PUJIAN DEVELOPMENT SDN BHD v 1. ) THEAN JUN THYE 2. ) CHIA SIYA HENG 3. ) CHEE CHIANG GIN 4. ) WONG CHIN MOO 5. ) KAN KWONG NAM 6. ) YAP KEOW 7. ) LAM KOK WENG 8. ) YONG GEOK JIN 9. ) WONG KIANG HOONG 10. ) KEE MOOI THONG 11. ) KEE LEK CHYE 12. ) YEN YEW LOONG 13. ) YEN YEW CHUNG 14. ) YAP WAI CHOY 15. ) PHANG SEW PIN 16. ) LIM GEOK KIM 17. ) YAP WEE LOY 18. ) YAP WEI THIAM

Case Significance

A clear example of when a Fortuna injunction issues to stop a disputed-debt winding-up petition, protecting a company from irreparable harm while the debt dispute is resolved elsewhere.

This High Court decision at Shah Alam concerns a Fortuna injunction sought by a developer company, Pujian Development Sdn Bhd, to restrain a group of creditors from presenting a winding-up petition against it. The creditors had issued a statutory demand under section 466 of the Companies Act 2016, and the company applied under the court’s equitable jurisdiction, invoking sections 50 and 51 of the Specific Relief Act 1950, to prevent the threatened petition. The governing principle is that the winding-up process should not be used to enforce a debt that is disputed on substantial and bona fide grounds, since a company faced with such a petition may suffer irreparable harm to its commercial standing before the dispute is resolved. The principal issue was therefore whether the debt asserted by the creditors — which included a very large claim for interest running into over a million ringgit and traceable to an earlier registrar’s order — was genuinely disputed. The Court held that it was. It found a serious and bona fide dispute over the creditors’ interest claim, including a question whether the sums demanded amounted to impermissible interest upon interest, and it distinguished SBSK Plantations, where a valid and unstayed judgment had entitled the claimant to petition as of right, on the ground that the factual matrix here was different. The Court was careful to note that its finding did not affirmatively decide that nothing was owed; it decided only that the debt was disputed, which, coupled with the irreparable harm a petition would cause, justified restraining the winding-up route while leaving the creditors free to pursue their claim by other lawful means. Accordingly, per Choong Yeow Choy JC, the application was allowed with costs of RM8,000. The judgment is a clear working example of when a Fortuna injunction will issue to protect a solvent company from a disputed-debt winding-up petition.