SHINE TECHNOLOGY PTE. LTD. v SHINE DC TECHNOLOGY SDN. BHD.

Case Significance

Illustrates that the power to strike out a winding-up petition under Order 18 rule 19 is to be exercised sparingly and not where the just-and-equitable petition raises genuinely disputed facts, and that a curable formal irregularity in a verifying affidavit will not defeat the petition.

This High Court decision in the Commercial Division at Johor Bahru concerns two interlocutory applications by the respondent company in a winding-up petition presented on the just-and-equitable ground under section 465(1)(h) of the Companies Act 2016. The petitioner, a Singapore company, alleged that it had been the original controlling shareholder of the respondent but had been stripped of its shareholding through improper share issuances by the respondent's sole director, leaving it with a much-reduced stake. The respondent applied by one summons to strike out the petition under Order 18 rule 19 of the Rules of Court 2012 and the inherent jurisdiction, and by another to expunge the affidavit verifying the petition.

On the strike-out, the respondent argued that the petition was unsustainable, frivolous and an abuse of process — that the company was a going concern with no deadlock, that it was not a quasi-partnership, that alternative remedies existed under section 346, that the shareholders had not been named, and that the pleaded breakdown was between shareholders of the Singapore parent rather than of the respondent. The court held that the striking-out jurisdiction is a summary power to be exercised sparingly and not to pre-empt disputed merits; the shareholding and dilution allegations raised disputed facts unsuitable for summary disposal, a quasi-partnership was not a prerequisite for relief, and matters such as alternative remedies and joinder were not grounds to strike out. The petition was not plainly unsustainable or abusive.

On the expungement application, the court found the affidavit verifying the petition was not defective, any irregularity being one of form curable under the Rules and occasioning no prejudice, and dismissed the objection as a technical afterthought. Both applications were dismissed with costs of RM8,000.00 each, the petition to proceed to be heard on its merits. The judgment illustrates the sparing use of strike-out against a winding-up petition raising genuinely disputed facts.