Chop Yew Lee Petroleum Sdn Bhd v Nyl Corporation Sdn Bhd (WA-12ANCC-23-03/2026)

On 5-3-2026, the Sessions Court dismissed the Appellant’s claim for RM300,000.00 being the value of six (6) dishonoured cheques drawn by the Respondent, NYL Corporation Sdn Bhd, in favour of the Appellant (“Dishonoured Cheques”).

The dismissal of the action followed the determination of the following questions of law framed by the Respondent pursuant to

Whether the Appellant may claim payment from the Respondent in relation to a debt of a third party company that is wound up;

Whether the Appellant may avoid the application of the Companies Act 2016 by applying the Bills of Exchange Act 1949; and

Whether the Court may grant any relief to the Appellant when the claim is based on an illegality.

The facts of this matter are straightforward and undisputed i.e. the Respondent drew 13 post-dated cheques in favour of the Appellant to settle a debt owed by one YCH Sdn Bhd (in liquidation) (“Debtor”) to the Appellant following a settlement reached between the Appellant and the Debtor on 6-9-2024 (“Settlement”).

The Debtor was compulsorily wound up on 11-9-2024. The 13 cheques were all post-dated beyond 11-9-2024, and the Dishonoured Cheques were the first six (6) presented by the Appellant for payment. The Respondent stopped payment on those cheques.

Briefly stated, the Sessions Court agreed with the Respondent that payment on the Respondent’s cheques will give the Appellant an undue preference as a creditor in the Debtor’s winding up, that the Appellant’s rights as a holder for value of the Dishonoured Cheques under the Bills of Exchange of Act 1949 cannot override insolvency laws that exist for the protection of creditors at large, and that the consideration for the Dishonoured Cheques was therefore illegal. The Appellant’s claim was summarily dismissed for those reasons.

This Court finds that the Sessions Court had erred in so deciding because it is not in dispute that the Respondent and the Debtor company are two separate legal entities. The Appellant’s claim is against the Respondent only and is founded upon the Respondent’s separate and independent liability as the drawer of the Dishonoured Cheques.

In law, it is trite that the dishonour of a cheque gives rise to a statutory right of recourse against the drawer of the cheque under Sections 47 and 55 of the Bills of Exchange Act 1949. It is an independent cause of action available to a holder for value of the cheque, and according to section 30 of the same Act, every party whose signature appears on it is prima facie deemed to have become a party thereto for value (Kum Hui Bing v. Premium Plaza Sdn Bhd [2018] CLJU 1027).

There is no issue of undue preference or illegality affecting consideration for the Dishonoured Cheques on the facts of this case because no claim has been made that involves any disposition or depletion of the assets of the Debtor company under liquidation. In commercial dealings, it is precisely out of concern for the financial standing of a debtor that a creditor may seek a separate and independent guarantee of payment from a more reliable source. Objectively, this is what the Settlement achieved in this case.

Accordingly, the decision of the Sessions Court to dismiss the Appellant’s claim is overruled and set aside with costs here and below in the sum of RM7,000.00. The case is remitted back to the Sessions Court. The Appellant’s entitlement to judgment is a matter to be determined on the merits of the case and the usual defences to resist the Appellant’s claim on the Dishonoured Cheques under the Bills of Exchange Act 1949 remain available subject to what has been pleaded. Bertarikh: 13 Julai 2026 ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA KUALA LUMPUR Peguam