Elixir Projects Sdn Bhd v Jhe Construction (M) Sdn Bhd (JA-28NCC-104-07/2024)

This is a judgment by this Court allowing enclosure 27 in this suit (suit “104” winding-up). Enclosure 27 was filed by the Respondent for a stay of the Winding-Up Petition in enclosure 2 filed by the Petitioner. The stay was sought pending the disposal of suit JA- 22C-3-05/2024 (hereafter refers to ‘suit “3” to claim and to challenge) filed by the Respondent before the Johor Bahru High Court.

The basis for allowing enclosure 27 by this Court is that there is real likelihood of breach of natural justice that goes towards the determination on enclosure 2 “inability to pay” by the Respondent in this present suit “104”. More importantly, suit “3” by the Respondent to claim and to challenge, was filed way earlier than this suit “104” winding-up.

This Winding-Up Petition suit “104” by the Petitioner is initiated based on an adjudication order dated 7.2.2024 in which an amount of debt claimed by the Petitioner for a sum of RM2,002,663.98 was allowed by the AIAC (Asian International Arbitration Centre). This sum was highly disputed by the Respondent that moved the filing of suit “3”. To this date, with pre-trial case management completed S/N jYnB4qNfR0aMzkVteM3Dzg and filing of the necessary cause-papers, suit “3” is fixed for case management before court 4 to fix the hearing date of suit “3”.

Although an application to enforce the said arbitration order was filed at the High Court by the Petitioner via enclosure 1 in suit JA- 24C-10-03/2024 (enforcement suit “10”), however at the time of filing this suit “104” winding-up’, the enforcement application suit “10” is yet to be disposed. In short, the petition, as contended by the Respondent and undisputed by the Petitioner, was filed in absence of a High Court enforcement order under section 28 Construction (Industry Payment and Adjudication) Act 2012.

Furthermore, the Respondent had also filed an application via suit “3” to set aside the Adjudication Order which (at the time of filing the Affidavit-In-Support by the Respondent to enclosure 27 in suit “104” winding-up), the application to set aside in suit “3”, was fixed for hearing on 9.10.2024. No subsequent affidavits filed by either party to suggest the outcome of this suit “3” to challenge, hence it is only reasonable for this Court to conclude that the relevant court hearing the suit, has yet to arrive at its decision.

The Respondent also sought to set aside the Adjudication Order by filing its application on 22.4.2024 via JA-24C-11-04/2024 (suit “11” to set aside). At the hearing of suit “104”, this application suit “11” to set aside, is yet to be disposed.

Based on all these suits filed and pending disposal, most particularly suit “3” to claim and to challenge the Adjudication Order, the inevitable deduction that can be arrived at by this Court, having S/N jYnB4qNfR0aMzkVteM3Dzg balanced the right and interest of both the Petitioner and also the Respondent is that the Adjudication Order has not reached its finality.

This is arrived at since the Respondent had taken all the necessary steps within a reasonable speed of time to dispute the Petitioner’s claim by revisiting the Adjudication Order again, utilizing the available procedures permitted.

The Respondent’s submission to move this Court to allow enclosure 27 also focused on the Statement of Defence and Counter-claim filed by the Petitioner to counter the Respondent’s claim in suit “3 to claim and to challenge”, where the Petitioner had pleaded a sum of RM2,051,102.47 in its counter-claim said a sum that was already claimed and adjudicated in the said Adjudication order.

In Lafarge Concrete (M) Sdn Bhd v. Gold Trend Builders Sdn Bhd [2011] CLJU 1763; [2012] 6 MLJ 817, the Court of Appeal dealt with this issue as to when a company is said “unable to pay its debt” and held as follows: "[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 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). S/N jYnB4qNfR0aMzkVteM3Dzg Where there is no judgment, it is not uncommon for companies to argue that 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 Sdn Bhd [2001] 1 CLJ 591; [2001] 1 MLJ 356 ' (Chan & Koh on Malaysian Company Law (2nd Ed), at para 22.145). "(emphasis mine)

The Companies Act 2016 section 466 sets a guide as to the meaning of this term as follows: 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;

execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or S/N jYnB4qNfR0aMzkVteM3Dzg

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.

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). [12] As such, in the absence of any application to strike out by the other party any of the suits mentioned above, rendering the issues pleaded all are life issues and with no plea of ‘res judicata’ raised to bar any of the suits, this Court is of the view the applicant@ Respondent has fulfilled the test laid out in Lafarge Concrete (M) Sdn Bhd. [13] To “ensure the company's survival or achieving a more advantageous asset realization than in a winding-up”, it is only right and proper for the stay be granted for the primary issues be dealt with before a determination on this requirement of “unable to pay its debt” arising in enclosure 1 of suit “104” can be heard and argued by both parties before this Court (see: Jaya Sudhir v Nautical Supreme Sdn Bhd & Ors [2019] 7CLJ 395). S/N jYnB4qNfR0aMzkVteM3Dzg [14] For these reasons, enclosure 27 is allowed and a stay of enclosure 1 is granted pending disposal of suit “3”. Bertarikh : 12 September 2025 (Nurulhuda Nur’Aini Binti Mohamad Nor) Hakim Mahkamah Tinggi Malaya Johor Bahru Johor Darul Ta’zim S/N jYnB4qNfR0aMzkVteM3Dzg Peguamcara Pempetisyen : Kimberly Ng Tetuan Ho Partnership & Neoh Suite A-11-3A Plaza Taragon Kelana No. 3 Jalan SS 6/6 Kelana Jaya 47301 Petaling Jaya Selangor 03-7665 5173 general@hopartnershipneoh.com Peguamcara Responden : Hazirah Hashim Tetuan Law Chambers Of Vin Sa & Ian Unit 6.14 & 6.15 Level 6 Plaza DNP No. 59 Jalan Dato’ Abdullah Tahir 80250 Johor Bahru Johor 07-2892220 officejb@vsilex.com haikal@vsilex.com mywong@vsilex.com S/N jYnB4qNfR0aMzkVteM3Dzg