Energy Equipment Tech Sdn Bhd v Arus Jaya Oil & Gas Sdn Bhd (WA-24NCC-547-11/2024)

This is the Plaintiff’s application seeking a Fortuna injunction to restrain the Defendant from commencing or proceeding with winding up proceedings based on a statutory notice dated 25.10.2024 under sections 465(1)(e) and 466(1)(a) of the Companies Act 2016 demanding payment of RM10,330,546.26 (“this Application”). A]

The Plaintiff is a company engaged in construction business and entered into a contract with Vestigo Petroleum Sdn Bhd (“Vestigo”) as the main contractor for a project known as “Provision of Offshore Transportation and Installation (T&I) Campaign for Mampu-1 Relocation from Bentara Field to KMSE Field”.

On 25.4.2024, the Plaintiff entered into a Time Charter Party Agreement (“CPA”) with the Defendant whereby the Defendant was engaged as subcontractor to provide marine spread and related services. The Plaintiff paid a mobilisation fee of RM626,275.00 to the Defendant on 6.5.2024.

In July 2024, following concerns raised by the Defendant regarding outstanding payments, a tripartite meeting was held on 22.7.2024 between representatives of the Plaintiff, Defendant and Vestigo. Subsequently, Vestigo issued a Letter of Assurance dated 26.7.2024 (“Letter of Assurance”) stating, inter alia, that it would make direct payment to the Defendant should the Plaintiff fail to pay for the subcontractor’s work.

On 25.10.2024, the Defendant issued a statutory winding up notice claiming RM10,330,546.26 being the outstanding amount under invoices for services rendered by the Defendant. B]

The principles governing Fortuna injunctions are well-established in Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947, where Ramly Ali JCA (later FCJ) held that to succeed in obtaining such an injunction, the applicant must satisfy both limbs: i) the intended petition has no chance of success, as a matter of law and fact; and ii) the presentation of such petition might produce irreparable damage to the company.

Both limbs are cumulative and must be satisfied for the injunction to be granted.

A creditor is not required to obtain judgment before serving a statutory demand (Lafarge Concrete (Malaysia) Sdn Bhd v. Gold Trend Builders Sdn Bhd [2011] 1 LNS 1763; [2012] 6 MLJ 817; Maril-Rionebel (M) Sdn Bhd & Anor v. Perdana Merchant Bankers Bhd & Other Appeals [2001] 3 CLJ 248).

A debtor must primarily satisfy the Court that “the debt is bona fide disputed on substantial grounds” (Tan Kok Tong v. Hoe Hong Trading Co Sdn Bhd [2007] 4 MLJ 355). C] FIRST LIMB: WHETHER THE INTENDED PETITION HAS

The Plaintiff contends that the debt is bona fide disputed on substantial grounds, relying principally on the Letter of Assurance whereby Vestigo allegedly undertook to pay the Defendant directly, thereby shifting the payment obligation from the Plaintiff to Vestigo.

However, a careful examination of the evidence reveals fatal weaknesses in the Plaintiff’s position.

