Gujarat State Fertilisers and Chemicals Ltd wins 25-year-old legal battle against Thermax

VADODARA: It could have been one of the first desalination plants providing potable water to people. But the project initiated by the Gujarat State Fertilisers and Chemicals Ltd (GSFC) got entangled in a 25-year-long legal suit as the plant couldn’t take off as envisaged.
A Vadodara commercial court recently passed an order in favour of GSFC suing Thermax Ltd over the failed project. Thermax has been ordered by the court to pay over Rs 1.40 crore to GSFC.
According to the complaint, the GSFC had decided to start a desalination plant in Sikka at Jamnagar, where the company already has a project. In the 1980s, the GSFC required potable water at Sikka for their business activity and other needs. But Sikka being a drought-prone region, it decided to procure additional water through desalination of seawater by reverse osmosis method.
For this, it roped in the services of Thermax Ltd to build a desalination plant in 1990. Work on the project began later, said the GSFC in its complaint, adding that it had paid Rs 1.26 crore to Thermax even as the latter couldn’t complete the project within the stipulated time.
In 1994, Thermax Ltd conveyed to the GSFC that the desalination plant was ready and trial commenced in the same year.
The complainant said that the plant couldn’t perform in the agreed manner despite several opportunities being given to the defendant for improvement. The GSFC further said in its complaint that the defendant breached the contract by supplying sub-standard goods, which were not in a position to perform in accordance with agreed specifications.
In 1997, the GSFC sent a notice to Thermax Ltd and demanded return of its invested amount on the plant along with interest.
Thermax told the court that the cause of action for filing the suit rose in 1990 and 1992, when the last of the payments were made. “Any suit for the recovery of money paid has to be filed within a period of three years,” the firm argued.
Thermax further said that the GSFC had produced incomplete documents and the defendant conducted various trials that were beyond its contractual obligation and under coercion.
“The plaintiff continuously threatened the said defendant with either invocation of bank guarantee or forfeiture of the moneys illegally and wrongly withheld by plaintiff,” Thermax told the court.
The company argued that the GSFC doesn’t have any right to reject the goods under the contract and the defendant never repudiated or terminated the contract.
After hearing both sides, the court observed that Thermax failed to fulfil the terms and conditions of the contract within the stipulated time. “The plant didn’t work and hence, the court ordered the defendant to pay Rs 1.27 crore along with Rs 12 lakh interest to the GSFC,” advocate Jaydeep Verma who represented GSFC told TOI.