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1. Euro Facade Tech Manufacturing Sdn Bhd v Sri Ribuan Industries Sdn Bhd [2023] MLJU 2319
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 EURO FACADE TECH MANUFACTURING SDN BHD v SRI RIBUAN
INDUSTRIES SDN BHD
CaseAnalysis
| [2023] MLJU 2319

Euro Facade Tech Manufacturing Sdn Bhd v Sri Ribuan Industries Sdn
Bhd [2023] MLJU 2319
Malayan Law Journal Unreported

HIGH COURT (SHAH ALAM)

MUNIANDY KANNYAPPAN J
ORIGINATING SUMMONS NO BA – 24NCC – 117 – 12 OF 2022
21 October 2023

Andrea Kong (Thomas Philip) for the plaintiff/applicant.

Sukunthan Pasupathy (Saleha Tahir & Partners) for the defendant/respondent.

Muniandy Kannyappan J:

JUDGMENT

[1] As background, parties as they were in the original civil suit which has culminated into the present application
for Fortuna Injunction are, Euro Façade Tech Manufacturing Sdn Bhd, the plaintiff/applicant to the present
application is the defendant and Sri Ribuan Industries Sdn Bhd, the defendant/respondent to this application, is the
plaintiff.

[2] Status of the civil suit is the following:

Summary judgment was ordered against the defendant company Euro Façade Tech Manufacturing Sdn Bhd for
an amount of RM341,084.65.
There was a counter claim by the defendant against plaintiff company Sri Ribuan Industries Sdn Bhd for an
amount of RM11,960.034.70 which was struck out.
The summary judgment obtained is enforceable as there has been no stay of execution or enforcement of the
judgment obtained by defendant.
Thus, there is a valid and enforceable judgment against the defendant.
However, appeals were lodged against the order of summary by defendant, to the Court of Appeal (COA). As at
date of judgment made as well as order to strike out the counterclaim hearing of this application for Fortuna
Injunction, the said appeals were pending hearing and determination by the COA.
In the absence of a stay of enforcement of the summary judgment by defendant, plaintiff is entitled under the
law to initiate a winding-up petition against the defendant company, in order to enforce the said judgment sum.
Thus, a notice under section 465 (1) (e) of the Companies Act 2016 was served on the defendant company.
Ensuing from that, the defendant has applied for a Fortuna Injunction to injunct and restrain the plaintiff from
doing so. Hence, the present Originating Summons (OS).

[3] Contention by the defendant, who is the plaintiff and applicant to the present OS to support its application for a
Fortuna Injunction (FI) is premised on the following material factors:
There is a bona fide dispute on the judgment debt enforceable.
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Euro Facade Tech Manufacturing Sdn Bhd v Sri Ribuan Industries Sdn Bhd [2023] MLJU 2319

Value of its counterclaim far exceeds claim by respondent against it, and if allowed to be sustained on appeal,
would have the effect of extinguishing the entire claim in the civil suit by plaintiff against the defendant which
was only determined vide summary judgment pursuant to Order 14 of the Rules of Court 2012 (ROC).
As both the appeals by defendant are pending hearing and determination by the COA, it would only be prudent
and proper for the plaintiff to wait and not petition to wind-up the defendant company. It is also contended; both
the appeals are on the merits.
The applicant would suffer irreparable damage and harm if an injunction is not allowed to restrain the
respondent from pursuing with the winding-up petition.

[4] When resisting the application, the respondent contends -

The grounds advanced by applicant fails to satisfy the principles applicable when granting FI; which are, the
intended winding-up petition has no chance of success as a matter of law and fact and presentation of such
petition does not produce irreparable damage to the company.
Filing of an appeal to the COA does not make a valid and enforceable judgment a disputed debt.
Merits of the said appeals is not a factor to be considered by this court.
Further, as the applicant had failed in their application for a stay of execution, it shows their case lacks merit.
Judgment obtained by the respondent is valid and enforceable and is not a disputed debt.

