Ambank Islamic Berhad v Ws Rent-A-Car Sdn. Bhd. (WA-28NCC-249-03/2024)

The Petitioner had obtained a Judgment in Default of Appearance before the Sessions Court at Kuala Lumpur against the Defendant in the Civil Suit bearing number WA-B5M-659-04/2021.

The Respondent did not apply to set aside the said Judgment; therefore, it remains binding on the Respondent.

Messrs B.H.Gan, Nor & Kim, solicitors for the Petitioner, issued a demand for payment of the Judgment debt via its notice dated 9-1-2024

The Respondent had failed to comply with the said statutory notice. This caused the Petitioner to file the Petition to Wind-Up the Respondent pursuant to section 465(1)(e) and section 466 (1)(a) of the Companies Act 2016.

(I) Grounds for Application to Strike Out the Petition by the

The Respondent did file an application to strike out the Petition pursuant to Order 18 rule 19 of the Rules of Court 2012. The grounds of the said application are summarized as follows: -

5.1 That parties did enter into a settlement agreement where it was agreed that the Respondent is entitled to pay the sums that are due to the Petition by way of RM 500.00 monthly payments until the Judgment sums due are fully paid.

5.2 The Petitioner had given a notice to the Respondent to surrender the vehicle finance under the account bearing number

The car has since allegedly been returned and the sum due after considering the said car is only RM 35, 186.59.

5.3 The Petitioner had given a notice to the Respondent to surrender the vehicle finance under the account number 8882000221558. The car has since allegedly been returned and the sum due after considering the said car is only RM 56, 143.00.

5.4 Therefore, the sums claimed in the Petition are no longer due and payable by the Respondent.

5.5 Parties had entered into negotiations and agreed to a settlement concerning the facilities due to the Petitioner. The Respondent has paid the sum RM 2, 878.75, RM 4, 981.25 and RM 14, 063.22 to the Petitioner.

5.6 The purpose of the said Petition is to force the Respondent to agree to a global settlement of the sums due to the Petitioner for all of the facilities with the Petitioner.

Decision of this Court on this Application to Strike Out 6. After considering the Petition, the affidavits filed by the Petitioner and the Respondent, the submissions filed, as well as the oral arguments by counsel for both parties, I find that the Respondent has failed to prove that this Petition is an abuse of process.

Firstly, I find that the Petitioner has shown that the Judgment in Default remains a valid and binding Judgment on the Respondent. The Petitioner has also produced copies of the Statement of Account for the said facilities where Judgment has been entered against the Respondent as of 9-1-2024 i.e. the date of the Default Judgment entered against the Respondent.

Secondly, I find that the documents produced by the Respondent to allegedly show that there was a settlement agreement between it and the Petitioner does not support its contention. The letter dated 5-4-2024 shows that there was a proposal for settlement issued by the Petitioner and this was not accepted by the Respondent. The Respondent had failed to confirm its agreement to the proposed settlement as seen in Exhibit WMK-1. Therefore, it cannot be said that there was any settlement as suggested by the Respondent. This was also denied by the Petitioner as the proposal was not agreed to by the Respondent.

Thirdly, the reduction of the sums due as a result of the sale of the repossessed vehicles has not been proven by the Respondent. The only documents produced by the Respondent are the Statutory Notices issued by the Petitioner, which demand the return or repossession of the vehicles and state that any subsequent sale would reduce the Respondent's indebtedness. The sums stated in these two notices merely reflect the estimated value of the vehicles. The Respondent has not provided any evidence to show that the vehicles were actually sold.

With regard to the sums of RM 2,878.75, RM 4,981.25, and RM 14,063.22 paid by the Respondent, I note that these payments were made after the notice was issued by the Petitioner. Specifically, the payments were made on 9-10-2024 and 31-12-2024. The Respondent did not settle the full sums demanded by the Petitioner in the said notice, and the payments were also made after the expiry of the 21 days period stipulated in the notice issued by the Petitioner.

Finally, with regard to the allegation that the Petition is an abuse of process as the Respondent was allegedly forced to agree to a global settlement of all facilities with the Petition, I find that this is also not correct.

