obtained any judgment against the appellant personally (as the insurer), but was against the insured person (M Sekar a/l Marimuthu);

(b) the respondent needs to file a recovery proceedings under s 96(1) of the Road Transport Act 1987 before taking any step to wind up the appellant company;

(c) there was an abuse of the Court's proceedings when the statutory notice under s 218 of the Companies Act 1965 was used by the respondent as a tool to oppress the appellant;

(d) the appellant at the material time was a solvent company whose total assets were in excess of RM600 million with total liabilities of slightly more than RM168 million; and the full judgment sum which i