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2025 MarsdenLR 2195
HIGH COURT MALAYA KUALA LUMPUR
BRILLIANT STAR CONSTRUCTION – Appellant
Versus
EXYTE MALAYSIA SDN BHD – Respondent
[Companies (Winding Up) Petition No: WA-28NCC-225-02/2025]
A winding-up petition cannot proceed if the alleged debt is genuinely disputed, necessitating resolution through arbitration or litigation instead.
Headnote:(A) Company Winding-Up Rules 1972 - Order 18 Rule 19 - Companies Act 2016 - Disputed debts - Petition for winding up dismissed due to bona fide disputes over debt - Court found that the allegations of debt were debatable and should be resolved through arbitration as per the contractual agreement - The application to arrest the petition was not fatal despite procedural discrepancies - Abuse of process by the petitioner noted. (Paras 3, 31, 35, 34)
(B) Courts' Role - The court must not allow the winding-up process to resolve disputes which should rightfully be settled in litigation or arbitration - The mere fact of a disputed debt precludes the initiation of winding-up petitions. (Paras 32, 36)
Facts of the case:
A petition for winding up was filed by the Petitioner against the Respondent claiming an alleged debt of RM690,969.72. The Respondent contested the claims, establishing a bona fide dispute requiring resolution by arbitration.
Findings of Court:
Petition to wind up struck out as an abuse of process due to substantial disputes over the claim and the absence of a clear admitting of the alleged debt.
Issues: The core issues concerned the validity of the winding-up petition amidst disputed debts, and whether arbitration was the appropriate forum for resolution.
Ratio Decidendi: The court ruled that when a debt is bona fide disputed, it is not appropriate for resolution through a winding-up petition using affidavit evidence alone, necessitating a trial or arbitration for appropriate resolution.
Result: Petition struck out with costs awarded.
| Table of Content |
|---|
| 1. contractual debt dispute details. (Para 1 , 5 , 6 , 10 , 12 , 13 , 14) |
| 2. preliminary objection regarding non-compliance. (Para 2 , 22 , 23 , 24) |
| 3. court procedures in striking out petitions. (Para 15 , 16 , 20 , 21 , 26) |
| 4. disputed debt not suitable for winding up. (Para 30 , 31 , 32 , 33 , 35 , 36 , 39 , 41) |
(Striking Out Petition)
Introduction
[1] The Petitioner has filed a Petition to wind up the Respondent for an alleged debt that it says is owed by the Respondent.
[2] The Respondent, disputing the said debt and the validity of the Petition, has filed an application to strike out the said pleading under O 18 r 19(b) and/or (d) of the Rules of Court 2012 Essentially, the Respondent contends that the debt is disputed, that the Petition is an abuse of process, and that the dispute between the parties should have been resolved by way of arbitration rather than by a Petition to wind up the company.
[3] Having considered the submissions, the affidavits filed and after hearing counsels on this issue, I find that the Respondent has successfully shown that:
(i) That the WindingUp is not based on a judgment of the Court or an award by an arbitrator.
(ii) That the Respondent has a bona fide defence and is disputing the validity of the sums claimed by the Petitioner.
(iii) That the Petitioner should not have filed the Petition and should have filed either a claim in arbitration against the Respondent for the sums or at the very least filed a writ to have the issue resolved.
(iv) That the dispute between parties cannot be resolved solely by affidavit evidence and must be determined through viva voce evidence.
(v) That the Respondent has shown a bona fide defence to the claim and has not admitted that the sums are due as alleged by the Petitioner.
[4]Therefore, I find that the Petition should be struck out as it is an abuse of the process of Court to utilize the windingup mechanism as a means to force the Respondent to pay the sums that are claimed. The alleged debt is disputed and should be resolved through the appropriate process as agreed between parties.
Background Facts
[5] Pursuant to the Letter of Award for Labour Supply dated 13 August 2024 ("LOA"), the Respondent agreed to enter into a contract with the Petitioner for the supply of skilled and unskilled labour in respect of "Beta Project - Package C04D Concrete, Structural and Architectural [CSA] Works" ("Labour Supply") for the project known as "Intel Pelican Project - Kawasan Perindustrian Bayan Lepas, Pulau Pinang" ("Project"). The Standard Terms and Conditions were attached to the LOA.
[6] Thereafter, during the lifetime of the Contract, the Respondent issued Purchase Order No. 5336274 dated 2 September 2024 ("PO dated 2 September 2024") to the Petitioner for the sum of RM3,316,525.94. The Purchase Order Standard Terms and Conditions were also attached to the PO dated 2 September 2024.
[7] This Court notes that the Petitioner disputes that the Standard Terms and Conditions were attached to either the Letter of Award (LOA) or the Purchase Order (PO).
[8] The Respondent relies on the following terms of the Contract as they appear in the Standard Terms and Conditions:
(1) All invoices and delivery orders must indicate PO Nos. and Project No. and include all supporting documents required by the Respondent. The payment terms shall start from the date of receipt of the Petitioner's invoices and all supporting documents required by the Respondent. The Respondent may withhold payments to the Petitioner to the extent required to cater for any breach or imminent breach of the Petitioner's obligation under the POs; and
(2) In the event of any dispute arising out of or in connection with the orders, the parties shall attempt to resolve such dispute in good faith through negotiations between their respective management teams. If such dispute cannot be so resolved within 30 days of notice from either party, the dispute shall be finally resolved by arbitration
