Teras Tegap Sdn Bhd v Pempetisyen (28NCC-461-07/2017)

The Petitioner commenced this winding up proceeding against the Respondent for the Respondent to be wound up on the ground that the Respondent is unable to pay its debts for a total sum RM21,088,751.07 and that it is just and equitable to do so. When the winding up petition (Petition) came up for hearing there was no affidavit opposing the Petition filed by the Respondent. Learned counsel for the Respondent however raised a legal issue challenging the Petition.

Having considered the oral and written submission of both parties on the legal issue raised, I am of the view there is no merit in the argument forwarded by the Respondent. As such, and premised on the fact that no affidavit filed by the Respondent to rebut the presumption that it is unable to pay its debt, the court granted the order sought by the Petitioner for the Respondent to be wound up. Aggrieved by such decision the Respondent appealed. 3

The Petition filed by the Petitioner is premised on section 466 (1) 2016). Based on its corporate information, the Respondent is a private company engaged in the business of engineering and consultancy and general contractor.

The grounds on which the Petition is premised can be found at the following paragraphs –

Melalu Perintah Mahkamah bertarikh 23 Februari 2017 dalam Saman Pemula No. WA-24C(ARB)-1-01/2017 dalam Mahkamah Tinggi di Kuala Lumpur, ia telah dihakimkan bahawa Pempetisyen dibenarkan untuk mendaftar dan menguatkuasakan Awad Muktamad Tuntutan Balas bertarikh 5 Ogos 2016, seperti dipinda oleh Final Award on the Counterclaim: Corrigendum dated 30.8.2016 (“Awad Muktamad”), yang diterbitkan menerusi suatu Timbangtara No. Rujukan KLRCA/D/ADM- 282-2014 di antara Teras Tegap Sdn Bhd (Penuntut) dan Malaysia Marine and Heavy Engineering Sdn Bhd (Responden) di hadapan Penimbangtara Dato’ Mohamad Ariff bin Md Yusof dalam cara yang sama seperti satu penghakiman atau perintah Mahkamah (“Perintah Penguatkuasaan”).

Selanjutnya, melalu Perintah Mahkamah yang sama, ia telah dihakimkan bahawa Responden hendaklah membayar kos sebanyak RM5,000.00 kepada Pempetisyen. 4

Dalam satu lagi Saman Pemula berkaitan antara pihak-pihak, yakni, WA-24C(ARB)-34-11/2016, melalui Perintah Mahkamah bertarikh 23 Januari 2017, ia telah dihakimkan bahawa Responden hendaklah membayar kos sebanyak RM10,000.00 kepada Pempetisyen.

Pempetisyen melalui peguamcaranya telah menuntut pembayaran kepada Responden untuk hutang penghakiman berikutan Penghakiman di atas melalui penyampaian Notis menurut Seksyen 466 Akta Syarikat 2006 bertarikh 12 Mei 2017 (“Notis Seksyen 466” tersebut) dengan serahan ke diri alamat berdaftar Responden di No 16-1 Jalan 2 / 23A Tmn Danau Kota off Jalan Genting Klang 53300 Kuala Lumpur.

Responden dikehendaki di bawah Notis Seksyen 466 tersebut untuk membayar sejumlah wang RM21,088,751.07 (Ringgit Malaysia Dua Puluh Satu Juta Lapan Puluh Lapan Ribu Tujuh Ratus Lima Puluh Satu Ringgit dan Tujuh Sen) sahaja setakat 12 Mei 2017 dalam tempoh dua puluh satu hari (21) hari dari tarikh penyampaian Notis Seksyen 466 tersebut. Sesalinan Notis Seksyen 466 tersebut bertarikh 12 Mei 2017 adalah dilampirkan di sini dan ditandakan sebagai “Lampiran D”.

