Bukit Kinding Country Homes Sdn Bhd v 1. ) Highbase Millennium Realty Sdn Bhd (AA-24NCC-8-08/2022)

HIGHBASE MILLENNIUM REALTY SDN BHD (Company No: 733448-V) 35

LEE HENG (NRIC No: 491018-08-5073)

LEE CHEE FOOK 40 (NRIC No: 550517-08-5737) ….. DEFENDANTS JUDGMENT 45 Introduction

This Court had on 11 November 2022 decided that the debts claimed by the defendants in three separate statutory section 465 (1) Companies Act 2016 notices of demand all dated 20 July 2022, and 50 served upon the Plaintiff to be bona fide disputed. Consequentially, an order for a [Fortuna] injunction was granted to restrain the defendants, its employees, agents or anyone else from presenting a winding-up petition against the Plaintiff based on the said notices of demand with costs of RM5,000.00 subject to allocatur to be paid by each defendant to the 55 Plaintiff.

Dissatisfied, the defendants appealed and these are the grounds for the decision made. 60 Background Facts

The plaintiff is a private limited company incorporated pursuant to 65 the Companies Act 1965 with its nature of business being in property development.

The first defendant (“D1”) is private limited company incorporated pursuant to the Companies Act 1965 and is in the hotel business including the sub-letting of hotel buildings. 70

The second defendant (“D2”) is at all material times a director and minority shareholder of the plaintiff.

The third defendant (“D3”) is similarly at all material times a director 75 and minority shareholder of the plaintiff.

D3 owns fifty per cent of the shares in D1.

Unless expressed stated otherwise, D1, D2 and D3 shall collectively 80 be referred to as the three defendants.

Through their solicitors, Messrs. Mariadass Lock & Ainuddin, (the 85 said “Defendants’ solicitors”) the three defendants, issued separate written demands all dated 20 July 2022 to the plaintiff claiming repayment of the following sums said to be due and owing: i) RM199,421.18 as claimed by D1; 90 ii) RM683,836.56 as claimed by D2; and iii) RM630,000.00 as claimed by D3.

In the written demands, the said Defendants’ solicitors made references to the following parcels of land all in the Mukim of Hulu Kinta, 95 Daerah Kinta, Perak, which were collectively referred to as “the Lands”: i. Geran 32602 for Lot 22656; 4 ii. Geran 27140 for Lot 22654; iii. Geran 27141 for Lot 22656; and 100 iv. GM 6 and 7 for Lots 47227 and 47228 respectively.

After making reference to the Lands, the said Defendants’ solicitors claimed that the defendants had on various dates purchased various plots of the Lands and made the following payments plus advances said to have 105 been given by D2 and D3 as follows: i) D1 a) Plot number Purchase Price (RM)

5 141,787.80 99,251.46 110

8 143,138.16 100,169.72 199,421.18 ii) D2 b) Plot number Purchase Price (RM)

