Rhb Bank Berhad v Legion Public Relations Sdn Bhd (WA-28NCC-458-06/2022)

This petition to wind-up the Respondent is filed under section 465(1)(e) of the Companies Act 2016 (“CA 2016”), which stipulates that the Court may order the winding-up of a company if it is unable to pay its debts.

The Petitioner granted credit facilities to the Respondent (“the Facilities”). The Facilities were secured by a landed property identified as Unit D-12-3A, Menara Suezcap 1, KL Gateway, No. 2, Jalan Kerinchi, Gerbang Kerinchi Lestari, 59200 Kuala Lumpur (“the Secured Property”).

Arising from the Respondent’s default under the terms of the Facilities, the Petitioner filed a suit against the Respondent in Suit No WA- 22NCC-97-03/2021 (“Suit 97”). Thereafter, the parties entered into a Consent Judgment dated 20.05.2021.

Meanwhile, the Petitioner obtained an order for sale of the Secured Property and proceeded to auction the Secured Property. The proceeds of the public auction were then credited into the Respondent’s account to reduce the amount due and owing under the terms of the Consent Judgment. After crediting the proceeds of the auction, there was a shortfall of RM384,144,42.00 as at 27.04.2022, which amount remains outstanding. S/N aSyU56orEmeG0Ww024ewA **Note : Serial number will be used to verify the originality of this document via eFILING portal 3

The Petitioner then issued a statutory notice to the Respondent under section 466 of the CA 2016 to demand the outstanding balance of RM384,144.42.00 to be paid within twenty-one (21) days from service of the notice.

In opposing the Petition, the Respondent avers as follows:

The Consent Judgment is a mere agreement between the parties and not a final judgment. The amount of RM384,144.22.00 was not particularised in any affidavit. The sum was plucked out of thin air;

The statutory notice under section 466 of the CA 2016 was not served on the Respondent; and

The Respondent is a solvent company and the onus is on the Petitioner to prove the Respondent is insolvent. FINDINGS BY THE COURT [7]

With respect to the Respondent’s submission that the Consent Judgment is a “mere agreement” between the parties and is not binding on the Respondent, the simple answer is that there is a plethora of cases which have decided that any judgment of a court is valid and binding until and unless it has been set aside or reversed by S/N aSyU56orEmeG0Ww024ewA a higher court. It does not matter whether the order of court is a consent judgment, judgment-in-default or summary judgment. (see the decision of the Federal Court in Boustead Trading Sdn Bhd v Arab-Malaysian Merchant Bank (1995) 4 CLJ and Bukit Baru Villas Sdn Bhd v Malaysia Building Society Berhad (2016) MLJU 1983.

(ii) With respect to the purported failure to particularise the exact amount due and owing, the sum has been clearly stated in the statutory notice, in Exhibit “M” paragraph 6 of the Petitioners’ Affidavit in Reply (“AIR”). There is no requirement for the breakdown of the amount owing to be particularised in the Affidavit of Support (“AIS”). [8] On the issue of the alleged non-service of the statutory notice, the exhibit in Enclosure 13 paragraph 6.2 of the Petitioners’ AIR contains an endorsement of delivery of the letter from the Petitioner’s solicitor (see paragraph 6.2 and Exhibit M-1 of the AIR). Thus, it is apparent that the cover letter enclosing the statutory notice has been delivered to the Respondent. [9] The Respondent avers that the Petitioner has failed to prove that the statutory notice was in fact enclosed in the cover letter. To suggest that the Petitioner would have sent a cover letter without any attachment to four different addresses is illogical and absurd. (see paragraph 7 of the petition). [10] Had the cover letter been sent sans the contents, surely the Respondent would have contacted the Petitioner’s solicitors to inform them that there was no attachment to the cover letter. The fact that this was not done by the Respondent is evidence that this averment by the Respondent is an afterthought and thus, not credible. S/N aSyU56orEmeG0Ww024ewA [11] The Respondent in its submission in paragraph 38 states, and I quote verbatim: “As explained above, the Respondent and the court is left clueless as to what documents were actually ‘delivered’ under the tracking number, this would include tracking number ‘RY180382326MY’.” [12] I find this submission to be mischievous. What other document would be included in a letter from a solicitor to an intended Respondent? Surely it has to be some form of demand or notice of intended court proceedings and not likely to contain a festive greeting card. [13] For the aforesaid reasons I find that on a balance of probabilities, the averment that the statutory notice was not sent is highly improbable. Therefore, this Court finds this averment to be untrue. [14] The final issue raised by the Respondent is the alleged failure by the Petitioner to prove that the Respondent is insolvent. This issue is a non-starter. It is trite law that the Petitioner only needs to establish that the Respondent is commercially insolvent (see Sri Hartamas Development Sdn Bhd v MBF Finance Berhad (1992) 1 MLJ 313). [15] In the case of Gulf Business Construction (M) Sdn Bhd v Israq Holdings Sdn Bhd (2010) 5 MLJ 34, the Court of Appeal held: “(7) The test to ascertain commercial insolvency is rather simple. It is this that the company is unable to meet the current debts as they fall due.” S/N aSyU56orEmeG0Ww024ewA [16] Thus, I am satisfied that the Respondent has failed to rebut the presumption of its commercial insolvency after service of the statutory notice. For the above reasons, I allow the prayers in the petition, with costs of RM10,000.00 to the Petitioner to be paid out of the assets of the Respondent. Dated 29 March 2024 …………t.t…..……………... Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur COUNSEL FOR THE PETITIONER: CH’NG ZI XUAN SOLICITORS FOR THE PETITIONER: TETUAN CHE MOKHTAR & LING COUNSEL FOR THE RESPONDENT: KELVESH DESHENRAJ SOLICITORS FOR THE RESPONDENT: TETUAN JAMIE WONG Cases Referred to: ➢ Boustead Trading Sdn Bhd v Arab-Malaysian Merchant Bank (1995) 4 CLJ ➢ Bukit Baru Villas Sdn Bhd v Malaysia Building Society Berhad (2016) MLJU 1983 ➢ Sri Hartamas Development Sdn Bhd v MBF Finance Berhad (1992) 1 MLJ 313 ➢ Gulf Business Construction (M) Sdn Bhd v Israq Holdings Sdn Bhd

5 MLJ 34 S/N aSyU56orEmeG0Ww024ewA Legislation Referred to: ➢ Section 465(1)(e) of the Companies Act 2016 ➢ Companies (Winding-Up) Rules 1972 Decision Date : 10.05.2023 S/N aSyU56orEmeG0Ww024ewA