JUDGMENT

Mokhtar Sidin JCA:

This is an application by the petitioner (ET Mix Sdn Bhd) to wind-up the respondent (Sun Steel Construction Sdn Bhd) under the provisions of the Companies Act 1965. According to the petition the respondent company was incorporated under the Companies Act 1965 (hereinafter referred to as 'the Act') on 12 June 1985 and has its registered office at No. 52 (3rd Floor), Jalan Hang Lekiu, 50100 Kuala Lumpur. The petition also stated that at the time of filing the petition the respondent was indebted to the petitioner in the sum of RM809,100.66. On 7 April 1995 the petitioner sent to the respondent a demand for the said sum by AR registered post. The respondent failed to pay the said sum within 21 days as stated in the notice. With that failure the respondent was deemed to be unable to pay its debt. For that reason, the petitioner petitioned that it was just and equitable that the respondent should be wound-up. The petition was filed on 29 July 1995.

On 21 October 1995 the respondent filed an affidavit affirmed by Mr. Teoh Seow Weng, the respondent's managing director, opposing the petition. In the affidavit the respondent admitted it had not paid the petitioner the sum due but averred that the petitioner had agreed to defer the payments of the whole or part of the debt. The material parts of the affidavit explains that the respondent is a construction company involved mainly in piling and substructure works. On 20 January 1993, the respondent was awarded a subcontract the piling and substructure works for the sum of RM13.75 million by MBf Builders Sdn Bhd, the main contractors in a project known as the Menara Budaya Project ('the first project'). The respondent admitted that the petitioner did supply ready-mixed concrete to the respondent from March 1993 until November 1993. The petitioner ceased to supply ready-mixed concrete at the end of November 1993 when the main contractor wrongfully terminated the subcontract of the respondent. After the termination Mr Teoh Seow Weng met Mr. Edwin Thiagaraj Palan a/l S. Thiophilus Palan, a director of the petitioner, and Mr. Teoh informed the latter that the respondent had not been paid by the main contractors in respect of three progress payments amounting to a few million ringgit. Mr. Teoh also informed Mr. Palan that at that moment the respondent was not able to pay the petitioner the amount due to the petitioner. The respondent would only be able to recover the money after the conclusion of the arbitration between the respondent and the main contractor. Mr. Teoh also informed Mr. Palan that the respondent had been awarded another subcontract to do piling and substructure works in respect of a project known as the Kuala Lumpur Stock Exchange (KLSE) Project ('the second project'). Mr. Teoh then proposed to defer the payment under the first project until the arbitration award. In addition, the respondent also proposed to appoint the petitioner as the supplier of ready-mixed concrete in the second project. The respondent also proposed to pay the amount due under the first project with whatever amount available from the progress payments under the second project after paying the goods supplied by the petitioner in the second project. According to the affidavit of the respondent the petitioner agreed to that arrangement. The affidavit further stated that under that arrangement the amount paid by the respondent amounting to RM744,735.50 consisting of RM374,318.86 for goods supplied under the second project and RM370,416.64 as part payment of the amount due to the petitioner under the first project. The respondent further claimed that it had kept its part of the bargain. The affidavit of the respondent stated that sometime in 1995, Mr. Palan invited Mr. Teoh for a meeting over lunch. At that meeting, attended by Mr. Chong, Mr. Palan and Mr. Teoh, it was explained to Mr. Teoh that both Mr. Chong and Mr. Palan had disposed of their majority shareholding to a third party