KUCHING: The High Court has dismissed Petroleum Sarawak Bhd’s (Petros) bid to challenge PETRONAS’ call on a RM7.96mil bank guarantee relating to gas supply.
Justice Faridz Gohim Abdullah said the bank guarantee was validly called in accordance with its terms and not unconscionable or unlawful as alleged by Petros.
“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 yesterday.
On Oct 15, 2024, Petros filed an originating summons 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.
PETRONAS called on the bank guarantee in Oct 2024 after Petros declined to pay for gas supplied in August.
Petros refused to pay for the gas supply on the grounds that PETRONAS did not have a licence to supply gas in Sarawak under the state Distribution of Gas Ordinance (DGO).
Justice Faridz ruled that Petros failed to prove unconscionable conduct by PETRONAS in calling on the bank guarantee.
He also said constitutional issues surrounding the state DGO and the federal Petroleum Development Act (PDA), 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.
Petros’ request for an injunction was academic as PETRONAS had already received the money from the bank guarantee, he added.
The court dismissed the originating summons with costs of RM50,000 to PETRONAS.
Following the decision, Petros lead counsel Tan Sri Cecil Abraham said his client would study the judgment in detail before deciding on the next course of action.
PETRONAS lead counsel Datuk Cyrus Das said the ruling meant that PETRONAS’ call on the bank guarantee was valid, adding that the proper forum to decide on the constitutionality of the PDA and the DGO was the Federal Court.
He said PETRONAS had applied for leave to seek clarity on the constitutional issues, which is scheduled to be heard by the Federal Court on March 16. Sarawak has also filed its own legal petition.
Meanwhile, state legal counsel Datuk Seri JC Fong, who appeared for the Sarawak government as an amicus curiae (friend of the court), told reporters that the constitutional issues remained undecided.
“We leave it to the Federal Court, maybe on March 16 or a later date,” he said.
