Mercator to Use Arbitration Win to Counter CBI Charge-sheet

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Posted May 8, 2018

Mercator Ltd intends to highlight an arbitration award it won in the Sethusamudram project in March in an effort to quash a CBI charge-sheet against its Executive Chairman HK Mittal for alleged irregularities in a dredging contract at Paradip Port Trust.

In 2007-08, the Dredging Corporation of India Ltd (DCI) chartered three dredgers from Mercator for the Sethusamudram project, which involved dredging in the Ram Sethu/Adam’s Bridge.

The project was later stalled due to various religious and environmental issues.

In May 2009, DCI “illegally terminated” two charter party agreements. While the partial amount claimed by Mercator towards work done was paid, DCI deducted the balance for alleged under-performance. Consequently, Mercator invoked arbitration.

On March 15, an Arbitral Tribunal passed awards in Mercator’s favour for breach of contract.

The Tribunal awarded Mercator a claim amount of ?50.75 crore with an interest rate of 9 per cent per annum till realisation.

“With this award, the company feels strengthened in its position — for the CBI to consider quashing the investigation — as the matter is clearly not of any favours extended by any employee of DCI to Mercator,” a Mercator statement said.

DCI appeals

DCI, however, filed several pleas against the award before the tribunal. One correction accepted on April 26 reduced the claim amount by ?1.87 crore. All other submissions filed by the DCI were dismissed.

As per the final orders, DCI has been directed to pay ?48.42 crore along with interest at 9 per cent per annum till the sum is realised.

A Shipping Ministry official said the DCI had appealed in a London court against the arbitration award. “DCI doesn’t agree with the arbitration award. There are some loopholes in the award. DCI is challenging the award itself. The award does not say anything about the work done certificate issued by the DCI official charge-sheeted in the case. The award only talks about the commercial angle of termination of contract. It has nothing to do with the certificates issued. The termination was done later,” the official said.

The CBI charge-sheet alleges that the four DCI officials and Mittal colluded to get sub-contracting work for Mercator at the Paradip Port Trust.

“Mercator was wrongly qualified for the Paradip work. Before the work at Sethusamudram was completed, Mercator got a certificate from DCI stating that it had performed the work satisfactorily. The same work was later terminated, but Mercator used the completion certificate to qualify for the Paradip contract,” a person briefed on the CBI charge sheet said.

“The CBI charge-sheet is for obtaining wrong certificates and qualifying for the Paradip work. Mercator has won an arbitration award for the Sethusamudram work — these are two completely different things. The arbitration award is not going to materially affect the Paradip case filed by CBI.”

A CBI source confirmed that its “investigation and charge-sheet pertained to the Paradip contract”.

“Work done certificates are issued basis successful completion of a job, with no dues and there are no legal cases or arbitration pending against the party,” the person mentioned earlier said. “One department of DCI was saying Mercator’s performance was bad while another wing issued the certificate. There is no file in DCI on how the certificates were issued; not even the request put up by Mercator for obtaining such certificate,” he added.

Source: The Hindu