JUDGMENT

Zakaria Yatim J:

In this petition the petitioner, Kimoyama Elektrik (M) Sdn. Bhd. is seeking the order of the Court to wind-up the respondent company, Metrobilt Construction Sdn. Bhd. (hereinafter referred to as `the company') on the ground that the company is unable to pay its debts.

There are other creditors of the company who attended the hearing of the petition. Three of the creditors, viz., Miliweb (M) Sdn. Bhd., Arab-Malaysian Merchant Bank Berhad and Syarikat Pembinaan Low Eng Moh Sdn. Bhd. are opposing the petition. One other creditor, Fullmark (M) Sdn. Bhd., (Fullmark) was also present at the hearing. Fullmark has given notice of its intention to support the petition.

At the commencement of the hearing of the petition, Mr. C.K. Tan, Counsel for Fullmark told the Court that Fullmark was withdrawing itself as a supporting creditor in the petition. Mr. Gurubachan Singh, Counsel for the petitioner objected to Fullmark withdrawing itself from supporting the petition. He said that a sum of RM50,000 had been paid by the company to Fullmark in settlement of the debt. He added that the company had also transferred a piece of property to Fullmark in addition to the amount paid. He submitted that this was an undue preference of one creditor over another after the petition had been presented and therefore contrary to ss. 223 and 293 of the Companies Act 1965.

Mr. C.K. Tan confirmed that a sum of RM50,000 was paid to him as stakeholder. According to him he was to hold the money pending the outcome of the hearing of the petition. He added that the money was paid by the parent company in Singapore, which was a third party and a different entity altogether. Mr. K.Y. Leong, Counsel for Syarikat Pembinaan Low Eng Moh told the Court that the money was paid by the company itself.

It is now necessary to consider whether it was proper for the company to settle its debt with one creditor while a petition for winding up is pending before the Court. Section 223 of the Companies Act states:

Any disposition of the property of the company including things in action and any transfer of shares or alteration in the status of the members of the company made after the commencement of the winding up by the Court shall unless the Court otherwise orders be void.

Encik Mohd. Ismail, Counsel for the company submitted that s. 223 refers to disposition of property after the company had been wound-up. In support of his submission, he cited Re Miles Aircraft Ltd. [1948] 1 Ch 188. In that case, the applicants, who held an equitable charge on the assets of the company, applied to the Court under s. 173 of the Companies Act 1929 for an order that a contract entered into by the company to sell certain premises should not be void. The contract was made on the day after the presentation of the petition for winding up. In considering the object of s. 173 Vaisey J referred to s. 153 of the Companies Act 1862 and held that the Court had no jurisdiction to make such an order unless a winding-up order had been made.

In a subsequent case, Re A.1. Levy (Holdings) Ltd. [1964] 1 Ch 19. Buckley J disagreed with the decision in Re Miles case saying, at p. 27, that the object of s. 227 of the Companies Act 1948 (which is similar to s. 173 of the Companies Act 1920):

is to protect the interests of creditors from the possibly unfortunate results which would ensue from the presentation of a petition, and to protect their interests as much during the period while the petition was pending as after an order has been made on it. What the section provides in its present terms is that any disposition of the property of the company made after the commencement of the winding up shall be void in the winding up of the company unless the Court otherwise orders ...

Mr. Gurubachan Singh contended that under s. 223 the payment of the money to Fullmark after the petition was filed was void unless the company applied to the Court for a validating order. He cited a number of cases in su