Court asks SDB to furnish Rs. 100 crore bank guarantee as PSP Projects seeks payment of claims

Gandhinagar: Ahmedabad headquartered PSP Projects Ltd has moved court for its claim of pending payment of Rs. over Rs. 500 crore from Surat Diamond Bourse(SDB). The company has put a note regarding this on its website and informed that the district court has in its order this week has directed SDB to furnish Rs. 100 crores bank guarantee within a week.

The company in its note stated: ‘We wish to bring to the attention of stakeholders of the company that the project was already running delayed due to force majeure of Covid-19 from March 2020 to the second wave of March 2021. After that, in October 2021, a high level meeting with Surat Diamond Bourse Committee and the Project Management Consultancy (“PMC”) was held to finally complete the project as soon as possible. During the said meeting, the Company raised several claims and technical issues, to which PMC’s Managing Director was given full responsibility and authority to solve both technical & financial claims simultaneously and finish the project as early as possible. And the same was followed by PMC’s Managing Director by solving some issues related to finance and the company also completed the major work by March 2022 and accordingly, the virtual completion certificate was also issued to the company on June 30 2022.’

‘However, to our surprise, major issues related to our several claims were not initiated by the PMC as instructed by Surat Diamond Bourse Committee which totals to Rs. 538.59 crores (Rs. 430.30 Crores as additional claim, Rs. 65.72 Crores against approved but not certified work done and Rs. 42.57 crores against retention). After that, we had several round of meetings with the committee members, but they discussed and negotiated to a negligible amount against our additional claim of Rs. 430.30 Crores, which is purely as per the contract terms and related to rate validity & force majeure.’

‘Therefore, in the interest of the company and its stakeholders, the board decided to initiate legal action after almost one year of communications to and fro.With this, we further clarify that out of the said claims, the company has already booked sales of Rs. 99.02 Crores and retention of Rs. 42.57 Crores.’

‘In the above matter, the Hon’ble District Court, vide its order dated December 6, 2023, while issuing the notice, directed the respondent to furnish Bank Guarantee to the tune of Rs. 100 Crores within a period of 7 (seven) working days from passing of its order. The next hearing in the matter is scheduled to be held on 16.12.2023.’

‘We are sharing the extant commentary to the stock exchange(s) as a part of our good Corporate Governance Practice and also to bring transparency to the shareholders and other stakeholders as well as to avoid any kind of misconceptions/rumours in the market.’  DeshGujarat