12 DEC, 2012, 07.54PM IST, MAULIK VYAS,ET BUREAU
MUMBAI: The Bombay High Court has asked billionaireAnil Agarwal controlled Vedanta Aluminum to deposit a security amount of Rs 187 crore with the court, till the arbitration proceedings reach a definitive conclusion, based on a plea filed by Chinese power equipment manufacturer Shenzen Shandong Nuclear Power Construction Company (SSNPCC).
On Wednesday, the division bench comprising Chief Justice Mohit Shah and Justice Anoop Mohta directed Vedanta Aluminum to deposit the security of Rs 187 crore within 6 weeks. The court also directed the company not to sell, lease or create third party rights on the asset for the same amount.
The genesis of the case of the case lies in the Vedanta’s plan to expand its alumina capacities in Langigarh, Odisha, with bauxite mined from the near by Niyamgiri hills. The environment ministry put a stop to the plans by denying clearance, thus depriving the alumina plant of a crucial raw material and forcing it to shut down.
In the beginning of the year, Chinese firm, SSNPCC filed an arbitration plea to recover its dues against Vedanta saying the firm has incurred ‘tremendous losses’. As per the plea, Vedanta Aluminum gave order to SSNPCC in 2008 for setting up co-generation units on a turn-key basis for the Lanjigarh project.
“SSNP has raised an issue on alleged breach of contractual obligations and has staked a claim which has been denied by us. This matter is pending before arbitration,” said Vedanta spokesperson. “The appeal court has completed the hearing today and passed an order. We await the receipt of the copy of the order and on it’s perusal will be able to decide further course of action in the matter,” the spokesperson in an email response said.
Shandong was contracted for five jobs to build a 210 MW co-generation power plant project that included offshore engineering and technical services, an offshore supply contract and onshore supply contract and onshore services & construction contract. Vedanta directed Shandong to suspend all “”construction activities”" at the site after the ministry order. The long duration of suspension, the petition said, has caused “”tremendous loss”" to Shandong. The Chinese company has cited a clause in the contract which empowers it to terminate the contract if the suspension of the agreement continues for over 180 days and at the end of it, after a thirty-day prior notice, Vedanta will pay 105% of the cost incurred by the contractor till the date of termination as compensation.
The Chinese company is represented by Kapil Arora of Kochar & Co along with Mahesh Londhe of Sanjay Udeshi & Co. While, Vedanta Group’s subsidiary is being represented by Mumbai-based corporate law firm Desai & Diwanji.
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