A winding-up petition cannot be presented on a genuinely disputed debt; it must be resolved through appropriate legal processes.

Ramly Ali J:

Plaintiff's Application

The plaintiff in this case, Malayan Flour Mill Berhad, in encl. 8, applied, inter alia, the following interlocutory relief:

(i) that the defendant, may be restrained whether by themselves, or by their servants or agents or otherwise howsoever from presenting any petition to the court for the winding-up of the plaintiff based on the sum of RM2,067,863.85 claimed in the statutory demand pursuant to s. 218 of the Companies Act 1965 , dated 25 May 2000 served on the plaintiff; and

(ii) that the defendant may be restrained whether by themselves, or their servants or agents or otherwise howsoever from proceeding with any petition to the court for the winding-up of the plaintiff based on the sum of RM2,067,863.85 claimed in the statutory demand pursuant to s. 218 of the Companies Act 1965 dated 25 May 2000 served on the plaintiff;

(iii) that the cost of the application be paid by the defendant;

(iv) such further and other orders as the court deems just and proper.

Grounds Of The Application

The grounds of the application are:

(i) that any presentation of or proceeding with a winding-up petition against the plaintiff is unlawful and an abuse of the process of the court; and

(ii) that there is a genuine dispute as to the sum of RM2,067,863.85 claimed by the defendant in the statutory demand pursuant to s. 218 of the Companies Act 1965 , dated 25 May 2000 served on the plaintiff.

Facts Of The Case

The plaintiff is a public listed company, listed on the main board of the Kuala Lumpur Stock Exchange (KLSE). By a written agreement dated 8 March 1989, the defendant firm agreed to construct and maintain the civil and building works for a broiler breeder farm at Batu Kundur, Lumut, Perak for the plaintiff at the times and manner prescribed by the agreement. After sometime, disputes and differences arose between the parties and pursuant to the contract, such disputes and differences were referred to arbitration.

The arbitration was heard in two parts - the first on liability and the second on quantum. On 6 March 1997 the arbitrator gave an award in respect of the first part of the arbitration (first interim award) in favour of the defendant holding that the plaintiff had breached the contract with the defendant by unlawfully terminating the contract. The plaintiff then applied to set aside the first interim award which was dismissed by the High Court in Originating Motion No: R3-25-62-97 on 16 February 1998. The plaintiff then filed a notice of appeal vide Civil Appeal No: W-04-14-1998 (first appeal). As of to date, this first appeal is still pending.

The second part of the arbitration which dealt with the issue of quantum in the light of the first interim award was heard on 29 December 1998 and 7 January 1999. This resulted in the publication of the second interim award by the arbitrator in respect of quantum of damages on 26 April 1999 and the final award which incorporated interest and cost. However, this time, the defendant applied to the High Court to have the second interim award and the final award be remitted to the arbitration for reconsideration on question of interest rate and pre-award interest and this application was allowed by the High Court by an order dated 17 December 1999. The plaintiff then filed a notice of appeal vide Civil Appeal No: W-02-51-2000 (second appeal). As of to date, this second appeal is still pending in the Court of Appeal.

On 21 January 2000, the plaintiff filed an application for stay of execution of the order dated 17 December 1999 pending disposal of the second appeal. This application was adjourned to 19 June 2000 and then to 25 July 2000. In the meantime, the parties had been exchanging correspondence as to whether the arbitrator should defer the proceedings on the remission of the award to him. Notwithstanding the ongoing discussion, the arbitrator then