The obligation of a bank guarantee is strictly as stated, and unconscionability must be clearly proven.

[1] This is an inter partes hearing in encl 11 as to whether the ex parte injunction restraining the 1st defendant ("D1") from receiving the sum of RM2.45 million under a bank guarantee issued by the 2nd defendant, Malayan Banking Berhad ("D2"), and restraining D2 from paying out to D1 the said sum, should be confirmed, discharged or varied.

The Project

[2] A company known as Tanjung Bin Energy Issuer Bhd, Malaysia ("TBEI") was tasked to administer and manage the construction of a 1,000 megawatt power plant located at Tanjung Bin Johor ("the project"). TBEI in turn appointed Alstom Services Sdn Bhd ("Alstom Services") to provide services of erection, commissioning and testing of a coal handling plant ("the works").

[3] Alstom Services thereafter entered into an agreement with the D1 wherein it was to carry out the works. D1 is a wholly owned subsidiary of Thyssenkrupp Industries India Pty Ltd and was incorporated on or around 15 August 2012.

[4] D1 then appointed the plaintiff to undertake the works for the project for a total price of RM24.5 million ("the contract sum") by its letter of intent dated 12 April 2013. The letter of intent set out the initial scope of works required to be carried out by the plaintiff in respect of the project. This was followed by a work order WO No: TK(M)/3M0037/PO-002 dated 15 May 2013 to the plaintiff in respect of the scope of works to be carried out ("the work order").

[5] The letter of intent, the work order, together with the commercial terms and conditions dated 9 April 2013 ("the terms and conditions") formed the salient parts of the contract between the plaintiff and D1. The initial scope of works included unloading at site, handling, storage till erection, erection, testing, commissioning and supervision ("the initial scope of works").

[6] It was a term of the contract that D1 was to provide an advance payment in the sum of RM2,450,000.00 to the plaintiff being 10% of the contract sum for the commencement of the initial scope of works by the plaintiff ("the advance payment"). The advance payment was to be made against the submission of a bank guarantee in favour of D1. Under Annexure 1 of the terms and conditions, the bank guarantee which was to secure the advance payment, was to remain valid until the expiry of 90 days beyond the completion or performance of the plaintiff's scope of works.

[7] It should also be mentioned that the subsequent 80% of the order value shall be paid to the plaintiff progressively against monthly progressive reports and bills as certified by D1 and after 30 days from the date of submission of documents by the plaintiff to D1. In respect of the last 10% of the order value, the plaintiff is entitled to payment upon: (i) the completion of their works as signified by a performance guarantee test (as defined in the contract) carried out by the plaintiff; and (ii) upon the provision of a bank guarantee for the value of the last 10% of the order value, which was to be valid up to 30 April 2018. For the avoidance of doubt and confusion, this bank guarantee is separate and distinct from the bank guarantee for the advance payment. The bank guarantee ("BG") for the advance payment dated 3 June 2013 was duly furnished by the plaintiff to D1; being issued by D2 to D1.

Problems

[8] The plaintiff experienced various difficulties which it said was beyond its control in completing its initial scope of works. Seeing that the plaintiff was falling behind its schedule of works, the plaintiff and D1 entered into an agreement wherein the balance of the initial scope of works of the pl