KUALA LUMPUR (April 29): Twenty-eight National Service Training Programme operators nationwide have filed a multimillion-ringgit suit against the government for purported breach of the main contract resulting in losses of rental for 27 months and total losses of RM108.737 million to them.

The alleged losses came about from the termination of the main contract to use the operators’ facilities between September 2018 and Dec 31, 2020.

The operators, comprising 28 companies nationwide, named the government as the sole defendant in the suit filed by Messrs Thomas Philip in February.

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In their statement of claim sighted by The Edge, the companies alleged that the notice of termination issued on Sept 3, 2018 had come as a complete surprise, as they had been expending funds for the consistent upgrading of the building infrastructure, and that they had not received any complaints about their performance under the main contract.

Prior to this, the camps were operated by the companies since the introduction of the National Service Training Programme in 2003 as a requirement for Malaysian youths aged 18 years and above.

“Yet, the payment due to the national service operators was completely revised downwards from 2014 onwards, with no formal reasons provided,” the statement of claim added.

“At the point of termination by the government, the companies still had 27 months of performance left under the main contract, which they were ready, willing, and able to perform at the material time,” the statement said, adding that the operators contended the termination by the government as being unlawful and a breach of the main contract, since Clause 36 of the contract was deemed void pursuant to Section 29 of the Contracts Act 1950.

Section 29 of the Act stipulates that a contract cannot be terminated arbitrarily.

Clause 36, which the operators claimed had only been inserted in the main contract after the 2013/2014 letter of acceptance (the previous contract), stipulates that the government may terminate the contract at any time by giving a written notice of 30 days in advance to the companies without giving any reasons if it found the termination is for national and security interest or public policy.

The companies claim that the defendant cannot rely on Clause 36 of the main contract, as such a clause could only be construed in the strictest sense, and allowing the government to rely on it would be unjust and unconscionable.

The plaintiffs claim that they would adduce evidence during the trial.

The companies claim that they tried to negotiate with the government, but the government failed or refused to pay compensation to them whatsoever.

As a result of the government’s actions, they said, they had suffered the loss of payment for 27 months from October 2018 to December 2020. The total amount of RM108.737 million claimed comes from the combined losses experienced by the 28 camps.

The companies are further seeking a declaration that Clause 36 of the main contract is declared void, the loss of payment reimbursed, and wasted expenditures and damages to be assessed by the court.

The government has previously been reported as saying that it wanted to revive the programme, to be called National Service 3.0, next year.

https://www.theedgemarkets.com/node/709761