Lamin Mohd Yunus PCA:

[1] The appellant/plaintiff and the respondent/defendant entered into an agreement dated 24 December 1981 (hereinafter referred to as the "main agreement") whereby the appellant/ plaintiff, formerly known as Perkayuan OTP Sdn Bhd and referred to in the agreement as "the Logger" was given the rights and privileges to carry out logging in a timber concession of approximately 40,000 acres of forest land in the area situated in the Daerah of Nanggiri in the Jajahan Ulu Kelantan. The timber expected to be felled, logged and removed shall be of all usable tree species and subject to such conditions as imposed by the Director of Forestry, Kelantan or his agent as specified in the licence. This main agreement stipulates the date on which the appellant/plaintiff was to commence logging operations and the various payments it has to make to the Government of Kelantan in the form of royalty and premium. It has also to pay the respondents a tribute on all timber felled and extracted from the concession area at the rate of RM15/- per ton or 10% of the prevailing average quarterly timber price per ton.

[2] By another agreement dated 24 May 1988 entered into between the appellant/plaintiff and Syarikat Kempadang Bersatu Sdn Bhd., (hereinafter referred to as the 2nd agreement, otherwise the Kempadang agreement) the appellant/plaintiff engaged the Syarikat Kempadang Bersatu Sdn Bhd as a contractor "to fell log and remove timber from the contract area" subject to the terms and conditions therein contained.

[3] By a letter of 26 October 1988 solicitors for the respondent/defendant served a notice alleging that the appellant/plaintiff had committed breaches of the main agreement namely:

(i) That you OTP Sdn Bhd did assign and/or transfer the main agreement and/or your rights therein to OKS No 2 Sdn Bhd without the written consent of KSEDC in breach of cl 18 of the main agreement.

(ii) That you OTP Sdn Bhd and/or OKS No 2 Sdn Bhd have on various occasions assigned, leased, sub-let and/or transferred your rights under the main agreement to 3rd parties without the written consent of KSEDC in breach of cl 18 of the main agreement.

(iii) That you OKS No 2 Sdn Bhd have misrepresented to YAB Datuk Menteri Besar, Kelantan vide your letter dated 28 September 1988 that you entered into an agreement with Kempadang Bersatu Sdn Bhd of 1127A, Jalan Pengkalan Chepa, 15400 Kota Bharu, Kelantan dated 3 April 1987 and that the agreement was cancelled vide statutory declaration of Rusli bin Bakar, a director of Kempadang Bersatu Sdn Bhd dated 18 March 1988.

(iv) That there is a subsisting agreement between OKS No 2 Sdn Bhd and Syarikat Kempadang Bersatu Sdn Bhd of No 61, Jalan Besar, 18300 Gua Musang, Kelantan dated 24 May 1988 giving away your rights under the main agreement to Syarikat Kempadang Bersatu Sdn Bhd again without the written consent of KSEDC.

[4] By that said notice, the appellant/plaintiff was required to remedy those breaches of the terms of the main agreement within two weeks from the date of the receipt of the notice and failure to do so the respondent/defendant would terminate the main agreement in compliance with cl 21 of the said agreement. For ease of reference I repeat here the two relevant clauses of the main agreement which read:

18. The logger shall not assign, lease, sub-let or transfer the whole or any part of its rights under this Agreement to any company or to any other person or persons whomsoever without first obtaining the written consent of the corporation.

21. Without prejudice to any other remedies the corporation may have against the logger, the corporation shall have the right at any time by giving notice in writing to the logger, to terminate this agreement forthwith upon the logger failing to remedy within 2 weeks of being required in writing so to do by the corporation any breach of terms and conditions contained in this agreement.

[5] By its letter of 5 November 1988 the appellant/plaintiff through its sol