21 189,050.40 103,154.55 115

25 143,138.15 113,793.02

31 168,000.00 31,574.21 c) Advance for additional capital 435,314.78 683,836.56 120 iii) D3 d) Plot number Purchase Price (RM) 30 238,560.00 70,000.00 e) Advance for additional capital 560,000.00 630,000.00 125 [12] After claiming that the respective defendants have not been able to get individual titles even after a lapse of 17 years, the Defendants’ solicitors proceeded to give notice of termination of all the sale and purchase agreements entered into with the plaintiff and demanded the 130 repayment of the monies paid for the purchase of the various plots and the refund of the advances made. [13] Each of the three respective notices ended with a similar statement by the Defendants’ solicitors saying that payment is to be made within 135 twenty-one days after service of the notice failing which they will file a petition to wind up the [plaintiff] company without any further notice. [14] The caption in each of the three notices of demand says “Statutory Notice of Demand Section 465(1) and Section 466 of the Companies 140 Act 2016 (hereinafter collectively referred to as the “statutory notices of demand”). Plaintiff’s Response 145 [15] Upon receipt of the statutory notices of demand, the plaintiff through its solicitors, Messrs T. Tharuma & Associates (“the Plaintiff’s solicitors”), by way of three separate letters all dated 11 August 2022 to the Defendants’ solicitors in response to each of the three statutory notices of demand said that the respective amounts claimed are disputed 150 for among others the following reasons: i) the claims are not debts due and owing at this juncture; ii) the claims are not premised upon any judgment and/or order of any Court of competent jurisdiction; 155 iii) the computation of the claims is wholly misconceived as the statutory notices of demand did not set out the calculations to arrive at the amount demanded or provide any proof as to how the claims were arrived at; iv) the statutory notices of demand have failed to make any 160 specific reference to any sale and purchase agreements and the relevant clauses relied upon; v) the claims (which are disputed) are time bared pursuant to the Limitation Act 1953; and vi) the issuance of the statutory notices of demand is an attempt 165 to exert undue pressure on the plaintiff pertaining to debts which are at all times disputed debts, and that it is a clear abuse of the Court’s process. [16] The Plaintiff’s solicitors ended each of their letters with a notice 170 calling upon the Defendants’ solicitors to withdraw the statutory notices of demand by 5:00 p.m. on 15 August 2022, failing which they will take all steps necessary in opposing them including amongst others, obtaining urgent injunctive relief against the defendants. 175 Defendants’ Response [17] By letter dated 15 August 2022, the Defendants’ solicitors replied to say they have instructions to proceed with the winding up of the [plaintiff] company. 180 Plaintiff Initiated Legal Action [18] On 17 August 2022, the plaintiff initiated legal action by filing an Originating Summons (Enclosure 1) under cover of a Certificate of 185 Urgency seeking for its action to be heard urgently and seeking the following reliefs: i) an injunction to restrain the defendants, its employees, agents or anyone else from presenting a petition to wind-up the 190 plaintiff based on the statutory notices of demand; ii) in the alternative, if a winding-up petition has been presented, an interim injunction be granted restraining the defendants, its employees, agents or anyone else from taking any further steps in the winding-up proceeding including steps to 195 advertise and gazette petition; iii) general damages to be assessed; iv) interest at 5% per annum on the general damages from the date of judgment until the date of full settlement; v) costs; and 200 vi) any further and/or orders which this Honourable Court deems fit. [19] An interlocutory application (Enclosure 3) was also filed for an interlocutory injunction pending the disposal of the Originating Summons, 205 for similar injunctive reliefs. [20] On the first return day for the hearing of both the applications for the interlocutory injunction (Enclosure 3) and the Originating Summons (Enclosure 1) on 22 August 2022, the application for interlocutory 210 injunction was struck out. This was because counsel for the plaintiff accepted an undertaking given by the counsel for the defendants that the defendants will not file any winding-up petition until the disposal of the Originating Summons. 215 [21] There followed an exchange of affidavits between the parties with the parties filing their respective written primary submissions and written submissions in reply. Prior to the hearing of the Originating Summons, the plaintiff filed an application (Enclosure 8) to seek to amend the Originating Summons but this was withdrawn and struck out on 4 October 2022 with 220 the Originating Summons set down for hearing on 1 November 2022. The Law Statutory demand 225 [22] It would useful to set out hereunder the provisions of section 465 (1) and in particular subsection 465 (1)(e) and section 466 of the Companies Act 2016 Act 777 (“CA”) so that the legal effect of what is commonly described a statutory notice of demand can be easily appreciated. 230 [23] Section 465 (1)(e) CA provides as follows:

The Court may order the winding up if- …… …… 235

the company is unable to pay its debts; … … [24] Section 466 of the CA provides as follows: 240 “(1) 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 245 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;

execution or other process issued on a judgment, decree or order of any 250 court in favour of a creditor of the company is returned unsatisfied in whole or in part; or

it is proved to the satisfaction of the Court that the company is unable to pay its debts and in determining whether a company is unable to pay its debts the Court shall take into account the contingent and prospective 255 liabilities of the company.

