UOB v Bombay Talkies: Winding Up Application for Failure to Pay Debt

United Overseas Bank Ltd ("UOB") applied to the High Court of Singapore to wind up Bombay Talkies (S) Pte Ltd ("Bombay Talkies") for failure to pay a debt of $233,202.33. Bombay Talkies resisted the application, arguing that the debt was compounded by a repayment agreement, the debt was disputed, UOB held sufficient security, and there were irregularities in the application. Hoo Sheau Peng JC ordered Bombay Talkies to be wound up, finding that the debt was not compounded to UOB's reasonable satisfaction, the debt was due and owing, the security was no longer valid, and the irregularities were not material. The court concluded that Bombay Talkies was unable to pay its debts.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Winding-up order granted.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

UOB sought to wind up Bombay Talkies for failure to pay debt. The court ordered Bombay Talkies to be wound up due to its inability to pay its debts.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
United Overseas Bank LimitedPlaintiffCorporationWinding-up order grantedWon
BOMBAY TALKIES (S) PTE LTDDefendant, RespondentCorporationWinding-up order grantedLost

3. Judges

Judge NameTitleDelivered Judgment
Hoo Sheau PengJCYes

4. Counsels

Counsel NameOrganization
Sim Kwan KiatRajah and Tann Singapore LLP
Chew Ming Hsien RebeccaRajah and Tann Singapore LLP
Ang Siok HoonRajah and Tann Singapore LLP
Assomull Madan D TAssomull and Partners

4. Facts

  1. Plaintiff sought to wind up the Defendant for failure to pay $233,202.33.
  2. A statutory demand was served on the Defendant on 24 February 2014.
  3. The Defendant made partial repayments totaling $66,000.
  4. A Repayment Agreement was entered into, but the Defendant defaulted.
  5. The Plaintiff held an insurance policy as security, but it lapsed.
  6. The Defendant disputed the debt and alleged irregularities in the application.

5. Formal Citations

  1. United Overseas Bank Ltd v Bombay Talkies (S) Pte Ltd, Companies Winding Up No 138 of 2014, [2015] SGHC 142
  2. United Overseas Bank Ltd v Bombay Talkies (S) Pte Ltd, Civil Appeal No 69 of 2015, [2015] SGCA 66

6. Timeline

DateEvent
Defendant incorporated
Defendant assigned insurance policy to Plaintiff
Defendant stopped paying insurance premiums
Insurance policy lapsed
Mirandah Law sent letter to Rajah and Tann
Plaintiff served statutory demand on Defendant
Defendant issued two cheques of $15,000 and $18,000
Rajah and Tann wrote to Mirandah Law with an interim repayment proposal
Defendant issued cheque of $15,500
Defendant issued cheque of $17,500
Repayment Agreement signed
Plaintiff filed winding-up application
Official Receiver urged the Plaintiff to approach a private liquidator
Mr Nagrani filed an affidavit, opposing the application
Substantive hearing took place
Substantive hearing took place
Court ordered the Defendant to be wound up
Appeal to this decision was dismissed by the Court of Appeal

7. Legal Issues

  1. Inability to Pay Debts
    • Outcome: The court found that the Defendant was unable to pay its debts, satisfying the requirements for a winding-up order.
    • Category: Substantive
    • Sub-Issues:
      • Failure to pay statutory demand
      • Failure to comply with repayment agreement
    • Related Cases:
      • [2008] 2 SLR(R) 491
      • [2009] 2 SLR(R) 949
  2. Compounding of Debt
    • Outcome: The court held that the debt was not compounded to the Plaintiff's reasonable satisfaction.
    • Category: Substantive
    • Sub-Issues:
      • Reasonable satisfaction of creditor
      • Effect of repayment agreement
    • Related Cases:
      • (1995) 13 ACLC 1309
      • (1846) 15 LJQB 352
      • (1884) 10 App Cas 14
      • [1996] 1 SLR(R) 75
  3. Validity of Statutory Demand
    • Outcome: The court found that the statutory demand was validly served and any irregularities did not invalidate the application.
    • Category: Procedural
    • Sub-Issues:
      • Compliance with statutory requirements
      • Effect of irregularities

