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Tuesday, July 31, 2012

Syabas fails in third party notice suit against Selangor

The Kuala Lumpur High Court has struck out a third party notice suit by Syarikat Bekalan Air Selangor (Syabas) against the Selangor government.

This follows a RM149 million suit filed by Konsortium Abass Sdn Bhd for non-payment, as stated in its invoices issued after March 28, 2011. The company provides treated water to Syabas.
azlanSyabas in turn filed a third party notice suit against the Selangor government on Dec 14 last year, seeking 100 percent indemnity from the state.

Today Judicial Commissioner Lee Swee Seng allowed a striking-out application by the Selangor government.
He ordered Syabas to pay costs of RM10,000 to the Selangor government.

The court accepted the state government’s arguments that it had tried to terminate the services of Syabas many times, but that the federal government had withheld agreement.

Lee said Syabas claimed it has the right to bring the Selangor government into this by virtue of the Novation Agreement between the two where, in its interpretation, Selangor has not effectively terminated the concession agreement.

Should Konsortium Abass succeed in its claim against Syabas, he noted, it ought to be indemnified by the Selangor government which was being brought into this action.

“In this case, the Selangor government has elected to terminate the concession agreement, though it could not do so effectively as it does not have the federal government’s consent,” Lee said.

“The Selangor government cannot then be said to have elected not to terminate the concession agreement. As such, Syabas has no right to join the Selangor government as a third party and seek an indemnity under this clause.”

Lee said that Syabas, in its defence to Konsortium Abass’ claim, had stated that it could not pay because the Selangor government has not increased the water tariff.

“That actually is the subject matter of another case in Justice Mary Lim’s court where Syabas is the plaintiff and Selangor government is the defendant and the federal government is the third party. 

“The issue of the non-increase in tariff will be sorted out with the decision there. In the circumstances, there is no need for this court to be involved in another proceeding between Syabas and the Selangor government.” 

Syabas was represented by Harpal Singh Grewal, Lua Ai Siew and Fadzillah Pilus, while Fahda Nur Ahmad Kamaruddin appeared for the Selangor government. 

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