Mlabs Systems Berhad v Longhouse Films Sdn Bhd (dalam Penyelesaian) (BA-24NCC-129-11/2025)

This is the Plaintiff’s application by way of Originating Summons for a Fortuna injunction to restrain the Defendant, a company in liquidation, and its liquidator from presenting or proceeding with a winding up petition against the Plaintiff based on a statutory notice dated 23.10.2025 issued pursuant to sections 465(1)(e) and 466(1)(a) of the Companies Act 2016 demanding the sum of RM450,480.10.

Having considered the affidavits filed and the written submissions by both parties, I was satisfied that the Plaintiff had crossed the threshold required for the grant of a Fortuna injunction under the second principle.

Accordingly, I allowed the application and granted an injunction in terms prayed. My reasons are as follows.

The Plaintiff, Mlabs Systems Berhad, is a public listed company.

The Defendant, Longhouse Films Sdn Bhd, is a company presently in liquidation, acting through its appointed liquidator.

The dispute arises from the Defendant’s issuance of a statutory notice to the Plaintiff in respect of an alleged debt said to be due and owing.

The Plaintiff relies on the following grounds in support of the application:

The alleged debt is non existent or, at the very least, bona fide disputed on substantial grounds.

The sum of RM500,000.00 relied upon by the Defendant was not an advance but a partial redemption of Redeemable Convertible Preference Shares (RCPS)

The Plaintiff relies on contemporaneous documents, including the payment description and the terms of the RCPS Agreement, to support its position.

The Defendant’s characterisation of the payment as an advance is said to be unsupported by primary documents such as board resolutions or any document evidencing a loan. S/N 8K88ScbywkSaF78RMnn7w

The Plaintiff further asserts a set off and cross claim arising from the Defendant’s failure to redeem the remaining RCPS and to pay preferential dividends.

The Plaintiff contends that the use of winding up proceedings in the face of such dispute amounts to an abuse of process.

The Plaintiff also asserts that the presentation of a winding up petition would cause serious commercial and reputational harm.

The Defendant opposes the application on the following grounds:

The Plaintiff is genuinely indebted in the sum claimed.

The RM500,000.00 was an advance as reflected in the Defendant’s audited financial statements.

The Plaintiff had filed a proof of debt in the Defendant’s liquidation on 9.9.2025, which amounts to an admission of liability.

The Plaintiff’s position is said to be an afterthought raised only to resist the statutory notice. S/N 8K88ScbywkSaF78RMnn7w

The Defendant further contends that the alleged RCPS redemption is not valid in law.

The Defendant submits that there is no bona fide dispute on substantial grounds. Analysis and Findings

The law on Fortuna injunction is settled. As decided in Mobilkom Sdn Bhd v Inmiss Communications Sdn Bhd [2007] 3 MLJ 316, adopting the principles in Fortuna Holdings Pty Ltd v The Deputy Commissioner of Taxation [1978] VR 83, there are two circumstances in which the court may restrain the presentation of a winding up petition:

where the petition has no real prospect of success and would cause irreparable harm; and

where the petitioner seeks to enforce a disputed debt by a procedure which may cause irreparable damage.

In an application of this nature, the court must be satisfied that the alleged debt is bona fide disputed on substantial grounds. It is not sufficient to raise a bare denial. S/N 8K88ScbywkSaF78RMnn7w Whether the alleged debt is bona fide disputed on substantial grounds

The central issue concerns the nature of the RM500,000.00 payment.

The Plaintiff’s case is that the payment was made as part redemption of RCPS pursuant to the RCPS Agreement. The Plaintiff relies on contemporaneous documents, including the payment description, and the contractual terms governing the RCPS. As the parties’ rights arise from the RCPS terms, which are contractual in nature, any dispute on their operation requires proper adjudication on evidence.

The Defendant, on the other hand, asserts that the same payment was an advance and relies primarily on its audited financial statements.

I find that there is a clear and genuine dispute as to the character of this payment. The dispute is not a bare assertion. It is supported by contemporaneous documents relied upon by the Plaintiff and a competing interpretation advanced by the Defendant.

