Ambank Islamic Berhad v Prolink Marketing Sdn Bhd (WA-28NCC-1299-12/2019)

This Winding-Up Petition was remitted back to this High Court following the decision of the Federal Court on 7.04.2023 vide Suit No. 02(f) -58-06/2022 (W).

The Petitioner filed this Petition to wind up the Respondent on the grounds of the Respondent’s failure to comply with a notice under section 466 of the Companies Act 2016 (“CA 2016”) issued and served on the Respondent on 07.11.2019. This Petition was filed after the expiry of twenty-one (21) days from the date of service of the notice. The notice was based on the failure of the Respondent to settle the sum of RM15,470,245.98 under a final judgment (“Judgment”) obtained at the High Court in Kuala Lumpur vide Suit No. WA-22M-253-04/2019.

As a supporting judgment creditor of the Respondent, CIMB Bank Berhad (“CIMB Bank”) filed Enclosure 98 on 14.12.2023 to appoint a private liquidator in the event the Respondent was ordered to be wound up.

The Respondent, subsequently filed Enclosure 114 on 09.04.2024 for an order that this Petition and all further proceedings under this Petition be stayed pending the hearing and final disposal of the S/N uM1H9r58zk6f88a62sT6qg **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 Respondent’s appeal against the order of this Court dated 27.03.2024, dismissing the Respondent’s striking out application vide Enclosure 67;

It is pertinent to note that the Respondent withdrew the appeal at the Court of Appeal vide the filing of the Notice of Discontinuance on 25.09.2024.

The Respondents solicitors then filed Enclosure 134 on 20.09.2024 for an order that Messrs Mohd Latip & Associates and Ms Kunamony a/p S. Kandiah be discharged and cease to be the solicitor and counsel acting for Prolink Marketing Sdn Bhd, the Respondent in this action

Both interlocutory applications were fixed for hearing together with the Winding-Up Petition before this Court on 23.09.2024.

On 21.10.2019, in Suit No. WA-22M-253-04/2019, the Petitioner obtained a final judgment for the sum of RM15,470,245.98 against the Respondent at the High Court in Kuala Lumpur. S/N uM1H9r58zk6f88a62sT6qg **Note : Serial number will be used to verify the originality of this document via eFILING portal 4

The Petitioner then served on the Respondent a Statutory Notice of Demand dated 07.11.2019 under section 465(1)(e) and section 466(1)(a) of the CA 2016, demanding the judgments sums. In the same notice, the Petitioner also gave notice that unless the Respondent paid the said sums to the Petitioner within 21 days from the date of service of the notice, the Respondent shall be deemed unable to pay the Petitioner’s debt and winding-up proceedings may be initiated against the Respondent.

The Respondent subsequently failed to pay the sum demanded in the notice.

Consequently, on 05.12.2019, the Petitioner filed this Winding-Up Petition at the High Court in Kuala Lumpur to wind up the Respondent.

Having considered the submissions by both parties, on 05.08.2020, the learned High Court Judge, Justice Nadzarin Bin Wok Nordin, ordered a conditional winding-up order against the Respondent, which is as follows: “UPON THE PETITION of the AmBank Islamic Berhad (Company No. 199401009897 [295576-U], the abovenamed Petitioner on the 5 December 2019 (Enclosure 1) preferred onto the Court … THIS COURT DOTH ORDER THAT the Respondent pays monies owed to the Petitioner within 5 months from the date hereof, i.e., on or before 5 January 2021, the full sum demanded by the Petitioner under the Petition dated 5 December 2019 and the Statutory Notice of Demand dated 7 November 2019. S/N uM1H9r58zk6f88a62sT6qg **Note : Serial number will be used to verify the originality of this document via eFILING portal 5 AND IT IS HEREBY FURTHER ORDERED THAT in the event the Respondent fails to pay the full sum demanded as stated above, the Respondent shall immediately be wound up by this Court on 5 January 2021.”

Aggrieved by the High Court’s decision, the Respondent appealed to the Court of Appeal, the appeal of which was dismissed on 12.09.2022.

Dissatisfied, the Respondent then appealed to the Federal Court. On 07.04.2023, the Federal Court allowed the appeal and made the following orders: “… MAKA ADALAH DIPERINTAHKAN bahawa:-

Rayuan ini dibenarkan;

Soalan 3 dijawab dalam negatif;

Penghakiman Mahkamah Rayuan bertarikh 6.1.2022 diketepikan;

Petisyen Penggulungan dikembalikan semula ke Mahkamah Tinggi untuk sebutan pada 14.4.2023 di hadapan Mahkamah Tinggi (Penggulungan Syarikat); dan