The evidence before me only shows that the Respondent was informed that the Petitioner would only entertain any offer for settlement if the Respondent was willing and able to agree to a global settlement of all outstanding facilities. There is nothing unreasonable about this proposal, particularly since the Petitioner is filing the Petition based on a Judgment in Default entered against the Respondent. This Judgment remains valid and binding, and has not been set aside. The Respondent also failed to pay the said sums within the 21 days period and did not even apply to set aside the said Judgment of Default.

In the circumstances of this case, it cannot be said that the filing of the Winding-Up Petition is an abuse of process. There is a binding Judgment of the Sessions Court against the Respondent, and as of the date of the Notice to Wind Up, the judgment debt remained unpaid. Even as of today, the full sums due have not been settled, notwithstanding the part payments made by the Respondent. This can be seen in the decision of the Court of Appeal in Gulf Business Construction (M) Sdn Bhd v. Israq Holding Sdn Bhd [2010] 8 CLJ 775.

The facts of this case did not fall within the scope of circumstances envisaged by Nallini Pathmanathan FCJ in V Medical Services M Sdn Bhd v. Swissray Asia Healthcare Co Ltd [2025] 2 MLJ 744.

I also refer to the following cases: -

Carimin Engineering Services Sdn Bhd v. Dynamic Navigation Sdn Bhd [2025] CLJU 77.

(ii) Conweld Engineering Sdn Bhd & Ors v. Goh Swee Boh @ Goh Cheng Kin & Anor [2022] 6 MLJ 810.

I find it instructive to refer to the decision of Mohd Nazlan Ghazali J in Klass Corporation (M) Sdn Bhd v. MKRS Management Sdn Bhd [2018] 7 CLJ 303 where he held: - “[34] The overriding question of whether the debt is disputed, arising from the test of whether the petition would be bound to fail, in this case is readily answered in an unequivocal "No", on both counts. There is the judgment debt which means there is no bona fide dispute, and there is no stay, which in effect reinforces the absence of a bona fide dispute. The existence of a bona fide disputes is affected by the presence of a stay. The rule that a stay does not prevent a winding-up is irrelevant and out of context in the instant case, and is thus entirely unmeritorious. Indeed, apart from this argument of little substance, no reason was proffered to clarify why the plaintiff refrained from seeking a stay of execution of the judgment debt.”

Therefore, as the Plaintiff has shown that there exists a Judgment debt that exists for a sum of more than RM 10,000.00 and the requisite notices have been duly issued to the Respondent, there is no basis for this Court to find that the Petition is an abuse of process. The said order has also not been stayed or set aside by the Respondent.

For the above reasons, I dismiss the Petitioner’s application in Enclosure 22 with costs. C. The Petitioner’s Application to Wind-Up the Respondent 19. The Petition is based on Section 465 and Section 466 of the Companies Act 2016. I reproduce the relevant statutory provisions for ease of reference: -

“Circumstances in which company may be wound up by Court

The Court may order the winding up if—

the company is unable to pay its debts;”

“Definition of “inability to pay debts”

A company shall be deemed to be unable to pay its debts if—

the company is indebted in a sum exceeding the amount as may be prescribed by the Minister and a creditor by assignment or otherwise has served a notice of demand, by himself or his agent, requiring the company to pay the sum due by leaving the notice at the registered office of the company, and the company has for twenty-one days after the service of the demand neglected to pay the sum or to secure or compound for it to the satisfaction of the creditor;”

In this case it is clear that the Respondent did not pay the full Judgment Sum / sum demanded after the receipt of the notice within the required 21 days, and failed to compound the sums demanded to the satisfaction of the Petitioner.

Therefore, the Petitioner has correctly argued that there is a presumption that the Respondent is insolvent The Respondent’s failure to pay the sums demanded within 21 days, or to compound the sums to the satisfaction of the Petitioner (the Creditor), causes the application of this presumption. It is then incumbent upon the Respondent to demonstrate that it is not insolvent. This can be seen in Sri Hartamas Dvpt. Sdn Bhd v. MBF Finance Bhd [1992] 1 CLJ 637 where the Supreme Court held: - “... In this case, the presumption of insolvency arises when the requirements of s. 218(2)(a) of the Act [note: equipollent to section 466(1)(a) of the CA 2016 ] have been satisfied and it is for the company to prove that it is able to pay its debts. In dealing with 'commercial insolvency', that is, of a company being unable to meet current demands upon it, we would respectfully follow the Privy Council in the Malayan Plant case and cite the following observations from Buckley on the Companies Act (13th Ed) at p 460: In such a case it is useless to say that if its assets are realized there will be ample to pay twenty shillings in the pound: this is not the test. A company may be at the same time insolvent and wealthy. It may have wealth locked up in investments not presently realizable; but although this be so, yet if it have not assets available to meet its current liabilities it is commercially insolvent and may be wound up. Applying the test in the above-quoted observations, we therefore held that the learned judge had exercised his discretion correctly in ordering the appellant to be wound up.”

