Chantika Kelang Beras Sdn. Bhd. v Chin Teow Hin Sdn. Bhd. (PA-28NCC-68-06/2023)

dibaca bersama Seksyen 466

(a) Akta Syarikat, 2016 Dalam perkara Kaedah-kaedah (Penggulungan) Syarikat 1972 Dalam perkara CHIN TEOW HIN SDN. BHD. (No.Syarikat 198801006782 (174140 – X)) ANTARA CHANTIKA KELANG BERAS SDN. BHD. (No. Syarikat.: 197701000884 (31845-P)) …PEMPETISYEN CHIN TEOW HIN SDN. BHD. (No. Syarikat: 198801006782 (174140-X)) …RESPONDEN JUDGMENT (SUBSTITUTION OF PETITIONER) PRELUSION S/N yfS/je6XtkeKZaoIlcwmMQ Page 2 of 15 [1] The petitioning creditor in this winding up Petition settled with the respondent company (RCo). The petitioning creditor informed this Court that it wished to withdraw the Petition. [2] The supporting creditors want RCo to be wound up. They oppose the withdrawal of the Petition. One of the supporting creditors—a bank— applies to substitute as the petitioning creditor, to proceed with the Petition. [3] Should the application to substitute be allowed? PARTIES AND PRELIMINARIES [4] The petitioning creditor is Chantika Kelang Beras Sdn Bhd (Chantika). [5] Chantika’s ground to wind up RCo was for its inability to pay its debt to Chantika. But apart from the usual prayer that RCo be wound up, Chantika also prays for—

a Dato’ Dr Shanmughanathan Vellanthurai (Dato’ Dr Shan) to be appointed the liquidator (and not the Official Receiver); and

Dato’ Dr Shan’s remuneration to be charged on a time-cost basis. [6] The creditors who gave their respective Notices Of Intention To Appear On Petition are Malayan Banking Berhad (MBB), United Overseas Bank (Malaysia) Bhd (UOB), CIMB Bank Berhad (CIMB), CIMB Islamic Bank Berhad (CIMB Islamic), Hong Leong Bank Berhad (HLB), Hong S/N yfS/je6XtkeKZaoIlcwmMQ Page 3 of 15 Leong Islamic Bank Berhad (HLB Islamic), Malayan Flour Mills Berhad (Malayan Flour), Prestasi Flour Mill (M) Sdn Bhd (Prestasi Flour), Sabah Flour & Feed Mills Sdn Bhd (Sabah Flour), and Kilang Beras Siong Heng Sdn Bhd (Siong Heng). I will refer to these creditors as the “participating creditors”. [7] The following is a schedule of the approximate amount of debt (rounded to the nearest thousand Ringgit) that RCo allegedly owes these creditors— RM Chantika 438K

MBB 699 million

UOB 213 million

CIMB 696 million CIMB Islamic 20.264 million

HLB 715 million HLB Islamic 2.088 million Malayan Flour 691K Prestasi Flour 944K Sabah Flour 380K Siong Heng 259K [8] All the bank-creditors support the Petition to wind up RCo, but all of them oppose the appointment of Dato’ Dr Shan as the liquidator. All the non-bank-creditors similarly support the Petition, but they are silent on the appointment of Dato’ Dr Shan as the liquidator. MBB’S APPLICATION S/N yfS/je6XtkeKZaoIlcwmMQ Page 4 of 15 [9] At the hearing of the Petition on 24.8.2023, Chantika informed the Court that they are negotiating with RCo to settle RCo’s debt to them. As such, Chantika wanted to withdraw the Petition against RCo. [10] MBB objected to Chantika’s withdrawal of the Petition. MBB represented that they were informed about Chantika’s intention to withdraw the Petition just before the hearing. MBB asked for time to consider applying to substitute as the Petitioner (the petitioning creditor), since Chantika is no longer interested in pursuing the Petition. [11] UOB too objected to the withdrawal of the Petition. UOB represented that they were not even informed about the withdrawal of the Petition. [12] It appeared that not only did Chantika not inform the participating creditors that they were withdrawing the Petition, they did not seek the participating creditors’ consent to withdraw the Petition. PERTINENT STATUTORY PROVISIONS [13] The statutory provisions pertinent to MBB’s Application to substitute are Rule 33 of the Companies (Winding Up) Rules 1972 (Rules), sections 464(1), 469(3), 465(1) and 466(1) of the Companies Act 2016 (CA 2016). [14] Rule 33 of the Rules provides that when a Petitioner (here: Chantika) wants to withdraw its Petition, this Court can substitute another party as the Petitioner. There are two requirements to do this—

the substituting party has the right to present the Petition, and S/N yfS/je6XtkeKZaoIlcwmMQ Page 5 of 15

the substituting party wants to proceed with the Petition. [15] Rule 33 (1) is set out below for reference (with my emphases in bold)— Rule 33. Substitution of any person as petitioner.