Sesalinan surat Akuan Penyampaian bagi Notis Seksyen 466 tersebut yang diikrarkan oleh Mohamad Nazri bin Mohamad pada 3 Julai 2017 dilampirkan di sini dan ditandakan sebagai “Lampiran E”, 12 Walaupun tuntutan telah dibuat dan tempoh 21 hari tersebut telah pun tamat, Responden masih enggan, gagal dan/atau cuai untuk membayar baki jumlah tertunggak sebanyak RM21,088,751.07 kepada Pempetisyen. 13 Pada semua masa yang material, Responden masih berhutang kepada Pempetisyen jumlah sebanyak RM21,088,751.07 (Ringgit Malaysia 5 Dua Puluh Satu Juta Lapan Puluh Lapan Ribu Tujuh Ratus Lima Puluh Satu Ringgit dan Tujuh Sen) sahaja setakat ini. 14 Responden adalah tidak berupaya untuk membayar hutangnya dan adalah insolven. Respondent’s contentions [5] It was argued on behalf of the Respondent that the winding up Petition which is premised on demand for payment pursuant to two separate judgment is fatal. This legal issue as to the validity of the petition is centred on the Respondent’s interpretation of s. 466 of the CA 2016 which read as follows – 466 Definition of "inability to pay debts" 6

it is proved to the satisfaction of the Court that the company is unable to pay its debts and in determining whether a company is unable to pay its debts the Court shall take into account the contingent and prospective liabilities of the company. [6] According to learned counsel for the Respondent, the real intention of Parliament when enacting s. 466 of the CA 2016 is to set two pre-conditions before a winding up petition can be filed in court, that is –

the debts owing must be more than RM5,000.00; and

the statutory notice of 21 days under s. 466 (1) (a) must be given and complied. Thus it was argued that the inability of a company to pay its debts in the context of the said section 466 ought to be established by reading –

section 466 (1) (a) together with paragraph (b); or

section 466 (1) (a) together with paragraph (c). [7] In other words the Respondent argued section 466 (1) (a) is not a standalone provision but a mandatory requirement which must be 7 complied with in both the situation under section 466 (1) (b) and (c) of the CA 2016. This, according to the Respondent is consistent with the word “or” which appears after paragraph (b) and not after paragraph (a). It is further argued that if the intention of the Parliament is for section 466 (1) (a), (b) and (c) are to be read disjunctively, then the word “or” would have appeared after each and every paragraphs. To support this contentions, learned counsel referred to section 122A of the Companies Act 1965 (CA 1965) where the words “or” appeared at the end of each of the paragraphs of section 122A (1) (a), (b) and (c) and at the end of each paragraphs at (a) and (b) of section 122A (3) of the same. [8] The Respondent further argued since the Petition filed herein is premised under section 466 (1) (a) of the CA 2016, the Petitioner must fulfil the requirement under section 466 (1) (b) of the same. Since section 466 (1) (b) makes reference to “a judgment” the Petition herein is bad and fatal as the Petition is grounded on two separate judgment obtained by the Petitioner against the Respondent. In this respect the learned counsel referred to section 3 (i) of the Bankruptcy Act 1967 which share the same wording with paragraph (b) of section 466 (1) (b) of the CA 2016, that is, “ a judgment”. Learned counsel reminded the court that in bankruptcy cases it will be fatal if a bankruptcy notice is filed based on combined judgments and cited the case Re Chen Chong Fatt 8 Willy Ex Parte Hitachi Lease (Singapore) Pte Ltd [1987] 1 MLJ 94 as the authority. Thus the Petitioner failed to prove the Respondent is unable to pay its debts in accordance with section 466 (1) (a) read with paragraph (b). [9] Respondent argued it is not the intention of the Parliament for the provision in paragraph (b) and (c) of section 466 (1) to be a standalone provision because there is no requirement for the statutory 21 days notice to be served in paragraph (b) and (c) and there is no statutory indebted sum fixed in both the said paragraphs. If both the paragraphs are read as standalone provision, it would result in absurd situation where –

