Devonport Sdn Bhd v Colonial Beach and Spa Resort Sdn. Bhd. (WA-28NCC-1191-11/2023)

This is a winding-up petition filed by the Petitioner, Devonport Sdn. Bhd., against the Respondent, Colonial Beach and Spa Resort Sdn. Bhd., pursuant to sections 464, 465 and 466 of the Companies Act 2016.

The Petition is founded on a Judgment Debt arising from a High Court decision delivered after a full trial. The Petitioner contended that the Respondent failed to satisfy the judgment despite service of a statutory notice of demand.

The Respondent opposed the Petition on several grounds, including disputing service of the statutory notice, challenging the existence of the debt, and relying on pending appeal and restructuring proceedings.

On 4 December 2025, approximately one week before the hearing date, Allamanda Medic Groups Sdn Bhd (AMGSB), which claimed to be a creditor of the Respondent, filed an Affidavit in Opposition to the Petition. On the same date, the party also filed a Notice of Intention to Appear and Oppose the Petition.

Having considered the cause papers and the written and oral submissions of parties, this Court allowed the Petition and ordered the Respondent to be wound up.

Both the Respondent and AMGSB appealed against the decision.

My reasons are set out below.

After a full trial before the High Court in Kuala Lumpur in Civil Suit No. WA-22NCvC-435-06/2019, the Petitioner obtained judgment against the Respondent on 13 October 2023. The Court awarded a total principal sum of RM1,760,370.00, together with costs of RM100,000.00 and interest thereon (the Judgment Debt).

On 31 October 2023, the Petitioner issued and served a statutory notice of demand under section 466 of the Companies Act 2016 on the Respondent at its registered address, demanding payment of RM2,248,082.64. The 21-day statutory period expired on 21 November 2023 without payment being made.

On 6 November 2023, the Respondent appealed the High Court judgment to the Court of Appeal.

Subsequently, on 24 November 2023, the Petitioner served the winding-up petition on the Respondent.

On 4 December 2023, the Respondent filed two applications, namely an application to strike out the Petition and an application for an injunction to restrain the advertisement of the Petition pending the disposal of the striking-out application.

On 8 December 2023, the Court granted an ad interim injunction pending the disposal of the striking-out application.

On 9 January 2024, the Respondent withdrew the striking-out application, contending that the same grounds had been raised in its affidavit opposing the Petition. Thereafter, on 7 February 2024, this Court dismissed the injunction application.

The hearing of the Petition, originally fixed earlier, was adjourned on 27 February 2024 to 19 April 2024 due to the striking-out and injunction applications.

In the meantime, the Petition was advertised in the New Straits Times on 14 February 2024, in the Berita Harian on 15 February 2024, and in the Government Gazette on 22 February 2024.

On 6 March 2024, the Respondent appealed against the dismissal of the injunction application.

On 14 March 2024, the Registrar issued a certificate confirming that the requirements of Rule 32(1) of the Companies (Winding-Up) Rules 1972 had been complied with.

On 25 March 2024, the Respondent filed an application for an Erinford injunction to stay the winding-up proceedings and to restrain the advertisement of the Petition. That application was dismissed on 3 April 2024.

On 19 April 2024, the hearing of the Petition was adjourned to 13 May 2024 at the Respondent's request, which informed the Court that it required time to finalise a purported sale of land.

However, on 9 May 2024, the Respondent filed a Judicial Management application in the High Court at Alor Setar (KA- 28JM-1-05/2024). As a result of the statutory moratorium arising from that application, the hearing of the Petition was adjourned on 13 May 2024.

On 12 December 2024, the High Court at Alor Setar allowed the Petitioner to intervene in the Judicial Management proceedings. Subsequently, on 28 April 2025, the same court struck out the Judicial Management application.

Thereafter, the hearing of the Petition was fixed for 16 May 2025.

