1. ) SEMASA SENTRAL SDN BHD (P dalam Tindakan Asal & D1 dalam Tuntutan Balas) v 1. ) GLOBAL FUSION SDN BHD (WA-22NCvC-320-05/2024)

GLOBAL FUSION SDN BHD [COMPANY NO.: 1244315-U]

JEWEL BUILDERS & RESOURCES (M) SDN BHD [COMPANY NO.: 848298-T] … PLAINTIFFS

SEMASA SENTRAL SDN BHD [COMPANY NO.: 84430-V] 14/08/2025 17:18:44

MALAYSIAN RESOURCES CORPORATION BERHAD [COMPANY NO.: 196801000388(7994-D)]

MRCB BUILDERS SDN BHD [COMPANY NO.: 199401015267 (300947-T)]

ONE SENTRAL PARK SDN BHD [COMPANY NO.: 199601004975 (377321-X)]

S&S QUEST RESOURCES SDN BHD [COMPANY NO.: 201001004593 (889208-X)]

6.

7.

MOHD IMRAN BIN MOHAMAD SALIM … DEFENDANTS (IN THE COUNTERCLAIM) GROUNDS OF JUDGMENT (encls. 76 & 77)

On 25.7.2025, I heard the applications by the 3rd Defendant (‘D3’) and 4th Defendant (‘D4’) in the counterclaim for a stay of the proceedings in the action between the 2nd Plaintiff in the counterclaim, namely Jewel Builders & Resources (M) Sdn Bhd (‘P2’) pending reference of the dispute between P2 and D3 and D4 to arbitration pursuant to s 10 of the Arbitration Act 2005 [Act 646] (‘AA 2005’) and/ or O. 69, r. 10 of the Court Rules 2012 (‘RC 2012’).

Upon due deliberation of the affidavit evidence and the oral and written submissions by the parties, I had dismissed D3’s and D4’s applications.

Dissatisfied, D3 and D4 have appealed against my decision. These are my full grounds for the decision.

The background facts as gleaned from the Plaintiffs’ Written Submission are set out below.

Sometime in 2017, the 6th, 7th and 8th Defendants in the counterclaim (‘D6’, ‘D7’ and ‘D8’, respectively) entered into an oral agreement with P2. One of the terms of the oral agreement was that P2 was to be paid 5% of the total value of all projects awarded to either P2 or to the 1st Defendant in the counterclaim (‘D1’) by D3 and D4.

Nine contracts were entered into, only three of which were with P2, between March 2016 to August 2017.

Arising from the failure on the part of the 2nd Defendant (‘D2’) to D8 to honour their obligations to make payment as agreed pursuant to the oral agreement, further representations were made and which induced the 1st Plaintiff (‘P1’), an associated company of P2, to enter into a tenancy agreement dated 10.1.2020 with D1 for the operations of a Food Court (‘1st Tenancy Agreement’). The representations were basically as follows:

as a result of non-payment of the balance 4.5% of the total value of all contracts, the tenancy for the Food Court will be awarded by D1 to P1 and the tenancy would be no less than 10 years;

the rental rate offered to P1 was significantly lower than the previous rate and that the Food Court business was and would be profitable;

the Food Court premise was located at a strategic location and P1 would be able to attract tenants to lease stalls at the Food Court;

P1 and P2 would receive full cooperation and support from D1 and D2; and

a separate payment of RM35,000.00 as consultancy fee was to be paid to SSS Management & Consulting Service Sdn Bhd, a company linked to D6, since he had caused D1 to award P1 the 1st Tenancy Agreement. To this end, a total sum of RM860,000.00 was paid to D6 and/ or SSS Management & Consulting Service Sdn Bhd.

P1 alleged that, based on the above representations, it incurred substantial expenditure on repairs, renovations and upgrading the Food Court premise. Following the completion of these works, the Food Court began operating with the tenancy running without any issue.

Upon expiry of the 1st Tenancy Agreement, a second tenancy agreement dated 23.5.2022 was executed on similar, if not identical, terms (‘2nd Tenancy Agreement’).

Around October 2023, P1 is said to have unilaterally increased the monthly rental of the Food Court and demanded 10% of P1’s total gross sales, a term that was never agreed to, and is not enforceable under the terms of the 2nd Tenancy Agreement.