under paragraph (b) a winding up petition can be filed based on a judgment sum RM1.00 because no statutory indebted sum fixed under paragraph (b) whereas the minimum indebted sum under the law is RM5000.00; and

under paragraph (c) a winding up petition can be filed based on an indebted sum less than RM5000.00 without giving the required statutory notice. 9 [10] Furthermore, argued the Respondent, section 466 (2) of the CA 2016 which is a totally new provision not found in the CA 1965 would be redundant if paragraphs (b) and (c) of section 466 (1) of the same were to be read separately from paragraph (a). Petitioner’s contentions [11] The Petitioner pointed out that section 466 (1) of the CA 2016 is in pari materia with the provisions of section 218 (2) of the CA 1965. In fact section 466 (1) (b) and (c) of the CA 2016 are worded in the same exact manner, word for word as section 218 (2) (b) and (c) of the CA 1965 including in respect of the placement of the word “or” between paragraphs (b) and (c). Therefore section 466 (1) of the CA 2016 ought to be interpreted in the same manner as the courts have, in the past, interpreted section 218 (2) of the CA 1965. [12] In response to the Respondent’s contentions, learned counsel for the Petitioner submitted as follows –

with regards to the issuance of a statutory demand under section 466 (1) (a) of the CA 2016, the Petitioner cited the Court of Appeal case Maril-Rionebel (M) Sdn Bhd & Anor v 10 Perdana Merchant Bankers Bhd And Other Appeals [2001] 4 MLJ 187 which held the issuance of a statutory notice under section 218 (2) (a) of the CA 1965 (which is in pari materia with section 466 (1) (a) of the CA 2016) is not a pre-requisite to commencing a winding up petition.

the court in Maril-Rionebel case observed that section 218

(a), (b) or (c) of the same.

the placement of the word “or” at the end of paragraphs (b) and (c) of section 466 (1) cannot be construed to suggest that section 466 (1) (a) is mandatory as to do so would be a clear departure from established precedent in law. In Weng Wah Construction Co Sdn Bhd v Yik Foong Development Sdn Bhd [1994] 2 MLJ 266 it was held a winding up order may be given solely on the basis of paragraph (a) of section 218 of the CA 1965. As such it is entirely unnecessary to link or draw a connection between section 466 (1) (a) and (b) of the CA 2016. 11

as the Respondent failed to pay its debt within the 21 days stipulated in the statutory demand, the Respondent is presumed to be unable to pay the same. The Respondent failed to rebut such presumption as there was no affidavit evidence adduced by the Respondent. As there was no evidence to oppose the Petition the Respondent therefore did not dispute the debts it owed to the Petitioner which remains outstanding and payable. Under the circumstances the Respondent has failed to discharge its legal burden on a balance of probabilities to counter the presumption.

Section 466 (1) (a) of the CA 2016 does not contain any limitation or restriction whatsoever to suggest that a statutory demand for payment ought to be made pursuant to any judgment or that it must be limited to a single judgment of the court. Findings of the court [13] Having given due consideration to the arguments forwarded by both parties I am of the view the legal issues raised by learned counsel 12 for the Respondent is misconceived and has no support of law. My reasons for saying so is stated below. [14] Section 218 (2) of the CA 1965 provides as follows – definition of inability to pay debts

it is proved to the satisfaction of the Court that the company is unable to pay its debts; and in determining whether a company is unable to pay its debts the Court shall take into account the contingent and prospective liabilities of the company. [15] As can be seen, except for the amount of debt, section 466 (1) (a) of the CA 2016 is identical to section 218 (2) (a) of the CA 1965.

