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Disputing A Winding Up Order In Different Courts- Is It Even Possible?

Disputing A Winding Up Order In Different Courts- Is It Even Possible?

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Can a party file multiple winding-up petitions against another party? This issue was dealt with in the court of appeal case of Sinarlim Sdn Bhd v Waja Destinasi (M) Sdn Bhd. We will briefly look at the case and what the court says in the case. 

Brief facts of the case

The facts, in this case, warrant a chronological breakdown:

  1. Sinarlim filed a winding-up petition against Waja Destinasi in Ipoh High Court in 2007.
  2. As Waja Destinasi did not attend the hearing, a winding-up order was made against them.
  3. As Waja Destinasi’s address was in Kuala Lumpur, an application to transfer the winding-up order to the Kuala Lumpur High Court was submitted by the official receiver to the Ipoh High Court. The application was duly granted by the Ipoh High Court.  
  4. In reply to what transpired above, Waja Destinasi filed a notice of motion in the Kuala Lumpur High Court to stay the winding-up order granted by Ipoh High Cout as Waja Destinasi has appealed against the decision of the Ipoh High Court. In its notice, Waja Destinasi also informed the Kuala Lumpur High Court that a winding-up petition had been presented against them in another Kuala Lumpur High Court in 2005 (2nd KL High Court). In this regard, the Kuala Lumpur High Court:
    1. Dismissed the motion to stay; and
    2. Set aside the Ipoh High Court winding-up order on the basis that:
      1. A winding-up proceeding has been presented in the 2nd KL High Court; and
      2. No leave had been obtained to file the petition in the Ipoh High Court.
  5. Sinarlim also filed another winding-up order in the 2nd KL High Court but that order was put on hold by mutual consent by both parties (it must be noted both the Ipoh High Court and the Kuala Lumpur High Court was unaware of this initially, once it was found out, it also became the basis why the Kuala Lumpur High Court set aside the Ipoh winding-up order).
  6. Aggrieved by the decision of the 2nd KL High Court, Sinarlim appealed the decision to the Court of Appeal. 

The court’s decision and rationale

The court allowed the Sinarlim’s appeal. In coming to its decision, the court noted that the Kuala Lumpur High Court has no jurisdiction to set aside or rescind a winding-up order which has been passed down by the other High Court, even if the decision in granting the winding-up order is wrong. What could have been done in that situation, is for Waja Destinasi to appeal the decision of the Ipoh High Court to the Court of Appeal. Furthermore, the court noted that:

  1. There is nothing against the filing of more than one winding-up petition against the same company at any one time;
  2. There is no leave required for the filing of the second and subsequent winding-up petitions if the company has not been wound up yet; and 
  3.  Each petition should be looked at separately upon its own merit.

However, the court must stress that at no time a company that has been wound up can subsequently be wound up again.

The court also relied upon the judgment laid down in the Court of Appeal case of Maril-Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Bankers Bhd And Other Appeals, where the court in that particular case states:

“I require no clearer authority for the proposition that more than one winding up petition may be presented against a company. Of course, the provision of r 33 is available to a petitioning creditor. And if he does not take advantage of the rule to have him substituted for a lethargic petitioner, he may find himself out of pocket for his costs. But on no account is his petition bad in law. Nor is it an abuse of the court’s process.”

What it means is simply this: A party can file multiple winding-up petitions against another party so as long the party is able to do so (i.e.can afford to pay for the legal fees and cover the legal cost in the event the winding-up petition does not succeed) and the other party has not been deemed wound up i.e. bankrupt by the court. 

Make an appointment with Company Secretary for advice and consultation

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