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Court rejects bid to stop government from cancelling KVDT2 project

18 Sep 2020 / 14:50 H.

KUALA LUMPUR: A contractor failed in its bid to obtain an interim injunction to restrain and prevent the Government from cancelling or terminating its contract for the Klang Valley Double Tracking Phase 2 (KVDT2) project, pending disposal of its main lawsuit.

This was after High Court judge (Construction Division) Datuk Aliza Sulaiman dismissed the application filed by Dhaya Maju LTAT Sdn Bhd, pending disposal of its suit against the Government and Transport Minister Datuk Seri Dr Wee Ka Siong, as the first and second defendant respectively.

In dismissing the application, Justice Aliza said the court is bound by the Federal Court’s previous decision which ruled that no injunction can be made against the government and public officials (from performing its public duties).

“I incline to follow the decision (of Federal Court) by not allowing the interim injunction against the Government and public official and therefore, this application is dismissed with costs of RM10,000,” she said.

Lawyer Tan Sri Cecil Abraham representing Dhaya Maju LTAT then informed the court that the company will file an appeal against the decision to the Court of Appeal.

The project came under fire after the Finance Minister Tengku Datuk Zafrul Abdul Aziz released the list of 101 projects awarded via direct negotiations worth RM6.61 billion during the Pakatan Harapan (PH) administration.

This includes the KVDT2 project awarded to Dhaya Maju LTAT worth RM4.475 billion.

On Aug 28, Wee in a statement said that the ministry will reopen the tender for the KVDT2 project after taking into consideration the results of extensive study and investigation which found that the cost of the said project under Dhaya Maju-LTAT was overpriced during the PH administration.

Earlier, Abraham submitted that the press statement by Wee gave an impression that the contract is going to be terminated.

“We are not restraining the government and minister in performing their public duties, this case today purely contractual in nature as we intended to maintain the status quo,” he said.

Senior federal counsel (SFC) Habibah Haron countered that the project involved billions of ringgit and it could not be decided through a press statement.

SFC Asliza Ali added that any cancellation of a project must be followed by a formal notice of termination.

“In our case, there is no formal notice of termination, for them (the plaintiff) to proceed with this civil action is premature,” she said adding that the government must perform its public duty concerning the KVDT2 project as it (the project) has the element of public interest.

The court then fixed Oct 19 for case management.

According to the suit filed on Sept 7, Dhaya Maju LTAT among others, is seeking a declaration that there exists a valid and binding contract between the company and the Government by way of a Letter of Acceptance dated Aug 19, 2019.

The plaintiff is also seeking a declaration that any termination or cancellation of the contract by the defendants will be invalid, unlawful and wrongful, besides, an injunction against both defendants to restrain and prevent them from acting or taking any steps in connection with any cancellation or termination of the contract.

Dhaya Maju LTAT among others, seeks the outstanding sum of RM137,054,534.21 from the Government and interest of five percent per annum on the outstanding sum until the date of judgment and final settlement.

The company also seeks damages to be assessed for Wee’s liability, interests, costs and other relief that the court deems fit and proper to grant.

In its statement of claim, the plaintiff, an 80:20 joint-venture company between Dhaya Maju Infrastructure (Asia) Sdn Bhd and Lembaga Tabung Angkatan Tentera (LTAT) incorporated on June 5, 2017, under the Companies Act 2016, was awarded the KVDT2 project by way of a Letter of Acceptance dated April 4, 2018, with the original contract valued at the sum of RM5.58 billion.

The company said it had immediately commenced work on the project upon issuance of the original contract but the change in government after the 14th General Election resulted in the original contract being unilaterally terminated on Oct 19, 2018, via a notice of termination issued by the Secretary-General of the Transport Ministry purportedly on grounds of public interest or national security or national interest.

The plaintiff said following the termination of the original contract, various meetings or discussions were held between the parties which culminated with the settlement agreement being executed on Aug 19, 2019.

The company said, in line with the terms of the settlement agreement, it was re-awarded with the project with the revised contract sum of RM4.475 billion, and that it had duly carried out its obligations which enabled the project to achieve a healthy progress of 24%, made possible with a dedicated 1,512 employees and 261 numbers of supply and services companies.

To date, the plaintiff said it has completed works which has been certified for payment in excess of RM300,763,033.12 as at the period ending June 30, 2020.

The company said, in March 2020, there was again a change in Malaysia’s political landscape which saw a new coalition government known as Perikatan Nasional coming into power and that, once again, resulted with the plaintiff landing itself in the middle of controversy, confusion and uncertainty in regards to the project.

The plaintiff said for reasons unknown to it, both defendants refused or failed to execute the relevant contract documents notwithstanding the fact that there is an express requirement for them to do so within a period of four months from the date of issuance of the Letter of Acceptance pursuant to the relevant Treasury Circular, which to date, the plaintiff said, the relevant documents have yet to be signed.

It said despite the existing contract between the plaintiff and the government, Wee had on Aug 28, via a press release, inter alia, announced the decision to cancel or terminate the contract with the plaintiff and to reopen the bidding process for the project via an open tender system. — Bernama

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