The judgement is in relation to a 3-bank syndicated financing, led by Bank Muamalat, for the construction of KUIS’ hostel building
by HABHAJAN SINGH / pic by MUHD AMIN NAHARUL
Selangor International Islamic University College (KUIS) may be faced with some major financial considerations as the private university college digests a recent court verdict.
On Nov 12, the Kuala Lumpur High Court awarded a judgement in favour of a consortium of three banks, led by Bank Muamalat Malaysia Bhd, for RM326.7 million.
The judgement was for a legal action against the Selangor Islamic Religious Council (MAIS) and KUIS that stood as guarantors for a syndicated financing of RM125.8 million to construct a hostel building for KUIS. The Bangi-based institution is wholly owned by MAIS.
In 2006, MAIS, KUIS and its contractor, Redha Resources Sdn Bhd, entered into a concession agreement for the construction project.
In the following year, Bank Muamalat, Bank Kerjasama Rakyat Malaysia Bhd and Bank Pembangunan Malaysia Bhd granted a syndicated financing facility for the project.
The repayment for the financing was to come from the hostel fees received by KUIS, according to a statement by Bank Muamalat which initiated the case as the facility and security agent for the financing.
In the statement, Redha completed the hostel building in 2009 and students have been occupying the hostel since then, while KUIS has been receiving the hostel fees since 2009.
“In the beginning, the syndicated financiers received scheduled repayments of the financing facility. The banks, however, did not receive any payment upon the decision of MAIS and KUIS to terminate the concession agreement with Redha.
“Due to the non-payment of the financing facility, the syndicated financiers led by Bank Muamalat initiated a legal action against Redha in 2014 and obtained judgement against Redha,” it said in the statement.
In 2017, the syndicated financiers, again led by Bank Muamalat, commenced a legal action against MAIS and KUIS as guarantors of the financing facility.
The legal action against MAIS and KUIS was pursuant to the payment guarantee agreement (PGA) dated Aug 3, 2007, provided by MAIS and KUIS to the syndicated financiers.
In the judgement delivered on Nov 12, Judge Datuk Khadijah Idris decided that MAIS and KUIS were “estopped from denying their debts and liabilities pursuant to the PGA”, according to a
statement from the bank. Among others, the court decided that MAIS and KUIS were liable under the PGA to pay RM327 million plus late payment compensation.
Bank Muamalat was represented by Datuk Adam Abdullah and Adlina Atikah of Messrs Adam Abdullah & Mani.
KUIS, which moved to its permanent campus in Bangi in 2000, has students from Malaysia, China and the Middle East, according to its website.
The institution offers programmes like Islamic studies, business management, Islamic banking, language studies, communication, multimedia and education.