KUALA LUMPUR (Aug 7): Pestech International Bhd (KL:PESTECH) has encountered another setback in its effort to prevent tampering with its machinery used in the Gemas-Johor Bahru electrified double track project, managed by main contractor Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd (SPYTL).

The Federal Court on Wednesday dismissed Pestech Sdn Bhd's (PSB) application for leave (permission) to appeal against a Court of Appeal decision that had previously denied PSB’s request for interim injunctions against SPYTL. PSB is a unit of Pestech International.

The Federal Court also ordered PSB to pay RM30,000 in costs to SPYTL, subject to allocation, according to a filing by Pestech to the local stock exchange.

Despite the dismissal of the leave application, Pestech stressed that proceedings at the Kuala Lumpur High Court, where PSB is seeking an order to compel SPYTL to return the machinery and claiming damages for wrongful detention or use, are ongoing, with the next case management scheduled for Sept 11.

The dispute between Pestech and SPYTL began in mid-2023 following Pestech's termination as a subcontractor for the project.

This project, awarded to Pestech in September 2018 under the SIPP-YTL JV — a consortium between SIPP Rail Sdn Bhd and SPYTL — had a fixed subcontract price of RM399 million.

Pestech was responsible for the turnkey engineering, procurement, construction, and maintenance of the electrification system for the 197km rail project, initially due by April 2021.

After a two-year extension, SPYTL terminated PTech as the sub-contractor for the project in June 2023, triggering Ptech to dispute the termination and alleging it as unlawful and amounting to SPYTL’s repudiation of the sub-contract.

Separately in May this year, Pestech filed its defence and counterclaim in response to SPYTL's October 2023 arbitration notice at the Asian International Arbitration Centre.

Shares in Pestech closed 1.5 sen or 7.69% higher at 21 sen on Wednesday, giving it a market capitalisation of RM203.16 million.