Also refer to Maril-Rionebel (M) Sdn Bhd & Anor v. Perdana Merchant Bankers Bhd & Other Appeals [2001] 3 CLJ 248 where Gopal Sri Ram JCA held: - “But a petition for winding up is not execution, for a winding up petition is not based upon any judgment of a court. Normally, it is based on the inability of a company to pay its debts as and when they fall due. Such inability is normally evidenced by the company's inability to satisfy or compound a notice of demand issued pursuant to s. 218 of the Act.”

It is also important to note that the fact that the Respondent may have made part payment of the sums due after the 21-day period does not mean that the debt is disputed and that the Petition should be dismissed by this Court. I refer again to Gulf Business Construction (M) Sdn Bhd v. Israq Holding Sdn Bhd (supra) where Abdul Malik Ishak JCA held: - “[9] The demand that is required under s. 218(2)(a) of the Companies Act 1965 can be in any form. There is no prescribed form to follow. So long as there is a notice of demand that is sufficient. The purpose of the notice is to warn the debtor, like the respondent here, of an impending petition (Sri Hartamas Development Sdn Bhd v. MBF Finance Bhd [1992] 1 CLJ 637; [1992] 1 CLJ (Rep) 303, SC). And the notice that is issued to the debtor must relate to a specified debt and that debt cannot be seriously questioned (Re a Company [1985] BCLC 37). That debt too must be in a liquidated sum (Ng Ah Kway v. Tai Kit Enterprise Sdn. Bhd. [1984] CLJU 164; [1984] 1 LNS 164). It must be emphasised that the debt must be presently due and owing (Re Bryant Investment Co Ltd [1974] 2 All ER 683). And the debtor has 21 clear days (three weeks) to pay and that would exclude the day of service (Re Lympne Investments Ltd [1972] 2 All ER 385). A note of warning must be sounded. That a statutory notice under sub-section (2)(a) of s. 218 of the Companies Act 1965 cannot be construed to be prima facie evidence of the debt (Metal Reclamation (Industries) Sdn Bhd v. JRC Tenaga Sdn Bhd [2000] 6 CLJ 290). [10] The failure of the debtor to pay the debt within 21 days (three weeks) after the service of the notice of demand entitles the creditor to present a petition and that petition cannot be restrained by an injunction. And it is not open to the debtor to say that it is able to pay the debt but chooses not to (Cornhill Insurance Plc. v. Improvement Services Ltd. And Others [1986] 1 WLR 114). [11] The failure on the part of the company to pay as demanded would trigger the presumption that the company is unable to pay its debt. This presumption is, however, rebuttable. The onus shifts onto the company to show that it is able to pay the debt (PT Anekapangan Dwitama v. Far East Food Industries Sdn Bhd (supra)). Thus, the inability to pay on the part of the company gives the requisite jurisdiction of the court to make a winding-up order against the company (Securicor (M) Sdn. Bhd. v.

The applicable test when dealing with a Petition to wind up a company to determine whether it is solvent was also explained by Abdul Malik Ishak J in Pioneer Concrete (Malaysia) Sdn Bhd v. Celini Corporation Sdn Bhd [1999] 5 CLJ 145: - “In my judgment, where there is no doubt (and there is none here) that the petitioner is a creditor for a sum which would otherwise entitle him to a winding-up order, a dispute as to the precise sum which is owed to him is not of itself a sufficient answer to his petition.... It is germane to mention that the test of commercial insolvency is simple. It is this. Whether the company is unable to meet its current debts as they fall due? A company may have substantial wealth which cannot be realized immediately and if that happens the company is said to be unable to pay its debts within the purview and ambit of s. 218(1)(e) of the Companies Act 1965 and this is so even though on liquidation the company will be able to meet all its liabilities.”