A petition to wind up a company shall be filed in the Court within six months from the expiry date of the notice of demand issued under paragraph

(1)(a).” 260 [25] To put it in brief form, for purposes of this case, if a company is indebted in a sum exceeding a sum of RM50,000.00 and a creditor has served a notice of demand requiring the company to pay the sum due and the company has for twenty-one days after the service of the demand neglected to pay the sum, the company shall be deemed to be unable to 265 pay its debt and the creditor may petition for the company to be wound-up. [26] However, if the debt is bona fide disputed then the creditor would have to first commence a civil suit against the alleged debtor company to 270 obtain judgment. [27] If the creditor persist in wanting to file a companies’ winding-up petition on the premise of this bona fide disputed debt, the company may seek injunctive relief from the Court to prevent the creditor from doing so 275 by seeking what has now been popularly called a Fortuna injunction, a name taken from the case which laid down the juridical basis for such a relief. Fortuna Injunction 280 [28] Justice Liza Chan Sow Keng JC had recently in United Malaya Stores Sdn Bhd v. S Selapa Sivalingam & Anor [2022] 6 CLJ 469 at paragraphs [17] and [18] set out the legal principles to be considered when an application for a Fortuna injunction is made and I gratefully adopt 285 the same which I reproduce hereunder: “[17] The legal principles that warrant the grant of a Fortuna injunction are well settled as elucidated in the following cases: 290

Fortuna Holdings Pty Ltd v. The Deputy Commissioner of Taxation of the Commonwealth of Australia [1978] VR 83: The decisions of the courts have established the principle that the presentation of a winding-up petition may be restrained by 295 injunction where its presentation would amount to an abuse of the process of the court. The courts apply this principle similarly to restrain the advertisement of a petition already presented. The principle enables companies to be protected from threatened or apprehended oppression and damage from 300 abuse of court process. The basis on which the courts have intervened in the cases cited by counsel, has been that presentation of a winding-up petition might of itself cause irreparable damage to the company. Given that basis, the 305 application of the principle which entitles the courts to intervene to prevent abuse of process, depends on the existence of different elements in two distinct situations considered in the authorities. For convenience I will refer to the applications of the principle in the two situations as the first and second branches of the principle. 310 First branch of principle The first branch applies in cases where the presentation of the petition might produce irreparable damage to the company and where the 315 proposed petition has no chance of success... Second branch of principle The second branch applies in cases where a petitioner proposing to 320 present a petition has chosen to assert a disputed claim, by a procedure which might produce irreparable damage to the company, rather than by a suitable alternative procedure. It may apply in cases where the petition, if presented, has a chance of success. In some cases both the first and the second branches of the principle apply.

(ii) Mobikom Sdn Bhd v. Inmiss Communications Sdn Bhd [2007] 3 CLJ 295; [2007] 3 MLJ 316, Gopal Sri Ram JCA (later FCJ) explained the basis as follows: 330 [5] The kind of injunction by which an intended winding-up petition is sought to be restrained is known as a 'Fortuna injunction' taking its name from the case in which the juridical basis for the relief was first explained. See, Fortuna Holdings Ptv Ltd v. The Deputy Commissioner of Taxation (1978) VR 83. 335 In that case, McGarvie J discussed the basis on which a court acts to restrain the presentation of a winding-up petition and the two branches of the principle that guide courts in the grant of an injunction... [8] In a later passage McGarvie J summed up the two branches 340 of the principle as follows: The first branch applies to cases where the petitioner is incapable of success as a matter of law or through absence of supporting evidence. Where the petitioner is 345 not entitled to present a petition or where the ground alleged is not a ground which can found a winding-up order, the petition is incapable of success as a matter of law, If there is no sufficient evidence to establish an otherwise sufficient ground, the petition is incapable of 350 success for that reason. Thus the first branch applies where the proposed petition cannot succeed. The second branch applies to cases where there is a more suitable alternative means of resolving the dispute 355 involved in a disputed claim against the company. They are not necessarily cases in which, as a matter of law or through absence of evidence, there is an inherent incapacity of success. They may be cases where the petitioner is entitled to present the petition, the ground is 360 sufficient in law and there is evidence to support the ground. They are cases, though, where, due to the availability of the more suitable alternative remedy, the court hearing the petition would in the circumstances, in the exercise of its discretion, decline to make a winding- 365 up order, at least while the circumstances remain as they are at the time of the application for an injunction. Thus the second branch applies where, because of the availability of a suitable alternative procedure, the petition is unlikely to succeed in the circumstances 370 existing at the time.