On 30 April 2025, the Court of Appeal dismissed the Respondent’s appeal against the judgment dated 13 October 2023.

On 15 May 2025, a day before the hearing of the Petition, the Respondent filed an application pursuant to section 366 of the Companies Act 2016 for a Scheme of Arrangement, together with an application for a restraining order, in the High Court at Kuala Lumpur (Commercial Suit No. WA-24NCC(SOA)-6- 05/2025). As a result, the hearing of the Petition on 16 May 2025 was adjourned due to the automatic moratorium under section 368(1A) of the Companies Act 2016.

On 7 July 2025, the High Court allowed the Petitioner to intervene in the Scheme of Arrangement and the restraining order applications.

Finally, on 16 October 2025, both the Scheme of Arrangement application and the restraining order application were dismissed, with costs of RM10,000.00 awarded to the Petitioner and another respondent, Great Purpose Sdn. Bhd., respectively.

Subsequently, the Petition was fixed for hearing on 11 December 2025. This Court allowed the Petition, and the Respondent was ordered to be wound up. Hence, this appeal. FINDINGS OF THE COURT IN ALLOWING THE PETITION Whether the statutory notice under section 466 was validly served and remained unsatisfied

The starting point of the Petition was the statutory notice of demand issued pursuant to section 466 of the Companies Act 2016.

On 31 October 2023, the Petitioner issued and served a statutory notice of demand on the Respondent at its registered address, demanding payment of RM2,248,082.64, being the Judgment Debt. The 21-day statutory period expired on 21 November 2023.

The Petitioner argued that the statutory notice was properly served at the Respondent’s registered address, in accordance with the Companies Act 2016, and that the Respondent’s company secretary had duly acknowledged receipt of the notice. No evidence was adduced by the Respondent to the contrary.

The Respondent disputed service, contending that the Petitioner served the notice at an address that was allegedly no longer used by the Respondent and that the Petitioner was aware of another business address.

However, this Court noted that, immediately after the Petition was issued on 24 November 2023, the Respondent filed applications on 4 December 2023 to strike out the Petition and to obtain an injunction restraining the advertisement of the Petition. These applications were premised on the existence of the statutory demand and the Petition itself. This demonstrated that the Respondent had actual knowledge of the statutory demand and the winding-up proceedings.

On the material before me, and based on the evidence and the Petitioner’s submissions, I am satisfied that service of the statutory notice had been sufficiently established.

It was not disputed that no payment was made within the statutory period or at any time thereafter.

Accordingly, the statutory condition under section 466(1)(a) was satisfied, and the statutory presumption that the Respondent was unable to pay its debts arose. Whether the debt was bona fide disputed

The Judgment Debt arose from a High Court judgment delivered after a full trial on 13 October 2023.

The Respondent’s primary basis for disputing the debt was that it had filed an appeal against the High Court judgment on 6 November 2023.

However, it is noted that, at the time of the hearing of the Petition, the Respondent’s appeal was dismissed by the Court of Appeal, therefore the Respondent’s argument has become academic.

It is trite that a Judgment Debt which has not been stayed or set aside on appeal remains a valid and enforceable debt for the purposes of a winding-up petition. A winding-up court is not the proper forum to reopen or re-examine the merits of the underlying judgment. This Court will not go behind the said judgment (see: Gulf Business Construction (M) Sdn Bhd v Israq Holding Sdn Bhd [2010] 2 MLRA 411; [2010] 5 MLJ 34; [2010] 8 CLJ 775 (CA)). The validity of the said judgment cannot be challenged at the hearing of this Petition in the absence of any evidence that it was procured by fraud or collusion, and no such evidence exists in the present case (see: Sri Jeluda Sdn Bhd v Pentalink Sdn Bhd [2008] 1 MLRA 357).

I agree with the Petitioner’s argument that the Respondent’s attempt to challenge the debt in these proceedings, in substance, amounted to a collateral challenge to a final High Court judgment.