Tiada perintah terhadap kos.” [15] The third question of law that was answered negatively by the Federal Court is as follows: “3. Whether a company may be wound up in the absence of the pronouncement of an order of winding up pursuant to an earlier order prescribing the time limit within which the subject company is to comply with the direction of the court?” S/N uM1H9r58zk6f88a62sT6qg [16] Thus, the Federal Court decided that there must be a pronouncement of an order of winding-up for a company to be considered wound up. [17] After the Federal Court remitted the Petition, the Petition was fixed originally for hearing on 25.07.2023 and thereafter, on 15.12.2023, and was postponed on the first occasion due to the Respondent’s counsel being on medical leave. [18] The Respondent has filed numerous interlocutory applications. On 23.06.2023, the Respondent filed an application to strike out the Petition in this Court. This Court dismissed the application to strike out the Petition under Enclosure 67 on 27.03.2024 (“Striking Out Decision”), which the Respondent then appealed. [19] Subsequently, the Respondent filed an application for a stay of the winding-up proceedings under Enclosure 114 (“Stay Application”) on 09.04.2024, pending the final disposal of the Respondent’s appeal against the Striking Out Decision. [20] The Respondent’s former solicitor then filed a formal application to be discharged on 20.09.2024 under Enclosure 134 (“Discharge Application”). S/N uM1H9r58zk6f88a62sT6qg [21] The Stay Application was then fixed for decision on 25.09.2024, after which this Court dismissed it and proceeded to hear the Discharge Application. [22] This Court allowed the Order in Terms of the Discharge Application. This Court then proceeded to hear submissions on Enclosure 1 by the Petitioner’s counsel. The Director of the Respondent, who was present on the hearing date of the Petition requested for an adjournment of the hearing. Thereafter, this Court refused any adjournment of the hearing and granted the order to wind up the Respondent. The appointment of a liquidator was allowed based on the application by the supporting creditor, CIMB Bank, under Enclosure 98. [23] The Respondent has since appealed against the Winding-Up Order. FINDINGS OF THIS COURT Stay Application [24] It is trite law that in considering an application for a stay of proceedings, the burden is on the applicant to show special circumstances. (see Kosma Palm Oil Mill Sdn Bhd v Koperasi Serbausaha Makmur Berhad [2003] 4 CLJ 7). S/N uM1H9r58zk6f88a62sT6qg [25] In Kosma supra, at pages 203 F-G, 205 D-E, Abdul Hamid JCA had this to say in regard to the application by the Respondent to stay winding-up proceedings: “It is timely that the court came out strongly against the unhealthy trend in the way winding-up petitions are often conducted. Instead of defending the petition, the Respondent makes all kinds of interlocutory applications that would invariably stall the hearing of the petition proper. Such a practice is unfair to the petitioners while clogging the court docket (pages 203 F-G, 205 D-E).” [26] It is also trite law that winding-up proceedings must be disposed of expeditiously. The courts do not look kindly upon applications that delay the winding-up proceedings. In the case of Maril Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Bankers Bhd & Other Appeals [2001] 4 MLJ 187, at page 203, the Court of Appeal was highly critical of the abuse of interlocutory procedures in winding-up proceedings by opposing parties to delay proceedings. [27] The Respondent has not filed any submissions on the Stay Application. After reading from the Respondent’s Affidavit in Support, it can be concluded that the Respondent implies that many serious issues of law in the Petition should be considered. The same point of argument was brought up during the Striking Out Application, which this Court has dismissed. S/N uM1H9r58zk6f88a62sT6qg [28] The ground averred by the Respondent in its Affidavit in Support that the Respondent’s appeal would be rendered nugatory without a stay of proceedings is misconceived for the following reasons:

No order for winding-up has been made, thus, the issue of appeal against a winding-up order is premature at this stage; and

(ii) Even if an order to wind up is made, the Respondent is still entitled to pursue its counter-claim through the liquidator (Zaitun Marketing Sdn Bhd v Boustead Eldred Sdn Bhd [2010] 2 MLJ 749). [29] Thus, this Court dismissed the Stay Application and found that the Respondent has failed to show special circumstances to justify an order to stay proceedings on this Petition. Winding-Up Petition [30] (i) Having dismissed the Stay Application, this Court proceeded to hear the Discharge Application. The Director of the Respondent appeared during the hearing and informed the Court that he does not object to the Discharge Application by his solicitors, but stated he would like to seek another adjournment. S/N uM1H9r58zk6f88a62sT6qg

(ii) Numerous interlocutory applications were filed by the Respondent from the day of filing of the Petition and up till the day of the hearing on 25.09.2024. As such, a further adjournment of the hearing of the Petition would be unfair to the Petitioner. It is also not in the interest of other supporting creditors of the Respondent to delay the winding-up hearing of the Respondent indefinitely. [31] The Respondent has failed to rebut the presumption of commercial insolvency since the date of service of the Statutory Notice of Demand under section 466(1)(a) of the CA 2016. [32] The Petitioner’s papers are in order, and there are no acceptable grounds for dismissing or adjourning the Petition hearing. [33] Thus, I make the order to wind up the Respondent, and for the appointment of the private liquidator, named in prayer 1 in Enclosure 98. Dated 24 December 2024 ……………t.t………………. Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur S/N uM1H9r58zk6f88a62sT6qg COUNSEL FOR THE PETITIONER: IRWAN ISMAIL & AMILA AHMAD SOLICITORS FOR THE PETITIONER: TETUAN LEE & LOH FORMER COUNSEL FOR THE RESPONDENT: K KANDIAH FORMER SOLICITORS FOR THE RESPONDENT: TETUAN MOHD LATIP & ASSOCIATES SOLICITORS FOR THE RESPONDENT: TETUAN PERU & CO COUNSEL FOR THE SUPPORTING CREDITOR (CIMB): NG HOOI HUANG & BRYAN CHEN SOLICITORS FOR THE SUPPORTING CREDITOR (CIMB): SHOOK LIN & BOK Cases Referred to: ➢ Kosma Palm Oil Mill Sdn Bhd v Koperasi Serbausaha Makmur Berhad [2003] 4 CLJ 7 ➢ Maril Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Bankers Bhd & Other Appeals [2001] 4 MLJ 187 ➢ Zaitun Marketing Sdn Bhd v Boustead Eldred Sdn Bhd [2010] 2 MLJ 749 Legislation Referred to: ➢ Companies Act 2016 ➢ Insolvency Act 1967 Decision date: 25 September 2024 S/N uM1H9r58zk6f88a62sT6qg