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

Mint Asia ST - - News - BMY AUL IK V YAS

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.

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