When a petitioner is not entitled to present a petition or, whether so entitled or not, where he - .

consents to withdraw his petition or to allow it to be dismissed or the hearing to be adjourned; or . the Court may upon such terms as it thinks just substitute as petitioner any person who, in the opinion of the Court, would have a right to present the petition and who is desirous of proceeding with the petition. [16] Section 464 of the CA 2016 sets out who are the persons who can petition to wind up a company. Section 464(1)(b) provides that the company’s creditor—including a contingent or prospective creditor—can present a winding up petition. [17] Section 464(1)(b) is set out below for reference (with my emphases in bold)— Section 464. Petition of winding up

A company, whether or not it is being wound up voluntarily, may be wound up under an order of the Court on the petition of any one or more of the following: .

any creditor, including a contingent or prospective creditor, of the company; S/N yfS/je6XtkeKZaoIlcwmMQ Page 6 of 15 [18] Section 469 of the CA 2016 sets out the powers of the Court on the Petition hearing. Under section 469(3)(e), this Court can allow a Petition to be amended. Under section 469(3)(f), this Court can give such directions about the proceedings as it thinks fit. [19] Sections 469(3)(e) and 469(3)(f) are set out below for reference (with my emphases in bold)— Section 469. Powers of Court on hearing petition for winding up .

The Court may, at the hearing of the petition or at any time on the application of the petitioner, the company, or any person who has given notice that he intends to appear on the hearing of the petition— .

allow the petition to be amended or withdrawn; and

give such directions as to the proceedings as the Court thinks fit. [20] Section 465 of the CA 2016 sets out the circumstances in which a company can be wound up. The circumstance that is relevant to this Petition is that RCo is unable to pay its debts, which is set out in section 465(1)(e). [21] Section 465(1)(e) is set out below for reference— Section 465. 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; [22] Section 466 of the CA 2016 sets out deeming provisions for the Court to determine that a company is unable to pay its debt. One of the deeming provisions is section 466(1)(a), where a creditor can serve a S/N yfS/je6XtkeKZaoIlcwmMQ Page 7 of 15 statutorily prescribed notice to the debtor company, giving the company 21 days to pay the debt. If the company fails to satisfy this statutory notice, the company is deemed to be unable to pay its debts. [23] But this is not the only way. Another deeming provision is section 466(1)(c), where the creditor satisfies the Court that company is unable to pay its debts by producing evidence of the company’s contingent and prospective liabilities. [24] Section 466(1)(a) and section 466(1)(c) are set out below for reference (with my emphases in bold)— Section 466. 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; .

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 liabilities of the company. PERTINENT CHRONOLOGY [25] I set out here the chronology of proceedings pertinent to MBB’s Application to substitute—

22.6.2023—Chantika presented this winding up Petition

24.8.2023—Chantika informed Court that it wants to withdraw this Petition S/N yfS/je6XtkeKZaoIlcwmMQ Page 8 of 15

18.9.2023—MBB filed its civil suit against RCo and its guarantors per Suit No. PA-22NCC-63-09/2023 (Suit 63) to recover the debt due to MBB

20.10.2023—MBB obtained a Judgment in default of appearance (JIDA) against RCo for approximately RM102 million

7.12.2023—MBB obtained a JIDA against RCo’s guarantors too for the same RM102 million RCo’s ARGUMENTS MBB did not have the right to present a Petition on the original date of the Petition [26] RCo makes two arguments to oppose MBB’s Application. First argument—RCo argues that according to Rule 33, for MBB to substitute as the Petitioner, MBB must have the right to present this winding up Petition on 22.6.2023—the date that Chantika first presented this Petition. RCo argues that MBB did not have the right to present this Petition on 22.6.2023, because the debt due to MBB crystallised only after 22.6.2023. [27] RCo argues that—

MBB issued their notice to recall RCo’s banking facilities and to demand full payment under the facilities only in August 2023;

MBB filed Suit 63 only in September 2023;

