PDM BUILDERS SDN BHD v FNA BUILDERS & SERVICES SDN BHD

Case Significance

Confirms that a debt admitted through an agreed repayment schedule defeats a claim of bona fide dispute, so that a winding-up petition under section 465(1)(e) read with section 466(1)(a) of the Companies Act 2016 will be allowed where the statutory notice goes unsatisfied.

This High Court decision from the Commercial Division in Kuala Lumpur concerns a petition to wind up a company for failure to satisfy an admitted debt, and the treatment of a purported dispute where the debt has effectively been acknowledged. The petitioner presented the petition under section 465(1)(e) read with section 466(1)(a) of the Companies Act 2016, relying on the respondent's failure to settle a sum after the expiry of twenty-one days from the service of a statutory notice. The debt of RM506,440.00 represented amounts owing to the petitioner for work done to prepare, organise and submit the documents required to enable the respondent to tender for a school project in Alor Setar, Kedah. Significantly, at a meeting between the parties the respondent had agreed to settle the sum owing according to an agreed repayment schedule spread over twenty instalments, which the Court treated as a clear admission of the debt. The respondent nonetheless resisted the petition, contending among other things that it was evidence of mala fide on the petitioner's part. The Court found those grounds to be without merit. Because there was a clear admission of the debt which the respondent was unable to rebut on a balance of probabilities, the Court held that the respondent had failed to raise any bona fide dispute on substantial grounds against the petitioner's claim. It accordingly allowed the petition and made the orders prayed for, with costs to the petitioner to be paid out of the assets of the respondent. The decision illustrates that an admitted debt, particularly one acknowledged through an agreed repayment schedule, will ordinarily defeat an assertion that a winding-up petition is disputed or brought in bad faith. The Court's reasoning reflects the settled position that the winding-up jurisdiction is engaged where a company neglects an undisputed debt following a statutory notice, and that a bare assertion of bad faith, unsupported by any genuine dispute over the sum owing, will not stand in the way of the orders sought. The presence of an agreed instalment plan only reinforced that the debt was real and acknowledged.