Synergy Promenade versus Felda: Decision on Feb 14

This article first appeared in The Edge Financial Daily, on December 6, 2019.
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KUALA LUMPUR: The High Court has set Feb 14, 2020 to decide whether it will give a summary judgement in the suit filed by the master developer of the Kuala Lumpur Vertical City (KLVC) against the Federal Land Development Authority (Felda) and its investment arm, Felda Investment Corp Sdn Bhd (FIC), following a dispute among the parties over the project.

Judge Datuk Azimah Omar said she will make her decision next year after hearing submissions from the developer, Synergy Promenade Sdn Bhd, and the defendant, FIC, yesterday.

Earlier, lawyer Datuk Seri Gopal Sri Ram, the lead counsel for Synergy Promenade, submitted that the company signed an agreement with FIC on June 2, 2014, under which it was appointed the master developer of the mixed project to be developed on 24 contiguous parcels of land owned by Felda along Jalan Semarak here.

Under the deal, FIC is responsible for getting Felda to provide the land parcels, measuring 20.66 acres (8.36ha) in total, for the project. It is supposed to have delivered vacant possession of the land to Synergy Promenade, within 30 days after signing the agreement, and to ensure that the vacant possession is not revoked by Felda before completion of the project.

Synergy Promenade, meanwhile, would have the sole and exclusive right to carry out the development, in various phases, in 10 years from the date of the first development order after converting the land for commercial use.

However, to date, FIC had only delivered one of the promised parcels, Sri Ram said. “In the event any party breaks the agreement, the master developer is entitled to go to court,” Sri Ram told the court.

In response, the defence, led by K Kanagasabai, said Felda is a statutory body needing ministerial approval — which it eventually did not get — before it could proceed with the project.

He also argued that the agreement is just a joint-venture agreement between the landowner, Felda, and the developer, Synergy Promenade — and not a development agreement. “Both parties are supposed to benefit [from this deal]. It (the agreement) also states that the minister’s approval is needed but there is no approval here,” he said.

Sri Ram, however, countered by pointing out that the agreement inked states that it is a development agreement. “It’s not a joint venture; it’s not a sharing of profit,” he said.

Lawyers Rajesh Kumar Sharma and Amritpal Singh also represented Synergy Promenande.

Speaking to reporters after submissions were made yesterday, Rajesh Kumar said Synergy Promenade is seeking a decree of specific performance, a remedy for breach of contract whereby the court issues a decree to compel a party to perform its contractual obligations.

“Our argument is that they (Felda) didn’t get the approval, which was supposed to be done by indoor management,” he said.

Synergy Promenade initiated the lawsuit in July this year following a dispute that arose among the parties over the transfer of ownership of land for the project. This happened after a local daily’s report in 2017 that Felda was at risk of losing ownership of the strategic parcels estimated to be worth RM200 million in Jalan Semarak, referring to the parcels meant for the KLVC project. A month after the news broke, Felda said it had regained ownership of the land.

Meanwhile, in November last year, Felda and FIC filed a RM2 billion suit against former chairmen Tan Sri Mohd Isa Abdul Samad and Tan Sri Shahrir Abdul Samad, together with various former Felda directors-general as well as Synergy Promenade, Synergy Promenade KLVC Sdn Bhd and lawyers. They alleged that these parties had jointly conspired for “the plundering” of Felda and FIC through unlawful means, resulting in the injuring of — and a loss suffered by — Felda and FIC.