KUALA LUMPUR (Aug 27): A restraining order imposed on Pelangi Prestasi Sdn Bhd, a company linked to businessman Tan Sri Syed Mokhtar Albukhary, is no longer valid after the company filed a suit against Sabah Forest Industries Sdn Bhd (SFI) and Grant Thornton Consulting Sdn Bhd, the High Court was told today.
Pelangi’s lawyer, Datuk Lim Chee Wee, said a restraining order under Section 366 of the Companies Act 2016 is limited to the period before a suit is filed.
"The effect of the restraining order was never meant to extinguish the substantive right of Pelangi in launching its claims against SFI and Grant Thornton. Upon expiry of the restraining order, the stay expires along with it.
"Thus Pelangi is able to pursue its claims without falling prey to the terms of the now expired restraining order," he said.
Lim was submitting in Pelangi’s application to strike out the restraining order issued against its application for an injunction to be heard inter partes (with both sides present).
Lim will continue his submissions on Sept 3.
SFI and Grant and Thornton were given the restraining order against the injunction last year. The injunction is still in effect until the disposal of the ongoing inter partes hearing.
Pelangi’s injunction seeks to stop the implementation of the new set of preconditions by the Sabah State Government to grant timber licences until the disposal of the suit.
In April 2018, Pelangi entered into a deal to acquire a 98% stake in SFI from India-based pulp and paper manufacturer Ballarpur Industries Ltd (BILT) for about RM1.2 billion. Under the sale and purchase agreement (SPA), the Syed Mokhtar-controlled firm would assume control of SFI, including all its assets, land titles and timber licences.
SFI, which was facing financial problems, was put under receivership and management of Grant Thornton before the deal was signed.
Pelangi subsequently went to court over a decision made by the Parti Warisan Sabah-controlled State Government after the 14th General Election in May 2018, not to issue fresh timber licences to SFI and instead, impose an entirely new set of preconditions in order to grant the licences.
A month before signing the SPA, the previous Barisan Nasional State Government had agreed to approve new timber licences to Pelangi if it fulfilled the prerequisites in the agreement.
Pelangi, in its suit, claimed that it had paid the salaries of SFI employees in full since March 2018, including shortfalls for the period of January to March 2018. The salaries of the workers were paid even up till March this year amounting to RM23.1 million, and hence it had fulfilled part of the prerequisites set by the Sabah Government, the company said.
Prestasi accused the present State Government of unilaterally imposing entirely new conditions on the company. It alleged it is being sidelined to allow the takeover of SFI by China pulp and paper company Lee & Man Paper Manufacturing Ltd.