Allowing a plea of state-owned steel major SAIL, the Delhi High Court has asked Rs 700 crore ($152.8 million) as security deposit by Australin mining firm AMCI PTY Ltd in pursuance of an award of the International Court of Arbitration (ICA).
"I allow this petition and direct the respondents [AMCI PTY Ltd] to furnish security in the sum of Rs 700 crore to the satisfaction of the Registrar General of this Court within four weeks from today, which shall remain in force, unless the award in question is set aside," Justice Vipin Sanghi said.
Steel Authority of India Ltd and Australin mining firm AMCI PTY Ltd are engaged in a legal battle over the ICA award in the favour of SAIL, which alleged that the foreign firm did not supply coal as agreed between them.
SAIL had approached the High Court seeking a direction to the Australian firm to deposit the amount before its plea against the ICA award is entertained.
The Australian firm has moved the High Court against the arbiration award in favour of SAIL.
SAIL had entered into an agreement on April 23, 2007, for supply of coal with Vale Australia Pty Ltd, which was later taken over by AMCI Pty Limited.
However, the supply of coal to SAIL was stopped allegedly due to some dispute. Later, the matter was referred to the ICA which gave its award in favour of the PSU.
The ICA asked AMCI PTY Ltd to pay the sum "forthwith" to the claimant (SAIL) as damages.
Justice Sanghi asked the Australian firm to deposit the amount, which shall remain with the registry of the court during the pendency of the suit.
"There is no impediment in directing the respondents to secure the awarded amount of Rs 700 crore by furnishing adequate security to the satisfaction of the Registrar General of this Court during pendency of the respondents' objection petition," he said.
The court rejected the plea of the foreign firm that "an award, when challenged within time, becomes unexecutable" and said it was necessary to secure the award amount keeping the financial health of the mining company.
"Looking to the financial position of the respondents [AMCI PTY Ltd] .... There is every likelihood that if the objections of the respondents to the award in question are dismissed, the petitioner [SAIL] may not be in a position to effectively enforce the award," he said.