The relevant portions of the Letter of Assurance central to the determination of this Application are reproduced below: Page 5 of 17 After careful consideration and most importantly to ensure continuation and completion of the CONTRACT in a timely manner, COMPANY hereby assures SUBCONTRACTOR that as a result of CONTRACTOR’s failure to pay for SUBCONTRACTOR’s WORK, COMPANY will make payment directly to SUBCONTRACTOR within thirty (30) days upon submission of all relevant invoices together with the supporting documents from SUBCONTRACTOR. COMPANY will make direct payment to SUBCONTRACTOR based on the following premise/conditions: a) Prior to receiving the Notice of Direct Payment from COMPANY to SUBCONTRACTOR, CONTRACTOR shall send a formal request letter to COMPANY titled "Notice of Assignment of Payment from COMPANY to SUBCONTRACTOR" along with the corresponding invoices; b) Performance and progress of SUBCONTRACTOR’s WORK shall continue unhindered and unaffected on the premise of the assurance provided by the COMPANY; c) COMPANY shall not make the same payment which has been remitted to CONTRACTOR and no “double payment” for the same scope of work is allowed; d) COMPANY shall not be liable and obligated to make any payment should the payment request exceeds the total CONTRACT PRICE under the CONTRACT; Page 6 of 17 e) Once the direct payment is made by COMPANY, any corresponding liability as well as any commitment by COMPANY in respect to such payment shall be deemed fully discharged and released; f) Any direct payments shall not create a separate contractual relationship between COMPANY and SUBCONTRACTOR nor shall it relieve CONTRACTOR of its responsibilities in respect of the SUBCONTRACTOR. In addition, this arrangement shall be on condition that the obligations, liabilities, risk and other expenses in respect of the SUBCONTRACTOR shall still remain with CONTRACTOR at all time. Please be reminded that payment made to SUBCONTRACTOR shall not constitute an admission by COMPANY as to the performance of CONTRACTOR and/or SUBCONTRACTOR’s obligations and all other terms and conditions, CONTRACTOR and/or SUBCONTRACTOR’s WORK and responsibilities under the CONTRACT shall remain unchanged.” (own emphasis added)

First and foremost, the above express terms (namely Clause

and the portions highlighted above) of the Letter of Assurance are determinative. The Letter of Assurance, by its own unambiguous language, preserved the Plaintiff’s primary contractual obligations to the Defendant. It did not transfer, Page 7 of 17 novate, or extinguish the Plaintiff’s liability. At most, it created a conditional secondary obligation on Vestigo’s part, subject to specified conditions, without relieving the Plaintiff of its primary responsibility.

The Plaintiff’s reliance on the Letter of Assurance as creating a separate payment obligation binding on Vestigo is fundamentally flawed. The express disclaimer in Clause (f), together with the paragraphs immediately following it, makes clear that the Letter does not create a contractual relationship between Vestigo and the Defendant, and crucially, does not relieve or release the Plaintiff of its responsibilities toward the Defendant.

The principle of contractual interpretation requires giving effect to the clear and unambiguous language used by the parties. Where parties have expressly disclaimed any intention to create particular legal consequences, the Court will give effect to that intention. Here, the parties explicitly agreed that the Plaintiff’s obligations would remain unaffected.

Secondly, the Letter of Assurance was expressly conditional. It required the Plaintiff to issue a “Notice of Assignment of Payment from Company to Subcontractor” to Vestigo. This condition precedent was clearly stipulated in the Letter itself and was acknowledged by all three parties.

The evidence demonstrates unequivocally that the Plaintiff failed to fulfil this critical condition. Vide its email dated 17.10.2024, Vestigo confirmed that, as of that date, it had not received any notice of payment assignment from the Plaintiff, which was a condition stipulated in the Letter of Assurance, stating as follows: “To date, we have yet to receive any notice of payment assignment to make the direct payments (part of condition set in the letter of assurance). VESTIGO has made a payment to EETSB amounting 65% of the contract value, reflecting the work and documentation completed as of September 2024. Nevertheless, Vestigo is still pursuing the matter with EETSB.” (own emphasis added)

Following the Plaintiff’s continued failure to pay despite the Letter of Assurance, the Defendant issued a letter of demand dated 15.10.2024 directly to Vestigo, seeking payment under the Letter of Assurance and fulfilling any conditions required therein. After receiving no satisfactory response and sending a reminder letter dated 26.11.2024, the Defendant received a formal reply from Vestigo’s solicitors, Messrs. Wong & Partners, dated 7.1.2025.

Significantly, Vestigo’s solicitors, Messrs. Wong & Partners, in their letter dated 7.1.2025 responding to the Defendant’s demand for payment from Vestigo, clarified in no uncertain terms that: Page 9 of 17 i) The indebtedness is due by the Plaintiff to the Defendant, not by Vestigo; ii) There is no contractual relationship between Vestigo and the Defendant; iii) The Letter of Assurance was subject to conditions which were not fulfilled; and iv) The Letter has been superseded by subsequent discussions and communications.

