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Supreme Court Directs NALCO To Allocate 90,000 Metric Tons Of Alumina To Vedanta As Full & Final Settlement

Shruti Kakkar
28 April 2022 4:05 PM GMT
Supreme Court Directs NALCO To Allocate 90,000 Metric Tons Of Alumina To Vedanta As Full & Final Settlement
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The Supreme Court on Wednesday directed the National Aluminium Company Ltd (NALCO) to allocate a total quantity of 90K metric tons of alumina to Vedanta Resource Limited, UK ("VRL-UK") as full & final settlement of the entire outstanding quantity remaining to be executed. While directing NALCO to allocate the same from a period commencing from May 1, 2022 and ending on July...

The Supreme Court on Wednesday directed the National Aluminium Company Ltd (NALCO) to allocate a total quantity of 90K metric tons of alumina to Vedanta Resource Limited, UK ("VRL-UK") as  full & final settlement of the entire outstanding quantity remaining to be executed.

While directing NALCO to allocate the same from a period commencing from May 1, 2022 and ending on July 31, 2022, the bench of Justices DY Chandrachud, AS Bopanna and V Ramasubramanian said that the price which shall be payable by VRL UK to NALCO will be of weighted average of the 6 bids of VRL UK where it was the highest bidder.

To allay NALCO's apprehension and to cover the quantum of benefits available to NACLO against each consignment in the event of NALCO failing to receive the export benefits, the bench directed VRL to provide a revolving Corporate Guarantee together at least 48 hours in advance of the actual delivery of assignment.

"In the event that for any reason NALCO is unable to realize the export benefits it would be at liberty to invoke the corporate guarantee and payment to NALCO shall be made within a period of 2 working days," the bench further said in its order.

The Top Court also asked VRL UK to give an undertaking within a period of 48 hours to this court recording the terms of the present order & arrangement.

The bench further said that the invoices shall be raised in the name of VL SEZ, Jharsuguda and the entirety of the sale price payable to NALCO shall be in foriegn currency by VRL UK in terms of the order of this court.

The bench issued the directions while hearing a contempt petition preferred by Vedanta Ltd against NALCO over non-complaince of Top Court's order dated January 14, 2020 by which the 3 judge bench had allowed Vendant to bid for NALCO's alumina tenders meant for exports. The bench also said the terms of the existing arrangement shall continue until NALCO executed fresh tender conditions.

Earlier the Top Court had pondered on the solution such as NALCO not insisting on LET Export Order, Vedanta providing to NALCO the bill of export and certification of goods having been admitted into the SEZ by the concerned officer of the SEZ as per Rule 30 of the SEZ Rules. The bench further asked the Attorney General to suggest further requirements which it could add over and above the conditions suggested by the bench.

During the course of hearing, Executive Director of NALCO indicated the factual position pertaining to the supply of alumina wherein:

  • 2 orders each for 30,000 metric tons were executed by VRL on March 5 2021 and April 16, 2021
  • In the case of 4 orders, covering quantity of 30,000 metric tons each VRL was H1 bidder but orders could not be executed
  • Likewise orders for each of 30k MT dated July 3, 2022 and March 16, 2022 have to be executed.

Considering the data, the bench noted that a quantity of 1,80,000 tons covering 6 tenders have not been executed as of date as a dispute had arisen on the instance of NALCO on the production of LET Export Orders.

Appearing for NALCO, Attorney General for India KK Venugopal had submitted that unless all procedural requirements of NALCO are fulfilled, it would not be in position to receive benefits from Union Governments since the tenders were intended for sale of goods to foreign purchasers. It was also AG's contention that NALCO reserved the right to modify the tender conditions to stipulate that the tender enquiries issued by NALCO were only for sale to parties situated outside the territory of India, specially to the exclusion of SEZ.

Appearing for Vedanta Limited, Senior Advocates C Aryama Sundaram and AS Nadkarni submitted that procedural requirements beyond those contemplated by order dated January 14 as reiterated on August 19, 2020 could not be insisted upon at this stage since the parties had agreed to mutually acceptable resolution. Senior counsel had further submitted that though total quantum covered by 6 orders for which VRL UK was H1 bidder stood at 180000 MT but a fair amount should be supplied to the company for fair resolution.

On January 14, 2020 bench the then Chief Justice SA Bobde, Justices BR Gavai and Surya Kant on January 14, 2020 was considering a SLP against Odisha High Court's order preferred by NALCO which had allowed Vedanta to take part in the tenders for the sale of its alumina. While considering the same, the Top Court had passed the following order:

  • The respondent(s) shall apply to the appellant viz National Aluminum Company Limited (NALCO), through its any foreign subsidiary company. The appellant - NALCO shall register the respondent(s) if the application is in accordance with the requirements.
  • The appellant – NALCO further accepts that it shall register Vedanta Resources Limited , a company incorporated in the United Kingdom, or any other foreign subsidiary of the respondent - M/s Vedanta Limited which is eligible to participate in its tenders for calcined alumina. However, the delivery of the consignment may be taken at Visakhapatnam Port on FOB basis, though the same will be for use in M/s Vedanta Limited SEZ at Jharsuguda, Odisha.
  • As desired by NALCO in its affidavit dated 10.01.2020, the respondent – M/s Vedanta Limited undertakes to provide to NALCO the bill of export and certification of goods having been admitted into the SEZ by the concerned officer of the SEZ as per Rule 30 of the SEZ Rules.

After the Top Court's order, Vedanta Resource Limited had emerged as successful bidder for NALCO's alumina tender but NALCO had refused to allow the UK Firm to take the consignment to its SEZ unit and had insisted on terminating the transaction at Visakhapatnam Port. The producer also asked VRL to obtain Let Export Order (LET), a mandatory requirement for the purpose of completion of the transaction, from the Customs authorities at Visakhapatnam Port.

This had resulted in Vedanta preferring a contempt petition alleging "wilful disobedience" of the January 14, 2020 order. Vedanta had alleged that NALCO was not making delivery at Visakhapatnam Port on FOB basis.

In the first contempt preferred, the Top Court on August 19, 2020 had directed National Aluminum Company (NALCO) to ensure delivery calcined alumina to Vedanta firm at Visakhapatnam on FOB basis to be used in in Vedanta's SEZ unit at Jharsuguda, Orissa. Counsel for NALCO had agreed in effecting the delivery of the same if it was meant to be used in M/S Vedanta Limited SEZ at Jharsuguda, Odisha and even Vedanta Limited had agreed to provide the bill of export and necessary certification under Rule 30 of the SEZ Rules.

Case Title: M/S Vedanta Ltd. Versus R. N. Mohapatra And Ors.| Conmt.Pet.(C) No. 691/2020 In C.A. No. 262/2020


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