(iii) Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947; [2010] MLJU 2217, the Court of Appeal in referring to the Fortuna and Mobikom cases explained the application of the 375 two branches as follows: [26] The first principle laid down in that case in that an injunction of that nature may be granted by court where the presentation of the petition might produce irreparable damage 380 to the company and where the proposed petition has no chance of success. In order to succeed in getting injunction under this principle, the applicant must satisfy both limbs of the principle ie: 385

the intended petition has no chance of success, as a matter of law as well as a matter of fact; and

(ii) the presentation of such petition (which has no chance of success) might produce irreparable damage to the company. 390 (see: Re A Company [1894] 1 Ch 349; Charles Forte Investment Ltd v. Amanda [1964] 1 Ch 240; [1963] 2 All ER 940; and Bryanston Finance Ltd v. De Vries (No 2) [1976] 2 WLR 41; [1976] 1 All ER 25) 395 [27] This principle is not applicable to the present case. The respondent herein had obtained a valid and enforceable judgment against the insured as well as the insurer (appellant). The intended petition if filed is not bound to fail. He has a good 400 chance to succeed. Therefore whether or not it causes irreparable damage is of no consequence. Thus the injunction applied for by the appellant in the present case, cannot be granted by court under this principle. 405 [28] The second principle established in the Fortuna case is that an injunction of that nature may be granted in cases where a petitioner proposing to present a petition has chosen to assert a disputed claim, by a procedure which might produce irreparable damage to the company, rather 410 than by a suitable alternative procedure. [29] This principle applies only to disputed debt. It does not apply to cases where the debt in question is undisputed. As long as the debt cannot be disputed, it is not consequence 415 whether or not it will cause irreparable damage to the company, if presented. A valid and enforceable judgment of court as in the present case, (unless set aside or stayed) cannot be considered a disputed debt. The law is settled on this point. Therefore, an order for injunction as prayed for by the appellant 420 in the present case, also cannot be granted under this principle. [18] The Court of Appeal in Tan Kok Tong v. Hoe Hong Trading Co Sdn Bhd [2007] 2 CLJ 305; [2007] 4 MLJ 355 made clear that in considering a Fortuna injunction, the principle in American Cynamid Co v. Ethicon 425 Ltd [1975] AC 396 does not apply: [8] When deciding whether to grant an injunction to restrain a petition that is based on a statutory demand for a debt, the court must be satisfied that the debt is bona fide disputed on 430 substantial grounds (see Stonegate Securities Ltd v. Gregory [1980] 1 All ER 241). It is not enough that there is a serious question to be tried. In other words, this is one of those cases to which the general test laid down in American Cynamid Co v. Ethicon Ltd [1975] AC 396 does not apply. In Molop Corp Sdn Bhd v. 435 Uniperkasa (M) Sdn Bhd [2003] 1 LNS 280; [2003] 6 MLJ 311, Low Hop Bing J (as he then was) correctly held as follows (at p. 321): In Natseven TV Sdn Bhd v. Television New Zealand Ltd [2001] 4 CLJ 722, I had the occasion to consider and 440 determine the burden of proof cast on the plaintiff in an application for interlocutory injunction to restrain the presentation of a winding-up petition, in the following words: I agree with the reasons given by the English and 445 New Zealand Court of Appeal respectively and by Abdul Malik J and hold that for the purpose of obtaining an interim injunction to restrain the defendant from proceeding with the winding-up petition, the burden of proof cast on the plaintiff is 450 only discharged by reference to the standard of proof or test in adducing evidence to establish a prima facie case and that the principle relating to the test of 'serious question to be tried' in American Cynamid Co v. Ethicon Ltd [1975] AC 396; [1975] 1 455 All ER 504 as applied in Keet Gerald Francis Noel John v Mohd Noor bin Abdullah & Ors [1995] 3 BLJ 254; [1995] 1 MLJ 193 is not applicable as the applications there were not applications to restrain winding-up petitions or proceedings, such as in the 460 instant case before me. Illustration of a prima facie case may be provided by necessary evidence that there is a bona fide dispute by the plaintiff in relation to the statutory demand or 465 that the plaintiff is solvent.” (emphasis added) [29] The underlying principle is that the applicant for the Fortuna injunction must make out a prima facie case that there is a bona fide dispute in relation to the statutory demand made by the defendants. 470 [30] As observed by Justice Liza Chan Sow Keng in United Malaya Stores Sdn Bhd (supra) there is no necessity for a creditor to obtain a judgment before serving a statutory demand. Her Ladyship said as follows: 475 “[22] To my knowledge, there are at least four Court of Appeal cases which made clear that for the purposes of s. 466(1)(a), there is no necessity for a creditor to obtain a judgment before serving a statutory demand: 480

