Metric sales

Supreme Court Orders NALCO to Award 90,000 Metric Tons of Alumina to Vedanta as Full and Final Settlement

On Wednesday, the Supreme Court ordered National Aluminum Company Ltd (NALCO) to award a total of 90,000 metric tonnes of alumina to Vedanta Resource Limited, United Kingdom (“VRL-UK”) as full settlement and final of the entire amount remaining to be executed.

While directing NALCO to award the same from a period commencing May 1, 2022 and ending July 31, 2022, the Bench of Judges DY Chandrachud, AS Bopanna and V Ramasubramanian specified that the price that will be owed by VRL UK to NALCO will be the weighted average of the 6 VRL UK offers of which it was the highest bidder.

To allay NALCO’s apprehensions and to cover the amount of benefits available to NACLO for each shipment in the event that NALCO does not receive the export benefits, the bench ordered VRL to provide a renewable corporate guarantee at least 48 hours before actual delivery. assignment.

“In the event that for any reason NALCO is unable to realize the export benefits, it will be free to invoke the company’s warranty and payment to NALCO will be made within 2 working days.” said the bench again in its prescription.

The High Court has also asked VRL UK to undertake within 48 hours with this court to register the terms of this order and the arrangement.

The bench further stated that the invoices will be made out to VL SEZ, Jharsuguda and that the full sale price payable to NALCO will be in foreign currency by VRL UK as ordered by this court.

The bench issued the directions at the hearing of a motion for contempt brought by Vedanta Ltd against NALCO for failure to comply with the Superior Court order dated January 14, 2020 whereby the 3-judge bench cleared the vendor to bid on NALCO alumina tenders for export. The bench also said the terms of the existing arrangement would continue until NALCO executes new tender terms.

Previously, the Supreme Court considered the solution such that NALCO does not insist on the LET export order, Vedanta provides NALCO with the export invoice and the certification of the goods having been admitted into the SEZ by the agent concerned of the SEZ in accordance with Rule 30 of the SEZ Rules. The bench further asked the attorney general to suggest other requirements he could add in addition to the conditions suggested by the bench.

During the hearing, the Executive Director of NALCO provided the factual position regarding the supply of alumina in which:

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

In view of the data, the training found that a quantity of 1,80,000 tons covering 6 calls for tenders has not been executed to date because a dispute had arisen at the instance of NALCO on the production of LET Export Orders.

Appearing for NALCO, Attorney General of India KK Venugopal argued that unless all of NALCO’s procedural requirements were met, it would not be able to receive benefits from Union governments since the tenders were for the sale of goods to foreign buyers. AG also contended that NALCO reserved the right to amend the terms of the tender to state that tenders issued by NALCO were only for sale to parties outside Indian Territory, especially excluding SEZ.

Appearing for Vedanta Limited, Lead Attorneys C Aryama Sundaram and AS Nadkarni argued that procedural requirements beyond those contemplated by the order dated January 14 and reiterated on August 19, 2020 could not be imposed at this stage since the parties had agreed to a mutually agreeable resolution. Lead Counsel had further argued that although the total amount covered by 6 orders where VRL UK was the H1 bidder was 180,000 MT, a fair amount should be provided to the company for fair resolution.

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

  • The defendant(s) will address the appellant, National Aluminum Company Limited (NALCO), through its overseas subsidiary. The Appellant – NALCO must list the Respondent(s) if the application meets the requirements.
  • Appellant – NALCO further agrees to register Vedanta Resources Limited, a UK incorporated company, or any other overseas subsidiary of Respondent – M/s Vedanta Limited which is eligible to participate in its tenders for calcined alumina. However, delivery of the consignment can be made to Visakhapatnam port on FOB basis, although the same applies for use in M/s Vedanta Limited SEZ in Jharsuguda, Odisha.
  • As requested by NALCO in its affidavit dated 10.01.2020, the Respondent – M/s Vedanta Limited undertakes to provide NALCO with the export invoice and certification of the goods having been admitted into the SEZ by the relevant agent of the SEZ in accordance with Rule 30 of the SEZ Rules.

After the Superior Court order, Vedanta Resource Limited had become the successful bidder for NALCO’s alumina bid, but NALCO had refused to allow the UK company to forward the shipment to its SEZ unit and had insisted on end the transaction at Visakhapatnam port. The producer also requested VRL to obtain the Let Export Order (LET), a mandatory requirement for the purpose of completing the transaction, from the customs authorities at Visakhapatnam Port.

This had led Vedanta to file a motion for contempt alleging “willful disobedience” to the January 14, 2020 order. Vedanta had alleged that NALCO was not making delivery to the port of Visakhapatnam on an FOB basis.

In the first preferred contempt case, on August 19, 2020, the Supreme Court had ordered National Aluminum Company (NALCO) to arrange delivery of Calcined Alumina to Vedanta Company in Visakhapatnam on an FOB basis for use in the SEZ unit of Vedanta in Jharsuguda, Orissa. NALCO’s lawyer had agreed to make delivery of the same if it was to be used in M/S Vedanta Limited SEZ in Jharsuguda, Odisha and even Vedanta Limited had agreed to provide the export invoice and certification required under Rule 30 of the ZES Rules.

Business Title: M/S Vedanta Ltd. Versus RN Mohapatra And Ors.| Conmt.Pet.(C) No. 691/2020 In CA No. 262/2020