Zulkefli Makinudin J:

The Plaintiff's Claim

[1] The plaintiff filed an action against the first defendant claiming the following reliefs:

(1) a declaration that the first defendant had by its conduct repudiated the subcontract entered into between the plaintiff and the first defendant. By the said repudiation of the first defendant, the plaintiff claimed it is no longer bound by that subcontract;

(2) an outstanding payment of USD2,170,544.99 and RM1,665,411.98; accrued interest on the said amounts at the rate of 1.5% per month from the due date of each invoice as listed in para 13 of the amended statement of claim until date of full and final realization; and accrued interest at the rate of 1.5% per month on all invoices that have been settled by the first defendant outside the 60 days period commencing from the due date of each respective invoice as stated at para 13 of the amended statement of claim until the date of actual settlement by the first defendant;

(3) a retention sum of RM405,826.30 and USD952,917.95 (or RM3,621,088.21 @ RM3.80 to USD1) and interest thereon according to s 11 of the Civil Law Act 1956 ("CLA 1956");

(4) loss and damages to be assessed for matters arising from paras 12.1, 12.3 and 12.4; para 12.2; para 12.5 of the amended statement of claim and interest on the assessed amount in accordance with s 11 of the CLA 1956; and

(5) costs.

[2] Since the filing of the action, the plaintiff stated that the outstanding payment owing by the first defendant has reduced. As at the time of trial, after accounting for the first defendant's part payments made in pursuant to a consent order dated 2 April 2001 entered in this action, the plaintiff's claim for outstanding payment has been reduced to RM313,482.94.

[3] At the commencement of the trial the plaintiff indicated that it is not proceeding with the action against Tenaga Nasional Berhad ("TNB"), the second defendant.

The Plaintiff's Case

[4] The plaintiff is a company that supplies and erects substations, switchgears and transmission equipment. The first defendant is a company carrying out business in the field of electrical engineering wherein it carries out works and contracts for governmental bodies such as TNB, the second defendant.

[5] In 1996, the first defendant requested the plaintiff to quote for the supply and erection of 275KV, 132KV, 33KV and 11KV transmission equipments for TNB Transmission System Development 1996 Phase 1 Mainheads D & F, a job that the first defendant was tendering for. Mainhead D has seven substations and so does Mainhead F.

[6] The plaintiff submitted its quotation dated 11 June 1996. This quotation was later revised by a letter dated 12 June 1996 and by a letter dated 14 June 1996. These letters set out the terms and conditions for the plaintiff's quotation.

[7] The first defendant was successful in its bid for the TNB contract. Under a letter of acceptance dated 25 August 1997, the first defendant was awarded Contract No TNB 632/97. This was a contract for the design, manufacture, testing of supply and erection of 275KV, 132KV, 33KV and 11KV switchgears, ancillaries and civil works for TNB Transmission System Development 1996 for Mainheads D and F. The contract price was RM141,321,196 as stated in cl 5 of the contract.

[8] The first defendant was required to complete the contract within fifteen months from the acknowledgement of the letter of acceptance as required by cl 10 of the contract.

[9] On 8 October 1997, the first defendant engaged the plaintiff to design and supply 275KV, 132KV, 33KV and 11KV transmission equipments for the TNB's Contract No 632/97 ("Subcontract").

[10] The first defendant issued two purchase orders to the plaintiff. They were Purchase Order No 241/97 for the sum of RM43,392,069.94 for seven substations under Mainhead D. The purchase order is in Bundle ABD1 at p 43 and Purchase Order No 241 A/97 for the sum of RM28,624,902.59 for another seven substations under Mainhead F, which is in Bundle ABD1 at p 44. In to