Small Medium Enterprise Development Bank Malaysia Berhad v Heng Seng & Company Sdn Bhd (WA-28NCC-201-02/2025)

This is a winding-up petition filed by the Petitioner, Small Medium Enterprise Development Bank Malaysia Berhad, against the Respondent, Heng Seng & Company Sdn Bhd (the Company), pursuant to sections 465(1)(e) and 466(1)(b) of the Companies Act 2016.

After considering the Petition, the supporting affidavits, and the Petitioner's oral submission, and noting the absence of any opposition from the Company or other creditors, this Court allowed the Petition and ordered that the Company be wound up.

My reasons are set out below.

The Company was incorporated on 7 April 2009 as a private limited company, with a registered address at L-2-1 & L-3-1 (Suite 2.1), No. 60 Jalan Sri Hartamas 1, Sri Hartamas, 50480 Kuala Lumpur, and business addresses at Level 4, 7E Nadayu 28 Dagang, Jalan PJS 11/7, Bandar Sunway, 47500 Subang Jaya, Selangor, and at Level 13, Boutique Office 3, BO3-D-13, Menara 3A (Pillar 7), KL Eco City, No. 3 Jalan Bangsar, 59200 Kuala Lumpur.

The Petitioner is a financial institution that carries on the business of providing financing facilities to enterprises.

By a judgment dated 17 April 2024, obtained in the Kuala Lumpur High Court in Suit No: WA-22M-277-03/2024, the Company became indebted to the Petitioner in the total sum of RM12,085,988.12 as at 28 February 2024 (together with contractual late payment compensation and costs).

Following the judgment, the Petitioner issued a statutory notice of demand dated 24 December 2024, pursuant to sections 465(1)(e) and 466(1)(b) of the Companies Act 2016, demanding payment of RM12,183,251.53 as at 13 December 2024 (the Judgment debt) within 21 days of service.

The statutory notice was served on the Company at its registered and business addresses, and service was confirmed by statutory declaration and an Affidavit of Service.

The Company failed to pay the sum demanded within the prescribed period and continues to fail to satisfy the Judgment debt. The Petitioner therefore asserted that the Company is unable to pay its debts and is insolvent.

Consequently, the Petition for winding-up was presented to this Court on 19 February 2025.

The Petition was duly advertised in The New Straits Times, The Star, and the Federal Government Gazette, and a memorandum of advertisement was filed.

The Affidavit Verifying the Petition confirmed the truth of the Petition’s contents and the Company’s continuing default.

The Registrar of the High Court certified compliance with Rule 32(1) of the Companies (Winding-Up) Rules 1972, and the Registrar’s Certificate was issued on 25 March 2025.

Notice of hearing was served on the Company, and an Affidavit of Service confirmed service.

On the hearing date, the List of Parties attending confirmed that no creditors, contributories, or the Company appeared to oppose the Petition.

The Company did not file an Affidavit in Opposition. It was also unrepresented, and no representative of the Company appeared on its behalf at the hearing.

The issues before the Court are:

whether the debt founded on the judgment is bona fide disputed.

whether the Petitioner is entitled to rely on the presumption of insolvency under section 466(1)(a) of the Companies Act 2016.

whether it is just and equitable for the Company to be wound up. FINDINGS OF THE COURT

The judgment debt exceeding RM12 million is undisputed. The statutory notice of demand was properly issued and served. The Company failed to pay within 21 days of service.

19.

On the evidence before this Court, the statutory conditions for the deeming provision are fully satisfied.

The Petitioner’s affidavit stated that the Company has no ability to pay or settle any part of the outstanding judgment debt.

There is no contrary evidence and affidavit from the Company disputing its solvency. The Court therefore accepts that the Company is unable to pay its debts. Petition founded on an undisputed Judgment debt

The Petition was founded on a judgment in default obtained by the Petitioner against the Company. The judgment remains valid, binding, enforceable, and outstanding. There is no stay of the judgment, and it had not been set aside at the time of the hearing.

