JUDGMENT

Mokhtar Sidin JCA:

We have dismissed the appeal earlier and now we give our reasons for doing so. To start with it is better for us to state the facts and the events leading to this appeal.

On 24 July 1998, the appellant who was the plaintiff in the court below, took out a writ for a declaratory order. To avoid any confusion we will refer to the appellant and the respondents as the plaintiff and defendants as in the court below. The declaratory order sought by the plaintiff are:

(i) that the performance bond dated 22 August 1998 was supplemental to a contract dated 15 July 1995, and thus invalid;

(ii) that the said contract and/or the performance bond did not permit the first defendant, whether by itself and/or through its agents or servants to make a call on the performance bond;

(iii) that an injunction be granted against the first defendant, whether by itself, or through its agents or servants from further calling and/or receiving the payment in the sum of RM4,800,000 which was payable upon the principal's written demand, made on the second-named defendant, until the disposal of the arbitration; (iv) for a declaration that the said performance bond is a conditional bond and that the second defendant is obliged to pay to the first-named defendant upon proof that the plaintiff is in breach of the obligations under the said contract, and that the plaintiff is not relieved from the performance of the contract;

(v) the second-named defendant whether by itself or by its servants or agents be injuncted and restrained from paying the said sum of RM4,800,000 or any other sum that shall be payable under the performance bond until the disposal of the arbitration proceedings; and

(vi)such other order/direction or relief.

At the same time the plaintiff took out an ex parte summons in chambers praying for an order that:

(i) an injunction be granted against the first-named defendant whether by itself, or by its servants or agents from further calling and/or receiving payments in the sum of RM4,800,000 under the performance bond from the second-named defendant, until the disposal of this matter inter partes; and

(ii) an injunction against the second-named defendant, restraining them from paying the first-named defendant, the sum of RM4,800,000 or any sum payable under the performance bond until the disposal of the hearing inter partes.

The undisputed facts leading to the filing of the writ and the summons in chambers were that on 15 July 1995 the plaintiff and the first defendant executed a formal contract for the construction and completion of a hotel cum office development in Johor Bahru for the sum of RM96,000,000. From the evidence it is clear to us that the plaintiff was awarded the contract by the first defendant by a letter dated 30 June 1995 whereby the plaintiff was required to execute a formal contract which was the contract dated 15 July 1995. One of the terms and conditions stipulated in the letter dated 30 June 1995 was the depositing of a performance bond of RM4,800,000 which is the subject matter of this appeal. Plaintiff apparently accepted this term when it signed the acceptance letter dated 30 June 1995. Since this letter is important it is better for us to state the contents of that letter:

THE EXECUTION AND COMPLETION OF THE PROPOSED HOTEL CUM

OFFICE DEVELOPMENT AT JALAN HARIMAU JOHOR BAHRU JOHOR

FOR CASTLE INN SDN BHD - LETTER OF ACCEPTANCE OF TENDER

1.0 You are hereby informed that your tender for the above-mentioned works in the revised sum of Ringgit Malaysia: Ninety-Six Million Only (RM96,000,000) is accepted subject to the terms, conditions and stipulations of the Tender Documents upon which the Tender is based and of this Letter of Acceptance.

This revised tendered sum shall be deemed to include all revisions of works as shown in the list of revised drawings appended herewith (Page DL/1-DL/12) which shall form part of the Contract.

2.0 You will be required to execute in due course a formal Con