PEMPETISYEN LLC INFRA SDN BHD VKPT SDN BHD

WA-28NCC-878-09/2024 Kand. 53 12/02/2025 17:27:10 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE STATE OF FEDERAL TERRITORY OF KUALA LUMPUR (COMMERCIAL DIVISION) COMPANIES (WINDING-UP) NO: WA-28NCC-878-09/2024 In the matter of VKPT Sdn Bhd [Company No. 200701018231 (776242-M)]; And In the matter of Sections 464(1)(b), 465(1)(e), and 466(1)(a) of the Companies Act, 2016. BETWEEN LLC INFRA SDN BHD [Company No. 197401000125 (17145-K)] … PETITIONER AND VKPT SDN BHD [Company No. 200701018231 (776242-M)] …RESPONDENT GROUNDS OF JUDGMENT INTRODUCTION [1] The Petitioner claims a debt for monies owed under two (2) decisions, being an adjudication decision dated 11.01.2024 (“the Adjudication Decision”) under the Construction Industry S/N uM2gdZGEZE62Cm5Gr0B9Mw 1 **Note : Serial number will be used to verify the originality of this document via eFILING portal Payment and Adjudication Act 2012 (“CIPAA”) and an order of the High Court dated 20.05.2024 (“the High Court Order”). (a) The Petitioner filed a winding up petition dated 23.09.2024 (Encl 1) (“the Petition”) based on the aforesaid debt. In response, the Respondent filed a notice of application dated 28.11.2024 (Encl 21) for essentially, a stay of the Petition pending the hearing of the other application for the a stay of the Adjudication Decision in WA-24C-190-11/2024 (“Suit 190”). (b) The Petitioner filed submissions (“collectively “Petitioner Subs”) on 26.11.2024 (“Petitioner Subs-1”) (Encl. 16) and on 17.12.2024 (“Petitioner Subs-2”) (Encl. 26). (c) The Respondent (“VKPT”) filed its submissions in support of Encl 21 on 17.12.2024 (Encl. 28) (“VKPT Subs”). [2] The facts and matters set out in paras 3 to 19 below are largely derived from Petitioner Subs and VKPT Subs. [3] The Petition was heard on 28.11.2024 but on the eve of the hearing, VKPT filed Encl 21 on 28.11.2024 at 8.14 am. The Petitioner submitted that: (a) during the hearing of the Petition, VKPT did not deny the existence of the debt; S/N uM2gdZGEZE62Cm5Gr0B9Mw 2 **Note : Serial number will be used to verify the originality of this document via eFILING portal (b) VKPT admitted the debt but refused to pay solely on the premise that the subject matter of the Adjudication Decision was being challenged in KLHC CS No. WA-22C-81-11/2024 (“Suit 81”). Suit 81 was again filed late, on 12.11.2024 and served on 14.11.2024, just two (2) weeks before the hearing of the Petition. [4] After hearing oral argument, I dismissed Encl. 21 and granted the Petition. VKPT appealed. These are my grounds. BACKGROUND FACTS Sub-SubContract [5] By a letter of award dated 26.07.2021 (“LOA”) (Encl 1 Ex B), the Petitioner awarded VKPT the “Sub-Subcontract for Trackwork and Power Conductor Rail Installation Works: Package 2A Mainline Installation Works from GS05~GS10” (the “Sub-Subcontract”). [6] On 20.09.2022, pursuant to clause 15.2(b) of the LOA, the Petitioner terminated the Sub-Subcontract with immediate effect (“Termination”) (Encl. 1 Ex B). The termination was disputed by VKPT. Adjudication Decision [7] Subsequent to the Termination, VKPT served the Petitioner with an Adjudication Notice under CIPAA. S/N uM2gdZGEZE62Cm5Gr0B9Mw 3 **Note : Serial number will be used to verify the originality of this document via eFILING portal [8] By an Adjudication Decision of 11.01.2024, the adjudicator found that VKPT had failed to prove its claim and dismissed VKPT’s claim in its entirety. He awarded costs of RM98,300.00 (“the CIPAA Debt”) to the Petitioner (Encl. 1 Ex E). [9] By letters dated 27.02.2024, 01.04.2024, and 06.05.2024, the Petitioner demanded the CIPAA Debt of RM98,300.00. No payment was forthcoming (Encl. 1 Ex F). Judicial Management [10] Separately, on 15.03.2023, VKPT filed an ex-parte application in KLHC OS No. WA-28JM-7-03/2023 (“JM7”). On 09.11.2023, VKPT obtained an extension of six (6) months of the judicial management order granted on 11.05.2023 (“JMO”). (a) By a notice of application dated 08.01.2024, the Petitioner applied for, amongst others, leave to intervene in JM7 and for an order that JM7 be struck out. (b) On 10.05.2023, the JMO expired. (c) On 20.05.2024, the High Court made the High Court Order granting the Petitioner leave to intervene and awarded the Petitioner costs of RM2,000.00, subject to the allocator fee of RM80.00. (d) The