Credit Guarantee Corporation Malaysia Berhad v Eternal Global Frontier Sdn. Bhd. (JA-28NCC-195-11/2025)

This is the Petitioner’s petition to wind up the Respondent under sections 465(1)(e) and (h) read with section 466(1)(a) of the Companies Act 2016 [Act 777]. The Petition is founded on an unsatisfied statutory notice of demand in respect of a judgment debt owed by the Respondent to the Petitioner.

The Respondent opposed the Petition by its Affidavit in Opposition in Enclosure 11 and by its written submissions.

The Petitioner is a body that extended to the Respondent two Islamic financing facilities (on the Bai Bithaman Ajil principle) in 2014, to finance contracts awarded to the Respondent by Felda Global Ventures (“FGV”). Disputes arose as to the parties’ respective obligations, which gave rise to two civil suits –

the Respondent’s claim against the Petitioner in the Shah Alam High Court (Civil Suit No. : BA-22NCVC-276-05/2017, “Suit 276”); and

the Petitioner's claim against the Respondent and its guarantors, commenced as Civil Suit No. : JA-22M-25-05/2018 and upon transfer, re-registered as Civil Suit No. : BA-22M-61-09/2018 ("Suit 61"). By order dated 16 August 2018, Suit 61 was consolidated with Suit 276.

On 21 February 2025 the Shah Alam High Court delivered its decision on the consolidated suits, that the Respondent’s claim in Suit 276 was dismissed and the Petitioner’s claim in Suit 61 was allowed. The Court ordered the Respondent to pay the Petitioner RM1,847,423.55, together with post-judgment charges at 5% per annum from the date of judgment until full settlement and costs of RM50,000.00 (“the Judgment Sum”).

On 13 March 2025 the Respondent filed a Notice of Appeal against that decision. Its Memorandum of Appeal, dated 18 October 2025, was filed on 22 October 2025. The appeal is fixed for hearing on 13 November 2026. On 18 June 2025 the Petitioner issued a notice of demand under section 466(1)(a) Act 777 for RM1,929,286.01, which was served on the Respondent and its solicitors on 23 and 24 June

The demand was not satisfied. The Petition was presented on 3 November 2025.

The requirements of the Companies (Winding-Up) Rules 1972 were complied with. The Petition was served on the Respondent at its registered office and on its solicitors on 12 November 2025, as deposed to in the affidavit of service (Enclosure 5). It was advertised in the Gazette, the New Straits Times and The Star, as exhibited to the affidavit in Enclosure 7 and the Memorandum of Advertisement and Gazette was filed in Enclosure 6. The Registrar's Certificate under rule 32(1) was duly issued in Enclosure 36. The Respondent took no point on service or advertisement as such. Its objection, at paragraph 21 of Enclosure 11, was that compliance with rule 32 does not displace the substantive grounds on which it resisted the Petition. That is correct as far as it goes, but it is not an objection to compliance and those substantive grounds are addressed below.

Section 466(1)(a) of Act 777 provides that a company is deemed to be unable to pay its debts where a creditor to whom the company is indebted in a sum exceeding the prescribed amount has served a statutory demand and the company has for twenty-one days thereafter neglected to pay, secure or compound for the sum to the satisfaction of the creditor. Section 465(1)(e) of Act 777 empowers the Court to order a winding up where the company is unable to pay its debts and section 465(1)(h) of Act 777 where it is just and equitable to do so.

It was not in dispute that the Judgment Sum far exceeds the prescribed amount, that the demand was duly served and that it remained unsatisfied beyond the 21 days period. The statutory presumption of inability to pay was therefore engaged and the burden lay on the Respondent to displace it.

The Respondent’s opposition raised four questions for determination–

whether the Judgment Sum is the subject of a bona fide dispute on substantial grounds, by reason of the pending appeal, such that the Petition is not maintainable;

whether the Respondent has a cross-claim capable of defeating the Petition;

whether the pendency of the appeal renders the presentation of the Petition premature, oppressive or an abuse of process; and

whether the Respondent has rebutted the statutory presumption of its inability to pay its debts.

