PEMPETISYEN KOK SIN MACHINERY SDN BHD MS TIME SDN BHD

BA-28NCC-1-01/2023 Kand. 44 Page1of9 17/09/2024 15:31:22 IN THE HIGH COURT OF MALAYA AT SHAH ALAM IN SELANGOR DARUL EHSAN COMPANIES (WINDING UP) PETITION NO: BA-28NCC-1-01/2023 In the matter of MS Time Sdn Bhd (Company N o. : 330942-U); And In the matter of Sections 465 and 466 of the C o m p a n i e s Act 2016; And In the matter of the Companies (Winding Up) Rules, 1972 BETWEEN KOK S I N MACHINERY S D N . BHD. (COMPANY NO.: 755338-A) .. . PETITIONER AND MS TIME SDN. B H D. (COMPANY N O . : 330942-U) .. . RESPONDENT GROUNDS OF J U D G M E N T Introduction [1] This judgment concerns the winding-up petition filed by the Petitioner, Kok Sin Machinery Sdn Bhd, against the Respondent, MS Time Sdn Bhd, under Section 465(1)(e) of the C o m p a n i e s Act 2016. S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 2 of9 Brief facts [2] The Petitioner rented heavy equipment and machinery to the Respondent, and issued invoices and monthly statements of account. [3] The sums invoiced accumulated, and despite intermittent payments by the Respondent, an outstanding sum of R M 1 , 1 0 3 , 8 7 0 . 9 1 remained as of 1 8 March 2 0 2 1 . [4] After the Respondent failed to meet the demands for payment, the Petitioner filed a winding-up petition on 2 July 2 0 2 1 . [5] Subsequently, both parties engaged in settlement negotiations, resulting in a Settlement Agreement executed on 24 September 2 0 2 1 . [6] The Settlement Agreement stipulated that the Respondent shall pay a settlement sum of R M 7 0 3 , 8 7 0 . 9 1 in two instalments: RM500,000 by 30 September 2021 and RM203,870.91 by 1 5 October 2 0 2 1 . [7] The Settlement Agreement included a clause (Clause 4 . 1 ) requiring the Petitioner to withdraw the Petition of 2 July 2021 upon receipt of a Director's Guarantee, which was duly executed by one Mohd Effandie bin Ahmad, the Respondent's Director, on the same day. [8] Despite this agreement, the Respondent defaulted, making only a partial payment of RM50,000 on 1 4 October 2 0 2 1 , whilst the post-dated cheques issued for the instalments were dishonoured. S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 3 of9 [9] Consequently, the Petitioner issued a statutory notice of demand on 24 November 2022, based on the Settlement Agreement, demanding R M 9 1 0 , 9 9 1 . 8 8 inclusive of costs and late payment fee. [10] The Respondent failed and/or neglected to meet the demand, leading the Petitioner to file the current winding up Petition on 4 January 2023. [11] The Respondent resisted the Petition, arguing ­ i. that the debt sum is incorrect and baseless, ii. that the Settlement Agreement was entered into on a goodwill basis in the hope of continuing business relationship with the Petitioner, but the Plaintiff had breached the Settlement Agreement, particularly clause 4. 1 , iii. that the Petition is an abuse of court process to enforce a disputed debt, and iv. that the Petitioner had failed in an Originating Summons [OS] against the Guarantor, where the judge held that the apparent breaches of the Settlement Agreement ought to be ventilated by Writ action. [12] So much for the facts. S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 4 of 9 The Issues [13] Arising from the above facts, this Court must determine the following issues: i. Whether there is a debt owed by the Respondent to the Petitioner; ii. Whether the Petitioner is a creditor; iii. Whether the Petitioner breached the Settlement Agreement; iv. Whether the Petitioner is disentitled from demanding the debt due to the alleged breach; v. Whether the debt is bona fide disputed on substantial grounds; vi. Whether the statutory notice was valid; and vii. What is the impact of previous legal proceedings on the current Petition. F i n d i n g s and Analysis Re: Existence of Debt [14] The evidence presented shows that the Respondent owed the Petitioner R M 1 , 1 0 3 , 8 7 0 . 9 1 million as of 1 8 March 2 0 2 1 . [15] The Settlement Agreement acknowledges this debt by setting a reduced settlement amount of RM703, 8 7 0 . 9 1 . [16] The Respondent's partial payment and issuance of the two post­ dated cheques further affirm the debt's existence. Re: The Petitioner's Status as a Creditor [17] The Petitioner is a legitimate creditor by virtue of the initial invoices and the subsequent Settlement Agreement. The Respondent's actions, S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 5 of9 including partial payments and the Director's Guarantee, substantiate the Petitioner's creditor status. Re: Alleged Breach by the Petitioner [18] The Respondent claims that the Petitioner had breached Clause 4.1 of the S e ttl e m e n t Agreement. However, the facts indicate that the Petitioner has f u l fi l l e d its obligation by withdrawing the July 2021 