A valid s 218 notice under the Companies Act 1965 permits winding-up proceedings despite existing security; the court will not grant a Fortuna injunction if the debt is undisputed and the petition likely to succeed.

[1] These two appeals by the same appellant are in relation to two applications made by the respondent in the court below for what is in essence, a Fortuna injunction [see Fortuna Holdings Pty Ltd v. The Deputy Commissioner of Taxation [1978] VR 83]. The respondent was seeking to restrain the appellant from presenting a winding-up petition after the appellant's notice issued pursuant to s 218 of the Companies Act 1965 failed to elicit payment by the respondent of monies ordered under a judgment dated 11 April 2016. Not only was the restraining order granted, the notice was also declared as invalid.

[2] Upon proper consideration of the submissions, records of appeal and the applicable principles of law, we were unanimous in our decision to allow both appeals. We found merit in the argument of learned counsel for the appellant and these are our reasons in full.

Undisputed Facts

[3] On 11 April 2016, the appellant obtained a summary judgment against the respondent vide High court Civil Suit No: 22NOC-397-11-2015. The civil suit relates to revolving credit facilities and overdraft facilities granted by the appellant to the respondent to which the respondent had defaulted in its repayments. The respondent's application to strike out the claim was dismissed whilst the appellant's application for summary judgment was allowed. The judgment sum was for over RM112,212,565.24 together with interest and costs [judgment sum]. The respondent appealed. On 4 October 2016, this court dismissed the respondent's appeal.

[4] The appellant commenced foreclosure proceedings in respect of the respondent's property situated at Lot 1203, Section 57, Bandar Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan together with the building constructed on the property ["the subject property"] which had been charged by the respondent to the appellant. On 10 August 2016, the High court at Kuala Lumpur granted an order for sale of the subject property by way of a public auction. The respondent appealed. At the time of the hearing of the two applications before the High court, the appeal had not been disposed. By the time of the hearing of the present appeals, this court had dismissed the respondent's appeal in respect of the foreclosure proceedings.

[5] On 8 June 2016, the appellant issued a notice pursuant to s 218(2)(a) of the Companies Act 1965 seeking payment of the judgment sum ["s 218 Notice"]. The respondent filed an Originating Summons [Amended Originating Summons - encl 14] challenging the validity and enforceability of the s 218 Notice and seeking in addition, an injunction restraining the appellant from presenting a winding-up petition based on that s 218 Notice. By application in encl 7, the respondent sought an interim Fortuna injunction. This application was granted on an ex parte basis on 14 June 2016. On 18 September 2016, both this application and encl 14 were heard inter partes.

The Contentions In The Amended Originating Summons

[6] The respondent claimed that the s 218 Notice is oppressive and an abuse of process because of the peculiar circumstances in the case. First and foremost, the respondent is a public listed company. It is listed on the Bursa Stock Exchange. The respondent is undergoing restructuring and such action is with Bursa's approval. Next, pending the hearing of the foreclosure proceedings, the respondent had suggested to the appellant that the subject property be sold to a third party, Terra Pontus Ltd, a Singaporean company, proposed by the respondent for RM250 million, a sum which was obviously more than the judgment sum. The respondent claimed that with the sale, it would then be in the position to settle the judgmen