8. Remedies Sought

  1. Winding-up order

9. Cause of Actions

  • Winding-up application based on inability to pay debts

10. Practice Areas

  • Commercial Litigation
  • Insolvency
  • Winding Up

11. Industries

  • Banking
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Pacific Recreation Pte Ltd v S Y Technology Inc and another appealHigh CourtYes[2008] 2 SLR(R) 491SingaporeCited for the principle that a winding-up application is not appropriate for enforcing a disputed debt and the standard of proof required to show a substantial and bona fide dispute.
Pac-Asian Services Pte Ltd v European Asian Bank AGUnknownYes[1987] SLR(R) 6SingaporeCited for the principle that strict compliance with the conditions set out in section 254(2)(a) of the Companies Act is necessary.
Re Dayang Construction and Engineering Pte LtdUnknownYes[2002] 2 SLR(R) 197SingaporeCited for the requirements under section 254(1)(a) of the Companies Act that the creditor must comply with.
BNP Paribas v Jurong Shipyard Pte LtdCourt of AppealYes[2009] 2 SLR(R) 949SingaporeCited for the principle that the court is to apply an objective standard in determining whether the debtor-company has secured or compounded the debt to the reasonable satisfaction of the creditor.
Commonwealth Bank of Australia v Parform Pty LtdFederal Court of AustraliaYes(1995) 13 ACLC 1309AustraliaCited for the definition of 'compound' and the objective test for 'creditor's reasonable satisfaction'.
Pennell and others, Assignees of Bradshaw, A Bankrupt v Rhodes and anotherUnknownYes(1846) 15 LJQB 352EnglandCited for the meaning of the word 'compound'.
The Commissioners of Church Temporalities in Ireland v Patrick Grant and OthersHouse of LordsYes(1884) 10 App Cas 14IrelandCited for the definition of 'compound' a debt or claim.
Re Ritecast (S) Pte LtdUnknownYes[1996] 1 SLR(R) 75SingaporeCited for the principle that part payment of a debt does not preclude the creditor from pursuing a winding-up application.
Cornhill Insurance Plc v Improvement Services Ltd and OthersUnknownYes[1986] 1 WLR 114EnglandCited for the proposition that if a debtor is shown to be unable to pay its debts, that is in itself evidence of insolvency and there is no need for a statutory demand to be issued before the creditor could apply for a winding-up petition.
Re Simpson Development Investment (HK) Co LtdUnknownYes[1999] HKCU 1653Hong KongCited for the proposition that if a debtor is shown to be unable to pay its debts, that is in itself evidence of insolvency and there is no need for a statutory demand to be issued before the creditor could apply for a winding-up petition.
Taylors Industrial Flooring Ltd v M & H Plant Hire (Manchester) LtdUnknownYes[1990] BCLC 216EnglandCited for the proposition that if a debt is due and an invoice sent and the debt is not disputed, then the failure of the debtor company to pay the debt is itself evidence of inability to pay.

13. Applicable Rules

Rule Name
Companies (Winding Up) Rules (Cap 60, R 1, 2006 Rev Ed) r 191(1)
Companies (Winding Up) Rules (Cap 60, R 1, 2006 Rev Ed) r 26(1)

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 254(1)(e)Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 254(2)(a)Singapore
Companies Act s 257(2)(e)Singapore
Companies Act s 392(2)Singapore
Companies Act s 387Singapore
Companies Act s 257(1)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Winding up
  • Statutory demand
  • Repayment agreement
  • Insolvency
  • Compounding of debt
  • Banking facilities

15.2 Keywords

  • winding up
  • statutory demand
  • insolvency
  • debt
  • repayment agreement

17. Areas of Law

Area NameRelevance Score
Winding Up95
Company Law60
Banking and Finance50
Statutory Demand40
Contract Law30

16. Subjects

  • Insolvency
  • Winding Up
  • Debt Recovery