I further refer to the decision of the Supreme Court in Lian Keow Sdn Bhd (in liquidation) & Another v. Overseas Credit Finance (M) Sdn Bhd & Ors [1988] CLJU 44: - “In short, the question is not whether the debtor's assets exceed his liabilities as appeared in the books of the debtor, but whether there are moneys presently available to the debtor, or which he is able to realise in time, to meet the debts as they become due. It is not sufficient that the assets might be realisable at some future date after the debts have become due and payable.”

Even if the Respondent did make part payment to reduce the amount debt due to the Petitioner, at the end of the day the Judgment Sum was not settled in full. This means that the company remains insolvent and should be wound up. Unless the Respondent proves that it is solvent as per the established legal test, then it should be wound up. This can be seen in the decision of the Court of Appeal in SSM Management Sdn Bhd v. Aeon Big (M) Sdn Bhd [2019] 5 CLJ 695: - "[20] In this regard, it is settled law that once a company has failed to comply with the statutory demand, there is a presumption of insolvency against it. The onus then shifts to the company to show that it is able to pay all its debts at the material time. The test of insolvency, as the learned judge correctly noted, is the test of commercial insolvency or cash flow insolvency in that the company must be able to pay its debts when they fall due and not at some future date. In other words, the company must be willing and able to meet the current demand of the creditor. In this way, a company cannot be said to be solvent when it asserts that it is able to pay the debt but persists in not doing so.” Also refer to Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947.

The facts of this case as disclosed in the affidavits filed by the parties did not show that the company is solvent. There is no evidence produced to show that the Respondent is able to pay the debts that are due. No statement of accounts or cash flow statement of the Respondent was produced to show that it is solvent as required by law to justify its opposition to the Petition. The Respondent did try to rely on the Company Commission Report exhibited by the Petitioner. This report does not support the Respondent’s contention and it does not show that the Respondent is able to pay the debts that are due. Even the full Judgment Sum due to the Petitioner remains unpaid as of to date.

The above is based on the judgment of Abdul Malik Ishak J in Pioneer Concrete (supra): - " ... A passage from the judgment of Plowman J. In Re Tweeds Garages Ltd [1962] 1 Ch D 406 merits reproduction. That passage would nip in the bud the problem... and that passage reads as follows (see pp 413- 414 of Plowman J's decision): From those sections it appears that the only qualification which is required of the petitioners in this case is that they are creditors and about that, as I have said, there is really no dispute. Moreover, it seems to me that it would, in many cases, be quite unjust to refuse a winding-up order to a petitioner who is admittedly owed moneys which have not been paid merely because there is a dispute as to the precise amount owing. If I may refer to an example which I suggested in the course of argument, suppose that a creditor obtains judgment against a company for £10,000 and after the date of the judgment something is paid off. There is a genuine bona fide dispute whether the sum paid off is £10 or £20. The creditor then presents a petition to have the company wound up. Is the company to be entitled to say: 'It is not disputed that you are a creditor but the amount of your debt is disputed and you are not, therefore, entitled to an order?' I think not.”

I also repeat the above findings made earlier on the same issues raised by the Respondent. I therefore find that the presumption of insolvency remains applicable against the Respondent and the company should be wound up pursuant to the applicable statutory provisos referred to earlier.

I also find, as reiterated earlier, that the Respondent claims that it is able to pay the Judgment sum. This appears in paragraph 4 of the Affidavit in Response affirmed on 27-5-2025. However, I do not find this statement to be credible. If the Respondent were indeed able to pay the said sums, it could have easily done so and avoided the filing of this Petition. The Respondent failed to do so, and accordingly, the Petitioner is entitled to file this Petition against the Respondent.

