Hameshpal Karamjit Singh and Shelbie Diana for the Applicant [Messrs Lui & Bhullar] v Fauzana binti Abdul Kari and Fatin Nur Nadhirah for the Respondent (Affin Islamic Bank Berhad) [Messrs Badruzzaman & Kamal] (ORIGINATING SUMMONS NO. WA-28JM-23-12/2021)

The Applicant has in enclosure 1 via an ex parte Originating Summons dated 6.12.2021 (OS) applied to this Court for a Judicial Manager (JM) to be appointed over the Applicant company (Applicant)

Amongst the grounds relied on for the OS are as follows:

(a) the applicant is unable to pay its debts;

(b) there is a reasonable probability that a judicial management order (JMO) will ensure the survival and/or rehabilitation of the Applicant or preserve all or part of its business as a going concern;

(c) a JMO will be more advantageous to the Applicant’s creditors as oppose to a winding up of the Applicant.

Affin Islamic Bank Berhad (Intervener) was granted leave to intervene in the proceedings on 14.3.2022.

The Intervener had inter alia submitted that the OS was not a bona fide application as:

(a) the OS was an afterthought;

(b) the OS was speculative as the process of obtaining the certification from Malaysia Digital Economy Cooperation (MDEC), as referred to herein thereafter in my grounds, was only at the application stage and not as yet approved. Copy 3 Court’s Findings

This Court has perused the OS before this Court and after examining the documents filed before it, the following is the decision of the Court.

This Court has in coming to its decision considered the Applicant’s proposal as per the Affidavit in Support of the OS which consisted of inter alia the following:

(a) to recover debts owed as a result of a unilateral termination of a contract between SPAD and the Applicant which was allegedly worth RM7,469,850.00;

(b) to secure a successful negotiation with all remaining creditors and litigants of the Applicant, especially when led by a JM;

(c) to successfully secure the certification by MDEC as a Technology Solutions Provider (TSP) to enable the Applicant to provide support to Malaysian SME’s in a digital adoption under the SME Business Digital Grant as announced in the Budget 2020;

(d) to develop new technology (Wizeewig) for Digital Transformation platforms;

(e) that the experience and clientele of the SKALI Group of companies (of which the Applicant is part of) would be paramount to the success of the above proposals when led by an independent JM. Copy 4

I have further observed and examined:

(a) that in the Company Search conducted on the Applicant dated 4.2.2021 in exhibit TRF-1 in enclosure 2 that there is no report or filing for the current year by the Applicant but that the revenue for the financial year end as at 31.12.2015 which was only tabled on 15.8.2018 was a revenue of RM10,740,456 compared to a loss after tax of-RM4,779,379 and that its current assets then were RM17,466,450 whilst its current liabilities then was RM23,580,990;

(b) exhibit TRF-2 in enclosure 2 which is the Applicant’s Annual Return for the calendar year 2021 which shows the Applicant’s amount of indebtedness based on the Registered Charges as at 20.1.2021 as RM3,565,047.74;

(c) exhibit TFR-3 in enclosure 2 which is a summary of the Applicant’s Income Statement but I note that the Applicant has not annexed their Audited accounts and/or their Financial Statements for this Court to verify the same;

(d) the documents in exhibit TFR-15 enclosure 31 shows that there is a SME Business Digitalisation Grant which consists of a strategic collaboration between the Ministry of Finance, Bank Simpanan Nasional and Malaysia Digital Economy Cooperation (MDEC) to make available a grant for Small Medium Enterprises (SME) to adopt digitalization in their daily operations; Copy 5

(e) Exhibit TFR 22 in enclosure 31 shows the Status Report and mentions inter alia of Wizeewig which is a very low costs of deploying business management systems over the internet with the same having a 118% increase in business for the year 2021 and higher returns to the Applicant with gross margins of 65-85%.

From the evidence before this Court, I am not satisfied that the Applicant has shown to this court that it is unable to pay its debt due to the lack of or non-availability, not only, of any supporting documents to corroborate that fact but also that it has been shown that the application of the new technology developed known as Wizeewig is evidence that there has been an increase in the business of the Applicant in the preceding year. This would thus lead to the Applicant not fulfilling the requirement under sections 404 and/or 405 of the Companies Act 2016 that it is unable to pay its debt to pass the first threshold in applying for a Judicial Management Order.

It is also my decision that the Applicant has not made a full and frank disclosure before this Court as regards its financial situation as the current relevant audited statements or financial statements of the Applicant has not been exhibited before this Court. To this I repeat what this Court had stated in Twin Unitrade Sdn V TSK Hardware Sdn Bhd [2021] 12 MLJ 155 where it was held: “It is trite law that in any ex parte application it is essential that there must be frank and fair disclosure of all relevant materials including points that may be unfavourable to an applicant.” Copy 6

I further find that the Applicant has averred that it has applied to become a technology solution provider under the said SME Business Digitalisation Grant but to date, there is no indication of whether the same will be successful and any averment thereto is at this juncture a mere speculation on the Applicant’s part. In the email dated 2.12.2021 from MDEC to the Applicant in exhibit TFR 7 of enclosure 2, it was stated that the Applicant should do a follow-up after 30.2.2022 but there is no evidence, documents enclosed or any averments to show the same. All in, I hold that these issues lack the fulfillment of any of the criterias required under section 405(1)(b).

I have also taken into account the alleged unilateral termination of the contract with SPAD said to be worth RM7,469,850 and the legal proceedings between the parties as per exhibit TFR-5 and exhibit TFR-6 respectively in enclosure 2 but I hold that any negotiations and/or the outcome for this matter can be dealt with by the Applicant themselves or even a liquidator in a winding up scenario to secure the successful negotiation of the same and thus this is not in my view a relevant factor nor a ground which can be relied on in support of the Application herein.

With the greatest of respect, I would like to quote CIMB Islamic Bank Berhad v Wellcom Communications (NS) Sdn Bhd & Anor [2019] MLJU 148 and I adopt the same for the purpose of my decision in this OS herein where the Court of Appeal held: “[9] The effect of making a judicial management order in relation to an insolvent company which may have no prospect of recovering money or assets within a reasonable time indeed may Copy 7 be very drastic. Thus, the court’s consideration at all stages, that is to say from the date the application is filed and from the date of the order, if any is given, must be based on strict proof and evidence and not merely surmise and conjecture to ensure creditors are not defrauded by sympathy evoking stories of insolvent companies”.

For the record, I further find no element of public interest applicable based on the facts of the matter before me and that the clientele of the Applicant per se does not in my opinion justify the public interest element as the Applicant is not the only company in the country who is able to provide the services mentioned. In the circumstances, I hold that the Applicant has failed to satisfy this Court that the requirements under section 404 and/or 405 of the Companies Act 2016 have been met.

This Court hereby dismisses the OS with costs. Dated: 12th September 2022 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE KUALA LUMPUR HIGH COURT Parties: Hameshpal Karamjit Singh and Shelbie Diana for the Applicant [Messrs Lui & Bhullar] Copy 8 Fauzana binti Abdul Kari and Fatin Nur Nadhirah for the Respondent (Affin Islamic Bank Berhad) [Messrs Badruzzaman & Kamal]