The Respondent’s principal answer to the Petition was that the Judgment Sum is bona fide disputed because the decision from which it arises is under appeal. The Respondent contends that –

Suit 61 and Suit 276 were tried together and disposed of by a single decision;

its Memorandum of Appeal is directed at “keseluruhan keputusan” (the whole of the decision); and

as its first ground of appeal makes explicit, the appeal challenges not only the dismissal of its claim in Suit 276 but also the allowing of the Petitioner’s claim in Suit 61.

On that footing the Respondent said the very foundation of the Judgment Sum is in issue before the Court of Appeal.

I accepted, as a matter of fact, that the appeal extends to the Judgment Sum. The Memorandum of Appeal does not confine itself to Suit 276. It is expressed to be against the whole of the decision of 21 February 2025 and in its first ground, takes issue with the allowing of the Petitioner’s claim in Suit 61. To that extent I did not accept the Petitioner’s submission that the appeal is concerned only with Suit 276.

That finding, however, does not carry the Respondent as far as it needs to go. The question is not whether the Judgment Sum is, in some sense, the subject of a pending appeal. Plainly it is. The question is whether it is the subject of a bona fide dispute on substantial grounds for the purposes of winding-up law. Those are different questions and the answer to the first does not determine the second.

It is settled that the mere existence of an appeal does not convert a judgment debt into a disputed debt. A judgment, once obtained, establishes the debt; it remains valid, binding and enforceable unless and until it is set aside or its execution is stayed. The filing of an appeal does not, of itself, revert the debt to the disputed status it bore before judgment. [See : Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947 and Bank Utama (Malaysia) Bhd v. GKM Amal Bhd [2000] 2 CLJ 525]. As the Court of Appeal observed in Pacific & Orient, upon a party obtaining judgment the debt ceases to be a disputed debt and the subsequent filing of an appeal does not revert the judgment debt to its former, disputed status. Nor is it the function of a winding-up court to go behind a valid and subsisting judgment, save in cases of fraud or illegality, neither of which is alleged here. [See : Comintel Sdn Bhd v U Television Sdn Bhd (previously known as U Telecom Media Holdings Sdn Bhd and MITV Corp Sdn Bhd) & Anor [2019] 12 MLJ 667].

Whether a dispute is bona fide and rests on substantial grounds is a matter for the assessment of this Court and the pendency of an appeal is not, without more, sufficient to establish it. In the present case two matters were decisive. First, the Judgment in Suit 61 had at no stage been stayed or set aside, whether by the court of first instance or by the Court of Appeal and it therefore remained valid, binding and enforceable according to its terms. Secondly, the Respondent had made no payment of the Judgment Sum into Court, nor any offer to secure or compound for it. That was the position considered in Bank Utama (Malaysia) Bhd v. GKM Amal Bhd [2000] 2 CLJ 525, an authority placed before me by the Respondent itself, in which a judgment debtor with a pending appeal to the Court of Appeal and no stay was held not to have shown a bona fide dispute, the judgment being good and enforceable unless and until a stay is granted or it is set aside on appeal.

The Respondent thus obtained none of the protections that the law makes available to a judgment debtor who maintains that it ought not, pending appeal, to be required to pay. I do not rest this conclusion on the failure to pursue any single remedy. The Respondent submitted and I need not decide, that a stay of execution would not in law have restrained the presentation of a winding-up petition. What matters is that no order of any kind protecting the Respondent against enforcement of the Judgment was obtained from any court and that no sum was paid into Court. In those circumstances I was not satisfied that the dispute was a bona fide dispute on substantial grounds such as to deprive the Petitioner of its standing to present the Petition.

The Respondent advanced a further and distinct ground, namely that it held a cross-claim against the Petitioner exceeding the sum demanded, comprising contractual losses, loss of profits, loss of reputation and the consequences of its having been blacklisted and that a petitioner faced with such a cross-claim is not a creditor entitled to petition. For that proposition it relied on Pembinaan Purcon v. Entertainment Village (M) Sdn Bhd [2004] 1 MLJ 545 and Mark Jaya Engineering Sdn Bhd v LFY Construction Sdn Bhd [1990] 1 MLJ 372. The difficulty is that the cross-claim relied upon is not an unlitigated one. It is the claim advanced in Suit 276, which was tried alongside Suit 61 and dismissed on 21 February 2025. The authorities relied upon are concerned with a genuine and serious cross-claim which the company has had no opportunity to have determined. That is not this case. It is apparent from the pleadings in both suits, exhibited to the Petitioner's Affidavit in Reply, that no set-off was pleaded against the Petitioner's claim in Suit 61 in either action. A cross-claim that has been pleaded, tried and dismissed cannot be revived in this Court as an answer to a petition founded on the judgment given in the same proceedings.

