Supreme Court of India issues contempt notice to Nalco for prohibiting Vedanta from bidding alumina exports

The Supreme Court of India on 7^th August’20 issued contempt notice to the top executives of National Aluminium Company (Nalco), including its executive director (Marketing) R N Mohapatra and CMD Tapan Kumar Chand, on a petition by Vedanta alleging “willful disobedience” of its January judgment that allowed its UK-based arm to participate in the state-run aluminium producer’s tender for the sale of surplus 30,000 MT of metallurgical-grade calcined alumina.

A bench led by Chief Justice SA Bobde solicited a response from the top Nalco brass as to why contempt should not be initiated against them for “clear deviation from the requirement recorded in it January 14 judgment,” as alleged by Vedanta.

The Supreme Court had permitted Vedanta Resources to bid for Nalco’s alumina tenders meant for exports but said the supply of consignment would take place at Vishakhapatnam on FOB basis, though the same would be for use in Vedanta’s SEZ unit at Jharsuguda.

Nalco had initially withstood the participation of Vedanta’s Jharsuguda unit, saying: “The tender for alumina exports can be issued only to overseas customers and, therefore, Vedanta cannot participate in its tender.”

However, Vedanta Resources on 24^th June’20 secured the spot tender for sale of 30,000 MT of metallurgical Grade calcined alumina. Nalco, the leading producer of low-cost metallurgical-grade alumina in the world, rejected the UK firm to take the consignment to its SEZ unit and asserted on terminating the transaction at the Vishakhapatnam Port. Besides, the producer asked Vedanta Resources to obtain Let Export Order (LET), a mandatory requirement for completion of the transaction, from the Customs authorities at the port – a stand contrary to the SC’s January directions that asked the mining giant to get documentation from SEZ authorities.

Mukul Rohtagi, Senior counsel, appearing for Vedanta, argued that Nalco was insisting that the goods should be taken out of India and could not be utilised by Vedanta at its SEZ unit. “Unfortunately, Nalco is making repeated attempts to wriggle out of the SC order,” he argued.

The contempt petition filed through counsel PS Sudheer and he stated. “This was all the more baffling since LEO under the Customs Act is issued for consignment to be shipped outside India. The insistence on the issuance of an LEO is a smokescreen to deny VRL usage of the consignment at their SEZ plant. Thus, the CMD effectively sought to undo the SC direction with respect to the certificate. This would have relegated Vedanta to its position at the start of this petition.”

According to Vedanta: “By refusing to raise the invoice in the VRL’s SEZ office, Nalco officials are purposely and wilfully trying to circumvent the SC’s directions. The judgment is pending compliance for seven months and this is indicative of the lackadaisical and tardy manner in which the transaction has been carried on especially with the intent to frustrate the mandate of the SC.”