Termination letter issued to Dhaya Maju over KVDT2 project

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KUALA LUMPUR (Sept 25): The government has issued a letter of termination to Dhaya Maju LTAT Sdn Bhd in relation to the contract for the Klang Valley Double Tracking Phase 2 (KVDT2) project, the High Court heard today.

Senior Federal Counsel Nik Mohd Noor Nik Kar informed High Court judge (Construction Division) Datuk Aliza Sulaiman that the letter was issued to the company yesterday.

“To update the court, I was informed by the Attorney-General’s Chambers this afternoon that the letter of termination was sent to Dhaya Maju LTAT through registered post on Thursday,” he said.

The court was scheduled to hear Dhaya Maju LTAT’s application for an Erinford injunction today.

A party appealing against a court decision may apply for an Erinford injunction, which is used to stop the other parties from dealing with the subject of a legal action until the disposal of the appeal.

Dhaya Maju LTAT had, on Sept 7, filed a suit against the government and Transport Minister Datuk Seri Dr Wee Ka Siong, among others, 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 project came under fire after Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz released a list of 101 projects awarded via direct negotiations worth RM6.61 billion during the Pakatan Harapan (PH) administration. It includes the KVDT2 project awarded to Dhaya Maju LTAT worth RM4.475 billion.

On Aug 28, Wee in a statement said 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.

Nik Mohd Noor, who was representing the government and Wee, said they needed to put the letter in the affidavit in relation to the plaintiff’s injunction application.

“We have limited time to prepare the affidavit. If possible, we seek for the defendants (government and Wee) to be granted time to prepare the affidavit until next Wednesday, and perhaps we can hear the matter (injunction application) next Friday,” he said.

Counsel Kuhendran Thanapalasingam, who acted for Dhaya Maju LTAT, however, said his client did not receive any notice of termination (of the KVDT2 project).

“My friend (Nik Mohd Noor) said there is a letter of termination, but he has not produced a copy of the letter today.

“My clients are here… we checked with the receptionist to the director. Nobody has received the letter,” Kuhendran said while urging the court to hear the injunction application today.

Justice Aliza said she had to take the same position as the earlier injunction application last week and maintained her view that an injunction could not be issued to restrain the government and officials from performing their public duties.

“I may be wrong, but I think this may be a point to bring it all the way up to Federal Court. The application (Erinford injunction) is dismissed with no order as to costs,” she said.

On Sept 18, Justice Aliza dismissed Dhaya Maju LTAT’s application for an interim injunction to restrain and prevent the government from cancelling or terminating its contract for KVDT2 project, pending disposal of its main lawsuit.

After the decision Dhaya Maju LTAT’s counsel told the court that the company will file an appeal against the decision at the appellate court and will also file an Erinford injunction.

According to the suit, the company 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 RM137.05 million from the government with interest of 5% 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 reliefs 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 supply and services companies.

To date, the plaintiff said it has completed works which has been certified for payment in excess of RM300.76 million as at the period ending June 30, 2020.

The company said that 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 regard 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.