Posted on September 7, 2021
Excavation contractor Van Oord India Pvt Ltd has filed a petition with the National Company Law Tribunal seeking recovery of unpaid 93.12 million quotas from the Dredging Corporation of India Ltd on a contract it had entered into in Jawaharlal Nehru Port Trust on behalf of DCI.
The petition seeks to initiate the company’s insolvency settlement process against DCI in accordance with sections 8 and 9 of the Insolvency and Bankruptcy Act.
Van Oord India is the wholly owned Indian entity of the Dutch dredging giant Van Oord Dredging and Marine Contracting Co. NV.
The unpaid quotas relate to a subcontract between DCI and Van Oord at JNPT, India’s largest state container port.
Contract on a nomination basis
In 2019, DCI secured a three-year annual maintenance excavation contract from JNPT on a nomination basis (without offer).
In the first year contract, DCI outsourced much of the work to another contractor ISDPL and earned “extra money” in the process from the deal.
The JNPT later requested repayment of the “extra money” from DCI to avoid potential negative comments or inquiries from the State Auditor, Comptroller and General Auditor of India as to why the contract was not offered to the lowest bidder – the preferred way to determine market interest rates – instead of giving it to DCI on a nomination basis, resulting in “unfair gain for DCI” by subcontracting the work to a lower value.
Excavation industry sources said this was the first such case in the sector where the employer (JNPT) is seeking reimbursement from the dredging contractor (DCI).
It is considered further important because DCI is now owned by JNPT.
In a strategic reinvestment agreement, Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust together acquired the central government’s 73.47 percent stake in DCI for $ 1,056 in March 2019.
Wiser from the experience of spending more than the market prices for annual dredging in the first year of the contract, JNPT decided not to pay the full amount that DCI estimates for the second and third years of work. Instead, the JNPT said it would only pay DCI the amount it completed with the subcontractor plus an additional 10 percent as supervision / project management advice.
DCI outsourced the second year of work to Van Oord India, which was completed in March this year. The unpaid quotas for the work performed are the subject of the petition filed with the NCLT.
Van Oord India declined to comment on the NCLT petition filed on 31 August.
GYV Victor, CEO and CEO of DCI, said the company had not yet received any notification from NCLT about the petition. He declined to discuss the matter further.
