Cagaran Ria Sdn Bhd V Dr Marine Services (M) Sdn Bhd

  

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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION)

 

COMPANIES (WINDING UP) NO: D-28NCC-265-2010

 

In the Matter of the Companies Act, 1965;

 

And

 

In the Matter of DR MARINE SERVICES (M) SDN BHD.

 

BETWEEN

 

CAGARAN RIA SDN BHD … PETITIONER

 

(Company No: 386771-D)

 

AND

 

DR MARINE SERVICES (M) SDN BHD

 

(Company NO. 701507-P)

 

RESPONDENT

 

GROUNDS OF DECISION

 

This Winding-Up Petition came up before me on 24th June 2010. The solicitors for the Respondent filed a Notice of Intention to Appear on Petition in Form 22, and pursuant to Rule 28 of the Companies Act, on the afternoon of 23rd June 2010. The record indicated this Notice was

 

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filed in Court at 12.33:15 pm on 23rd June 2010. No Affidavit in Opposition to Petition was filed.

 

Counsel for the Petitioner placed on record the Petitioner’s objection to the Notice on the ground that no Affidavit in Opposition had been filed. Counsel for the Respondent, apologising for the failure to file the Affidavit in Opposition, nevertheless argued there was a bona fide dispute in this matter. The amount being claimed by the Petitioner, it was argued, arose from a tenancy agreement and it included sums which were not yet due. According to counsel, there were strong arguments against granting a Winding-Up Order, and the company was very much a solvent company.

 

As far as the Notice of Intention to Appear was concerned, I was of the opinion that it was filed within time and in compliance with the Winding-Up Rules. Nevertheless, the fact remained no Affidavit in Opposition had been filed as required by Rule 30(1), and I was not satisfied this was a proper case for this Court to exercise its discretion to allow an amendment to allow the Respondent to file this Affidavit in Opposition, particularly in light of the strenuous objections by the Petitioner.

 

Rule 30(1) is couched in imperative terms:

 

“Affidavits in Opposition to a Petition that a company may be wound up shall be filed and a copy thereof served on the Petitioners or his solicitor at least seven days before the time appointed for the hearing of the Petition.’’

 

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I was not persuaded the Respondent had made out a convincing case to incline me to apply Rule 193:

 

“The Court may, in any case in which it shall see fit extend or abridge the time appointed by these rules or fixed by any order of the Court for doing any act or taking any proceeding.”

 

The affidavit in opposition not having been filed, there was simply no evidence for this Court to be persuaded by the Respondent’s grounds. Very simply, there was nothing before me to prove the company was solvent. What I had by way of evidence was to the contrary. I found the Respondent had defaulted in payment of its agreed rentals ever since December 2009 in relation to a Tenancy Agreement for a fixed term.

 

The Petition had been served on the Respondent on 11th May 2010, and this was duly acknowledged receipt by the Respondent. See the Affidavit of Service affirmed by Venkateswara Kandasamy, paragraph 8. The section 218 Notice had been served on 11th March 2010, and the Petition filed on 12th April 2010. In my view, the Respondent had been given ample time to come up with an Affidavit in Opposition, given the circumstances. A relatively short affidavit to prove its solvency status would have sufficed. Even that was not provided.

 

I was mindful of the other argument raised by the Respondent that the Petitioner’s claim was for rentals not yet accrued. However, when the terms of the Tenancy Agreements were studied, I found this argument was without merit. This was a tenancy for a fixed term, and

 

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Clause 5(a) of the Agreement made it plain the Petitioner was entitled, in the event of breach in rental payments agreed, to terminate the Agreement and claim for “the rent for the remaining unexpired portion of the said sum together with the said security deposit, as agreed liquidated damages.”