(c). If Parliament had intended for the requirements in paragraph (a) to be mandatory in a situation where either (b) or (c) is applicable, then section 466 (1) would have been drafted so to clearly show such 14 purported intention, and without going into the rationale or practicality of such purported intention, the drafting could be in the following manner (or something similar) – A company shall be deemed to be unable to pay its debts if the company is indebted in a sum exceeding the amount as may be prescribed by the Minister and a creditor by assignment or otherwise has served a notice of demand, by himself or his agent, requiring the company to pay the sum due by leaving the notice at the registered office of the company, and the company has for twenty-one days after the service of the demand neglected to pay the sum or to secure or compound for it to the satisfaction of the creditor and either -

the execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or

it is proved to the satisfaction of the Court that the company is unable to pay its debts and in determining whether a company is unable to pay its debts the Court shall take into account the contingent and prospective liabilities of the company. Contrary to the Respondent’s baseless argument, it is the intention of Parliament that the three paragraphs may be invoked as standalone provisions. [18] In the case of Weng Wah Construction, the respondent challenged the winding up petition on the ground, inter alia, that the petitioner had wandered beyond section 218 (2) (a) of the CA 1965 by digressing into 15 section 218 (2) (c) of the same. In dismissing the said objection the court held – As for the second preliminary objection that the petitioner is making use of all the provisions in s 218(2) of the Act and not para (a) alone, I find that this objection certainly lacks merit as in the first place the disjunctive use of the word 'or' for the three paragraphs in sub-s (2) of the relevant section of the Act clearly means that the petitioner is at liberty to proceed under any or all of them especially so when they had not specifically stated any particular paragraph in the recital of the petition. In any case, for what it is worth, this objection is of no consequence in view of my overruling the earlier preliminary objection and it follows that the winding-up order may be given on the basis of para (a) alone. The interesting thing to note is that it is in fact the respondent who is making use of para (c), particularly to show that they are solvent by submitting their latest audited accounts and providing evidence that they had realizable assets and that their profit situation was improving. (emphasis added) [19] Thus it is legally permissible for the Petitioner to only invoke section 466 (1) (a) of the CA 2016 (read with section 465 (1) (e) and (f) of the same) to commence winding up proceedings against the Respondent without having regards to paragraphs (b) or (c) of the same. As such the Respondent’s reliance on paragraph (b) to challenge the validity of the Petition is of no significance and irrelevant as the Petition is premised on paragraph (a) which does not restrict a statutory demand 16 for payment ought to be made based on a single judgment. Besides that, the learned counsel’s argument that the phrase “a judgment” which appears in the said section 466 (1) (b) refers to a single judgment is misconstrued as section 4 (3) and 66 of the Interpretation Acts 1948 and 1967 (Interpretation Acts) provides that words in the singular include the plural and words in the plural include the singular. Also, the Respondent’s reliance on the case of Re Chen Chong Fatt Willy is misplaced as that particular case is a bankruptcy case. Furthermore, as can be gathered from the judgment of that case, there is no discussion on section 3 of the Bankruptcy Act 1967 (as contended by the learned counsel) and there was also no comparison made with section 218 (2) of the CA 1965. [20] It is also legally permissible for a petitioner to commence winding up proceedings based on section 466 (1) (b) or (c) of the CA 2016. In the case of KNM Process Systems Sdn Bhd v Mission Biofuels Sdn Bhd [2014] 8 MLJ 434; [2013] MLJU 584, the petition presented against the respondent was on the grounds that the respondent was unable to pay its debts under section 218 (1) (e) read with s 218 (2) (c) of the CA 1965. It is therefore just and equitable that the respondent be wound up under section 218 (1) (i) of the same. The petitioner's case is premised on their assertion that sometime in October 2012, they discovered that the 17 respondent and its group of companies are hopelessly insolvent. To substantiate the petition, the petitioner adduced evidence via the respondent’s financial statement and the respondent’s holding company audited account and submitted that the state of insolvency required by section 218 (2 ) (c) of the CA 1965 has been proven. In his judgment, Vernon Ong J (as his lordship then was) compared paragraphs (a) and

