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SFI: Receiver fails in bid against State Government
Published on: Tuesday, February 13, 2024
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SFI: Receiver fails in bid against State Government
The Court further ruled that the Court has no jurisdiction to hear the application as the Appellants failed to invoke Section 44 of the Courts of Judicature Act 1964.
Kota Kinabalu: Grant Thornton Consulting (M) Sdn Bhd, the receiver and manager for the now defunct and wound-up Sabah Forest Industries Sdn Bhd, failed in its bid to obtain a stay order against the Sabah Government’s acquisition of some 13,000 hectares formerly held by SFI.

Court of Appeal judges Datuk Hanipah Farikullah, Dato’ Sri Mariana Yahya and Mohamed Zaini Mazlan dismissed Grant Thornton’s application and in delivering their unanimous decision said that “the application has no merits”. 

Further, the stay application contains injunctive prayers which ought to be disregarded and cannot be granted against the Government.

The Court further ruled that the Court has no jurisdiction to hear the application as the Appellants failed to invoke Section 44 of the Courts of Judicature Act 1964.

Counsel for the Respondents were Dato’ Firoz Hussein Ahmad Jamaluddin, Tengku Datuk Ahmad Fuad and Syed Anwar Shariff Abdullah.

Counsel for the Appellants were Sukumaran Vanugopal, Jeyan Marimuttu and Vanessa Marimuttu.

“Despite SFI’s receiver and Manger’s repeated efforts to obstruct, the Sabah Government has already commenced the implementation of the public purpose scheme for which the former SFI lands were compulsorily acquired,” said Fuad in a statement, Monday. 

He said SFI’s business collapse and insolvency severely damaged the Sipitang economy. 

“It is because of this that the GRS lead Sabah Government is now implementing the Sustainable Forest Timber Utilisation, Processing, Management, Conservation Research and Development scheme to ensure that the economy of Sipitang is revived and developed and that the former SFI-workers are given employment opportunities,” he said. 

In 2021 it was reported that the pulp and paper mill set up in 1982 was one of Malaysia’s largest timber growers and wood processors, managing a forest estate of some 288,000 hectares, pulp and paper manufacturing facilities and an integrated timber complex consisting of a saw mill and a veneer and plywood factory, supporting the local community in Sipitang.

 It has been inundated with financial troubles in the last decade, having been sold over the years to different private companies who held the major shares and has been under receivership since 2017.

 Businessman Tan Sri Mokhtar Albukhary’s Pelangi Prestasi won a bid to take over SFI in March 2018 and acquire all of SFI’s assets for RM1.2 billion but encountered problems after the previous Parti Warisan-led state Government issued fresh terms and conditions on timber licences to the company in June 2019.

It resulted in salaries to staff being held up for at least four months at the start of 2021. In November 2021, SFI was ordered by the High Court to wind up its business after failing to pay its debts.

Judicial Commissioner Leonard Shim issued the order after SFI failed to pay some RM2.7 million owed to its contractor Lee Khoon Hoo and others.

On 24 November 2023, High Court Judicial Commissioner Amelati Parnell granted Leave for SFI to proceed for full hearing of the Judicial Review action challenging the purported compulsory acquisition of 15 parcels of land registered in SFI’s name. 

SFI contends that the said compulsory acquisition is not for “public purpose” as alleged and the said compulsory acquisition were tainted with mala fide (bad faith).

Justice Amelati held that SFI had established an arguable case to challenge the compulsory acquisition by way of the Judicial Review.

Accordingly, the Judicial Review application must proceed for full hearing.

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