KUCHING: The High Court has ruled that PETRONAS' call on a RM7.95mil bank guarantee in relation to gas supply to Petroleum Sarawak Bhd (Petros) was valid and not unconscionable or unlawful.
Justice Faridz Gohim Abdullah said the bank guarantee was validly called and invoked in accordance with its terms.
"The bank guarantee is of an on-demand and unconditional nature.
"As such, PETRONAS was not required to establish any breach, default or failure on the part of Petros as a precondition to making such a demand," he said when delivering his judgment on a dispute between Petros and the national oil corporation here on Wednesday (Feb 25).
Petros had filed an originating summons on Oct 15, 2024, seeking a declaration that PETRONAS' demand on the bank guarantee was unconscionable, unlawful, null and void.
It also sought an injunction to restrain PETRONAS from further pursuing the payment or utilising any money it may have received under the bank guarantee.
The bank guarantee was called on in October 2024 after Petros declined to pay for gas supplied in August that year on the grounds that PETRONAS did not have a licence to supply gas in Sarawak under the state Distribution of Gas Ordinance (DGO).
However, Justice Faridz ruled that Petros failed to prove unconscionable conduct by PETRONAS when calling on the bank guarantee.
He also said constitutional issues surrounding the state DGO and the federal Petroleum Development Act (PDA) 1974, which were submitted by both parties during proceedings, lay outside the scope of Petros' originating summons and should rightfully be heard in the Federal Court.
On Petros' request for an injunction, Justice Faridz said the matter was academic as PETRONAS had already received the money from the bank guarantee.
He added that the court previously dismissed Petros' application for an interim injunction on Oct 21, 2024.
"Given the findings and after considering the submissions and arguments from both parties and the amicus curae in totality, I am of the considered view that Petros has failed to prove its claim for reliefs under the originating summons filed," he said.
As such, he dismissed the originating summons with costs of RM50,000 to PETRONAS.
After the decision, Petros lead counsel Tan Sri Cecil Abraham said his client would study the judgment in detail before deciding on its next steps.
PETRONAS' legal team was led by Datuk Cyrus Das, while the Sarawak and Federal governments appeared as amicus curae (friends of the court) in the case.
