ASIAN KITCHEN (M) SDN BHD v MENARA KUALA LUMPUR SDN BHD

Case Significance

Restates that no Fortuna injunction will restrain a judgment creditor from winding up a company on an unstayed summary judgment: a pending appeal, without a stay, does not preclude a winding-up petition, and the Fortuna jurisdiction guards only against abuse of process.

This High Court decision at Kuala Lumpur refused a Fortuna injunction and restates the settled limits on restraining a judgment creditor from winding up a company. The plaintiff applied by originating summons for a Fortuna injunction to restrain the defendant from commencing winding-up proceedings founded on a summary judgment the defendant had obtained against it in an earlier suit. The plaintiff's basis for the injunction was that it had appealed to the Court of Appeal against that summary judgment, and the appeal had not yet been heard. Significantly, the plaintiff had also applied for a stay of execution of the summary judgment in both the High Court and the Court of Appeal, and both stay applications had been dismissed.

The court reasoned that a summary judgment is enforceable as a judgment unless it is stayed pending appeal or set aside on appeal. It followed, applying the principles associated with Fortuna Holdings and the line of Malaysian authority developing them, that the mere existence of a pending appeal does not preclude a judgment creditor from presenting a winding-up petition, and that no court will grant a Fortuna injunction to restrain a judgment creditor from commencing winding-up proceedings based on a summary judgment that has not been stayed. Because the plaintiff's stay applications had failed, the summary judgment remained fully enforceable and the debt it established was not the subject of any bona fide dispute capable of supporting the injunction.

The court dismissed the originating summons on the day it was heard. The judgment illustrates the narrow scope of the Fortuna jurisdiction: it protects a company only against an abuse of the winding-up process, not against enforcement of an unstayed judgment. A debt reduced to an unstayed summary judgment is not a genuinely disputed debt, and it is the failure to obtain a stay — rather than the mere pendency of an appeal — that leaves the judgment creditor free to pursue winding up. A company that wishes to hold off a winding-up petition while it appeals must therefore secure a stay of execution; having been refused a stay at both levels, the plaintiff here had no foundation for the injunction it sought.