total amount due to the Petitioner was therefore RM100,380.00. S/N uM2gdZGEZE62Cm5Gr0B9Mw 4 **Note : Serial number will be used to verify the originality of this document via eFILING portal [11] On 11.07.2024 and upon receipt of the High Court Order and the allocator certificate dated 20.05.2024, the Petitioner by its solicitors, served the same on VKPT’s solicitors and demanded payment. By a letter dated 16.07.2024, VTKP’s solicitors informed that they no longer represent VKPT (Encl. 1 Ex H). [12] On 09.08.2024, the Petitioner by its solicitors, issued a Statutory Notice of Demand dated 09.08.2024 (“Statutory Notice”) to VKPT for RM100,380.00 pursuant to section 466 of the Companies Act 2016 (“the 2016 Act”). The Statutory Notice was duly served (with receipt acknowledged) at VKPT’s business and registered address (Encl. 1 Ex I). [13] On the expiry of the twenty-one (21) day notice from service of the Statutory Notice on VKPT, VKPT failed to make payment of the sum demanded or any part thereof, or to secure or compound for it to the satisfaction of the Petitioner. [14] The Petitioner then presented the Petition on 23.9.2024. [15] As stated above, the debt of RM100,380.00 underlying the Petition is made up of awards made under two (2) decisions which remain binding. The Petitioner submits that the debt and VKPT’s failure to pay it are not disputed and that VKPT has admitted the Adjudication Decision in para 8 of Encl. 14. [16] The first award is for the sum of RM98,300.00 being the costs awarded in favour of the Petitioner in the Adjudication Decision. The following are some obvious legal propositions. S/N uM2gdZGEZE62Cm5Gr0B9Mw 5 **Note : Serial number will be used to verify the originality of this document via eFILING portal (a) The Adjudication Decision remains binding as there is no evidence to suggest that an application to set aside has been made and granted under section 13 of CIPAA. (b) A winding-up petition need not be based upon a judgment but may be based on the insolvency or the statutorily presumed insolvency of the debtor, see Maril-Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Bankers Bhd and other appeals [2001] 4 MLJ 187 CA. (c) A winding-up petition may be based on the Adjudication Decision under CIPAA, see the trilogy of the Court of Appeal’s decisions in Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd [2019] 3 MLJ 244 CA; Sime Darby Energy Solution Sdn Bhd (formerly known as Sime Darby Offshore Engineering Sdn Bhd) v RZH Setia Jaya Sdn Bhd [2022] 1 MLJ 458 and the most recent Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 4 MLJ 67. [17] The second is the sum of RM2,080.00 being the costs and allocator fee pursuant to the High Court Order in JM7. [18] The Petitioner submits in Petitioner Subs-1 that VKPT’s sole ground in opposing the Petition is Suit 81 dealing with matters decided in the Adjudication Decision. [19] In this regard, the Adjudicator, in dismissing the entirety of VKPT’s claim, found that it had “failed to prove all of its claims raised in the Payment Claim / Adjudication Claim and the claims are dismissed”. S/N uM2gdZGEZE62Cm5Gr0B9Mw 6 **Note : Serial number will be used to verify the originality of this document via eFILING portal [20] The central assertion by VKPT is that Suit 81 is on the same subject matter that was decided in the Adjudication Decision, and is pending; and that VKPT has also filed an application to stay the Adjudication Decision Suit 190. And thus, it was submitted that Encl 21 staying the Petition should be granted, see paras 48 to 50 of Encl. 28. The Adjudication Decision [21] The starting point in the analysis is that an adjudication decision under CIPAA is binding but not absolute. Under section 13, any dispute may still be set aside by Court or decided by arbitration or court. [22] However, the Court of Appeal in Bludream (supra) went further in the case of a winding up. The Court made it clear that a debt created by an adjudication decision is indisputable when dealing with a Petition for a winding up order; this is so notwithstanding the challenges permissible under section 13. The Court of Appeal held at para 39: “[39] … However, if the dispute on the debt has been adjudicated which resulted in an adjudication decision obtained in favour of the unpaid party, the debt ceases to be disputable