Cement major Dalmia Bharat has suffered close to $5 million financial blow in a dispute with global major Glencore for failing to honour a deal for accepting fully a large import consignment. The cement manufacturer has an aggregate cement capacity of 25 million tonnes.
Cement major Dalmia Bharat has suffered close to $5 million financial blow in a dispute with global major Glencore for failing to honour a deal for accepting fully a large import consignment. The cement manufacturer has an aggregate cement capacity of 25 million tonnes.
The award of $4.3 million (approximately Rs 27.85 crore) given in favour of Glencore by an arbitral tribunal has just been upheld by the Delhi High Court on Monday. Dalmia Cement (Bharat) Ltd, part of the Dalmia Bharat Group, had earlier struck a deal to import coal spread over several consignments but refused to pick up the imports midway citing poor quality. Glencore then approached an arbitral tribunal which has awarded Glencore International AG a compensation of $4,305,625 plus legal fees citing breach of contract by Dalmia.
The Indian group appealed before the Delhi High Court, which rejected it on July 3, according to the copy of the ruling available with DNA Money. “...This court is not persuaded to decline enforcement of the award. The objections raised by Dalmia in this regard are, accordingly, rejected,” said Judge Vibhu Bkhru.
The operative part of the award directed Dalmia to pay Glencore $4,573,013, of which $4,305,625 is in damages and $267,388 the interest component; interest would have to be paid at 4.25% a year on the outstanding amount from the date of the award until the date of payment. Moreover, Dalmia would have to also pay £62,879.42 in respect of arbitration costs; £370,000 in respect of legal costs.
Mahendra Singhi, director and group CEO, who is on leave couldn’t be reached for comments. The dispute between the parties was concerning a February 2011 agreement under which Glencore had agreed to supply to Dalmia coal of Indonesian origin, to be shipped in nine consignments.
Dalmia refused to accept deliveries of seventh, eighth and ninth shipments claiming that the quality of coal delivered by Glencore in the previous shipments was not as per specifications agreed under the agreement. The dispute was taken to an arbitral tribunal which found that Dalmia had breached its contractual commitments by non-acceptance of delivery and entered the award in favour of Glencore.
Dalmia then filed objections under Arbitration and Conciliation Act praying that enforcement of the Award be declined. Its objection was based on the claim that it was unable to present its case before the arbitral tribunal which rejected its request for production of documents and that the award was against public policy of India as the tribunal granted liberty to Glencore to file additional documents, on selective basis, just prior to the final hearing.
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