Reliance Naval sues ONGC for ending vessels pact
Firm tells Bombay high court that ONGC has refused to take delivery of eighth vessel, invokes a bank guarantee
Reliance Naval and Engineering Ltd has approached the Bombay high court against Oil and Natural Gas Corp. Ltd (ONGC) after the explorer ended a deal for the supply of a dozen vessels to support offshore oil exploration.
In its petition, the firm controlled by Reliance Infrastructure Ltd said ONGC has refused to take delivery of the eighth vessel and also invoked a bank guarantee.
The company, a part of billionaire Anil Ambani’s diversified Reliance Group, is seeking a refund of more than $6.6 million, which ONGC has invoked as performance bank guarantee, along with $15.46 million as payment for the eighth offshore support vessel (OSV) that it built for India’s largest explorer.
Reliance Naval also sought the court’s intervention to direct ONGC to take delivery of the eighth vessel. Reliance Naval said in its plea that ONGC had in 2008 floated a tender to build and supply the dozen vessels. At that point in time, erstwhile private shipbuilder Pipavav Defence and Offshore Engineering Co. Ltd had entered into an agreement with Singapore-based Jurong Shipyard Pte Ltd to meet the eligibility criteria for technical support to build the vessels.
The contract was bagged by Pipavav in 2009. On 4 March 2015, Reliance Defence Sys- tems, a unit of Reliance Infrastructure, acquired Pipavav Defence—then India’s largest shipyard with a licence to build warships— and rechristened it Reliance Naval and Engineering Ltd. However, in June 2016, ONGC informed Reliance Naval it needs to execute a fresh memorandum of understanding with Jurong Shipyard for continuing technical support. However, Reliance responded that all trials concerning the eighth ship have been completed and it also provided the progress report for the remaining four vessels.
Reliance Naval, in its subsequent responses, told ONGC the technical pact with Jurong is still binding and, therefore, a new agreement isn’t needed. In June 2017, Jurong Shipyard and Reliance Naval entered into an amendment agreement regarding technical support. The firm had also sought an extension of a year to June 2019 to deliver remain- ing vessels. However, ONGC said the only reason the eighth ship was not accepted is because of change of name issue and the company’s “alleged inability to substantiate Jurong Shipyard’s contribution to the project”. Also, in June 2018, ONGC informed Reliance Naval that the name change has not been accepted by them.
An emailed query to ONGC did not elicit a response. Nishit Dhruva, managing partner of law firm MDP and Partners who is advising ONGC, confirmed the filing of the case by Reliance Naval. A spokesperson for Reliance Naval declined to comment on the issue as the matter is in the court.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.