KUALA LUMPUR (July 22): Pestec International Bhd (KL:PESTEC) has been sued by its former group CEO Paul Lim Pay Chuan and his uncle, former deputy chairman Lim Ah Hock, for a total of RM17.52 million in alleged unpaid advances.

The suit comes on the heels of the duo's demotion from their previous positions just last Friday by the company, which at the end of last year saw the emergence of Dhaya Maju Infrastructure (Asia) Sdn Bhd (DMIA) as the new controlling shareholder in the engineering outfit.

In a filing with Bursa Malaysia on Tuesday, Pestec said it had received a writ of summons and statement of claim dated July 3 from both men.

According to the company, Ah Hock is seeking RM11.29 million, consisting of RM10.25 million in outstanding principal plus accrued interest on the sum from April 1, 2025.

Meanwhile, Pay Chuan is claiming RM6.23 million, comprising RM6 million in principal and further interest at the rate of 8.4% per annum on the outstanding principal sum from April 1 until full settlement.

Pestec said it has appointed a solicitor to defend the claims. The Shah Alam High Court has scheduled an e-review case management on Aug 4.

The lawsuit comes amid an ongoing leadership tussle at Pestec. Just last Friday, the company removed Pay Chuan as group CEO and redesignated him as a non-executive director, citing his refusal to return to work despite reconciliation efforts by the Selangor Industrial Relations Department.

Separately, Ah Hock was also redesignated as a non-executive director, with no explanation provided by the company.

Pay Chuan, who served the CEO position since October 2020, had alleged constructive dismissal and earlier filed a representation under Section 20 of the Industrial Relations Act 1967, which largely deals with unfair dismissals.

Constructive dismissal occurs when an employer creates an untenable working environment for the employee. Pestec denied the allegation and requested that Lim return to work.

Prior to that, Pay Chuan in June ceased to be a substantial shareholder in Pestec after his stake was diluted following a restricted placement to DMIA, who now owns 61.39% of the company.

After the placement, Pay Chuan's direct stake in the company now stands at 4.52%, down from 4.97%, with a 0.05% indirect stake.

Shares of Pestec were down half a sen or 3.3% to 14.5 sen at the midday break on Tuesday, giving the company a market capitalisation of RM370.8 million. The counter has fallen over 34% year-to-date.