Petition on 31 January 2023 upon fil i n g of a Notice of D i s c o n ti n u a n c e . [19] If ever there was a breach of the S e tt l e m e n t Agreement, it would have been committed by the Respondent who had only made one part­ payment of RM50,000 to the Petitioner on 14 October 2021. [20] The previous OS against the Guarantor was dismissed due to procedural issues and does not affect the principal debt. Re: Bona fide Dispute on the Debts [21] The Respondent's opposing arguments, including those raised in the OS, focus on procedural issues rather than substantive evidence disputing the debt. [22] The Respondent argues there was never any undisputed debt nor acknowledgment of such by the Respondent, h i g h l i g h ti n g unresolved disputes and the lack of a formal judgment of indebtedness. [23] However, the execution of the Settlement Agreement, the partial payment of RM50,000 made by the Respondent, and the failure to meet the demands as per the statutory notice undermine these arguments. S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 6 of 9 [24] The Settlement Agreement serves as a formal acknowledgment of debt, and Respondent's default on its terms further substantiates the debt. The procedural arguments in the OS do not translate to a substantial and bona fide dispute regarding the debt itself. Re: Validity of the Statutory Demand [25] The Notice of Demand issued on 24 November 2022 was in compliance with legal requirements and accurately reflected the debt as per the SA. Re: Impact of Previous Legal Proceedings [26] The dismissal of the OS against the Guarantor was based on procedural grounds. It does not however, negate the debt owed by the Respondent to the Petitioner. [27] The outcome of the OS does not affect the validity of this Petition. I must add that the personal guarantee provided by the Respondent's Director, Encik Mohamed Effendi underscores the acknowledgment of the debt. The dismissal of the OS against h i m as the Guarantor does not affect the enforceability of the debt under the Settlement Agreement. Conclusion [28] It is trite law that a judgment is not a pre-requisite for commencing a winding-up action. In Maril-Rionebel v Perdana Merchant Bankers [2001] 4 MLJ 187, the COA stated ... but a petition for winding up is not execution, for a w i n d i n g up petition is not based upon any judgment of a court. Normally it is based on the inability of a company to pay its debts as and when they fall due. Such inability S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 7 of9 is normally evidenced by the company's inability to satisfy or c o m p o u n d a notice of demand issued pursuant to s . 2 1 8 of the C o m p a n i e s Act." [29] It is further instructive for t h i s C o u rt to have regard to the observation of the COA in Kumpulan Liziz Sdn Bhd v Pembinaan Azam Jaya [2022] 1 MLJ 570 at p.581 that " .. . a company may be wound up for an undisputed debt .. . there is no prerequisite of a judgment having been obtained before a winding up may be commence on ground of the debtor company not being able to pay its debt." [30] I hold that the Respondent has not s u ffi c i e n tl y shown a substantial and bona fide dispute regarding the debt itself. The existence of the S e tt l e m e n t Agreement, the partial payment, and the failure to meet the debts as they fall due collectively indicate that the debt is not genuinely and substantially disputed. [31] I further hold that the Petitioner has succeeded in raising the presumption of inability to pay debts against the Respondent, based on the following established facts -- a) the sum indebted exceeds the prescribed amount fixed by the Minister (RM50,000.00 with effect from 1 April 2021); b) a demand has been made in the manner provided by Section 466(1)(a); and c) the Respondent neglected to pay the amount demanded within 21 days. S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 8 of9 [32] This presumption remained unrebutted. [33] In the premises, I grant the order as prayed in Enclosure 1 , that MS Time Sdn Bhd be wound up according to Section 465(1)(e) of the Companies Act 2016, that the Official Receiver be appointed as Liquidator, and the Petitioner be allowed costs of R M 1 0 , 0 0 0 to be paid out of the assets of MS Time Sdn B h d . ed: 1 6 Septe ber 2024 Judicial Commissio Muamalat and lnso Shah Alam S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 9 of9 COUNSELS Solicitors for the Petitioner Azwar & Associates D-3A-8, Block D, Megan Avenue 1 189 Jalan Tun Razak, 50480 Kuala Lumpur Solicitors for the Respondent Tetuan Clinton Tan Peguamcara Responden E-12-06 & E-12-07, Plaza Mont Kiara, No.2 Jalan Kiara 50480 Kuala Lumpur S/N OOiJHklSMUavHm5mT56Fkg **Note : Serial number will be used to verify the originality of this document via eFILING portal