of section 218 (2) and made the following observations – [23] In most instances a WUP is presented against a company on the basis that the company is unable to pay its debts under s 218(1)(e). Such petitions are usually preceded by the service of a notice of demand under s 218(2)(a), otherwise commonly known as a 's 218 Notice' on a company giving it 21 days ('three weeks') to pay the debt stated therein, it is noted that there are two requirements -- (i) the statutory minimum amount of the debt owing by a company must be not less than RM500; and (ii) there must be a prior demand under the s 218 Notice. If the company fails to pay the debt within the stipulated period, the company is presumed to be unable to pay its debts -- this presumption constitutes the basis of the winding up petition. [24] Whilst the petition in this case is predicated on the respondent's inability to pay its debts under s 218(1)(e), it is not premised on the same assumption as in the preceding paragraph. Instead, the presumption is grounded on the respondent's contingent and prospective liabilities -- which factors the court will take into account in determining whether the respondent is unable to pay its debts. Therefore, there is no s 218 Notice in this instance; the petitioner did not serve any s 218 Notice on the respondent. Instead, the WUP was presented against the respondent on the ground that the respondent is unable to pay its debts under s 18 218(1)(e) because of its contingent and prospective liabilities pursuant to s 218(2)(c). Section 218(2)(c) reads as follows … [25] Therefore, under s 218(2)(c), the ground for winding up under s 218(1)(e) is made out if the court, after taking into account the company's contingent and prospective liabilities, is satisfied that the company is unable to pay its debts. In this sense, insolvency does not necessarily require proof that the company's liabilities exceeds its assets. It means that the company is unable to pay its debts as they become due. This requires an examination of the company's entire financial position. Evidence suggesting a temporary lack of liquidity is not sufficient to prove that a company is unable to pay its debts (Sandell v Porter (1966) 115 CLR 666)… [21] Based on the facts the court held, taking into account the respondent's contingent and prospective liabilities, it was not satisfied that the respondent was unable to pay its debts. The pertinent point to note here is the principle enunciated thereto, that is, paragraph (a) and

of section 466 (1) of the CA 2016 are 2 separate provisions which relate to different situations under which a respondent company is deemed to be unable to pay its debts and the element that is required to prove such inability also differs. [22] Another case to illustrate s. 218 (2) (a) (b) and (c) are mutually exclusive is the case of Teck Yow Brothers Hand-bag Trading Company v Maharani Supermarket Sdn Bhd 1989] 1 MLJ 101; [1989] 2 CLJ (Rep) 19 555; [1989] 1 MLJ 101. This case was referred to in the case of KNM Process Systems but was distinguished on the facts. In Teck Yow Brothers Hand-bag case, a petition to wind up the respondent company was made pursuant to section 218 (2) (b) and (c) of the CA 1965. The petition was opposed by a creditor who was the landlord of the respondent and who had levied distress proceedings after the petition was presented. One of the issue raised by the respondent opposing the petition was that the petitioner failed to serve the statutory notice under s. 218 (2) (a) of the CA 1965 prior to the presentation of the petition to allow the respondent 21 days to pay its debt. It was argued that since the petitioner did not avail himself of the said section 218 (2) (a), there was therefore no evidence that the respondent was unable to pay its debt. The petitioner countered such argument and pointed out that the petitioner is proceeding under section 218 (1) (e) and (i) and section 218

