KUALA LUMPUR, Aug 27 — A National Service Training Programme (PLKN) camp operator has failed in its lawsuit against the federal government to recover some RM14 million allegedly owed for the running of the now-defunct programme.
Sri Ledang Ventures Sdn Bhd, filed the suit at the High Court in March last year following a federal government announcement in 2018 that the PLKN was to be discontinued, which led to the termination of its contract as an NS camp operator.
In the now dismissed suit, Sri Ledang claimed to have suffered substantial losses that eventually led to its winding up, and therefore sought to challenge its “wrongful termination” and the constitutionality of one of the contract’s clauses.
Sri Ledang was appointed as an operator in September 2005 and a notice of termination was issued by the government in September 2018.
It wanted the court to declare that the disputed clause was against the Federal Constitution and the Contracts Act; and sought further financial claims for damages and “outstanding payments”.
In the grounds of judgment made available publicly today, judicial commissioner Roz Mawar Rozain said the disputed contract terms — under Clause 36 — clearly stipulated that the government may terminate the contract at any given time if it considers such termination necessary for national interest or public policy.
Roz Mawar said the parties signed the contracts freely and voluntarily; and Sri Ledang must be taken to have understood and accepted the terms of their agreement including Clause 36.
“The plaintiff (Sri Ledang) did not adduce any evidence to suggest that the termination by the defendant (government) was carried out in bad faith or an unreasonable manner.
“The abolishment of the PLKN program falls within this provision (Clause 36) and it is not for this court to question the insight or necessity of this policy decision,” she said in her grounds of judgment.
Roz Mawar said PLKN’s abolishment, being a significant national policy decision, is presumed to be made in consideration of national interest.
As for the operator’s complaint over financial losses suffered due to the contract’s termination, Roz Mawar said Clause 36.3 explicitly provides that they are not entitled to any form of losses.
She however expressed the court’s sympathy over the financial predicament faced by the operator as a result of the termination, but conceded that the court must give effect to the contract term’s the parties had negotiated and agreed upon.
“As a commercial entity, the plaintiff must be taken to have understood and accepted the risk when entering into the contract.
“The business risks on either side were always present as they usually were in the world of commerce,” she said, adding that the court’s role was not to insulate parties from the consequences of their bargains.
In light of the present facts and considerations, Roz Mawar said the court found that the government had fully complied with the procedural and substantive requirements of Clause 36 in terminating the contract.
“The termination of the contract by the defendant pursuant to Clause 36 was lawful and valid and with that conclusion there shall be no damages awarded to the plaintiff.
“This case serves as a salient reminder that government contracts, despite common misconceptions, are not inherently more secure or profitable than other commercial agreements.
“The court’s duty is to uphold these freely entered agreements, not to rewrite them based on subsequent disappointments or unfulfilled expectations,” she said.