in Maril-Rionebel (M) Sdn Bhd & Anor v. Perdana Merchant Bankers Bhd & Other Appeals [2001] 3 CLJ 248; [2001] 4 MLJ 187, Gopal Sri Ram JCA (as he then was) explained as follows: But a petition for winding-up is not execution. For a winding-up 485 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 Companies Act. But the 490 issuance of such a notice is not a sine qua non for the presentation of a winding-up petition. What is needed is compelling evidence of the company's inability to pay its debts as and when they fall due. (emphasis added)

(ii) in Syarikat Mohd Noor Yusof Sdn Bhd v. Polibina Engineering Enterprise Sdn Bhd [2005] 2 CLJ 676; [2006] 1 MLJ 446, Mohd Ghazali Yusoff JCA stated: 500 We are aware that it is not provided under the Act that a petitioner must be armed with a judgment debt prior to the filing of a petition to wind up a company....

(iii) in Megasteel Sdn Bhd v. Perwaja Steel Sdn Bhd [2008] 4 CLJ 505 352, Gopal Sri Ram JCA (as he then was) held as follows: A creditor, generally speaking, does not have to obtain judgment before instituting winding-up proceedings against a company. That is the purpose for which s. 218(2)(a) of the 510 Companies Act, 1950 was enacted.

