Tata Steel May Have To Compensate ICCL For Breaching Supply Contract
Mar 24, 2003
The Financial Express

Mumbai, March 23: Tata Steel may have to pay a hefty consideration to Indian Charge Chrome Ltd (ICCL) for reneging on a contract for supply of raw material to ICCL, as the court appointed umpire has upheld most of the arguments put up by ICCL.

ICCL had filed a case in the Calcutta High Court after Tata Steel reneged on the contract for supplying chrome ore for conversion by ICCL into charge chrome, for a fee.

The court appointed umpire has, however, not quantified the claims of ICCL but will appoint an independent chartered accountant to quantify the amount. Rough estimates of the amount claimed by ICCL vary between Rs 187-211 crore.

ICCL had made claims, which had been vetted by its arbitrator, the late retired Justice G L Oza.

Tata Steel officials, when contacted, did not comment on the issue as the matter was subjudice.

"We don't expect any dramatic surprises to turn up for us, as all major claims have been upheld by the umpire," said a top ICCL official.

ICCL has claimed that Tata Steel's supply of raw material from Jamshedpur was intermittent, as a result of which ICCL was compelled to shut down its charge chrome plant at Cuttack (Odisha) from time to time. Tata Steel, through its letter dated November 26, 1993, informed ICCL about its plan to cancel the agreement with effect from December 31, 1993.

ICCL's largest claim is on account of the plant being shut down due to lack of raw materials, which were to come from Tata Steel. The loss estimated by ICCL on account of this is almost Rs 211 crore. The umpire has pointed out that ICCL is entitled to claim damages. The umpire further pointed out that Tata Steel has committed a breach of the contract in failing to discharge its obligation under the agreement of 1992 and that there is no case for awarding damages to Tata Steel as per its claim.

On issues relating to Tata Steel's claim on interest and the rates to be applied, the court appointed umpire has said that the issue will be treated after the chartered accountant or other experts submit their report.

The issue of appointment of the chartered accountant is yet to be sorted out between Tata Steel and ICCL as the chartered accountant has to be a person agreeable to both parties.

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