Up to the date of the hearing, the Respondent did not pay the sums due based on the judgment of the Court. Although the payments made by the Respondent, as reflected in WMK-7, may have reduced the outstanding amount, this does not render the Judgment Sum incorrect. The payments commenced from March 2024, whereas the judgment was entered on 25-5-2021 and remains valid and binding to this day, having not been set aside. The Notice to Wind-Up was also properly issued by the Petitioner via a notice dated 9-1-2024. Accordingly, there is nothing improper with the notice issued by the Petitioner, and as at 9-1-2024, the sums claimed were due and payable by the Respondent to the Petitioner in accordance with the terms of the Sessions Court judgment

I have also considered the Respondent’s contention that it was wrong for the Petitioner to force the Respondent to agree to a global settlement as contained in the letter dated 5-4-2024. The Respondent refers to the letter dated 5-4-2024 and the email appearing in Exhibit WMK-6 dated 31-12-2024. I do not see anything wrong with the Petitioner’s decision to have all the claims to be considered holistically to ensure all of the indebtedness are duly settled once and for all. It is up to the Petitioner to propose any settlement that it deems fit and appropriate. The Respondent did not indicate that it agreed to the terms of settlement and therefore, is not bound to accept the same. This does not mean that the Petition to Wind-Up that is based on a Judgment of the Sessions Court is wrong. I therefore reject the Respondent’s contention.

I repeat that even if I were to accept that the sums may have been reduced after the notice issued on 9-1-2024 due to the periodical payments made, this does not invalidate this Petition. I refer to Malaysia Air Charter Company Sdn Bhd v. Petronas Dagangan Sdn Bhd [2000] 4 CLJ 437 where the Federal Court held: - “After analysing the authorities, we would prefer the reasoning and conclusion of the Full Court of Victoria in Re Fabo that the court should adopt a liberal interpretation when considering the provisions of s. 218(2)(a) of the Act. We have earlier set out the reasons of the Full Court for adopting a liberal interpretation and their considerations that the adoption of a literal interpretation would be difficult. We would reiterate here that we agree with Re Fabo that a literal interpretation of the section would compel the court not to make a winding-up order notwithstanding the existence of clear evidence that an undisputed sum due exceeding RM500 has remained unpaid after a demand made without any reasonable explanation for the failure to pay. In the instant case, the statutory demand required the appellant to pay the respondent the Judgment Sum of RM334,118.79 together with interest at 8% per annum etc. as at the date of the notice. From the evidence, the aforesaid sum remained unpaid. Thus, if we were to interpret the section literally or strictly, it means no winding-up order could be made as the exact amount due as at the date of the notice has not been quantified, notwithstanding that the debt exceeded RM500 and remained unpaid. By contrast, the liberal interpretation would permit the court, if proved to its satisfaction, to make a winding-up order. Secondly, we agree with Re Fabo that commercial reality demands that "preference be given to an interpretation that will remove from unmeritorious respondents the temptation to undertake an investigation into the exactness of the debt claimed to be owing on the relevant date in cases where complicated accounts or running accounts with daily adjustments may render probable the risk of some small errors having been made in the course of ascertaining with precision the extent of the debt. Indeed, the possibility exists that a contrary interpretation might lead to the absurdity that an understatement of the debt in the notice would prevent the making of an order where to do so was clearly appropriate." It is necessary to consider the factual situation presented in this appeal for the unreality of the literal approach to become evident. Here, the appellant was required to pay the respondent the Judgment Sum of RM334,118.79 together with interest thereon at the rate of 8% per annum on all outstanding sums from 28 October 1988 until the date of realisation. By taking the literal interpretation approach, the respondent is required to undertake an exercise in calculating the exact sum due as at the date of the notice when on the face of the notice the sum due is more than RM500 and the appellant has been shown as deemed to be unable to pay its debts.”

