Emrail loses RM59m LRT3 bond suit, ordered to pay Kuwait Finance House RM39m

KUALA LUMPUR, Sept 24 — The High Court dismissed Emrail Sdn Bhd's RM59.1 million lawsuit against Kuwait Finance House (KFH) and ordered the company, along with three personal guarantors, to pay KFH RM39.09 million. Justice Quay Chew Soon ruled that Emrail and its guarantors are jointly and severally responsible for the outstanding debt.

The case centered on whether Kuwait Finance House was contractually obligated to issue a performance bond adhering to a template prescribed by MRCB George Kent Sdn Bhd, the project delivery partner for the Light Rail Transit 3 (LRT3) project. The court found that the underlying Islamic financing facility stipulated the performance bond had to be in a specific form acceptable to KFH, giving the bank the discretion to determine if the requested bond's wording and structure were suitable.

Emrail could not rely on its independent construction contract with MRCBGK to enforce obligations against KFH, as the latter was not a party to that agreement. The court also rejected Emrail's claim of negligence by KFH for failing to issue a compliant bond, stating that a claimant cannot extract a more favorable commercial agreement than what was negotiated under contract.

Emrail's claim for withheld interim project payments was dismissed due to the lack of evidence proving causation. The court further determined that KFH's financing facility had expired on Oct 31, 2021, resulting in an outstanding debt of RM39,089,705.42 as of May 16, 2025. Emrail and the guarantors, Zaki Azmi, Hari Narayanan Govindasamy, and his son Amrish, were ordered to settle the sum within one month, along with post-judgment interest at 5 percent per annum from the decision date until full settlement, with KFH awarded RM100,000 in legal costs.