(iv) in Lafarge Concrete (Malaysia) Sdn Bhd v. Gold Trend Builders Sdn Bhd [2011] 1 LNS 1763; [2012] 6 MLJ 817, Jeffrey Tan JCA pronounced: 515 [6] Before we proceed to answer those questions, we should perhaps say that ' a creditor is not required to obtain a judgment before serving a statutory demand...' (The Law of Company Liquidation (4th Ed), by Andrew R Keay at p. 520 83) and 'whether or not judgment had been obtained, an unpaid creditor is, as a general rule, entitled to a winding-up order against a company which is insolvent' (The Law of Company Liquidation (4th Ed), by Andrew R Keay at p 91). Where there is no judgment, it is not uncommon for companies to argue that 525 the debt is disputed. But 'in order to oppose a winding-up petition, the respondent must raise a bona fide dispute in both a subjective and objective sense. It must be honestly believed to exist and must be based on substantial or reasonable grounds - BMC Construction Sdn Bhd v. Dataran Rentas 530 Sdn Bhd [2001] 1 CLJ 591; [2001] 1 MLJ 356' (Chan & Koh on Malaysian Company Law (2nd Ed), at para 22.145). (emphasis added)” [31] Besides the above case of Megasteel (supra) mentioned by Justice 535 Liza Chan in her judgment in United Malaya Stores (supra) on there being no necessity to first obtain a judgment, the defendants also cited the case of SSM Management Sdn Bhd v. Aeon Big (M) Sdn Bhd [2019] 5 CLJ page 695, where the Court of Appeal similarly held that: 540 “It was also pointless to argue that there must be a judgment for the sum of RM 1.1. million before winding-up proceedings can be commenced. It is trite law that a creditor is not required to obtain a judgment before issue the statutory demand...” [32] However, as mentioned above, the main thrust of the plaintiff’s case 545 was that the debts relied upon by the defendants to support their statutory notices of demand were bona fide and are in fact heavily disputed. [33] In support of its challenge to the bona fides of the debts, the plaintiff also relied upon the Court of Appeal authority of Kumpulan Liziz Sdn 550 Bhd (In liquidation) v. Pembinaan Azam Jaya Sdn Bhd [2022] 1 MLJ 570 at paragraph [51] and the High Court authority of ASM Development (KL) Sdn Bhd v. Econpile (M) Sdn Bhd [2021] 8 MLJ 99 at paragraph [36] for the legal principle mentioned earlier, that a winding-up petition is not a legitimate means of seeking to enforce a payment of debt which has 555 not been clearly determined and that the presentation of a winding-up petition is not a convenient, and often not a proper method of trying a disputed debt. Bona fide disputed debt? 560 [34] As pointed out by the plaintiff, in the statutory notices of demand, the defendants gave notice of termination of all the sale and purchase agreements without identifying or particularising what agreements these are. 565 [35] I observed that notwithstanding a challenge mounted in the affidavit filed by the plaintiff to seek particulars of how the debts were said to have accrued, the defendants failed to do so. 570 [36] Instead, the defendants took a simplistic stand that the plaintiff has acknowledged receipt of a sum of RM517,942.96 (Enclosure 12 paragraph 7). [37] What is clear is that in the statutory notices of demand which I have 575 tabulated above, the Defendants’ solicitors complained that the defendants have not been able to get individual titles for plots for which they have bought some 17 years ago and for which each of the defendants have yet to pay the full purchase price for each of the plots purchased. 580 [38] Needless to say, the Plaintiff justifiably asserted that these claims for the refund of purchase monies are hopelessly time barred, if at all the defendants are entitled to claim, which the plaintiff again justifiably deny seeing that no particulars were given at all as to how these claims are 585 being formulated. [39] Recently the Court of Appeal in Obata-Ambak Holdings Sdn Bhd v. Prema Bonanza Sdn Bhd & Another Appeal [2022] 5 CLJ 251 held that if the plaintiffs are complaining about the validity or otherwise of terms 590 in a contract, the cause of action ran from the date of the execution of the sale and purchase agreements and as the two agreements were executed on 11 July 2012 and 18 July 2012 and the suit filed on 18 June 2020, limitation had already set in by reason of section 6(1)(a) of the Limitation Act 1953 which provides that that an action founded on contract shall not 595 be brought after the expiration of six years from the date on which the cause of action accrued. [40] With the defendants in this case seeking for the refund of monies paid pursuant to sale and purchase agreements all made some 17 years 600 ago, their claim sounds in contract and would prima facie be time barred unless the defendants can explain why it should not be but which they failed to do. [41] The sale and purchase agreements which the defendants exhibited 605 (Enclosure 12 exhibit LH-12) did little to assist the defendants as the three agreements were made in 2008 some 14 years before the statutory notices of demand were made. [42] When these three sale and purchase agreements are studied, 610 I agree with the assertions of the plaintiff that there are no terms for termination of the agreements for failure to deliver individual title deeds. Instead there is a clause 22.1 which provides that the vendor shall as expeditiously as possible obtain the issue of separate freehold individual documents of title for the respective plots sold subject to any government 615 policy. [43] While there is a clause 18 for delivery of vacant possession, it is dependent upon the completion of road-base-work for the said plots, but as pointed out by the plaintiff, there is no time stipulated for the completion of the road-base-work for the said plots. 