in an ensuing winding up proceeding. This is because the disputed debt has been independently adjudicated by a neutral third party. More pertinently, it should not be open to the non-paying party to again dispute the debt when the sanctity of the adjudication decision has been preserved by the subsequent court orders refusing to set aside and/or stay as well as allowing enforcement of the adjudication decision as a judgment pursuant to ss S/N uM2gdZGEZE62Cm5Gr0B9Mw 7 **Note : Serial number will be used to verify the originality of this document via eFILING portal 16, 27 and 28 of the CIPAA respectively. Consequently, it is immaterial in the winding up court that the non-paying still disputes the adjudicated debt and has referred the dispute to arbitration or the court for final determination: see Barisan Performa Sdn Bhd v Hype Park City Sdn Bhd [2018] MLJU 10. …” [Emphasis mine] [23] On a plain reading of the judgment, the reasoning of the Court of Appeal is that the Adjudication Decision became indisputable when it was adjudicated; for convenience, I will call this ‘CIPAA Indisputability’. This happens irrespective of whether an order was obtained dismissing an application to set aside under section 15 or to stay under section 16 or whether an enforcement order under section 28 was granted. Such orders merely ‘preserve’ the Adjudication Decision, while the true source of the indisputability is the Adjudication Decision itself. [24] Indeed, in Likas Bay (supra) at para 20, the Court of Appeal also held that there was no need for an enforcement order under section 28 before a winding up order may be made based on the Adjudication Decision. [25] I repeat what the Court of Appeal said in Bludream: “[39] … However, if the dispute on the debt has been adjudicated which resulted in an adjudication decision obtained in favour of the unpaid party, the debt ceases to be disputable in an ensuing winding up proceeding. This is because the disputed debt has been independently adjudicated by a neutral third party. … the adjudication decision has S/N uM2gdZGEZE62Cm5Gr0B9Mw 8 **Note : Serial number will be used to verify the originality of this document via eFILING portal been preserved by the subsequent court orders refusing to set aside and/or stay as well as allowing enforcement of the adjudication decision”. [26] I must say, however, that CIPAA Indisputability sits a little uncomfortably with the winding up legislation. [27] Primarily, this is because CIPAA Indisputability applies notwithstanding that the underlying CIPAA debt is ‘genuinely disputed on substantial grounds’. This is the traditional test for refusing winding up orders, as re-stated by the Privy Council in Sian Participation Corp (in liquidation) v Halimeda International Ltd (Virgin Islands) [2024] UKPC 16. Indeed, this CIPAA Indisputability of the Adjudication Decision notwithstanding that it is genuinely disputed on substantial grounds, would appear to infringe the policy behind the winding up legislation. The Privy Council in Sian Participation (supra) said this: “There is a policy of insolvency legislation that the liquidation route should not be pursued, or even threatened, against a company which genuinely disputes the debt on substantial grounds. Where there is such a dispute, the policy is that the creditor should first establish his claim, by having that dispute resolved in its favour, either by a judgment in court or, if there is an applicable arbitration agreement, by an arbitral award.” [Emphasis mine] [28] CIPAA Indisputability can only mean that it trumps the policy behind the winding up legislation. But it will not apply in an arbitration wherein any dispute may be re-contested. The Court of Appeal continued: S/N uM2gdZGEZE62Cm5Gr0B9Mw 9 **Note : Serial number will be used to verify the originality of this document via eFILING portal “… The disputability of the dispute can only be done in the arbitration or the court to enable the parties to finally re-contest the dispute de novo unabated by the adjudication decision as well as without attracting res judicata because the adjudication decision enjoyed temporary but not perpetual finality: see G-Pile Sistem Sdn Bhd v CMMC Sdn Bhd and Anor [2021] MLJU 2694; [2021] 1 LNS 1727.” [Emphasis mine] [29] But the imposition of CIPAA Indisputability in a winding up is