JSNT2 SDN BHD 1. ) EXYTE MALAYSIA SDN BHD 2. ) BANK OF CHINA (MALAYSIA) BERHAD 3. ) CHINA CONSTRUCTION BANK CORPORATION NANTONG BRANCH

JSNT2 SDN BHD 1. ) EXYTE MALAYSIA SDN BHD 2. ) BANK OF CHINA (MALAYSIA) BERHAD 3. ) CHINA CONSTRUCTION BANK CORPORATION NANTONG BRANCH

On the facts the court accepted that the PB is an autonomous on‑demand bank guarantee and not security over the plaintiff’s property for purposes of s 410 CA 2016, but found that the 1st Defendant’s call on the PB in the circumstances was unconscionable; accordingly the court granted interim injunctive reliefs restraining payment under the PB and related enforcement of the counter‑guarantee and awarded costs of RM20000 against the 1st Defendant.

Citation
WA-24C-111-07/2023 (Mahkamah Tinggi)
Parties
Plaintiff: JSNT2 SDN BHD; 1st Defendant: EXYTE MALAYSIA SDN. BHD.; 2nd Defendant: BANK OF CHINA (MALAYSIA) BERHAD; 3rd Defendant: CHINA CONSTRUCTION BANK CORPORATION NANTONG BRANCH
Court
High Court
Jurisdiction
Malaysia
Judgment Date
18 January 2024
Case Number
WA-24C-111-07/2023 (Mahkamah Tinggi)
Procedural Posture
Originating Summons (interim Injunctive Reliefs) / Interlocutory Judgment Granting Injunctions Pending Arbitration; Appeal Filed by 1st Defendant
Outcome
Plaintiff's interlocutory applications allowed; injunctive reliefs preserved pending arbitration; costs RM20,000 awarded to Plaintiff against 1st Defendant subject to allocatur; no costs against 2nd and 3rd Defendants (nominal).
Legal Topics
Performance Bond, On‑demand Bank Guarantee, Unconscionability, Judicial Management, Moratorium, Undue Preference, Interim Measures
Source Language
Malay/English
Company Law Arbitration Contract Law Bank Guarantees Insolvency/rehabilitation Civil Procedure Performance Bond On‑demand Bank Guarantee +5 more

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Parties

JSNT2 SDN BHD

Plaintiff

EXYTE MALAYSIA SDN. BHD.

1st Defendant

BANK OF CHINA (MALAYSIA) BERHAD

2nd Defendant

CHINA CONSTRUCTION BANK CORPORATION NANTONG BRANCH

3rd Defendant

Procedural Posture

Originating Summons (interim Injunctive Reliefs) / Interlocutory Judgment Granting Injunctions Pending Arbitration; Appeal Filed by 1st Defendant

Legal Issues

  1. 1 Whether the performance bond (PB) constitutes security over the plaintiff’s property within s 410 Companies Act 2016
  2. 2 Whether beneficiary’s call on PB during pendency of judicial management application requires leave of court under s 410 CA 2016
  3. 3 Whether the 1st Defendant’s call on the PB was unconscionable such that the court should restrain payment under the Arbitration Act 2005 s 11

Ratio Decidendi

On the facts the court accepted that the PB is an autonomous on‑demand bank guarantee and not security over the plaintiff’s property for purposes of s 410 CA 2016, but found that the 1st Defendant’s call on the PB in the circumstances was unconscionable; accordingly the court granted interim injunctive reliefs restraining payment under the PB and related enforcement of the counter‑guarantee and awarded costs of RM20000 against the 1st Defendant.

Court Disposition

Plaintiff's interlocutory applications allowed; injunctive reliefs preserved pending arbitration; costs RM20,000 awarded to Plaintiff against 1st Defendant subject to allocatur; no costs against 2nd and 3rd Defendants (nominal).

Orders

  • Grant injunction restraining 1st Defendant from receiving the sum of RM24,828,868.80 or equivalent under the Performance Bond pending disposal of the arbitral proceedings (prayer A(2))
  • Grant injunction restraining 2nd Defendant from complying with any demand by 1st Defendant under the Performance Bond, from releasing the Said Sum or taking further steps to realise D1's demand and from making any demand on the counter‑guarantee pending disposal of the arbitral proceedings (prayers B(4), B(5), B(6),...