At the end of the day the presumption of insolvency remains unrebutted by the Respondent. It is appropriate for this Court to order the Respondent to be wound up. I refer to the decision of Harmindar Singh Dhaliwal JCA in SSM Management Sdn Bhd v Aeon Big (M) Sdn Bhd [2019] 5 CLJ 695: - “[14] It was also pointless to argue that there must be a judgment for the sum of RM1.1 million before winding-up proceedings can be commenced. It is trite law that a creditor is not required to obtain a judgment before issuing the statutory demand (see Morgan Guaranty Trust Company New York v. Lian Seng Properties Sdn Bhd [1991] 1 CLJ 260; [1991] 1 CLJ (Rep) 317; [1991] 1 MLJ 95; Lafarge Concrete (Malaysia) Sdn Bhd v. Gold Trend Builders Sdn Bhd [2011] CLJU 1763; [2011] 1 LNS 1763; [2012] 6 MLJ 817). Of course, if there is a judgment, a debtor would be hard-pressed to argue that the debt in question is disputed. Conversely, a debtor would be better placed to argue a bona fide dispute exists when there is no judgment. Even then, the debtor must provide cogent reasons to show the existence of a bona fide dispute. The primary consideration is whether there is compelling evidence of an inability to pay a debt when it falls due whether under a judgment or otherwise. …. Whether The Appellant Is A Solvent Company [19] In its final key argument, the appellant contended that it was indeed a solvent company and was able to pay its debt as and when it accrues. In this respect, the appellant relied upon two documents. The first was the auditors' statement dated 30 December 2016 ("auditors' statement") and the second was the certificate relating to an exempt private company also dated 30 December 2016 ("EPC certificate"). In essence, these two documents provide that the appellant had kept proper accounting records and other books for the year 2016 and that the appellant appeared to have been able to meet its liabilities as and when they fall due. [20] In this regard, it is settled law that once a company has failed to comply with the statutory demand, there is a presumption of insolvency against it. The onus then shifts to the company to show that it is able to pay all its debts at the material time. The test of insolvency, as the learned judge correctly noted, is the test of commercial insolvency or cash flow insolvency in that the company must be able to pay its debts when they fall due and not at some future date. In other words, the company must be willing and able to meet the current demand of the creditor. In this way, a company cannot be said to be solvent when it asserts that it is able to pay the debt but persists in not doing so. [21] Now, the learned judge considered that the appellant had failed to show that it was solvent. The learned judge took the view that the two documents presented were insufficient. Instead, the appellant ought to have produced its audited financial statements. The appellant, before us, criticised this approach and submitted that the two documents were provided as part of the appellant's statutory obligation under the CA 2016 and must be taken as the true and accurate reflection of the appellant's solvency. In short, the appellant was in effect contending that a winding up court should not go beyond the two documents in determining whether the presumption of insolvency has been rebutted. [22] On this score, we do not think there is merit in the appellant's submission. In our view, any attempt to displace the presumption of insolvency must go beyond opinions of insolvency by auditors. We agree that rather than mere assertions of insolvency even by professionals, a company must produce the best evidence of its financial position in the form of audited statements and accounts. The appellant, even if it was an exempt private company, had an obligation under the law to maintain audited accounts. [23] Having failed to produce its latest audited financial statements, as noted by the learned judge, we agreed with the finding that the appellant fell far short of establishing its solvency. Given the presumption of insolvency, the appellant ought to have taken seriously its duty and burden of displacing the presumption by putting all its card on the table and not hide merely behind opinions of the auditors through the two documents. In this context, we have also noted that the appellant failed to respond to six letters of demand, which we agree had weakened the probative force of the argument against insolvency as advanced by the appellant. In the upshot, this contention of solvency must fail.”

In this case, the Respondent has not shown any evidence of its solvency to rebut the presumption. It also did not apply to set aside the Judgment in Default. The notice to wind-up was issued for a debt that is beyond the sum of RM 10,000.00 and the said debt remains beyond the said sum. It has shown haphazard payment to the Petitioner but did not pay the full judgment sum. The proposed settlement was also not accepted by the Respondent. Therefore, I have no choice but to find that the Respondent is insolvent and should be wound up by this Court.

I also find that the Petitioner has fulfilled the requirements of Rule 32(1) of the Companies (Winding Up Rules) 1972. Therefore, as the papers are in order and that the company is insolvent, I direct that it be wound up in accordance with section 465 of the Companies Act 2016.

For the above reasons, I allow the Petition and grant the following orders: -

the Respondent be wound up pursuant to Section 465(1)(e) of the Companies Act 2016;

(ii) The Official Receiver of Malaysia to be appointed as the Liquidator for the Respondent;

(iii) that the cost of this Petition of RM 5,000.00 be paid out of the assets of the Respondent. Dated 13th Jun 2025 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC5 Counsel: Ahmad Danial Bin Yusoff For the Petitioner B.H. Gan, Nor & Kim Advocates & Solicitors Cheah Tien Eu For the Respondent Cheah Law Chambers Advocates & Solicitors