The Plaintiffs claimed that, as a result of breach of the oral agreement by D6, D7 and D8, P1 ceased making the consultancy fee payments and this led to D1 terminating the 2nd Tenancy Agreement.

The Plaintiffs’ Amended Counterclaim is premised on the Defendants’ breach of the oral agreement and fraudulent misrepresentations, which directly caused P1 to suffer substantial loss, and gives it the right to recover the unpaid balance of the 4.5% that was promised under the oral agreement due to the termination of the 2nd Tenancy Agreement.

Section 10 of the AA 2005 provides as follows: “Arbitration agreement and substantive claim before court

10.

A court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds –

that the agreement is null and void, inoperative or incapable of being performed; or

that there is in fact no dispute between the parties with regard to the matters to be referred.

The court, in granting a stay of proceedings pursuant to subsection (1), may impose any conditions as it deems fit. …”.

In Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 9 CLJ 1, the Federal Court held that: “[32] The clear effect of the present s. 10(1) of the 2005 Act is to render a stay mandatory if the court finds that all the relevant requirements have been fulfilled ... [33] What the court needs to consider in determining whether to grant a stay order under the present s. 10(1) (after the 2011 Amendment) is whether there is in existence a binding arbitration agreement or clause between the parties, which agreement is not null and void, inoperative or incapable of being performed. The court is no longer required to delve into the details of the dispute or difference ... In fact the question as to whether there is a dispute in existence or not is no longer a requirement to be considered in granting a stay under s. 10(1). It is an issue to be decided by the arbitral tribunal.”.

D3 and D4 contended that –

P2’s appointment by D3 for the projects involving D3 and P2 are based on the Letter of Award (‘LoA’) dated 15.3.2017 and LoA dated 28.8.2017 wherein Clause 18 provides that: “18. Arbitration

18.1 If any dispute or difference shall arise between the Main Contractor and the Sub-Contractor either during the period of the Contract or after the expiry thereof or after the termination of the Sub-Contractor’s services under the Letter of Award, or breach of the Letter of Award, as to: -

the interpretation of this Letter of

any matter or thing of whatsoever nature arising under this Letter of Award; then such dispute may be referred by either party, by notice in writing to the other, with a copy to the Main Contractor, to Arbitration and final decision of a person to be agreed between the parties to act as Arbitrator, or, failing agreement to be nominated on the application of either party by the Director for the time being of the Regional Centre for Arbitration in Kuala Lumpur and any such reference shall be deemed to be a submission to arbitration within the meaning of the Arbitration Act 2005 of Malaysia or any other law amending or replacing this Act.”; and

P2’s appointment by D4 for the projects involving D4 and P2 are based on the LoA dated 1.3.2016 wherein Clause 24 reads as follows: “24.0 Dispute Resolution

24.1 This Letter of Award is governed by and shall be construed in accordance with the laws of Malaysia. In the event of any dispute or difference between the Employer and the Contractor, either during the progress or after the completion or abandonment of the Works, as to any matter or thing of whatsoever nature arising thereunder or in connection therewith, then such dispute or difference shall be referred in the first instance to a panel (“Panel”) comprised of the Director (or his nominees) of the Employer, the Managing Director (or his nominee) of the Contractor and one expert (“Expert”) selected by mutual agreement and all cost incurred thereby shall be equally apportioned between the Employer and the Contractor. The Expert shall chair the Panel. The event of a dispute or difference shall not affect the obligation of the Contractor to carry out the execution of the Works in accordance with this Letter of Award, which shall continue to be in full force and effect.

24.2 Failure to resolve any dispute, contradictions and/or controversies arising out of or in connection with this Letter of Award shall be referred to arbitration proceedings in accordance with the rules and procedures of the Regional Centre for Arbitration Kuala Lumpur. The arbitration shall be held in Kuala Lumpur at the Regional Centre for Arbitration.

24.3 The Parties bind themselves and acknowledge and accept as final in all respect any decision award of the courts in relation to a dispute between the Parties under this Letter of Award.”.

D3 and D4 asserted that the above quoted Clauses provide that any dispute arising between the parties in connection with any matter related to, and arising from, the LoA shall be referred to arbitration.