The Defendant’s reliance on audited accounts is not determinative of legal liability. The court must examine the true nature of the transaction. In Homelite Development Sdn Bhd v Wong Shin Kah [2022] MLRHU 3183, the court held that sums reflected as owing in audited accounts were in fact S/N 8K88ScbywkSaF78RMnn7w monies held on trust and not a debt. Moreover, the Defendant’s reliance on accounting classification alone is insufficient to conclusively establish the legal nature of the transaction. As recognised in Soo Boon Siong v Saw Fatt Seong & Ors [2008] 1 CLJ 365, accounts are not conclusive proof of legal liability without supporting primary evidence.

On the materials before me, the Defendant has not identified contemporaneous documents evidencing that the RM500,000.00 was advanced as a loan, or the terms governing such advance.

The dispute therefore turns on factual and legal issues relating to the interpretation of the RCPS Agreement and the surrounding circumstances. These are matters which require proper ventilation at trial and are not suitable for determination in winding up proceedings.

The Defendant also relies on the Plaintiff’s subsequent conduct, in particular the filing of a proof of debt.

I take into account that the Plaintiff had filed a proof of debt in the Defendant’s liquidation on 9.9.2025. The Defendant relies on this as an admission of liability.

However, the filing of a proof of debt is not conclusive of liability. It must be considered in the context of the Plaintiff’s overall position as disclosed in the affidavits.

An admission must be clear and unequivocal before it displaces a dispute. In Prosmier Construction Sdn Bhd v Ching Chee Kong [2019] 6 MLRH 221, the court treated the debt as undisputed only because the admission was crystal clear and unequivocal.

That is not the position here. The Plaintiff has, at the same time, challenged the legal character of the alleged debt and asserted set off and cross claims arising from the same transaction.

In these circumstances, the filing of the proof of debt does not amount to an unequivocal admission that the alleged debt is due and owing. It remains a relevant factor, but does not displace the existence of a bona fide dispute on substantial grounds. Suitability of winding up proceedings

Where there is a genuine dispute of fact as to the existence or nature of the alleged debt, the proper course is for the dispute to be resolved through ordinary civil proceedings.

On the authorities cited, including Kumpulan Liziz Sdn Bhd v Pembinaan Azam Jaya Sdn Bhd [2021] CLJU 2043 and S/N 8K88ScbywkSaF78RMnn7w Pujian Development Sdn Bhd v Thean Jun Thye & Ors [2025] CLJU 701, winding up proceedings should not be used as a means of exerting pressure in respect of a disputed claim.

In the present case, the dispute involves competing versions supported by documents and requires findings on contractual interpretation and factual context. It is not appropriate for resolution in insolvency proceedings. Irreparable damage

The Plaintiff submits that the presentation of a winding up petition would cause serious commercial and reputational harm.

I accept that such consequences may arise. However, this factor is not determinative. The primary consideration remains whether the Plaintiff has crossed the threshold under the Fortuna principles.

The commercial consequences of a winding up petition are not speculative. As observed in Jaks Sdn Bhd v Zeta Letrik Sdn Bhd [2021] MLRHU 1375, such action may disrupt operations, affect financing arrangements and impact market confidence. Having found that there is a bona fide dispute on substantial grounds, the risk of such harm supports the grant of injunctive relief.

Having considered the affidavit evidence and the submissions, I am satisfied that the Plaintiff has established that the alleged debt is bona fide disputed on substantial grounds.

I make no finding on whether the debt ultimately exists. That is a matter to be determined in appropriate proceedings.

This case falls within the second principle governing the grant of a Fortuna injunction.

Accordingly, the Plaintiff’s application is allowed. The Defendant is restrained from presenting or proceeding with any winding up petition against the Plaintiff based on the statutory notice dated 23.10.2025, and from advertising any such petition.

Costs of RM5000 are awarded to the Plaintiff, subject to the allocator. Dated this: 4 May 2026 ~signed~ (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR S/N 8K88ScbywkSaF78RMnn7w Representative: For the Plaintiff : Kevin Chung Messrs W. M. Ang & Co. For the Defendant: Mohd Danish bin Shahrir together with