The Respondent pressed the further argument that, because the order in Suit 61 and the dismissal of Suit 276 rest upon the same body of findings, in particular the construction of the financing terms and the question of which party was first in breach, therefore, the two are inseverable. So that a reversal on appeal would necessarily undo the Judgment Sum. I gave this argument careful consideration, but I was not persuaded that it converted the Judgment Sum into a bona fide disputed debt for present purposes.

The order in Suit 61 is a discrete, perfected order for a liquidated sum. It is presently valid and enforceable according to its terms and its enforceability does not depend upon the outcome of the appeal. A party who contends that enforcement would pre-empt or stultify its appeal has remedies available to it, whether by way of a stay of execution from the court that gave the judgment or from the Court of Appeal, or by payment into Court. The Respondent obtained no such relief from any quarter. This Court, exercising its winding-up jurisdiction, will not achieve by refusing to give effect to a final and unstayed judgment what the Respondent has been unable to obtain by any proper application.

For the same reasons, I did not accept that the presentation of the Petition was premature, oppressive or an abuse of process. The Petition was presented after a final judgment, an unsatisfied statutory demand and the expiry of the statutory period and in circumstances where the Judgment remained unstayed. The presentation of a winding-up petition in those circumstances is a legitimate exercise of a creditor’s right and a recognised mode of execution. The position is no different where an appeal is pending but unaccompanied by any stay of execution. A creditor remains entitled to present a petition founded on an unstayed judgment notwithstanding the pendency of the appeal.

That the Petitioner did not object to the Respondent’s application for an extension of time in the appeal did not amount to any concession as to the merits of the appeal, nor any waiver of the Petitioner’s right to present the Petition.

I have not overlooked the Respondent’s submission that a winding-up order would render its appeal nugatory. I observed that the making of a winding-up order need not be the end of the matter should the appeal succeed, there being mechanisms by which the winding up may then be addressed. I did not, however, rest my decision upon that consideration. The dispositive point was the one already stated, namely that there was a final and enforceable judgment against the Respondent, which it had not sought to stay, and it had not paid the sum into Court.

The Respondent denied that it is insolvent, asserting that it is an active company with paid-up capital of RM850,000.00, that it has no registered charges and that retention monies held on the FGV project would suffice to meet the debt. These assertions did not displace the statutory presumption. The denial of insolvency was a bare averment unsupported by audited financial statements, evidence of cash flow, or any payment into Court. The only financial statement on the record, exhibited by the Petitioner, is for the year ending 31 March 2010 and discloses nothing capable of establishing present solvency. The reference to retention monies was unparticularised and unsupported by any evidence of the sum said to be held or its availability. The Respondent having failed to adduce the evidence of solvency that lies peculiarly within its own knowledge, the presumption of inability to pay stood unrebutted.

For the foregoing reasons I was satisfied that the Petitioner is a creditor entitled to present the Petition, that the Respondent is deemed unable to pay its debts and that no bona fide dispute on substantial grounds, nor any other ground, had been made out to resist the relief sought. The Petition was founded on both section 465(1)(e) and section 465(1)(h) of Act 777. Being satisfied that the Respondent is unable to pay its debts within the meaning of section 465(1)(e) of Act 777, it was unnecessary for me to consider whether it would also be just and equitable that the Respondent be wound up under section 465(1)(h) of Act 777 and I express no view upon it.

Accordingly, I allowed the Petition and made an order in the following terms –

the Respondent, Eternal Global Frontier Sdn. Bhd., be wound up by the Court under the provisions of the Companies Act 2016;

the Official Receiver be appointed as liquidator of the

the Respondent pay the Petitioner costs of RM10,000.00 subject to the allocatur. Dated : 26 June 2026 -signed- (DR NORADURA BINTI HAMZAH) Judicial Commissioner High Court Civil 2 Johor Bahru Counsel for the Petitioner : : Ratha a/p Govindasamy (with Priyadiana a/p Annadurai) Messrs. Skrine Counsel for the Respondent : : Siti Nuraisah binti Abdul Ghani