(b) and (c) relying on evidence that the company is unable to pay its debt and therefore there was no need for the petitioner to issue the statutory notice as the petitioner is not relying on the presumption under paragraph (a) of the said section 218 (2). The court held – As for the contention that no proper notice under s. 218(2)(a) of the Act has been given I find in this case that the notice is in the circumstances unnecessary and I order that it be dispensed with as the petition is not wholly founded under s. 218(2)(a) of the Companies Act. I am of the 20 view that s. 218(2)(a)(b) and (c) are mutually exclusive and on the facts and in the exercise of its discretion a company can be wound up by the Court on any of the grounds (a), (b) or (c). (emphasis added) [23] Thus by the above authorities (which concerns paragraphs (a), (b) and/or (c) of section 218 (2) of the CA 1965 which is identical to section 466 (1) of the CA 2016), a winding up petition may be commenced on any one of the grounds pursuant to section 466 (1) (a), (b) and/or (c). Each of the paragraph, as demonstrated in the authorities referred to above, relate to different circumstances upon which a respondent company are deemed to be unable to pay its debts. [24] One of the basis forwarded by the Respondent for arguing paragraph (a) ought to be read with either paragraph (b) or (c) of section 466 (1) of the CA 2016 is that if the said paragraphs (b) and (c) were to be read separately from paragraph (a), the new section 466 (2) of the same would be redundant. The only correct and significant point pointed out by learned counsel for the Respondent in that argument is that section 466 (1) of the CA 2016 is indeed a new provision not found in the repealed CA 1965. Other than that, in particular the manner how he interpreted the said section 466 (1) is flawed and misconstrued. For all intent and purposes the said section 466 (2) which is so patently and 21 plainly drafted, is specifically meant to be complied in a situation under paragraph (a) of section 466 (1) (a) and not for situations under paragraph (b) and (c) where there is no requirement whatsoever for a statutory demand to be issued prior to the presentation of a winding up petition. [25] Learned counsel for the Respondent contended based on the Hansard Report in Parliament it is crystal clear that the real intention of Parliament when enacting the said section 466 of the CA 2016 is to set 2 pre-conditions before any winding up petition can be filed in court. The conditions are that, firstly the debts owing must be more than RM5,000.00 and secondly the statutory notice of 21 days must be complied with. This so called pre-conditions are incorporated in section 466 (1) (a). The said Hansard Report which was furnished by the Respondent in its Bundle of Authorities as Tab 3 is a one (1) page document which appears to be a running page extracted from a document relating to “Syarikat” and this document appears to have more than 661 pages. Perusing that particular page, the document appears to explain the various provisions in respect of “Fasal 466” until “Fasal 471”. The learned counsel referred to and quoted “Fasal 466” which reads as follows – 22 Fasal 466 bertujuan untuk mengadakan peruntukan bagi takrif ‘ketidakmampuan untuk membayar hutang’ oleh sebuah syarikat. Fasal ini menjelaskan bahawa jika syarikat tidak mampu membayar hutang apabila syarikat itu keterhutangan dalam jumlah yang melebihi lima ribu ringgit dan notis tuntutan telah disampaikan kepada syarikat dan syarikat itu telah mengabaikan pembayaran jumlah wang itu dalam jangka masa yang ditetapkan. Fasal ini selanjutnya menyatakan bahawa tempoh untuk memfailkan petisyen di Mahkamah untuk menggulung syarikat adalah dalam tempoh enam bulan dari tarikh tamat tempoh notis permintaan. [26] Hansard are official records or minutes of proceedings in Parliament. With regards to reference to Hansard, the Federal Court in Rossarin Nuekaew V. PP [2017] 8 CLJ 503; [2017] 1 LNS 1128 said – [16] … We would state here that in construing a statute a reference to Parliamentary report of proceedings or Hansard is permitted as an aid to statutory interpretation where the enactment is ambiguous, obscure or which if literally construed might lead to an absurdity, provided that the statement reported in the Hansard was made by a Minister or the promoter of a Bill. (See the case of Chor Phaik Har v. Farlim Properties Sdn Bhd [1994] 4 CLJ 285; [1994] 3 MLJ 345) Thus for purpose of interpreting a statute, courts are allowed to refer to Hansard provided the statute concerned is ambiguous and the statement reported in the Hansard was made by a Minister. 23 [27] Having perused the said one page document, it is seriously doubt that that one page document is a Hansard of the Parliament. I say so for the following reasons –

There is no indication whatsoever that the one page document are official records or minutes of proceedings in Parliament and that it was a statement made by the Minister concerned.