[5] To support its contention, the respondent has referred to various case authorities, which are essentially the
following:
Pursuant to the case of BJ Homes Development Sdn Bhd v Trade-Link Exhibition Services Sdn Bhd (2020)
MLJU 1082, a default judgment is held to be a valid and enforceable judgment. But in the present case, the
respondent had obtained a summary judgment against the applicant.
By virtue of the decision in CME Group Bhd v Belljade Sdn Bhd (2022) MLJU 928, it is the respondent’s
statutory right under the Companies Act 2016 to present a winding-up petition anchored on the applicant’s
inability to pay its debts. Thus, it cannot be restrained by an application for FI.
Following the case of Comintel Sdn Bhd v U Television Sdn Bhd (previously known as U Telecom Media
Holdings Sdn Bhd and MITV Corp Sdn Bhd) & Anor (2019) 12 MLJ 667, the applicant to the present OS has
not offered any explanation as to why the judgment sum has not been paid.
Averment that the applicant is commercially solvent is disputed. The fact remains it had refused to settle the
judgment debt. So, to avoid suffering any alleged irreparable damage and harm, it is best for the applicant to
settle the judgment debt with the respondent. It has refused to comply with the summary judgment order by the
court, which was obtained validly. The FI is intended to prevent the respondent from pursuing its statutory right
to present a winding-up petition.
Applicant in the present case failed to disclose that it was unsuccessful in obtaining an order to stay execution
of the judgment obtained against it. Nor it has appealed against the court’s refusal to grant a stay, or applied for
a stay of execution at the COA. Reference is made to the case of Klass Corp (M) Sdn Bhd v MRKS
Management Sdn Bhd (2018) 9 MLJ 305, where an application for FI is characterised as a backdoor attempt to
obtain a stay.
As decided in the case of RHB Bank Bhd v Malaysia Pacific Corp Bhd and another appeal (2018) MLJU 103,
the summary judgment, and the COA judgment obtained by appellant in that case was a had decided, although
the lear d judge has discretion to prevent abuse of process and grant orders in the interest of justice, such
exercise must be made according to judicial and guiding principles as propounded either in statute or case law.
It was further decided in that case, the applicable principles are twofold as enunciated in Mobikom Sdn Bhd v
Inmiss Communications Sdn Bhd, followed in Pacific & Orient Insurance Co Bhd v Muniammah Muniandy,
which decides that the right of the appellant to initiate winding-up proceeding is a substantive right and
enforcing such a right by issuing a section 218 Notice, as was done, is not an abuse of court process and
neither procedural nor inherent jurisdiction of the court can deprive of such a right.

[6] Conversely, the applicant has rebutted the arguments advanced by the following submission:
Sometime around 1.7.2019, the applicant and respondent had entered into an agreement for sale and delivery
of construction materials such as window handles and sealants for construction embarked on by the applicant.
In all dealings between them, the applicant would normally issue a purchase order (POs) to request and
purchase the materials. Pursuant to the agreed terms and conditions in the POs, the respondent is obligated to
deliver the materials to the applicant according to the delivery dates stipulated.
There have been numerous occasions of severe delays of delivery of materials, which had caused substantial
losses and/or expenses to the applicant.
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Euro Facade Tech Manufacturing Sdn Bhd v Sri Ribuan Industries Sdn Bhd [2023] MLJU 2319

By way of telephone conversations, WhatsApp messages and emails, the applicant had informed and/or
complained to the respondent pertaining late delivery of materials.
As such, the applicant has lawfully counterclaimed from the respondent a total sum of RM11,960,034.70 for the
losses, damages suffered and/or additional costs incurred.
This court pursuant to section 50 and 51 of the Specific Relief Act 1950 (Act 137) and O 29 rule 1 ROC, has
jurisdiction and power to grant an injunction restraining the respondent from pursuing with the petition to wind-
up the applicant company.
Pursuant to the case of Fortuna Holdings Pvt Ltd v The Deputy Commissioner of Taxation (1976) 2 ACLR 349,
a FI is intended to prevent an abuse of court’s process. Abuse of process occurs when a winding-up petition is
wrongfully presented against a company, which can cause irreparable damage to its commercial reputation. In
that case it was also decided if there is a real risk of damage occurring by mere presentation or advertisement
of the petition and the court presented with the petition would not, or would not until after clarification of a
disputed claim, make a winding up order, thus the risk of damage may be avoided by restraining presentation
or advertisement of the petition.
Further, in the case of Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd (2007) 3 MLJ 316, decided by
the COA, it was held presentation of a winding-up petition may result in irreparable damage to the plaintiff and
proposed petition has no chance of success or the petitioner proposing to present a winding-up petition
has chosen to assert a disputed claim, by a procedure which might result in irreparable damage to the
company rather than by a suitable alternative procedure or cause of action. (emphasis is mine)
There is a genuine dispute amongst parties on the judgment sum claimed as the summary judgment obtained
is interlocutory in nature, likewise the order made to strike out the counterclaim against the respondent and
finally the issues raised by respondent on the merits of its claim are subject matter of the appeals, pending at
the COA.
Reliance is also on the case of Multimedia Development Corp Sdn Bhd v Pembinaan Purcon Sdn Bhd (2006) 2
MLJ 653, where it was decided the proposed winding-up petition would be an abuse of process as there was an
appeal against the summary judgment obtained by the plaintiff.
The case of Aeon Big (M) Sdn Bhd v SSM Management Sdn Bhd (2017) MLJU 1824, had decided that a
counterclaim filed against the debt amounts to a bona fide dispute. Further in the case of Matta Timber
Products Sdn Bhd v N & P Construcitons Sdn Bhd (2004) 1 MLJ 119 it was held, a cross-claim of some
substance would be a good ground to warrant a dismissal of the petition and it is no difference at all to a
situation where the respondent is disputing the debt.
It was also decided by the COA in the case of Pontian United Theatre Sdn Bhd v Southern Finance Bhd
(formerly known as United Merchant Finance Bhd) (2004) 2 MLJ 602, that a winding-up petition ought to be
stayed if there is a genuine pending counterclaim against the petitioning creditor which it had not reasonably
been able to litigate, the petition should usually be dismissed or stayed.
It was similarly decided in the case of Kumpulan Lizz Sdn Bhd (in liquidation) v Pembinaan Azam Jaya Sdn
Bhd (2022) 1 MLJ 570 in the following terms:

