DP World has received a major setback in its legal battle with the Adanis in Indai, as it will have to stop operations at its container terminal at the Mundra port.
A city civil court in Ahmedabad has dismissed a petition by the DP World-owned Mundra Container Terminal Ltd (MICT) seeking an interim stay on the state government's decision to terminate a sub-concession agreement between MICT and Gautam Adani's Mundra Port and Special Economy Zone Ltd (MPSEZ) that took place in January 2003.
Termination of the sub-concession agreement means that DP-World will have to surrender the container terminal and hand over its possession to the MPSEZ.
The state's port regulator Gujarat Maritime Board (GMB) had slapped a notice on DP World, taking strong objection to the fact that the company had not sought its permission before taking over the MICT from UK's P&O. The permission was mandatory as per the concession agreement between MPSEZ and GMB in 2001.
This takeover was a part of DP World's global acquisition of P&O's container terminal business. However, the MPSEZ officials said that they would appoint a valuator to adjudge the depreciation cost of the time period after GMB had issued notice to MPSEZ and MICT in November last.
But by filing a civil suit against MPSEZ's order to stop functioning at Mundra port, MICT contended that DP World was not bound to follow the concession agreement, and change in MICT's holding was not in violation of the norm.
It also claimed that MICT, as bound by the sub-concession agreement, was quite regular in paying 10 percent royalty to Mundra Port. However, the court rejected this argument and held MPSEZ's argument that the sub-concession agreement should be in compliance with the concession agreement and that DP World diluted its equity in MICT by not intimating GMB about the acquisition.
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