ENRA Group Berhad Annual Report 2021

FINANCIAL STATEMENTS & OTHERS Annual Report 2021 | ENRA Group Berhad 181 NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2021 41. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (a) Development on claim against Gemula Sdn. Bhd. On 11 June 2018, EEFAB, a wholly-owned indirect subsidiary of the Company served an Adjudication Claim against Gemula Sdn. Bhd. (“Gemula”) in accordance with Section 9 of Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) for a total amount of RM10,574,663 (“CIPAA Payment Claim”). Gemula appointed EEFAB as a subcontractor for the project known as “Pembinaan Garaj Utama Kenderaan 8 x 8 Dan Kenderaan Pasukan Serta Infrastruktur Di Kem Batu Sepuluh (10) Kuantan, Pahang” (“the Project”). Gemula subcontracted the following works for the Project to EEFAB by way of these respective documents: (i) Letter of Award dated 15 January 2016 (“LOA 1”) whereby Gemula appointed EEFAB to undertake the ‘Struktur Besi’ works for the Project; and (ii) Letter of Award dated 9 May 2016 (“LOA 2”) whereby Gemula appointed EEFAB to undertake the scope described as “membekal bahan binaan dan menyiapkan segala kerja berbaki” for the Project. The CIPAA Payment Claim is in relation to outstanding amounts due and payable by Gemula for works completed pursuant to LOA 1 and LOA 2 including additional/variation works ancillary to the said subcontracts. On 6 September 2018, the Adjudicator had determined in EEFAB’s favour that: (i) Gemula shall pay EEFAB the total outstanding sum of RM10.22 million; (ii) Gemula shall pay EEFAB interest at the rate of 5% per annum on each invoice claimed by EEFAB from its respective due date for payment until full and final settlement; and (iii) Gemula shall pay the total costs of adjudication in the amount of RM132,594. (collectively “Adjudication Decision”). On 8 October 2018, EEFAB, applied to the Construction Court (a division of the High Court) in KL to enforce the Adjudication Decision as a judgement or order of the High Court (“Enforcement Application”) as Gemula failed to make payment of the Adjudication Decision within the given time frame. On 1 November 2018, a sealed Originating Summons was served on EEFAB by Gemula to set aside the Adjudication Decision on the grounds that the Adjudicator had acted in excess of his jurisdiction and had not acted impartially. On 8 January 2019, the High Court held: (a) Gemula’s application to set aside the Adjudication Decision for CIPAA Payment Claim was dismissed with costs in the sum of RM15,000; and (b) the Enforcement was allowed with costs in the sum of RM10,000 to be paid by Gemula. On 29 January 2019, EEFAB received a Notice of Appeal from Gemula to appeal against the decision of the High Court dated 8 January 2019 (collectively “CIPAA Appeals”).