The court found the call on the Performance Bond to be unconscionable due to ongoing negotiations and substantial completion of works, granting injunctive relief to the Plaintiff.

JUDGMENT

Aliza Sulaiman J:

Introduction

[1] In this application (encl 1) by the Plaintiff for an order for injunctive reliefs against the Defendants to, among others, prevent the Defendants from complying with any demand or receiving or releasing the sum of RM24,828,868.80 (Said Sum') in relation to the Performance Bond dated 11 March 2022 ('PB') which was issued by the 2nd Defendant ('D2') in favor of the 1st Defendant ('D1') pending the disposal of the arbitral proceedings between the Plaintiff and D1 (Proceedings') on the ground of unconscionable conduct by D1, the Plaintiff had raised a novel issue involving s 410 of the Companies Act 2016 ( CA 2016).

[2] Apart from the usual issue which arises in applications under subsection 11(1) of the Arbitration Act 2005 [Act 646] (' AA 2005') as to whether a defendant's demand on the performance bond or bank guarantee is unconscionable, the issues in the present case include the questions on whether-

(a) the PB is a security over the Plaintiff's property under para 410(1) (b) CA 2016; and

(b) D1 can call for the PB during the pendency of a judicial management (JM') proceeding, specifically the statutory moratorium phase under s 410 CA 2016.

[3] On 14 July 2023, I had allowed the Plaintiff's ex-parte application (encl 2) to restrain the Defendants from, among others, releasing the sums under the PB to D1 pending disposal of encl 1.

[4] Two weeks later, the learned COUNSELS representing the Plaintiff and D1 (as D2 was named as a nominal defendant and it took the position that it will abide by whatever Order that is made by the Court while the 3rd Defendant (D3) was made aware of the suit, but the Plaintiff chose not to serve encl 1 on D3 as the Plaintiff's stance was that the Counter Guarantee which was issued by D3 on 10 March 2022 for the Said Sum in favour of D2 (CG) will not be affected, subject to any Order that will be made by the Court ) appeared before the Court and indicated their clients' agreement for encls 1 and 2 to be heard together.

[5] In addition, D1 did not object to the Plaintiff's application for an Ad- Interim Injunction to preserve the status quo pending the disposal of encls 1 and 2, subject to the usual undertaking by the Plaintiff. An order was accordingly made to this effect.

[6] After hearing the Plaintiff's applications on 14 November 2023 and 14 December 2023 which was contested by D1 only, I had on 18 January 2024 allowed the Plaintiff's application in encls 1 and 2, specifically prayers A(2), B(4), B(5), B(6), B(7), C(9), C(10) and D(11) in encl 1 with costs of RM20,000.00 to be paid by D1 to the Plaintiff, subject to allocatur.

[7] On 19 January 2024, D1 filed a Notice of Appeal against the entire decision. These are my full grounds of judgment for the appeal which is now scheduled for hearing on 29 April 2024.

The Cause Papers

[8] The cause papers are as follows:

(a) the Plaintiff's Originating Summons (O.S.) dated 14 July 2023 (encl 1);

(b) the Plaintiff's Ex-Parte Notice of Application dated 14 July 2023 (encl 2);

(c) the Plaintiff's Affidavit In Support (AIS) affirmed by its Director, Chen Guohua on 14 July 2023 (encls 3 and 4 in the English language and encl 11 in the national language);

(d) the Plaintiff's Certificate of Urgency affirmed by Mohd Rezan Ezra Bin Muhammad Mosinal, an advocate and solicitor in Messrs. Thomas Philip, the erstwhile firm which represented the Plaintiff (encl 5);

(e) D1's Affidavit In Reply (AIR) affirmed by its local Director, Kok Jee Yin on 27 July 2023 (encl 10);

(f) the Plaintiff's AIR affirmed by the same deponent on 11 August 2023 (encl 12);

(g) the Plaintiff's Additional Affidavit affirmed by its Deputy General Manager, Zhu Yanbin on 24 October 2023 (encl 30); and

(h) D1's AIR affirmed by the same deponent on 1 November 2023 (encl 31).

Background Facts

[9] By way of a Letter of Award dated 30 December 2021 (LoA), D1 had appointed the Plaintiff as its contractor to carry out the works for package "C04A - Sub Structure & Superstructur