So long as the set off, crossclaim or counterclaim is not completely fanciful and for so long as it has the
colour and cover of credible claim in the context of the alleged debt being disputed and on substantial
grounds, the court would not be comfortable to grant a winding up order but would instead dismiss the
petition. (emphasis is mine)
It is contended, the counterclaim by the applicant is based on substantial grounds and presentation of a
winding-up petition would prevent it from prosecuting their counterclaim.
It is further submitted; the applicant and its EFT group of companies are waiting for its main contractors and
employers to settle their outstanding payments owed to them for work done on its numerous projects.
With reference to the case of Metalform Asia v Holland Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd
(2020) MLJU 1196, it is contended, businesses that have a chance of recovery should not be pushed into a
state that makes it difficult for them to recover. Commercial viability of a company should not be put in jeopardy
by the premature presentation of a winding-up petition against it where it has a serious cross-claim based on
substantial grounds.
In RHB Bank Berhad v Gunasingam Ramasingam (2002) 5 CLJ 544, the High Court allowed the plaintiff’s
application for a FI as it was satisfied that the plaintiff had proven that it was capable of paying off all its
debtors.
It was also decided in that case, a company that has proven itself to be commercially solvent, has the right to
protect itself from being disturbed by a creditors’ petition to wind up, and it can be determined that the petition is
bound to fail, an injunction will lie.
Shankar J (as he then was) in the case of Ng Ah Kway v Tai Kit Enterprise Sdn Bhd (1986) 1 MLJ 56 had
decided – Great damage may obviously be done to a solvent company by a winding up petition
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Euro Facade Tech Manufacturing Sdn Bhd v Sri Ribuan Industries Sdn Bhd [2023] MLJU 2319

presented by an unreasonable creditor, whose debt the company are bona fide believe they are not indebted.
In such a case, on a writ issued by the company, an injunction will be granted to restrain the creditor presenting
the petition. (emphasis is mine)
It is finally submitted, the applicant here is a viable business capable of generating revenue to meet its
obligations and is therefore, commercially solvent.

[7] Pursuant to the plethora of case authorities cited to this court for and against the application for FI by the
applicant, it is apparent that in order to decide whether to allow or dismiss the application by the applicant to have a
Fortuna Injunction restraining the respondent from winding up its company, both the interest of the applicant and
respondent ought to be considered. On one hand, the respondent cannot be denied of its fruits of litigation, which is
the enforceable summary judgment obtained against the applicant and on the other, applicant cannot be denied of
their legitimate expectation of likelihood of success in the appeals lodged by them to the COA against the order of
summary judgment and order striking out their counterclaim. Both of the competing interest of parties has to be
weighed and balanced equitably.

[8] After having considered the evidence essayed in the affidavits filed and submissions, both written and oral
advanced to this court, this court finds the interest of the applicant prevails over that of the respondent. It is so, as it
is entitled in law have the appeals lodged to the COA to be heard and determined first before the respondent
pursues with its petition to wind-up the applicant company.

