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Case Update: High Court has discretion to make other orders as the Court thinks fit in a Winding-Up Petition

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15 September 2022

COMPANY LAW
Winding-Up – Company – Conditional – High Court – Appeal – Companies Act 2016, s. 469

Prolink Marketing Sdn Bhd v Ambank Islamic Berhad
Civil Appeal No: W-02(NCC)(A)-158-01/2021|Court of Appeal
- see the grounds of judgment here

Facts Ambank Islamic Berhad (the ‘Respondent’) filed a Winding up Petition at the High Court of Kuala Lumpur and served on Prolink Marketing Sdn Bhd (the ‘Appellant’). The learned High Court Judge, after having considered the submission by both parties and all the evidence, ordered a conditional winding-up order against the Appellant. The High Court ordered that the Appellant pay the full sum demanded by the Respondent before a certain date, after which, failure to do so would result in the Appellant being wound up. Aggrieved by the High Court’s decision, the Appellant appealed to the Court of Appeal. Counsel for the Appellant contended that the High Court Judge erred in making the conditional winding-up order as there cannot be a ‘prospective’ order to wind up a company. It was submitted that the Judge fell into error in ordering the winding-up of the Appellant to take place at a future date. On the other hand, the Respondent submitted that the High Court Judge was empowered to make the conditional winding-up order where the winding-up takes effect on a future date upon failure by the Appellant to pay the judgment sums. Here, it was argued that the High Court Judge had exercised his discretion pursuant to sub-section 469(1)(c) of the CA 2016.

Issue 1. Whether the High Court Judge was empowered to make the conditional winding up order?

Held In unanimously dismissing the appeal, the Court of Appeal held that s. 469(1) of the CA 2016 is plain and unambiguous that the Court’s discretionary power on hearing a winding-up petition is either to dismiss the petition, adjourn the hearing of the petition, or make an interim order, or any other order as the Court thinks fit. Hence, the Court must give effect to its natural and ordinary meaning without any other interpretation. The Court of Appeal held that the phrase “any other order as the Court thinks fit” under s. 469(1)(c) in its natural and ordinary meaning is wide. The Court on hearing a winding up petition may make other order as the Court thinks fit that relate to the winding up petition. This is a discretion given by law to a High Court Judge. The Court of Appeal held that the imposition of the condition of 5 months period for the appellant to pay the judgment sums was fair and reasonable and it benefited the Appellant as the Appellant was given time to pay the debts. The condition is also relevant because it relates to the winding up application where the ultimate result is the winding up of the Appellant. In conclusion, the Court of Appeal held that the conditional winding up order was in accordance with the provision of s. 469(1)(c) of the CA 2016 and that the appeal was without any merit and ought to be dismissed.

Zul Rafique & Partners
{15 September 2022}

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