Richard Malanjum JCA (now CJ (Sabah and Sarawak) delivering judgment of the court)::

INTRODUCTION

[1] The matter before us is an appeal by the appellant (the respondent in the court below) against the decision of the High Court made on 28 September 2001 wherein upon the presentation and hearing of the petition filed by the respondent (the petitioner in the court below) under s 218 of the Companies Act 1965 (‘the Act’) it was ordered that the appellant be wound up.

FACTS OF THE CASE

[2] The appellant was incorporated in September 1995 with a paid up capital of RM3,000,000. Its principal business activities include shipping agency representing several shipping lines.

[3] On or about 1 October 1996, the appellant was appointed the shipping agent for a South Korean Shipping Line, Hanjin Shipping Co Ltd (‘Hanjin’) which has a regional office based in Singapore. The appellant succeeded the former agent of Hanjin namely, Marine Meridien Sdn Bhd.

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[4] Upon the expiry of the agreement between Hanjin and the appellant, Hanjin appointed the respondent as their agent for Peninsula placecountry-regionMalaysia.

[5] Pursuant to an agency agreement dated 1 April 2000, the respondent with the consent of their principal, Hanjin, duly appointed the appellant as their exclusive sub-agent for East Malaysia, ie Labuan and all of Sabah and Sarawak ports. Added in to the territories however, were Malacca and Kuantan (‘the territories’).

[6] Not long after the appointment of the appellant by its letter dated 23.8.2000 the respondent unilaterally and without assigning any reason thereto terminated the sub-agency of the appellant by giving it a three months’ notice in writing and effective from 24 November 2000.

[7] Subsequently the parties or their representatives had several meetings to sort out, verify and settle all the accounts prior to the handing back of the agency on the territories to the respondent.

[8] During the process of verifying the accounts both parties came out with their own claims or counterclaims against each other.

[9] Whilst the appellant admitted owing the respondent a sum of RM33,595.60 without yet taking into account the sum of RM500,000 it had spent on the instruction of Hanjin to upgrade and renovate the offices in the territories, the respondent by its letter dated 4 January 2001 claimed that the appellant owed it the sum of RM540,050.76 after deducting the sum of RM54,003 being commission due to the appellant.

[10] Arising from the claim by the respondent the appellant sought for a proper handing over of the business as per in the agency agreement which would include the verification and settlement of all accounts between the parties.

[11] The respondent did not favourably respond to the request. Instead it caused to be issued and served on the appellant a notice under s 218 of the Act.

[12] Subsequently a winding up petition was filed by the respondent seeking to wind up the appellant on the ground of being unable to pay its debt. There was no court judgment against the appellant filed to support the petition.

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[13] Upon being served with the petition the new solicitors of the appellant in its letter dated 1 August 2001 offered to settle the outstanding sum of RM194,969 in one payment within seven days from the date of confirmation by the respondent of the said sum. It was also requested that the respondent withhold the advertisement of the petition pending the outcome of the negotiation of the parties.

[14] By a letter dated 6 August 2001 the solicitors for the respondent informed the solicitors of the appellant of their client’s agreement to the settlement proposal except that it could not withhold the advertisement of the petition which had been arranged earlier on.

[15] A cheque for the sum of RM194,969 was thus deposited on 15.8.2001 by the appellant to its solicitors with instruction to release the same to the solicitors for the respondent upon fulfilling the request by t

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