Bank Utama (M) Bhd

- vs -

GKM Amal Bhd

Judgment

Abdul Aziz Mohamad J

1. The following is my decision on the two points raised by learned counsel for the respondents in opposition to this petition.

   RULE 24

2. Rule 24 of the Companies (Winding-up) Rules 1972 requires every petition to be advertised, in the manner laid down,

   seven clear days or such longer time as the court may direct before the hearing.

   It would appear that the advertising must be done exactly seven clear days before the hearing and cannot be done earlier unless the court so directs. I find the rule most unusual. Its purpose is to give to creditors notice of the petition. Statute does not usually, in requiring something to be done, provide for it to be done exactly on a specific day. One might find it being required to be done, for example, not later than a certain date, in which case it may be done earlier than that date; or at least a number of days before a certain date, in which case it may be done earlier than the prescribed number of days.

3. In the case of Rule 24, one would expect that the direction of the court will only be necessary if the advertising were to be done a shorter period of days before the hearing and that no direction of the court will be necessary if it were to be done earlier than the prescribed number of days because a longer notice would be better for creditors and would not prejudice anybody. I am puzzled as to the reason why Rule 24 is drafted in the way that it is. Neither counsel has been able to suggest a reason. It makes me wonder if there has been an error in the thinking, or in the expression of the thinking, behind Rule 24.

4. Counsel's research has revealed that in Australia the time for advertising is not less than fourteen days before the hearing and that in England, under Rule 4.11 (2)(b) of the Insolvency Rules 1986, it is "not less than 7 business days after service of the petition on the company, nor less than 7 business days before the day" appointed for the hearing. In England, under Rule 28 of the Companies (Winding-up) Rules 1949, it used to be "seven clear days before the hearing", but because there was no provision, such as exists in our Rule 24, for the court to direct a longer time, I should think that a longer number of clear days would have been acceptable as a matter of course.

5. In this case the advertising was, without court direction, done earlier than the seven days. Technically, therefore, it is an irregularity. Since, however, it does not do injustice to anybody and is, on the contrary, beneficial to creditors, I rule that it is an irregularity which, by virtue of Rule 194, does not invalidate the advertisement.

   THE QUESTION OF DISPUTE

6. This petition is based on a summary judgment. An appeal against the summary judgment has been dismissed. The respondents have appealed farther to the Court of Appeal and the appeal has not been decided. There has been no stay of execution pending appeal. Learned counsel for the respondents submitted that because there is an appeal to the Court of Appeal, the debt is disputed and cannot form the basis for a winding-up petition. He relied on the following pronouncement by Rekraj J. in Solid Kitchen Sdn Bhd v Regal Development Sdn Bhd [1998] 6 MLJ 437 at p 4391:

   But where the debt is disputed, as in this case, being a debt on a judgment. subject to a further appeal to a superior court, it certainly cannot be said to be an undisputed debt; and the petitioner cannot at this stage claim to be a creditor of the respondent until that judgment obtained in his favour has become final and conclusive upon the disposal of the appeal.

7. With respect, my understanding of what is meant by a disputed debt in the context of a winding-up petition is that it is a debt in respect of which it is shown, with grounds supported by evidence, that there is a bona fide dispute. A debt is not a disputed debt in that context simply because the respondent maintains that he disputes the debt. A judgment on the debt establishes in law that there is no bona fide dispute as to the debt. The judgment is good until it is set aside on appeal, and it is enforceable unless a stay has been granted. The fact that the debtor has lodged an appeal against the judgment merely means that he still disputes the debt but does not establish that the debt is bona fide disputed. The judgment has already established the contrary.

8. I make orders in terms of paragraph 10(a), (b) and (c) of the petition.

Cases

Solid Kitchen Sdn Bhd v Regal Development Sdn Bhd [1998] 6 MLJ 437

Legislations

Malaysia

Companies (Winding-up) Rules 1972: R. 24, R. 194

United Kingdom

Companies (Winding-up) Rules 1949: R. 28

Insolvency Rules 1986: R. 4.11(2)(b)

Representation

Edwin Koh (Raja Darryl & Loh) for Petitioner

Ong Chee Keong (Ong Manickam & Co) for Respondent

Notes:-

This decision is also reported at [2000] 2 AMR 1563