In a setback to infrastructure major Lanco Infratech, the Supreme Court of western Australia has asked the company to serve a prior notice to Perdaman Chemicals & Fertilisers before raising any additional funds by pledging the Griffin asset.

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Interestingly, the court has admitted Perdaman’s petition, which was otherwise pooh-poohed by Lanco.

Perdaman had filed a $3 billion lawsuit against Lanco on the issue of possible disruption in coal supplies to its upcoming urea plant in western Australia under an agreement signed in 2008.

Adding strength to Perdaman’s petition, the Supreme Court has also said that contentions in the petition are “clearly arguable”.

With the court’s order following the admission of the petition, Perdaman would seek an injunction on Lanco’s plan to raise about $800 million by securing the Griffin coal asset.

Lanco had acquired Griffin coal mine by paying about $760 million.

The company has been working on a major plan for securing fuel supplies to its thermal power plants using the Australian asset.

However, Perdaman, an Australian company founded by an entrepreneur of Indian origin, filed a case against Lanco for breach of contract and claimed damages to the tune of $3 billion.

Lanco has been challenging the lawsuit and during last month Perdaman’s application for restraining Griffin from entering into a charge or security without putting it on notice was dismissed by a lower court in Australia. Aggrieved by the order, Perdaman approached the Supreme Court there.

As per the agreement between Griffin and Perdaman, Griffin was to supply about 2.8 million tonne of coal per annum to Perdaman’s 2 mt urea plant. However, after taking over the management of Griffin, Lanco had terminated the coal supply agreement in August this year.

While Perdaman’s management hailed the Supreme Court’s order asking Lanco to put it on notice before pledging its assets, Lanco has put up a brave face yet again.

“Although we have an option to take available legal recourse, we may choose not to pursue this matter any further since this order only entails Perdaman to have 10 days notice on creation of security, which is similar to the undertaking we have provided earlier,” Lanco said.