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State Trading Corporation of India Ltd. v. M/s Global Steel Holding Limited & Ors.

Civil Appeal · 2018 INSC 1162Decided 6 Dec 2018
Civil Appeal No. 11907 of 2018
Justice Abhay Manohar Sapre · Justice Indu Malhotra

Background

State Trading Corporation (STC), a government-owned company, had sold HR/CR steel coils to Global Steel Holding Ltd. (GSHL) and Global Steel Philippines Inc. (GSPI), companies chaired by Mr. Pramod Mittal, who also personally guaranteed payment. When the buyers defaulted, the parties settled the dispute twice through conciliation (in 2011 and 2012), agreeing the buyers would pay over $347 million with interest. The buyers still did not pay in full, so STC filed an execution petition in the Delhi High Court, which was dismissed for lack of territorial jurisdiction since the buyer companies were based abroad. STC then appealed to the Supreme Court, and over several years of hearings the respondents gradually paid most of the principal amount, leaving only the question of interest unresolved.

Decision Breakdown

The Supreme Court noted that by the time of the final hearing the respondents had already deposited around Rs. 1,610 crores (including a final Rs. 800 crores during the appeal), discharging the principal dues. Rather than deciding the technical jurisdiction question that had occupied years of litigation, the Court, with both sides' consent, decided only the live issue of interest, to finally close the long-running dispute. It directed the respondents to pay interest at 8% per annum from 10.11.2012, computed as a lump sum of Rs. 600 crores, within 12 weeks, failing which it would be treated as contempt of the Court's order. On payment, all claims under the settlement agreements would stand fully and finally closed, and the appeal and the connected contempt petitions were disposed of accordingly.

Lesson Learnt

When parties have substantially complied with a settlement during the pendency of litigation, courts can step back from deciding abstract legal questions (like jurisdiction) and instead resolve only the practical issue still in dispute (here, interest) to bring finality, and non-compliance with such a court-fixed payment deadline can itself amount to contempt.

Official source (sci.gov.in)View Judgment (PDF)

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