A creditor does not need a judgment to initiate winding-up proceedings; the obligation to pay debts is recognized once a contractual term is breached.

[1] This appeal arose from the order of the Kuala Lumpur High Court dated 23 June 2017. The learned Judge had allowed the winding-up petition filed by the respondent under sections 218(1)(e) and 218(2)(a) of the now repealed Companies Act 1965 (" CA 1965") and wound up the appellant company.

[2] Aggrieved with the decision, the appellant filed the instant appeal. After hearing the parties and taking into consideration the written submissions, we unanimously dismissed the appeal and affirmed the order of the High Court. Our reasons for doing so now follow and will constitute the judgment of the Court.

Background Facts

[3] The facts leading to the presentation of the winding-up petition are not disputed and have been summarised by the parties in their submissions and by the learned Judge as follows. The appellant and the respondent executed a Lease Agreement dated 22 June 2012 ("the Lease Agreement") whereby the appellant agreed to lease a plot of land ("the said land") for a period of 30 years to the respondent. The Lease Agreement was subject to conditions precedent.

[4] A deposit amounting to RM1.1 million was paid by the respondent to the appellant under the Lease Agreement. Pursuant to the Lease Agreement, the appellant was to refund the deposit to the respondent upon the determination of the Lease Agreement.

[5] On 23 September 2013, the appellant rescinded the Lease Agreement and attempted to refund the said deposit. Prior to that, there was a disagreement as to the non-fulfillment of certain conditions precedent as stipulated in the Lease Agreement before the cut-off date. This resulted in the respondent commencing legal action in suit no. 22NCVC-113-03/2014 in the KL High Court ["2014 Civil Suit"] against the appellant for specific performance.

[6] The respondent returned the appellant's cheque for the sum of RM1.1 million to the appellant's solicitors and indicated that the deposit of RM1.1 million was to be held by the appellant's solicitors as stakeholder pending the outcome of the 2014 Civil Suit. Nevertheless, the 2014 Civil Suit was dismissed by the KL High Court on 29 July 2016 with costs of RM20,000.00 to the appellant. The KL High Court essentially decided that the appellant had correctly exercised its right to terminate the Lease Agreement.