If one were to access the official portal of the Parliament of Malaysia (https://www.parlimen.gov.my), one would find the format of Hansard published by the Parliament is obviously not like the one page document furnished by the learned counsel in the instant case.

Based on the contents of the one page document, the said document appears to be Explanatory Statement of a bill (presumably the Companies Bill) which has yet to be passed by Parliament. [28] In any event the said “Fasal 466” relied upon by the learned counsel is of no assistance to the Respondent as I fail to see how such 24 explanation supports the Respondent’s contentions. That particular “Fasal 466” is a mere echo of some of the contents in section 466 of the CA 2016 without offering any explanation as to how the said provision may be construed. Above it all, there is no necessity for reference to be made to the Hansard as the provision in section 466 of the CA is clear and unambiguous. [29] With regard to section 122A of the CA 1965 which the learned counsel relied upon to support his specific point on the placement of the conjunction “or”, it is interesting to note that the learned counsel chose to cite that particular old provision and not its equivalent provision in the current CA 2016. Perhaps the reason for doing so can be best appreciated by comparing the two provisions in the repealed CA 1965 and the current CA 2016 – Companies Act 1965 [Act 125] Companies Act 2016 [Act 777] 122A Persons connected with a director

For the purposes of this Division a person shall be deemed to be connected with a director if he is – 197 Persons connected with directors

A person shall be deemed to be connected with a director if the person is –

a member of that director's family; or

a member of the director's family;

a body corporate which is associated with that director; or

a body corporate which is associated with that director; 25 Companies Act 1965 [Act 125] Companies Act 2016 [Act 777]

a trustee of a trust (other than a trustee for an employee share scheme or pension scheme) under which that director or a member of his family is a beneficiary; or

a trustee of a trust, other than a trustee for an employee share scheme or pension scheme, under which that director or a member of the director's family is a beneficiary; or

a partner of that director or a partner of a person connected with that director.

a partner of that director or a partner of a person connected with that director.

In subsection (1) (a), "a member of that director's family" shall include his spouse, parent, child (including adopted child and step-child), brother, sister and the spouse of his child, brother or sister.

For the purposes of this section –

"a member of the director's family" means the director's spouse, parent, child, including adopted child and stepchild, brother, sister and the spouse of the director's child, brother or sister;

For the purposes of subsection (1) (b), a body corporate is associated with a director if –

a body corporate is associated with a director if –

the body corporate is accustomed or is under an obligation, whether formal or informal, or its directors are accustomed, to act in accordance with the directions, instructions or wishes of that director; or

the body corporate is accustomed or is under an obligation, whether formal or informal, or the majority of directors of the body corporate is accustomed, to act in accordance with the directions, instructions or wishes of that director;

that director has a controlling interest in the body corporate; or

(ii) that director has a controlling interest in the body corporate; or

that director or persons connected with him, or that director and persons connected with him, are entitled to exercise, or control the exercise of, not less than fifteen per