The law clearly states that a judgment debt is an undisputed debt. In Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2010] MLJU 2217, the Court of Appeal held: “[22] The status of the judgment on the insurer under s. 96(1) of the Road Transport Act 1987 is the same with status of the said judgment on the insured earlier granted in favour of the respondent. Unless set aside or stayed by proper authority, the said judgment remains. Upon the respondent obtaining the judgment against the insured, the debt ceased to be a disputed debt. Thereafter the question whether the debt or amount due was bona fide disputed became non-issue. This is so even though the appellant had filed an appeal against the said judgment because the filing of an appeal does not have the effect of reverting the status of the judgment debt to its original status as a disputed debt before judgment was obtained. The filing of an appeal does not make a valid and enforceable judgment a disputed debt. (see: SBSK Plantations Sdn Bhd v. Dynasty Rangers (M) Sdn Bhd [2002] 2 CLJ 329). [23] In the instant case, the respondent has the right to proceed to issue a statutory notice under s. 218(2)(a) of the Companies Act 1965. Upon the expiration of the 21 days period as set out in the statutory notice and the amount claimed remaining unpaid, the debt becomes ‘due and payable’ and the appellant as the insurer is deemed to be unable to pay its debts. Consequently, the respondent acquires the status of ‘creditor’ for the purpose of winding up proceedings under s. 217(1)(h) and 218(1)(e) of the Companies Act 1965.” [emphasis added]

Therefore, a winding-up petition based on an unsatisfied judgment debt gives rise to a statutory presumption of insolvency under section 466(1)(a) of the Companies Act 2016.

In Klass Corp (M) Sdn. Bhd. v MKRS Management Sdn. Bhd. [2018] 9 MLJ 305, the High Court held that once a judgment is obtained, the debtor’s failure to satisfy the judgment within the prescribed statutory period gives rise to a presumption that the company is unable to pay its debts under section 466(1)(a) of the Companies Act 2016. So long as the judgment remains neither set aside nor stayed, the existence of the debt cannot be challenged.

Similarly, in Gulf Business Construction (M) Sdn. Bhd. v Israq Holding Sdn. Bhd. [2010] 5 MLJ 34, the Court of Appeal held that the presumption of inability to pay is triggered automatically when a debtor fails to comply with a statutory demand founded on a judgment debt. In such circumstances, the Court is entitled to proceed to grant a winding-up order. The Court of Appeal stated: “[11] The failure on the part of the company to pay as demanded would trigger the presumption that the company is unable to pay its debt. This presumption is, however, rebuttable. The onus shifts onto the company to show that it is able to pay the debt (PT Anekapangan Dwitama v Far East Food Industries Sdn Bhd). Thus, the inability to pay on the part of the company gives the requisite jurisdiction of the court to make a winding up order against the company (Securicor (M) Sdn Bhd v Universal Cars Sdn Bhd [1985] 1 MLJ 84).” [emphasis added]

In the present case, it is undisputed that the Petitioner, through its solicitors, Messrs. Sidek Teoh Wong & Dennis, issued and served a Statutory Notice of Demand dated 24 December 2024 on the Company pursuant to sections 465(1)(e) and 466(1)(b) of the Companies Act 2016. The said notice was duly served at the Company’s registered office and business addresses, by personal service on 30 December 2024 and by registered post on 24 December 2024.

The 21-day period prescribed by statute has since expired. Yet the Company has neither paid the debt, in whole or in part, nor made any bona fide proposal to settle it. In these circumstances, the Company’s failure to comply with the statutory demand within the stipulated period gives rise to the statutory presumption that it is unable to pay its debts, thereby vesting this Court with jurisdiction to grant a winding-up order.

This presumption is rebuttable, and the burden lies on the Company to establish that, at the material time, it was able to pay its debts as they fell due. However, no Affidavit in Opposition was filed, and no evidence has been placed before the Court to rebut the presumption or to show that the Company was in a position to satisfy the debt stated in the statutory demand.

Accordingly, the Court finds that the Company is unable to pay its debts within the meaning of section 465(1)(e) read together with section 466(1)(b) of the Companies Act 2016. In these circumstances, it is just and equitable that the Company be wound up.

Therefore, for the reasons stated above, I ordered that the Petitioner’s Petition Enclosure 1 be allowed and that the Company be wound up. The Petitioner is granted RM5,000.00 in costs. Dated 6 February 2026 -sgd-JAMHIRAH ALI JUDGE HIGH COURT OF MALAYA KUALA LUMPUR To the parties’ solicitors: For the Petitioner : Amira (Messrs Sidek Teoh Wong & Dennis) For the Respondent : Tidak hadir Tidak diwakili