I therefore find that the Respondent has not raised a bona fide dispute regarding the debt.

Furthermore, the Respondent’s appeal against the High Court judgment, the application for Judicial Management, and later the Scheme of Arrangement and the restraining order application were all dismissed by the respective Courts.

This Court finds that, in the absence of any subsisting stay or restraining order, there was no legal impediment to the continuation of the winding-up proceedings.

I further agree that the sequence of multiple applications filed by the Respondent, all of which were unsuccessful, reflected procedural attempts to delay enforcement of the Judgment Debt rather than to satisfy the debt. Whether the Petitioner was entitled to a winding-up order

From the materials before me, the following facts were clear and undisputed: a. There was a valid High Court undisputed Judgment Debt in favour of the Petitioner. b. A statutory notice of demand under section 466 was issued and expired unpaid. c. The Respondent failed to raise a bona fide dispute about the debt. d. No stay or restraining order existed to prevent the continuation of the Petition.

These facts triggered the statutory presumption of inability to pay debts under section 466(1)(a).

The law clearly states that a Judgment Debt is an undisputed debt. In Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2010] MLJU 2217, the Court of Appeal held: “[22] The status of the judgment on the insurer under s. 96(1) of the Road Transport Act 1987 is the same with status of the said judgment on the insured earlier granted in favour of the respondent. Unless set aside or stayed by proper authority, the said judgment remains. Upon the respondent obtaining the judgment against the insured, the debt ceased to be a disputed debt. Thereafter the question whether the debt or amount due was bona fide disputed became non-issue. This is so even though the appellant had filed an appeal against the said judgment because the filing of an appeal does not have the effect of reverting the status of the Judgment Debt to its original status as a disputed debt before judgment was obtained. The filing of an appeal does not make a valid and enforceable judgment a disputed debt. (see: SBSK Plantations Sdn Bhd v. Dynasty Rangers (M) Sdn Bhd [2002] 2 CLJ 329). [23] In the instant case, the respondent has the right to proceed to issue a statutory notice under s. 218(2)(a) of the Companies Act 1965. Upon the expiration of the 21 days period as set out in the statutory notice and the amount claimed remaining unpaid, the debt becomes ‘due and payable’ and the appellant as the insurer is deemed to be unable to pay its debts. Consequently, the respondent acquires the status of ‘creditor’ for the purpose of winding up proceedings under s. 217(1)(h) and 218(1)(e) of the Companies Act 1965.” [emphasis added]

Therefore, a winding-up petition based on an unsatisfied Judgment Debt gives rise to a statutory presumption of insolvency under section 466(1)(a) of the Companies Act 2016. The debtor cannot oppose the petition merely by offering to negotiate or by claiming that payment might be made.

In Klass Corp (M) Sdn Bhd v MKRS Management Sdn Bhd [2018] 9 MLJ 305, the High Court held that once a judgment is obtained, the debtor’s failure to satisfy it within the statutory period creates a presumption of inability to pay its debts under section 466(1)(a) of the Companies Act 2016. Unless the judgment is set aside or stayed, the debt cannot be disputed.

In Gulf Business Construction (M) Sdn Bhd v Israq Holding Sdn Bhd (supra), the Court of Appeal further observed that the presumption of inability to pay arises automatically once the debtor fails to comply with a statutory demand based on a Judgment Debt, and the Court is justified in granting a winding-up order. The Court of Appeal stated: “[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). 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 Universal Cars Sdn Bhd [1985] 1 MLJ 84).” [emphasis added]

In the present case, it is not disputed that the Respondent has failed to pay the debt, whether in whole or in part, or to make any bona fide offer to settle it. In these circumstances, failure to pay within the stipulated 21 days will give rise to the statutory presumption that the Respondent is unable to pay its debts, thereby conferring on the Court the jurisdiction to grant a winding-up order.

