Punj Lloyd received a blow when its UK subsidiary lost adjudication proceedings against Sabic Petrochemicals UK.
Engineering & construction firm Punj Lloyd received a blow on Tuesday when its wholly owned UK subsidiary, Simon Carves, lost adjudication proceedings against Sabic Petrochemicals UK.
The proceedings began five months ago in December 2008 when Simon Carves sought restitution of the £28.5 million (Rs 220 crore) of performance bond that Sabic had encashed, and also damages from cancellation of contract.
Simon Carves will now proceed to seek resolution in the UK courts, a process that Atul Punj, founder-chairman of Punj Lloyd said, could take 12 to 14 months. “It’s only an adjudicated judgement, not from the court of law,” Punj told CNBC-TV18, referring to the adjudication process which led to the verdict.
The case relates to a contract awarded by Sabic to Simon Carves in 2006 for designing and building a low density polyethylene plant in the UK. The company had provisioned for the amount under contention in its Q3, 2008-09 results and hence suffered a net loss of Rs 227 crore that quarter, compared with a net profit of Rs 92 crore the previous year.
A spokesperson from Punj Lloyd said it is only a temporary setback. “We will study the adjudication and come back with necessary steps. Simon Carves feels we have a very strong case here.” he said.
Since the matter is sub-judice, the spokesperson refused to comment further.
Earlier, in an interview to DNA in February, Punj had said the project was 99% complete with two months still to go for completion when Sabic encashed the performance bond.
“Honestly speaking, the dispute is because of some interpersonal issues. I don’t see any other reason. I have been told subsequently that they expect contractors to behave in a subservient manner and we were not behaving that way and we laid bare the facts,” Punj had said.
Simon Carves came into the Punj Lloyd fold two years ago when the Delhi-based firm acquired Singapore-based Sembawang Engineers & Contractors.
Sembawang had earlier bought Simon Carves. The contract under question had actually been awarded by Huntsman International, which was later bought by Sabic.
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