 

Counsel for the Petitioner cited before me the following cases: Crocuses & Daffodils (M) Sdn Bhd v Development & Commercial Bank Bhd [1997] 3 CLJ 485; Unispan Formwork Sdn Bhd v Kim Choy Tractor Works Sdn Bhd [2004] 4 CLJ 151; and Mettube Sdn Bhd v Taiace Engineering Sdn Bhd [2009] 1 LNS 134. All these cases were cited in support of a strict insistence on the mandatory requirement of Rule 30(1).

 

In this connection, I was also mindful of the additional decisions in Anvest Corporation Sdn Bhd v Wong Siew Choong Sdn Bhd [2008] 3 CLJ 317 and Eastool Industries Sdn Bhd v Getfirms Electronics (M) Sdn Bhd (No 1) [2001] 6 CLJ 151.

 

The issue was essentially whether the requirement under Rule 30(1) was mandatory in nature where the court could not exercise a discretion to extend time. The decision of the Court of Appeal in Crocuses & Daffodils (M) Sdn Bhd v Development & Commercial Bank Bhd [1997] 3 CLJ 485 at page 491 of the report was cited:

 

“By their words and expression, r. 30(1) is mandatory in nature and as such the learned judge was correct when he refused to admit all four affidavits in opposition for noncompliance of that particular rule…”

 

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In Eastool Industries, the High Court adopted a strict view of this requirement and agreed with the submission that a “failure to comply with r. 30(1) of the Companies (Winding-Up) Rules 1972 was fatal and was not a mere irregularity…and was not capable of being rectified by the court under r. 193 and 194…” (at page 165). This is also the view expressed in Unispan Formwork Sdn Bhd v Kim Choy Tractor Works Sdn Bhd and Mettube Sdn Bhd v Taiace Engineering Sdn Bhd ,supra.

 

Anvest Corporation, another Court of Appeal decision, adopted a similar strict position, and this was a case where no Affidavit in Opposition was filed on the facts.

 

In Crocuses & Daffodils, however, no reference was made to rules 193 and 194, and the facts of the case show very clearly there was inordinate delay, with the court observing that the service of all the affidavits on the bank had clearly and blatantly contravened the mandatory time requirement of r.30(1). This was also a case where the Petitioner had a judgment in hand obtained on 4.7.1991, where the original hearing date of the Petition was 24.9.1992. It would therefore seem that there could be no excusable reason why the affidavits had to be filed out of time.

 

I considered the facts raised in this instant Petition, and considered a slightly less mechanistic view where the” time appointed” mentioned in Rule 193 refers to “by these rules”, and as such even the requirement of r. 30(1) should be read as conditioned by this saving proviso. See the judgment of Kang Hwee Gee J (as his Lordship then was) in Zaibar

 

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Auto (Malaysia) Sdn Bhd v Cosmic Angle Travel & Tours Sdn Bhd

 

(No 2) [2008] 10 CLJ 701.

 

It needs no undue stressing that Winding-Up proceedings are drastic in nature and consequence, since it invariably spells the legal and economic demise of a company when allowed. Where there are circumstances shown by the Respondent company that it has plausible grounds to oppose the Petition, I would have been prepared to adopt a slightly less mechanistic approach to the issue of time limits, and exercise a discretion to allow time to file an Affidavit in Opposition. However, on the facts of this instant Petition I was not persuaded there was merit in the Respondent’s argument. The affidavit in opposition should have been filed earlier, or at least filed before the matter came up for disposal. This will prevent the Courts being faced with unmeritorious last-minute excuses to delay the fair disposal of Winding-Up Petitions.

 

For these reasons, I chose to allow the Petition and granted an order in terms. To me, that was a proper order to make, given the circumstances.

 

( MOHAMAD ARIFF BIN MD. YUSOF ) HAKIM MAHKAMAH TINGGI DAGANG NCC 3 KUALA LUMPUR

 

Dated 24th June 2010.

 

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COUNSELS

 

For the petitioner: Vasugi Syed Alwi Ng & Co.

 

For the respondent: Claire Joseph Messrs. Hisham Yoong – K C Lim

PDF Source: http://kl.kehakiman.gov.my