difficult to justify as the policy behind CIPAA (to promote cashflow and collection of debts) is not offended if CIPAA Indisputability in a winding up were not imposed. Indeed, ordinary execution proceedings may nevertheless be commenced by a contractor under section 28(3) to collect its debts. On the contrary, to allow winding up proceedings to be used to collect debts is in itself, an abuse of process, see my comments in Konsortium Express Sdn Bhd v Embition Sdn Bhd [2025] MLJU 199 at para 74 (“Embition”). [30] Be that as it may, I am bound by Bludream (supra). And I am obliged to grant the winding up order prayed for in the Petition. [31] However, I did consider staying the winding up petition in view of the pending arbitration. However, I was acutely aware of the strength of CIPAA Indisputability endorsed by the Court of Appeal. In Embition (supra), I said this: “[88] In Sian Participation (supra), the issue of the Court’s discretion on the hearing of a winding up Petition was considered. The Privy Council held: S/N uM2gdZGEZE62Cm5Gr0B9Mw 10 **Note : Serial number will be used to verify the originality of this document via eFILING portal “35. Fourthly, and in sharp contrast with the role of the court (or arbitrator) in proceedings for the enforcement of a debt, the court’s powers on the hearing of a liquidation application (or winding up petition) are discretionary. That is not to say that the court’s discretion is entirely unfettered. In principle, a petitioning creditor with an unpaid debt which is not genuinely disputed on substantial grounds is often described as being in substance entitled to an order, as a statutory right, ex debito justitiae: see Bryanston Finance Ltd v de Vries [1976] Ch 63, 78; In re Crigglestone Coal Co Ltd [1906] 2 Ch 327, p 337; and In re Southard & Co Ltd [1979] 1 WLR 1198, 1203, approved in Ebbvale Ltd v Hosking [2013] UKPC 1, para 25.” [89] If the debt is not genuinely disputed, then the petitioner has a statutory right, ex debito justitiae, to a winding up order. Given that the Court of Appeal in Bluedream has decided that an Adjudication Decision is undisputable, the test in Sian Participation is met. The CIPAA Debt owed to the Petitioner cannot be genuinely disputed on substantial grounds, quite simply because it is undisputable. [90] As such, the Petitioner has a statutory right, ex debito justitiae, to the winding up order. Accordingly, I granted the winding up order prayed for in Encl 1.” [Emphasis mine] [32] Similarly, with the making of the Adjudication Decision, the CIPAA Debt becomes indisputable for the purposes of the Petition. And given Sian Participation, the Petitioner would thus have a statutory right ex debito justitiae to the winding up order, thus precluding a stay. [33] As such, I was compelled to dismiss the application for stay in Encl 21 and to grant the winding up order in Encl 1 (in paras 16.1 and S/N uM2gdZGEZE62Cm5Gr0B9Mw 11 **Note : Serial number will be used to verify the originality of this document via eFILING portal 16.2); which I did. There were other procedural issues and preliminary objections taken against Encl 21, but given my decision on Encl 21, I need not consider them. Dated 9th February 2025 ...................t.t........................... YA Tuan Saheran Suhendran Judicial Commissioner, High Court of Malaya, Kuala Lumpur. Tasha Lim Yi Chien (Gan Partnership) for Petitioner Ganesh Magenthiran & Suronmani Krishnan (Ganesh Azhar & Associates) for Respondent Cases Referred to: • Maril-Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Bankers Bhd and other appeals [2001] 4 MLJ 187 • Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd [2019] 3 MLJ 244 • Sime Darby Energy Solution Sdn Bhd (formerly known as Sime Darby Offshore Engineering Sdn Bhd) v RZH Setia Jaya Sdn Bhd [2022] 1 MLJ 458 • Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 4 MLJ 67 • Sian Participation Corp (in liquidation) v Halimeda International Ltd (Virgin Islands) [2024] UKPC 16 • Konsortium Express Sdn Bhd v Embition Sdn Bhd [2025] MLJU 199 Legislation referred to: • Construction Industry Payment and Adjudication Act 2012 (“CIPAA”). • Companies Act 2016 (“the 2016 Act”) Decision date: 21st January 2025 S/N uM2gdZGEZE62Cm5Gr0B9Mw 12 **Note : Serial number will be used to verify the originality of this document via eFILING portal