The Plaintiff’s failure to issue the Notice of Assignment is particularly telling. It indicates that the Plaintiff deliberately chose not to fulfil the condition that would have triggered Vestigo’s direct payment obligation. Instead, the Plaintiff received payments from Vestigo for work done by the Defendant but failed to pay the Defendant. Acknowledgment via Auditor’s Confirmation

Most significantly, the Plaintiff’s own auditors sought confirmation from the Defendant regarding the outstanding sum of RM10,330,546.26 as at 31.10.2024. The Defendant duly confirmed this amount. This contemporaneous admission through the Plaintiff’s own accounting records fundamentally undermines any assertion of a genuine dispute. Page 10 of 17 The Plaintiff’s books clearly recorded this debt as owing to the Defendant.

Throughout the entire performance of the CPA, the Plaintiff never disputed the amounts invoiced by the Defendant. The invoices were issued, services were rendered, and no objection was raised. The allegation that the Defendant should pursue Vestigo for payment only emerged after the statutory notice was issued on 25.10.2024. This timing strongly suggests an afterthought calculated to avoid legitimate liability rather than a genuine dispute.

Under Clause 12(e) of the CPA, if the Plaintiff disputed any invoice, it was obligated to notify the Defendant before the due date and to pay the undisputed portion. No such notification was ever made.

The Plaintiff’s conduct throughout this matter demonstrates a pattern inconsistent with their position that there exists a genuine dispute as to the debt/the Defendant’s claim: i) The Plaintiff never raised any dispute during performance of the contract or upon receipt of invoices; Page 11 of 17 ii) The Plaintiff’s own auditors confirmed the debt in their records; and iii) Only after the statutory notice did the Plaintiff attempt to deflect liability to Vestigo.

In Best Re (L) Ltd v. Hanwha General Insurance Co Ltd [2014] 9 MLJ 125, the High Court held that allegations raised to stifle genuine statutory rights that are “inconsistent with undisputed contemporary documents” constitute abuse of process. The Court held as follows: “[24] Therefore, I find that the allegation of the plaintiff is plainly and simply an afterthought calculated to stifle genuine statutory right to present a winding up petition against it and the allegation is inconsistent with undisputed contemporary documents where the plaintiff has admitted in all these contemporary documents that the September installment is due and payable to the defendant. It is settled law, when considering affidavit evidence, the court must reject any assertions of fact, denial or dispute by a party that is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents.” (own emphasis added)

Applying these principles, I find that the Plaintiff has failed to establish any bona fide dispute on substantial grounds (Tan Kok Tong (supra). Page 12 of 17 D]

As I have found that the Plaintiff has not established a genuine dispute as to the debt, the issue of irreparable damage is no longer entirely relevant (see Bakti Dinamik Sdn Bhd v. Bauer (Malaysia) Sdn Bhd [2016] 10 CLJ 247). To take this point further, it was similarly held in Karisma Synergy Sdn Bhd v. Gates Pcm Construction (M) Sdn Bhd [2018] MLHRU 555 as follows: “[62] For completeness, I must add that even if the Defendant could show that it was not insolvent (which it fails to here), there is no justification whatsoever for its refusal to pay the debt claimed by the petitioner.” (own emphasis added)

However, for the sake of completeness, I will nonetheless address this issue.

The Plaintiff produced unverified documents regarding a purported contract in the Philippines worth RM90 million. These documents provide no meaningful evidence of the Plaintiff’s ability to pay current debts in Malaysia. There are no bank statements, no proof of actual cash flow, and no demonstration of liquid assets available to satisfy the debt.