MBB obtained JIDA against RCo only in October 2023. [28] I find that this argument is not cogent. One—it is trite that MBB, who wishes to substitute as the Petitioner in this Petition must demonstrate that they have the right to present this Petition on 22.6.2023 (the date that Chantika first presented this Petition)—Bank Industri & Teknologi S/N yfS/je6XtkeKZaoIlcwmMQ Page 9 of 15 Malaysia Bhd v Alom Building Systems Sdn Bhd [2006] 4 MLJ 405 (HC); [2006] 5 AMR 334; [2006] 3 CLJ 506; [2006] 1 MLRH 534 per Justice Clement Skinner. [29] In Bank Industri (supra), the High Court held that— [9] So, was Bank Industri a person who would have a right to present the petition in this case? In considering this question, I accept the preposition [sic]… that the words 'would have a right to present the petition' refer to a right to present the particular petition at the time it was presented, and not at the date the substitution is ordered. Put in another way, the person applying for substitution must be a person who would have had the right to present a petition at the time the original petition was presented. To me that represents the correct position because if a winding up order is eventually granted, the order relates back to the date when the petition was first presented because s 219(2) of the Act stipulates that 'winding up will be deemed to have commenced at the time of the presentation of the petition for the winding up'. Therefore, the person who wishes to be substituted as a petitioning creditor must show that at that date he would have had a right to present the petition. [emphases mine] [30] Two—MBB does not have to be a judgment creditor as at 22.6.2023 (the original date Chantika presented this Petition) to substitute as the Petitioner. Section 464(1)(b) of the CA 2016 provides that a “creditor, including a contingent or prospective creditor” has the right to present this Petition. MBB was, on 22.6.2023, RCo’s creditor. [31] In Bank Industri (supra), the High Court held— [13] …It is not only a 'judgment creditor' who may present a winding up petition against a company. Section 217(b) of the Act [identical to section 464(1)(b) of the CA 2016] makes it very clear that any creditor, including a contingent or prospective creditor of the company may present a petition to wind up a company. Here, it is my view that Bank Industri was clearly a S/N yfS/je6XtkeKZaoIlcwmMQ Page 10 of 15 creditor of the respondent. By 31 July 2004, the respondent was already indebted to it for RM906,898 under the facility agreement dated 23 May 2001. Further by 20 October 2004, Bank Industri had already filed a writ of summons against the respondent claiming the repayment of the liquidated amount of RM906,898. There is no evidence that the debt was genuinely disputed on substantial grounds. Accordingly, at the date when the petition was originally presented, Bank Industri was, in my view, a person coming within the meaning of a creditor in s 217(b) of the Act, and in any event it was a contingent and prospective creditor of the respondent. So there was no reason why Bank Industri would not have had a right to present the petition on the date it was originally presented. [note and emphases mine] [32] Three—MBB presented affidavit evidence to demonstrate that even before 22.6.2023 (the original date of this Petition), RCo was indebted to MBB and was unable to pay its debt to MBB. The particulars of RCo’s indebtedness include—

Since May 2023, RCo defaulted in making payments under the banking facilities that MBB gave to it. This is evidenced by the letters of reminder that MBB issued to RCo.

In May 2023, RCo had 98 matured and hence outstanding trade bills (financed by MBB) which RCo did not fully pay. The total sum due in May 2023 was over RM23 million.

In June 2023, between 1.6.2023 and 21.6.2023—before 22.6.2023 (the original date of this Petition)—RCo had 70 matured and outstanding trade bills which RCo had failed to pay in full. The total sum due on these June 2023 trade bills was S/N yfS/je6XtkeKZaoIlcwmMQ Page 11 of 15 over RM18 million. These trade bill debts are evidenced by supporting documents such as debit advices and reminders issued to RCo.

The Certificate Of Indebtedness for the total sum due from RCo for RCo’s banking facilities, including Bankers’ Acceptance and Overdraft facilities, as at 21.6.2023, amounted to over RM51 million.