620 [44] There is a surprising twist to the story because as it turned out D2 and D3 are the registered owners of the Lands who had entered into a joint venture agreement with the plaintiff to develop the lands. D2 and D3 could not terminate the joint venture agreement which provides that they 625 hold the land on trust for the plaintiff. [45] Thus, the assertion by the plaintiff that the defendants sought to extricate themselves from the sale and purchase agreements by seeking to terminate the agreements, demand payment of monies paid and in the 630 process seek to use the winding up process as a leverage for a collateral purpose of enabling D2 and D3 to avoid their trustee or fiduciary duties they owe as trustees over the Lands, does have credence. [46] Similarly for the advance of RM435,314.78 said to have been made 635 by D2 more than 12 years ago on 31 March 2010, and an advance of RM560,000.00 said to have been made by D3 but without any particulars given at all, limitation would be a sound defence to be deployed. [47] In the circumstances, I am of the considered opinion that the plaintiff 640 has made out a prima facie case that the debts alleged to be due to the respective defendants are bona fide disputed. [48] Before concluding and for the sake of completeness there were two issues which had been taken up early, one suo motu by the Court and the 645 other by the Defendants. [49] The first issue was one observed by the Court, namely, that the plaintiff had failed to file its accounts since 2013. If the plaintiff comes to Court to seek equitable injunctive relief, it ought to ensure that it comes 650 with clean hands. [50] Learned counsel for the plaintiff explained that D2 is a director and holder of 100,000 shares in the [plaintiff] company and a director of the company, Sunrise Excelsior Sdn. Bhd. which is the majority shareholder 655 of the plaintiff, and that D2 was also responsible for the accounts of the plaintiff, and therefore I accept that it would not lie in the mouth of the defendants, particularly D2 on why the accounts of the plaintiff were not filed. Instead, it should be D2 who ought to answer and he did not. 660 [51] The second issue was one raised by the defendants. They had asserted that the deponent of the affidavits of the plaintiff, Khairulizam Bin Ishak, was not lawfully appointed as a director of the plaintiff and therefore not authorised to affirm the affidavits filed on behalf of the plaintiff in support of the plaintiff’s action. They went on to further assert that without 665 these affidavits, there are no supporting materials in support of the plaintiff’s action which should therefore fail. [52] Learned counsel for the plaintiff objected to this second issue being raised rather belatedly and asserted that with insufficient notice having 670 been given, it ought not to be considered and alluded to there being transgression of professional practice. [53] However, during the course of arguments, it was conceded by learned counsel for the defendants that on the appointment of Khairulizam 675 Bin Ishak as a director of the plaintiff, the board of directors needed the mandate of a majority of the directors, and not the full board (see Teh Chock Soon v. Lovelace and Hastings [1947] 1 MLJ 83). [54] In fact, such a mandate was given by directors present and voting, 680 and with the defendants conceding that at the material time, the directors who formed the majority were lawfully entitled to be directors, this second issue faded away. [55] It was asserted during submissions that D2 wore many hats; he 685 being a director and shareholder of the plaintiff, a director of Sunrise Excelsior (M) Sdn Bhd (In Liquidation) who is the majority shareholder of the plaintiff, he is a party to the joint venture agreement in his capacity as one of the two registered owners of the Lands, he is a purchaser of three plots of the Lands and as a director of the plaintiff he would have signed 690 the sale and purchase agreements on behalf of the plaintiff as well. [56] This would make D2 the best person to explain why individual titles have yet to be issued and with none forthcoming, a full trial will enable D2 to be cross-examined on this crucial issue which forms the basis of the 695 statutory notices of demand. [57] Learned counsel for the plaintiff asserted in closing submissions that the demands by the defendants were in fact a façade for a shareholders’ fight, and the defendants should fight it out in that manner. 700 [58] This Court observed that recently, Justice Lee Swee Seng JCA speaking for the Court of Appeal in PNL Capital Sdn Bhd & Ors v. Loh Teck Wah & Ors and Other Appeals [2022] 1 LNS 2314; MLJU 2438 at paragraph [168] has cautioned parties not to abuse the Court process in 705 seeking a Judicial Management Order when they ought to have commenced a derivative or an oppression suit. [59] This Court would venture to caution parties against seeking to threaten or to proceed with the filing of a winding-up petition premised 710 upon a bona fide disputed debt at the risk of being heavily penalised with costs. This is because the filing of a winding-up petition has severe adverse consequences to the company, and would often, if not always, bring about the freezing of its banking facilities resulting in, among others, the salaries of its employees and other dues unpaid. In other words, the 715 operations of the company will come to a halt with accompanying prejudice to its commercial reputation and credibility. Conclusion 720 [60] With no evidence led by the plaintiff on having suffered any damages by the wrongful threat of having to face winding-up proceedings, and no submissions having been presented on the prayer for this relief, this prayer was not allowed. 725 [61] In the circumstances, an order for a [Fortuna] injunction was granted to restrain the defendants, its employees, agents or anyone else from presenting a winding-up petition against the Plaintiff based on the said statutory notices of demand with costs of RM5,000.00 (as sought by the plaintiff) subject to allocatur to be paid by each defendant to the plaintiff. 730 Dated: 22 December 2022 Su Tiang Joo ( SU TIANG JOO ) 735 Judicial Commissioner High Court in Malaya Ipoh, Perak 740 For Plaintiff : Leong Kwong Wah (together with Jonathan Sidhu) Advocates and Solicitors [T Tharuma & Associates] 745 For Defendants : Teo Siew Chin Advocates and Solicitors [Mariadass Lock and Ainuddin] 750 [Notice: This Grounds of Decision is subject to official editorial revision] 755 Headnotes Company law – companies winding-up – bona fide dispute on the debt alleged to be owing under a section 466 (1) (a) Companies Act 2016 notice of demand and a Fortuna injunction granted to restrain the filing of 760 a winding up petition Companies winding-up - parties are cautioned against seeking to threaten or to proceed with the filing of a winding-up petition premised upon a bona fide disputed debt at the risk of being heavily penalised with costs. 765