In Karisma Synergy (supra), the Court emphasised the concept of commercial solvency – the actual ability to pay Page 13 of 17 debts when they fall due, not merely theoretical assets or future projects. The Court held as follows: “[58] It is settled law that the issue on the inability to pay debt is to be considered in commercial context, which is the neglect to pay current demands regardless of whether the debtor is in possession of assets which, if realized would permit it to discharge its liabilities. The test of commercial insolvency simply means that the respondent company is not able to meet current debts when they fall due (see System Communication Engineering Sdn Bhd v. Zabidin Sdn Bhd [1999] 5 MLRH 826;[1999] 1 AMR 1187). [59] This is why it has been said that a company could be both insolvent but wealthy at the same time (see, for example, the Privy Council decision in Malayan Plant (Pte) Ltd v. Moscow Narodny Bank Ltd [1980] 1 MLRA 488; [1978] 2 MLJ 81 and the Supreme Court decision in Sri Hartamas Development Sdn Bhd v. MBF Finance Bhd [1992] 1 MLRA 492). It is wholly insufficient that the assets might be realizable at some future date after the debts have become due and payable (see the Supreme Court decision in Lian Keow Sdn Bhd (in Liquidation) & Anor v. Overseas Credit Finance (M) Sdn Bhd [1987] 1 MLRA 672; [1988] 2 MLJ 449). [60] In essence, the test of commercial solvency requires immediate availability of assets to pay current liabilities whenever they fall due. And I emphasise that it is cash flow solvency that really matters, not balance sheet solvency. Page 14 of 17 [61] In the instant case, the respondent has not satisfactorily shown that it is not insolvent based on its cash flow position. In any event, it has also not furnished any evidence of its more recent financial position, not even any unaudited management accounts. This does little to assist the case of the respondent.” (own emphasis added)

The Plaintiff has received substantial funds from Vestigo but has chosen not to pay the Defendant. This is not a question of inability but unwillingness.

As stated in Karisma Synergy (supra), even if a company has sufficient cash flow but refuses or is unwilling to make payment available to the creditor for any reason other than that the debt is bona fide disputed on substantial grounds, the company fails to rebut the presumption of insolvency (see also WWTAI Finance Ltd v. IES Energy Holdings Sdn Bhd [2016]

The Plaintiff has failed to establish solvency or irreparable harm. E]

In summary, after careful consideration of all the evidence and submissions, I conclude as follows: i) The Plaintiff has wholly failed to establish a bona fide dispute on substantial grounds. The Letter of Assurance, Page 15 of 17 properly construed in accordance with its express terms, does not relieve the Plaintiff of its contractual obligations to the Defendant. Furthermore and, in any event, the conditions set out in the Letter of Assurance were not fulfilled, particularly with respect to the “Notice of Assignment”; ii) It cannot be said that the intended winding up petition has no chance of success; and iii) The Plaintiff has not demonstrated genuine solvency or irreparable damage that cannot be avoided by simply paying the admitted debt.

For all these reasons, this Application is dismissed with costs. Dated this 7th day of November, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) JUDGE HIGH COURT OF MALAYA, (COMMERCIAL DIVISION (NCC 3)) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA Page 16 of 17 COUNSEL FOR THE PLAINTIFF : Lee Chia Yee Messrs Ong, Ric & Partners Level 1, Tower 11, Avenue 5, The Horizon, No. 8, Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur Tel: 03-62113830 Email: general@orplegal.com.my COUNSEL FOR THE DEFENDANT : Cherian Kuruvila Messrs Cherian Kuruvila & Co. No. 1, Jalan Tun Sambanthan 1, Brickfields, 50470 Kuala Lumpur. Tel: 012-3065120 / 011-65211240 Email: cheriankco@outlook.com LEGISLATION CITED Companies Act 2016 ▪ Section 465(1)(e) ▪ Section 466(1)(a)

Best Re (L) Ltd v. Hanwha General Insurance Co Ltd [2014] 9

Bakti Dinamik Sdn Bhd v. Bauer (Malaysia) Sdn Bhd [2016] 10

Karisma Synergy Sdn Bhd v. Gates Pcm Construction (M) Sdn

Lafarge Concrete (Malaysia) Sdn Bhd v. Gold Trend Builders

Maril-Rionebel (M) Sdn Bhd & Anor v. Perdana Merchant

Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947

Tan Kok Tong v. Hoe Hong Trading Co Sdn Bhd [2007] 4 MLJ 355

WWTAI Finance Ltd v. IES Energy Holdings Sdn Bhd [2016]