D3 and D4 submitted that they have fulfilled the requirements under s 10 of the AA 2005 as –

other than entering appearance and the filing of the applications in encls. 76 and 77, D3 and D4 have not taken any other step in the proceedings;

P2’s claim for sums due and owing is relation to the LoA to which an arbitration clause exists; and

the arbitration clause remains valid and binding on all parties and that there is no challenge to the same by P2. - Whether D3 and D4 have taken any steps in the proceedings

The Plaintiffs claimed that they were taken by surprise when encls. 76 and 77 were filed because D3 and D4 had entered appearance on 8.5.2025 without reserving their rights to refer the dispute to arbitration. Furthermore, they participated in the case management on 15.5.2025 (‘CM’) without any express reservation as to the filing of an application for a stay of proceedings under s 10 of the AA 2005.

The Plaintiffs submitted that these actions indicate that D3 and D4 wish to defend the action in these proceedings and the failure to reserve their rights and immediately file a stay application must be considered to be an active step in the current proceedings and therefore waiving their right to pursue arbitration (see Yeo Eng Lam v Infinity Vantage Sdn Bhd [2020] 4 MLJ 835 and Mun Seng Fook v AIG Malaysia Insurance Bhd [2018] 8 CLJ 394).

As indicated during the hearing, I was inclined to the view that –

the entering of an appearance, and an unconditional one, is a permitted, excluded or an exempted step [see Sanwell Corporation v Trans Resources Corp Sdn Bhd & Anor [2002] 3 CLJ 213 (FC) and Airbus Helicopters Malaysia Sdn Bhd v Aerial Power Lines Sdn Bhd [2024] 4 CLJ 243 (CA)];

the participation of D3’s and D4’s solicitors in the CM without any express reservation does not amount to taking a step in the proceedings as the word “steps” in s 10 of the AA 2005 must be definitive, conscious and deliberate steps taken in respect of participating in the court proceedings (see ZAQ Construction Sdn Bhd & Anor v. Putrajaya Holdings Sdn Bhd [2014] 4 CLJ 895); and

the Plaintiffs allegation of being taken by surprise when encls. 76 and 77 were filed is disingenuous because, as early as their amendment and joinder application dated 17.9.2024 (encl. 41), and vide D2’s Affidavit in Reply affirmed on 23.9.2024, Written Submissions dated 10.10.2024 and Written Submissions in Reply dated 17.10.2024 (encls. 44, 52 and 55, respectively), the Plaintiffs were put on notice of D3’s and D4’s position that the proper forum to hear the disputes is arbitration.

In sum, I find that D3 and D4 have not taken any steps in the proceedings. - Whether the arbitration agreement covers the present dispute

According to the Plaintiffs –

the subject matter or the cause of action in the Amended Counterclaim relates to a breach of oral agreement and the tort of fraudulent misrepresentation and arose independently of, and subsequent to, the LoA and are not in relation to the scope, performance or execution of the works under the LoA. The Plaintiffs’ position is that no such works were carried out;

they have provided a lengthy explanation on how the alleged breach of oral agreement and fraudulent misrepresentation arose, and made references to the pleadings. The purported breach of the oral agreement by D6 to D8 occurred when the Defendants unilaterally increased the rental of the Food Court and eventually terminated the 2nd Tenancy Agreement. The alleged representations made were not related to the scope of performance, contractual and payment obligations or enforcement of the LoA, but were distinct assurances intended to induce the Plaintiffs into entering the Tenancy Agreements and making substantial financial commitments; and

the reliefs sought by the Plaintiff in the Amended Counterclaim are not pursuant to, or arise out of, the LoA. They arise from distinct events such as the oral representations, unilateral increase in rent and termination of the tenancy, and fraudulent assurances made independent of the contractual framework set out in the LoA. The reliefs sought do not pertain to monies owing pursuant to the LoA but constitutes a percentage i.e. 5% of the total value of all the LoA awarded to P2.

After having considered the submissions by the Plaintiffs, D3 and D4, I was persuaded that the arbitration agreement covers the present dispute for the reasons as put forth by D3 and D4, namely the alleged oral agreement –

is connected to the LoA as P2 pleaded that the sums due and owing by D3 and D4 to P2 is RM4,208,290.37 being monies that should be paid to P2 for the projects awarded to it by D3 and D4;

emanated or arose from the LoA, and not something which existed in isolation from the LoA, as the terms of the alleged oral agreement, as pleaded by the Plaintiffs relate to the projects and payments pursuant to the LoA; and

is a “matter or thing of whatsoever nature arising under” the LoA. - Whether an order for stay pending reference to arbitration may be made in view of there being non-parties to the arbitration agreement in the instant suit

