GROUNDS OF JUDGMENT

These 2 suits were consolidated by this court order on 30.10.2006. The plaintiff, Arowana One Enterprise Sdn Bhd (Arowana), in suit 561 of 2001 is the defendant in suit 784 of 2004 and the defendant Tractors Petroleum Services Sdn Bhd (Tractors), in suit 561 - 2001 is the plaintiff in suit 784 of 2004. For ease of reference, parties have agreed that Arowana is referred to as the plaintiff and Tractors as the defendant in the trial before me, and suit 784 of 2004 be regarded as the defendant's counter claim. At the trial on 13.4.2009, the plaintiff's counsel informed the court that the plaintiff was abandoning its claim for RM 1.2 million in sub paragraph 13(c) of the plaintiff's amended statement of claim as no claims had been made against the plaintiff by its employees.

2. The facts began when a company known as Mujatra Mewah Sdn Bhd (MMSB) which had entered into 3 shipping contracts, one with Sarawak Shell Berhad and 2 with Petronas Carigali Sdn Bhd respectively ; entered into a Management Agreement dated 29.8.1998, exhibit P2, with the defendant which is a wholly - owned subsidiary of Tractors Malaysia (1982) Sdn Bhd (TM (1982)). Under the said Management Agreement, the defendant was appointed as Manager of the vessels known as 'Mujatra I', 'Mujatra II, 'Mujatra III and 'MV Mewah 16' which were owned by MMSB. According to the Management Agreement, the defendant was to provide the management services set out in the said Management Agreement and were empowered in the name of Mujatra Mewah Sdn Bhd or otherwise on their behalf to do all things which may be expedient or necessary for the provision of the management services or otherwise in relation to the proper and efficient management of the said vessels.

3. Subsequently, on 2.9.1998, the defendant and MMSB entered into an Operational Agreement, exhibit P1, with the plaintiff whereby it was agreed that the plaintiff would undertake the functions set out in the said Operational Agreement, namely to perform MMSB's duties under its shipping contracts with Petronas Carigali Sdn Bhd and Sarawak Shell Berhad.

4. Pursuant to the Management Agreement, the defendant was made a co-signatory to a bank account in the Miri branch of the Bank of Commerce which was in the sole name of MMSB. Monies paid by Petronas Carigali Sdn Bhd and Sarawak Shell Berhad pursuant to their shipping contracts with MMSB were transmitted by MMSB's bankers into the project account. Also, pursuant to the said Management Agreement and the said Operational Agreement, the defendant utilized the monies in the project account to settle the monies due and owing to the plaintiff by MMSB.

5. In August 1999, the vessel known as 'Mujatra III' was seized by Arab- Malaysian Credit Berhad because MMSB breached their financing arrangement with Arab - Malaysian Credit Berhad. Subsequently, MMSB's bankers, namely RHB Bank and Bank Industri Malaysia Berhad withheld payments from MMSB's own accounts. Hence no monies were paid by MMSB into the project account, following with the defendant stopped paying the plaintiff.

6. The plaintiff therefore now claims against the defendant, inter alia for the following sums:

(1) RM374,731.88 being payment for services rendered under the said Operational Agreement

(2) RM15,258,000.00 being loss of profit and

(3) RM400,000.00 being costs of repairs of the ships Mujatra Mewah III and Mewah 16.

7. The defendant in its Statement of Defence avers inter alia , the following:

(1) That it acted as agent of MMSB and therefore the plaintiff should look to MMSB to recover the monies allegedly due to them.

(2) The plaintiff's claims are outside the scope of indemnity given by the defendant in favour of the plaintiff in the said Operational Agreement.

(3) The Operational Agreement was revoked by the execution of the Operational Agreement between MMSB and the plaintiff in late 1998 (2^nd Operational Agreement).

8. As a counter claim, the defendant seeks for, inter alia , an order that the plaintiff pays