(iii) that director, or persons connected with that director, or that director and persons connected with him, are entitled to exercise, or control the exercise of, not 26 Companies Act 1965 [Act 125] Companies Act 2016 [Act 777] centum of the votes attached to voting shares in the body corporate. (emphasis added) less than twenty per centum of the votes attached to voting shares in the body corporate. (emphasis added) [30] At this juncture it would be useful to look at the history of section 122A. The CA 1965 was amended via the Companies (Amendment) Act 1986 [Act A657] which came into force on 1 February 1987 (see P.U. (B) 46/87). Via section 8 of Act A657, the CA 1965 was amended by inserting immediately after section 122 a new section, that is, the said section 122A. As can be seen from the comparative table above and as correctly pointed out by learned counsel for the Respondent, the word “or” appears at the end of every paragraphs in section 122A (1) and (2) (except the last paragraph). This, again as rightly pointed out by the learned counsel clearly shows the paragraphs are to be read disjunctively. [31] However when the CA 1965 was reviewed and revamped and thereafter amended and repealed by the CA 2016, the provisions relating to persons who are deemed to be connected with directors are now found in the current section 197. As can be seen from the 27 comparative table above, the old section 122A has been streamlined where sub-section (3) was deleted and incorporated in the new sub-section 197 (2) of the CA 2016. However the underlying principle which governs the said provision remains the same. A significant physical change is the conjunction “or” which appeared at the end of every paragraph of subsection 122A (1) and (3) of the CA 1965 is also deleted except at paragraph (c) of sub-section 122A (1) and at paragraph (b) of what used to be sub-section 122A (3). The deletion of the conjunction “or” obviously shows that the presence of such word at the end of every paragraph (to indicate that the paragraphs are intended to be read disjunctively) is redundant as the conjunction “or” which appears between the last two paragraphs is a clear manifest of the intention of the Parliament that those paragraphs are to be read disjunctively. [32] Likewise, paragraphs (a), (b) and (c) of section 466 (1) of the CA 2016 which has the conjunction “or” between the last 2 paragraphs (b) and (c) are intended to be read disjunctively. Such is the only interpretation which can be made out of the unambiguous manner section 466 (1) of the CA 2016 was drafted. In this respect reference is made to section 17A of the Interpretation Acts which reads – 28 17A Regard to be had to the purpose of Act In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object. Thus this court is duty bound to give effect to the clear words of the section 466 (1) of the CA 2016 which promote the purpose or object underlying such provision. In DYTM Tengku Idris Shah Ibni Sultan Salahuddin Abdul Aziz Shah v. Dikim Holdings Sdn Bhd & Anor [2002] 3 CLJ 69; [2002] 2 MLJ 11; and Chor Phaik Har v. Farlim Properties Sdn Bhd [1994] 4 CLJ 285; [1994] 3 MLJ 345 the court had adopted the purposive approach in interpreting the provisions of statutes of Parliament. [33] It is obvious that learned counsel for the Respondent is being selective and self-serving when he chose to highlight section 122A of the repealed CA 1965 rather than the current section 197 CA 2016. Conclusion [34] The legal issue raised by the Respondent is devoid of merits. Section 466 (1) of the CA 2016 ought to be interpreted in the manner section 218 (2) of the CA 1965 was interpreted as both provisions are 29 identical. There is no valid and justifiable reason whatsoever to depart from the already established principles in interpreting section 466 (1) of the CA 2016. [35] It is not disputed that the Respondent has failed to pay its debts when it failed to pay the demanded sum as stated in the statutory notice (under section 466 of the CA 2016) dated 12 May 2017. Accordingly the failure raised a rebuttable presumption that the Respondent is unable to pay its debts in the context of section 466 (1) (a) of the CA 2016. Under such circumstances the Respondent has the legal burden to rebut such presumption on balance of probabilities (Sri Hartamas Development Sdn Bhd v MBF Finance Bhd [1992] 1 MLJ 313; [1992] 1 CLJ Rep 303; Pacific & Orient Insurance Co Bhd v Muniammah Muniandy [2011] 1 CLJ 947; Ambank (M) Bhd v Malaysian Coal & Minerals Corp Sdn Bhd [2016] 11 MLJ 590). As there was no affidavit evidence adduced by the Respondent to rebut the presumption that he was unable to pay its debts as stated in the Petition, such presumption remains and this winding up court is therefore compelled to exercise its discretion to grant the order sought via the Petition (Kumpulan Protection Sdn Bhd v Global Globe

(M) Sdn Bhd [2016] MLJU 289). 30 [36] The Respondent company was accordingly ordered to be wound up and the consequential order that the Official Receiver be appointed as the Liquidator of the Respondent company. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 6 NOVEMBER 2018 Counsel: Petitioner : Kalashini Sandrasegaran of Messrs Mohanadass Partnership Respondent : Terence Chan Yoong Tian of Messrs K.P. Ng & Amardas