Although in paragraph 6 of D3’s and D4’s Skeletal Submissions and paragraph 26 of the Reply Submissions, it was contended that the order for stay pending reference to arbitration may be made on conditions, no elaboration was made on this point in the written submissions. No reference was made to leading cases such as the decision by the Singapore Court of Appeal in Tomolugen Holdings Ltd And Another v. Silica Investors Ltd and Other Appeals [2015] SGCA 57 and the Court of Appeal in Malaysia in Protasco Bhd v. Tey Por Yee & Another Appeal [2018] 5 CLJ 299, which had discussed the law governing a stay of proceedings in relation to non-parties to an arbitration agreement and whether any condition is to be attached to an order for stay.

And nor did D3 and D4 allude to cases where the courts have, in the exercise of the broad discretion under sub-s 10(2) of the AA 2005, imposed conditions where the factual circumstances warrant such imposition, for example, Gadang Engineering (M) Sdn Bhd v Bluwater Developments Bhd [2010] MLJU 2213, Apex Marble Sdn Bhd & Anor v Leong Tat Yan [2018] MLJU 39 and FAMG Idaman Resources v Jasmadu Sdn Bhd [2020] 7

When questioned during the hearing, the learned counsel for D3 and D4 merely responded that non-parties can consent to arbitration. In the Reply Submissions, D3 and D4 submitted that “… the possibility of other parties in the suit consenting to refer the matter to arbitration cannot be discounted.”.

With due respect, based on my experience in case managing this suit since September 2024, and having heard and decided on several interlocutory applications by the parties, the dispute in this case is fiercely contested by all the parties. In my opinion, it is highly unlikely that, not just one, but six other Defendants in the counterclaim would consent to an arbitration. The learned counsel for the Plaintiffs was also pessimistic that the consent of all non-parties to the arbitration agreement can be secured.

Pertinently, in their written submissions, the Plaintiffs’ counsel had cited Protasco’s case (supra) to illustrate the injustice and procedural chaos that arises when the same causes of action are split between the court and arbitration proceedings, particularly when not all parties are subject to the arbitration agreement. Proceeding in this manner would inevitably result in duplicity of evidence and findings by two separate fora with the real risk of inconsistent determinations on the causes of action of breach of an oral agreement and fraudulent misrepresentations.

The learned counsel also highlighted the fact that the solicitors representing D3 and D4 also act for D1, D2, D7 and D8, all of whom are central to the Amended Counterclaim. These other Defendants have filed their Defences and thereby have submitted to the jurisdiction of this Court. Furthermore, D2, the 5th Defendant and D6 have each filed an application to strike out the Amended Counterclaim (encls. 19, 86 and 91, respectively).

The above lends credence to the Plaintiffs’ submission that the instant applications amount to a tactical manoeuvre as clearly, there was selective invocation of the arbitration clause by D3 and D4 while their co-Defendants have submitted to the jurisdiction of this Court on the same factual matrix. There appears to be an attempt to carve out only those claims involving D3 and D4.

For the sake of completeness, the Plaintiffs additionally submitted that, in the event this Court was minded to grant the applications in encls. 76 and 77, the arbitration should be stayed vis-a-vis P2, D3 and D4 pending the court proceedings between P2 and the other Defendants in the Amended Counterclaim. The justification proffered was that it would be unjust to permit the arbitration proceedings to proceed as the issues are inextricably intertwined with the factual allegations involving the non-parties and would give rise to duplicity of evidence and conflicting findings.

As D3 and D4 did not propose and submit on the conditions that may be imposed by the Court, I was not persuaded that an order as desired by D3 and D4 vide encls. 76 and 77 is appropriate in the circumstances of this case.

Based on the aforementioned reasons, D3’s and D4’s applications were dismissed with costs of RM3,500.00, respectively, subject to allocatur. Dated: 8 August 2025 (ALIZA SULAIMAN) JUDGE HIGH COURT IN MALAYA (NCvC2) KUALA LUMPUR Counsels for the 3rd and 4th Defendants in the Counterclaim: Suria Juan Pillai (Sajitha a/p Suresh with her) Messrs. Selva Mookiah & Associates Counsels for the Plaintiffs in the Counterclaim: Manmohan Singh Kang (Kavimani a/p Muthayam and Emanuell Premdas a/l Anthony Dass with him)