The statutory presumption is rebuttable, and it is the Respondent's responsibility to prove that, at the relevant time, it was able to pay its debts as they became due. However, in this case, the Respondent has provided no evidence to rebut the presumption or to demonstrate that it was capable of settling the debt mentioned in the statutory demand notice. The various proceedings filed by the Respondent, allegedly in an attempt to restructure its debts, were also dismissed by the respective Courts.

This Court therefore finds that the Respondent is unable to pay its debts within the meaning of section 465(1)(e) read with section 466(1)(a) of the Companies Act 2016. THE OPPOSING CREDITOR, AMGSB’S OBJECTION TO THE

Allamanda Medic Groups Sdn. Bhd. (AMGSB) filed a Notice of Intention to Appear (Form 8) under Rule 28 of the Companies (Winding-Up) Rules 1972 and an Affidavit to oppose the Winding-Up Petition against the Respondent (Enclosure 124).

AMGSB alleged that on 1 June 2024, an Acknowledgement of Debt (AOD) was entered into between AMGSB and the Respondent. Under the AOD, the Respondent expressly and unconditionally acknowledged the existence of a lawful and subsisting debt owed to AMGSB in the sum of RM2,000,000.00. AMGSB further contended that the Respondent acknowledged that the admission of debt was final, binding, and enforceable against the Respondent, including against any successor, receiver, trustee, or liquidator. The AOD also provided that the said debt was to be fully settled on or before 31 May 2026.

AMGSB contended that clause 3.9 of the AOD further provided that AMGSB was entitled to require security for the repayment of the debt, together with all accrued interest. Such security included, but was not limited to, a charge or assignment over the Respondent’s rights, interests, and entitlements in a parcel of freehold land held under GM 4115, Lot 60206, Section 4, Bandar Padang Mat Sirat, Tasik Anak, District of Langkawi, measuring approximately 5,949 square metres (the said Land). AMGSB asserted that this provision conferred upon AMGSB an existing and binding contractual right to require the transfer of the beneficial interest or any form of security at AMGSB’s reasonable discretion.

AMGSB subsequently discovered that a Winding-Up Petition had been filed against the Respondent under Petition No. WA- 28NCC-1191-11/2023. AMGSB alleged that the Respondent had never disclosed this material fact to AMGSB at any time.

AMGSB maintained that if a winding-up order were made at this stage, its rights and interests in relation to the said Land would be prejudiced. This includes the real risk of losing the opportunity to recover the admitted debt, the inability to enforce the agreed transfer of the beneficial interest, and the likelihood that the winding-up process would delay, complicate, or effectively defeat AMGSB’s contractual right to payment and to the security contemplated under the AOD.

In the circumstances, AMGSB contended that the Petition is inappropriate in light of the bona fide commercial arrangement between the parties, in particular, the AOD executed between AMGSB and the Respondent.

The Petitioner, in its Affidavit in Reply (Enclosure 125), disputed AMGSB’s assertion that it is entitled to security for the alleged debt of RM2,000,000.00 purportedly owed by Respondent, pursuant to the AOD, by way of a charge over the said Land.

The Petitioner asserted that AMGSB was not listed as a creditor in the debt settlement proposal submitted by Colonial Beach to its creditors under the Judicial Management application in Originating Summons No. KA-28JM-1-05/2024, filed on 9 May 2024.

The Petitioner further informed this Court that a land search dated 5 December 2025 showed that no charge had been registered over the said Land, which was said to be the only substantial asset owned by the Respondent. In support of these contentions, the land search dated 5 December 2025 was exhibited.

The Petitioner further contended that, as the Winding-Up Petition had been presented on 24 November 2023, the AOD executed on 1 June 2024 was void pursuant to section 472 of the Companies Act 2016.

