KUALA LUMPUR (June 27): Proton Holdings Bhd's unit Perusahaan Otomobil Nasional Sdn Bhd (Proton) is facing a legal dispute with long-time vendor UCM Automotive Systems Sdn Bhd, which is claiming over RM2 million in unpaid dues.

In turn, Proton is trying to stop UCM Automotive from filing a winding-up petition against the company to recover the unpaid money.

The dispute comes amid rising tensions between Proton and its suppliers. In November 2023, the Proton Vendors Association, which comprises 77 companies, wrote to the national carmaker to complain about higher costs and Proton’s refusal to pay more for parts. Vendors later also alleged that Proton ordered less parts than promised.

In July 2024, UCM Automotive, which supplies air-conditioning parts and transmission coolers for Proton, filed a statutory demand to claim RM4.31 million in unpaid invoices, interest and other charges from Proton, according to a grounds of judgement sighted by The Edge.

This is usually the first legal step before a creditor can apply to wind up a company if the debt isn’t settled.

Proton disputed the amount and applied for a Fortuna injunction to stop UCM Automotive from filing a winding-up petition while the court decided on the actual amount owed.

The dispute involved disagreements over alleged defective parts, missing supporting documents, and who should bear foreign exchange and inventory holding costs.

While the case was ongoing, Proton made partial payment and UCM acknowledged certain offsets, which left about RM550,000 in balance from the original claim. UCM Automotive subsequently added another RM1.47 million to its claim.

In February 2025, the Shah Alam High Court rejected Proton’s attempt to block UCM Automotive from going forward with its winding-up action, ruling that Proton didn’t credibly dispute the outstanding amount.

The court confirmed Proton still owed UCM Automotive RM2.02 million, including the RM1.47 million newly-approved by the court, and upheld UCM Automotive’s right to charge 10% annual interest on late payments.

High Court judge Noor Hayati Haji Mat also rejected Proton’s claim that the action would cause "irreparable damage" to it, stating the company’s financial health wasn’t relevant to stopping the winding-up petition.

Proton had not contested the claims 'within the stipulated period', according to the ruling.

Proton has appealed the decision and obtained an Erinford injunction to delay UCM Automotive’s action until the appeal is heard, according to a court notice sighted by The Edge. The next hearing is scheduled for June 15, 2026.

Proton Holdings is 50.1%-owned by DRB-Hicom Bhd (KL:DRBHCOM).

In both the Fortuna injunction application and subsequent appeal, UCM Automotive was represented by lawyers Kriishand G Krishnan and Muhd Thaqif Rusyaidi from Messrs Kriishand G Krishnan. Proton was represented by lawyers SY Liew, Hee Hui Ting and Ching Hao Yan from Messrs Shearn Delamore & Co.

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