JUDGMENT

Hashim Yeop Sani CJ (Malaya):

On 10 December 1987 Morgan Guaranty Trust Company of New York (the petitioner) presented a petition to have Lian Seng Properties Sdn. Bhd. (the company) wound up. It was not disputed that the company had taken a loan of RM30 million from the American International Assurance Co. Ltd. (AIA) the repayment of which together with interests and costs was guaranteed by the petitioner. The guarantee agreement between the company and the petitioner inter alia provided that if the guarantor notified the company that AIA had required the guarantor to pay any part of the amount guaranteed, the company should forthwith on demand pay such amount to the guarantor notwithstanding that the sum called for might not have been properly due.

It was also not disputed that there were other lenders of the company. The company's debts were secured in several other ways. One such security was a piece of land in Kuala Lumpur on which the respondent was constructing offices and apartments for sale to the general public.

Some time in April 1987 the lenders combined by entering into an agreement with the company to share among themselves the proceeds from the sales of the offices and apartments and they agreed on a common formula on the sharing to be done. The petitioner was not a party to the agreement. The lenders however reserved their rights under the instruments of lending.

The petition relied on a number of grounds. Firstly it referred to cl. 5 of the guarantee facility agreement dated 13 August 1984 that the company would unconditionally and irrevocably undertake to keep the petitioner fully indemnified in accordance with the guarantee facility agreement on all liabilities whatsoever incurred under or in connection with the agreement.

By a letter dated 23 September 1987 AIA demanded payment from the petitioner the sum of RM33,323,593.91 pursuant to the guarantee. By a letter dated 9 November 1987 following the occurrence of a number of defaults as described in the said letter, the petitioner demanded from the company the said sum. The company failed or refused or neglected to pay the said sum.

The petition also reproduced the balance sheet of profit and loss of the company which showed that liabilities exceeded assets and that the company had incurred a loss of RM11,811,100 as at 31 December 1986 as against a profit of RM1,006,292 as at 31 December 1985.

Finally the petition relied on just and equitable grounds that the company should be wound up.

On 15 April 1988 a contracting company, Pembinaan KSY Sdn. Bhd. gave notice of intention in support of the petition.

On 21 December 1988 the company filed a notice of motion seeking that the winding-up petition be set aside on the grounds that:

(a) the petitioner was not entitled to present the petition; and

(b) the petition did not disclose a cause of action.

The notice of motion was heard and on 26 October 1989 the learned Judge set aside the petition on the sole ground that in his view the petitioner had no locus standi to present the petition.

The learned Judge stated in his judgment that he was:

far from satisfied that the petitioner was at the material time qualified to petition the Court as it did.

p. 20 of the appeal record.

There were many red herrings thrown in below and before us but the simplest approach in this appeal is to just answer the question whether on the facts of this case as were available to the learned Judge as on the date of the petition the petition should be struck out in limine or should he heard. After hearing arguments and considering the facts we took the view that the petition should not have been struck out in limine and that it should have been heard on its merits. We accordingly allowed the appeal with costs here and below.

It would appear that the trial Judge based his decision mainly on the contention of the company that the petitioner was not entitled to invoke cl. 5.2 of the guarantee agreement as the demand was "stage managed"