The Respondent offered no explanation and advanced no arguments in response to AMGSB’s contentions in opposing the Petition. FINDINGS OF THE COURT IN REJECTING THE OPPOSING

In a winding-up petition, the question before the Court is whether the Petitioner has established the existence of an undisputed bona fide debt and the Respondent’s inability to pay that debt. The Court is not concerned with whether a particular creditor might eventually be paid, nor with preserving the commercial expectations of any individual creditor. Those matters fall within the liquidation process.

The Opposing Creditor, AMGSB, relied on an AOD dated 1 June 2024, by which the Respondent acknowledged a sum of RM2,000,000.00 payable on or before 31 May 2026, and which contained a clause permitting AMGSB to require security over the Respondent’s land in Langkawi.

AMGSB contended that the contract remained valid, that the debt was not yet due, and that liquidation would prejudice its contractual right to obtain security. However, a critical chronology emerged from the affidavits. The winding-up petition was presented on 24 November 2023. The AOD relied upon by AMGSB was executed on 1 June 2024, several months after the Petition was presented.

Further, AMGSB surfaced to oppose the petition only approximately one week before the hearing, despite the petition having been before the Court since 2023. This Court finds this sequence of events material.

AMGSB placed significant reliance on clause 3.9 of the AOD, asserting a right to security over the Respondent’s land. However, the Petitioner produced a land search dated 5 December 2025, which showed that no charge or encumbrance had been registered over the said Land. Therefore, as at the hearing of the Petition, no proprietary interest had been created in favour of AMGSB. The alleged security remained no more than a contractual expectation contingent on future action. This Court therefore finds that, even if the AOD is accepted, AMGSB stood in the position of an unsecured creditor. Accordingly, the alleged debt falls to be dealt with within the liquidation process.

The Petitioner further argued that any disposition of assets or creation of security after the presentation of the petition would be affected by section 472 of the Companies Act 2016, and that AMGSB could not rely on a post-petition promise of security to defeat the Petition. The Petitioner relied on Azabar Holdings Sdn Bhd (in liquidation) v Kumarappan @ Thannirmalai a/l KM Palaniappan & Anor [2021] 3 MLJ 448 (CA) and TIC Technologies Sdn Bhd (in liquidation) v Mohamad Suhaimi Mohamed Taib & Ors [2019] 9 CLJ 422 to argue that any disposition of assets after the presentation of a winding-up petition is void, as it contravenes section 472 of the Companies Act 2016.

This Court agrees with the Petitioner’s contention. Accepting AMGSB’s argument would, in substance, permit the Respondent to rearrange the position of creditors after the commencement of winding-up proceedings, contrary to the statutory insolvency framework.

AMGSB’s contention that it could seek a validation order to realise its debt is also unpersuasive. The mere possibility of a future application did not provide a basis to refuse or adjourn a Petition that was otherwise properly founded.

Having considered the affidavits and oral submissions, this Court finds that AMGSB’s objections were grounded in a post-petition arrangement, unsupported by any perfected security interest, and did not address the central issue of the Petitioner’s undisputed debt. To accept those objections would elevate a private contractual expectation above the statutory insolvency regime.

Accordingly, this Court rejected the Opposing Creditor’s objections. The Petitioner having satisfied the legal requirements for a winding-up order, the Petition was allowed.

Therefore, for the reasons stated above, I ordered that the Petitioner’s Petition in Enclosure 1 be allowed, that the Respondent be wound up, and that the Petitioner be granted costs of RM15,000.00. Dated 5 FEBRUARY 2026 -sgd-JAMHIRAH ALI JUDGE HIGH COURT OF MALAYA KUALA LUMPUR To the parties’ solicitors: For the Petitioner : Wong Ying Ying dan Sharrin Kaur (Messrs Tommy Thomas) For the Respondent : Noor Syakirah Khalid dan Umeeta Kaur (Messrs Jasbeer, Nur & Lee) For the Opposing : Muhamed Nizam, Muzaqiamlul-lail dan Creditor Nur Zulaikha (Messrs Nizam Syan Syazwan Gan)