Additionally, this evidence shows that MBB is a creditor, or at least a “contingent or prospective creditor” categorised under section 464(1)(b) as a party who can present a winding up Petition. [33] Four—RCo cannot dispute that it is unable to pay its debt. In May 2023, RCo filed a Judicial Management Application (JM Application). In its affidavit in support of the JM Application, RCo admitted that it has financial problems; that it has bank loans in excess of RM342 million; that it has cashflow problems; and that it was not able to pay its debts. [34] I am compelled to find that MBB has satisfied the requirement that MBB had the right to present this winding up Petition against RCo as at the original date the Petition was presented by Chantika, and should be permitted to substitute as the Petitioner. MBB did not issue a section 466 notice to RCo [35] Second argument—RCo argues that MBB had no right to present a winding up Petition against RCo because MBB did not issue a statutory S/N yfS/je6XtkeKZaoIlcwmMQ Page 12 of 15 notice under section 466(1)(a) of the CA 2016 (the equipollent of section 218(2)(a) of the previous Companies Act 1965). [36] I find this argument untenable. One—Bank Industri (supra) further guides me with the reasoning that Rule 33 of the Rules does not require that the party to substitute the present petitioner, must have first issued a section 466(1)(a) notice. [37] Two—the case law authority of the Court Of Appeal case of Maril-Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Bankers Sdn Bhd And Other Appeals [2001] 4 MLJ 187 (CA); [2001] 3 AMR 2893; [2001] 3 CLJ 248; [2001] 1 MLRA 270, guides and binds me with the principle that the issuance of the section 466(1)(a) notice is not a mandatory or indispensable requirement to present a winding up petition. The indispensable requirement is to prove with cogent evidence that the company is unable to pay its debts “as and when they fall due”. [38] In Maril-Rionebel (supra), the Court Of Appeal propounded (at MLJ page 198) that— 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. But the 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. [emphases mine] S/N yfS/je6XtkeKZaoIlcwmMQ Page 13 of 15 [39] Three—I go back to the provisions of the CA 2016 again. Section 464(1)(b) provides that RCo can be wound up on a winding up petition by any creditor, including a contingent or prospective creditor. [40] Section 465(1)(e) provides for one of the grounds on which the Court can make a winding up Order, namely if the company is unable to pay its debts. Then section 466(1)(a) is the deeming provision for what it means to be unable to pay its debts. Section 466(1)(a) provides that if the company is served with the statutory notice to pay a specified sum, and it does not do so in 21 days, it is deemed to be unable to pay its debts, to satisfy the ground to wind up the company under section 465(1)(e). [41] But, as alluded to above, this is not the only way by which a company is deemed to be unable to pay its debts. There is section 466(1)(c). [42] Section 466(1)(c) provides that to determine whether a company is unable to pay its debts, the Court can consider the company’s “contingent and prospective liabilities”. [43] I have referred to the evidence that MBB produced and relies on to prove RCo’s current, contingent and prospective liabilities to MBB. This evidence can be evaluated and considered on the question of whether RCo is unable to pay its debts, when I later hear and determine the Petition. [44] I therefore find that MBB need not to have issued a section 466(1)(a) notice to RCo to have the right to present this Petition against RCo. And I S/N yfS/je6XtkeKZaoIlcwmMQ Page 14 of 15 find that it is fit that MBB substitute as the Petitioner in this winding up Petition. CONCLUSION [45] For these reasons, I allow MBB’s Application to substitute as the Petitioner, with costs of RM12K to be paid by RCo to MBB by 19.4.2024. Costs are subject to the allocator. Dated: 29 May 2024 KENNETH ST JAMES Judicial Commissioner Penang High Court Counsel/Solicitors: For the Petitioner: Chong Hang Lim [Messrs. The Chambers of Cheong (Selangor)] For the Respondent: Tanusha [Messrs. Prem & Associates (Kuala Lumpur)] For the Intervener: Ng Hooi Haung, Hanna Mathews [Messrs. Shook Lin & Bok (Kuala Lumpur)] S/N yfS/je6XtkeKZaoIlcwmMQ Page 15 of 15 For the Aggrieved Party: Tan Hui Ru [Messrs. Benjamin Dawson (Kuala Lumpur)] Legislations referred to:

Rule 33 of the Companies (Winding-Up) Rules 1972.

Section 464(1)(b) of the Companies Act 2016.

Section 469(3)(e) and (f) of the Companies Act 2016.

Section 465(1)(e) of the Companies Act 2016.

Section 466(1)(a) and (c) of the Companies Act 2016. Cases referred to:

Bank Industri & Teknologi Malaysia Bhd v Alom Building Systems Sdn Bhd [2006] 4 MLJ 405 (HC); [2006] 5 AMR 334; [2006] 3 CLJ 506; [2006] 1 MLRH 534 2. Maril-Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Bankers Sdn Bhd And Other Appeals [2001] 4 MLJ 187 (CA); [2001] 3 AMR 2893; [2001] 3 CLJ 248; [2001] 1 MLRA 270 S/N yfS/je6XtkeKZaoIlcwmMQ