[9] It is also in evidence there are various outstanding payments due to the applicant company from other paying
entities for work done and services rendered. In that respect, it cannot be true that it has become insolvent justifying
a petition for winding it up. The outstanding payments due, which is unrebutted by the respondent, only proves it is
commercially solvent, thus obviating any need for the respondent to cripple its business operations with a winding-
up petition. On that score, contention by the applicant that it has a viable business and it is commercially solvent
capable of generating revenue to meet its obligations under the law, is a perfect justification to deny pursuit of a
winding-up petition by the respondent. Echoing the dictum of Shankar J in the case referred to above, great
damage may obviously be done to the solvent applicant company by a winding up petition presented by the
respondent, whose judgment debt it is able and willing to pay once finally adjudged pursuant to the law, and not via
an interlocutory mode.

[10] Additionally, albeit merit of the appeals lodged by the applicant to the COA is not a pivotal consideration to
decide on its application for a Fortuna Injunction, but prosecution of those appeals to its fruition at the COA and
likelihood of its success are inevitably a material consideration. Fortifying the appeals lodged by the applicant to the
COA, is the counterclaim pursued against the respondent, which if allowed to be reinstated and rendered
sustainable for trial, it has the greatest effect of extinguishing the principal claim by the respondent against the
applicant, as the amount counterclaimed far exceeds the amount signed as judgment debt by the respondent.
There is no iota of rebuttal evidence by the respondent that the counterclaim by applicant against it is fanciful, not
genuine and not anchored on substantial grounds. In the absence of such refutation vide affidavit evidence, the
counterclaim by the applicant against the respondent is deemed to be a credible claim in the context of the
judgment debt which is being disputed. See: Overseas Investment Pte Ltd v Anthony William O’Brien & Anor
(1988) 3 MLJ 332, wherein it was decided, also by Shankar J, where a case is to be decided on a contest of
affidavits, the rule is that material allegations which are not contradicted are deemed to be admitted. In the present
case, genuineness of the counterclaim by applicant and its sustainability is unchallenged by the respondent.

[11] It is also commercially sensible for the applicant to carry out its business operations unimpeded as it has in
fact a myriad of outstanding payments due and payable to it by other business entities. It also goes to show,
business of the defendant is solvent, thus it must not be hard-pressed with a petition to wind it up. If allowed to do
so, it would also be cumbersome for the applicant to pursue and recover monies owed to it. Furthermore, the
outstanding sums available would also operate in favour of the respondent, as it can pursue (if it is viable to do so)
to garnish such monies to be paid to it instead and not to have the applicant company wound up. Not to pursue this
mode of enforcement of judgment, favours submission advanced by the applicant, that the petition to wind it up is
an abuse of process. With that alternative avenue available to the respondent, rights of the applicant are also intact.
(See: Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd, referred to above).

[12] Logically, the respondent ought to have refrained from pursuing a winding-up petition of the applicant
company, in view of the appeals which are pending hearing and determination by the COA. Albeit there being no
stay of execution of the summary judgment obtained, an appeal to the COA is by way of a rehearing pursuant to
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Euro Facade Tech Manufacturing Sdn Bhd v Sri Ribuan Industries Sdn Bhd [2023] MLJU 2319

section 69 (1) of the Courts of Judicature Act 1964 (Act 91) which prima facie entitles the defendant to a legitimate
expectation for the orders made against it to be reversed.

[13] In the upshot, balance of justice tilts in favour of the applicant, thus application for a Fortuna Injunction is
granted to the applicant, so that it is allowed to remain status quo.

[14] An order of costs is at discretion of the court. Primary consideration being facts and circumstance of the case
before it. Costs shall follow the event of success to the applicant. However, this court is mindful, the respondent has
been deprived of its fruits of litigation, albeit interlocutory, and although decision of this court did not favour the
respondent, it is still entitled to costs of this application. Counsel for respondent had prayed for an amount of
RM15,000 as costs, on the basis, extensive research was undertaken as getting up for the application pursued, with
a study and analysis of about seventeen case authorities. Conversely, counsel for applicant, agreed to pay an
amount of RM5000 as costs. On the preparation of case, it is contended by the applicant to be only minimal, thus
an amount of RM15,000 is unjustified. After having considered the submissions made as well as facts and
circumstance of the case, an amount of RM12,000 as costs is appropriate, thus allowed. It is also ordered to be
paid to the respondent within 14 days.

Fortuna Injunction allowed.

End of Document