UNITED PAULOWNIA PLANTATION SDN BHD v FGP VENTURES SDN BHD

Case Significance

Confirms that a Fortuna injunction to restrain a winding-up petition will be refused where the debtor's conduct, such as seeking time to pay, shows the demanded sum is not genuinely disputed, and that no judgment is required to found a petition on a section 466(1)(a) statutory demand.

This High Court decision in the Commercial Division at Kuala Lumpur concerns an application for a Fortuna injunction to restrain a creditor from presenting a winding-up petition pending a related civil suit. The plaintiff, United Paulownia Plantation Sdn Bhd, sought an order restraining the defendant, FGP Ventures Sdn Bhd, from filing a winding-up petition against it until the disposal of the plaintiff's civil suit in the High Court. The dispute arose from a notice dated 13 May 2025 issued by the defendant under section 466(1)(a) of the Companies Act 2016, a statutory demand issued without a prior judgment, which the plaintiff challenged on the footing that the underlying debt was disputed and that the claim was premature. The principle governing a Fortuna injunction is that the court will restrain a winding-up petition where it would be an abuse of process, in particular where the petition is founded on a debt genuinely disputed on substantial grounds. The court examined whether the demanded sum was genuinely disputed. It held that by seeking an extension of time to pay the demanded sum the plaintiff had in effect confirmed that the sum was not disputed, so there was no genuine dispute on substantial grounds. It found no evidence to establish that the force majeure events on which the plaintiff sought to rely had occurred, and held that a judgment is not required before a creditor institutes winding-up proceedings on a statutory demand under section 466(1)(a). Concluding that the plaintiff had not made out a basis to restrain the presentation of a winding-up petition, the court dismissed the application. The judgment is a useful illustration that a Fortuna injunction will be refused where the debtor's own conduct shows the demanded sum is not genuinely disputed and no judgment is needed to found a winding-up petition.