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2025 MarsdenLR 5589
HIGH COURT (KUALA LUMPUR)
SAHERAN SUHENDRAN, JC
Pembinaan BY Sdn Bhd – Plaintiff
Versus
Minda Muhibah Sdn Bhd & Anor – Defendant
ORIGINATING SUMMONS NO WA-28JM-9-06 OF 2025
Yap Boon Hau(with Nur Ayu Asyikin) (Mah-Kamariyah & Philip Koh) for the applicant.
Lock Jun Qi (Tang Hong & Lock) for the first respondent.
Chia Oh Sheng (with Athena Chan) (Lee Hishammuddin Allen & Gledhill) for the second respondent.
A Judicial Management Application requires substantial evidence to demonstrate the likelihood of achieving company survival, as mere assertions of potential recovery are insufficient.
Headnote:(A) Companies Act 2016 - Sections 405 and 410 - Judicial Management Application - The court considered whether the Respondent, a company, was able to pay its debts and whether a Judicial Management would likely lead to its survival as a going concern. The application for Judicial Management was dismissed due to insufficient evidence proving financial viability and a real prospect of reorganization. The Court allowed an unsecured creditor to intervene based on conflicting judgments regarding the locus of unsecured creditors in Judicial Management Applications. (Paras 1-109)
(B) Judicial Management - The burden of proof lies with the applicant to demonstrate the likelihood of achieving purpose under s. 405(1)(b); mere assertion is insufficient. The Court emphasized the importance of thorough evidence in proving financial circumstances and proposed plans for survival. (Paras 74-94)
(C) Insolvency - Evidence showed the Respondent was severely insolvent with debts exceeding RM70 million, thus questioning the viability of the Judicial Management Application. (Paras 87-99)
(D) Leave Nunc Pro Tunc - The Court granted leave for an unsecured creditor to proceed with winding-up despite the existence of a moratorium, highlighting the legal and practical barriers faced by insolvent companies. (Paras 102-105)
| Table of Content |
|---|
| 1. applications for judicial management. (Para 2 , 3 , 4) |
| 2. background facts regarding the contractual relationship. (Para 6 , 7 , 8) |
| 3. details on cipaa adjudication and contract terminations. (Para 9 , 10 , 11 , 12 , 13) |
| 4. subsequent settlement agreements. (Para 14 , 15 , 16 , 17 , 19) |
| 5. statutory notices and winding-up petition filings. (Para 20 , 21 , 22 , 23 , 24) |
| 6. details of the judicial management application. (Para 25 , 26 , 27) |
| 7. court's observations on the locus of creditors. (Para 31 , 32 , 33 , 34 , 35 , 36) |
| 8. judicial precedent and its implications. (Para 39 , 40 , 41 , 42) |
| 9. the assessment of the respondent's financial viability. (Para 86 , 87 , 88 , 89 , 90 , 91 , 92 , 93 , 94 , 95 , 96 , 97 , 98 , 99 , 100) |
| 10. conclusion regarding winding-up petitions. (Para 102 , 103 , 104) |
Saheran Suhendran JC:
GROUNDS OF JUDGMENT
[1]These Grounds concern 2 applications filed herein, Encl 1 and Encl 10.
INTRODUCTION
[2]Encl 1 was filed by the Applicant, Pembinaan BY Sdn. Bhd. (“Applicant”) for orders, inter alia:
a.that Minda Muhibah Sdn. Bhd. (“the Respondent”) be placed under Judicial Management pursuant to s. 405Companies Act 2016CA 2016”);
b.that Mr. Andrew Heng and Mr. Kumarakuru Krishnan, be jointly and severally appointed as Judicial Managers of the Respondent;
[3]Encl 10 was filed by China State Construction Engineering (M) Sdn. Bhd. (“China State”), pursuant to, inter alia, O. 15 r. 6(2)(b), O. 18 r. 19(1)(b), (1)(c) and/or (1)(d) and O. 92 r. 4 of the Rules of Court 2012 , s. 410(c) CA 2016inter alia, the following Orders:
a.China State be granted leave to intervene and be added as the 2nd Respondent in these proceedings;
b.Encl 1 be struck out;
c.China State be granted leave to continue with the arbitration against the Respondent ‘In the Matter of the Arbitration Act 2005 (Amended 2011 & 2018) and In the Matter of an Arbitration between Minda Muhibah Sdn Bhd and China State Construction Engineering (M) Sdn Bhd’ (“Arbitration”);
d.China State be granted leave nunc pro tunc to continue with the winding up proceedings against the Respondent in KL HCt [OS No. WA-24NCC-339-06/2025] (“OS 339”) and KL H Ct [Companies Winding Up Petition No. WA- 28NCC-648-06/2024] (“Petition 648”);
[4]Save where the context otherwise provides, all references to sections are with reference to the sections of CA 2016.
[5]The contents of these Grounds are set out below.
| Contents | Para |
|---|---|
| INTRODUCTION | 2-5 |
| BACKGROUND FACTS | 6-8 |
| CIPAA 1 | 9-10 |
| Termination of Contract | 11-12 |
| Arbitration | 13 |
| Settlement Agreement 1 | 14 |
| CIPAA 2 | 15-16 |
| Settlement Agreement 2 | 17-19 |
| Statutory Notice of Demand | 20-21 |
| Respondent’s Fortuna Application (OS 300) | 22-24 |
| Winding-Up Petition against the Respondent (Petition 648) | 25-26 |
| China State’s Fortuna Application (OS 339) | 27 |
| Encl 1 – Judicial Management Application (“JMA”) | 28-30 |
| China State & the Locus of an Unsecured Creditor | 31-38 |
| An Unenviable Choice | 39-59 |
| Inconsistency | 60-69 |
| Encl. 10 & the Striking Out | 70-72 |
| Encl 1 & the Appointment of the JM | 73-86 |
| Respondent is Severely Insolvent | 87-89 |
| No Real Proof of Financing | 90-101 |
| Prayer 6 – Leave ‘Nunc Pro Tunc’ to Proceed with Petition 648 | 102-105 |
| CONCLUSION | 106-108 |
BACKGROUND FACTS
(see generally, Encl 11)
[6]The following background facts are adopted from the submissions of China State, for which I am grateful.
[7]The Respondent is the employer of a commercial development known as ‘Rencana Royale’ (“Project”).
[8]By a Letter of Award dated 12.11.2018, the Respondent appointed China State as the main contractor for the main building works under the Project (“Works”) for a total sum of RM160,627,298.81 (“Contract”).
CIPAA 1
[9]On 24.6.2022, China State commenced adjudication proceedings (Adjudication Reference No. AIAC/D/ADJ-4334- 2022) against the Respondent for unpaid certified sums due and owing under Interim Payment Certificates No. 18-32, 34 and 35 in respect of the work done (“CIPAA 1”).
[10]On 25.10.2022, China State obtained an adjudication decision against the Respondent for the sum of RM5,285,194.28 together with interest an
