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14.11.

2014
To,
1.

Paradeep Phosphates Limited,


Pt.Jawaharlal Nehru Marg,
Bhubaneshwar.
Orrisa.

Ref:

Notice dated 29.10.2014

And in Ref:
Sub:

Purchase Sale Contract No. TG-PPL/DAP/01 dated 29.6.2013


Reply to Notice dated 29.10.2014.

We hereby are serving you the reply to your Notice dated 29.10.2014. At
the outset it is denied that we are liable to compensate any loss suffered
by you; nor there has been any violation of statutory and contractual
obligations in respect to Purchase Sale Contract dated 29.10.2013 by us.
Brief Facts is as hereunder:
1.

Transglobe DMCC is reputed Company based in Dubai and has been


in the business of selling fertilizers for many year.

2.

On 29.6.2013 Paradeep Phosphates Ltd, hereinafter referred to PPL


and M/s Transglobe DMCC after round of negotiations entered into
the Purchase Sale Contract No. TG-PPL/DAP/01 dated 29.6.2013 for
sale of 35,000 MT+/- 10% Dap fertilizer to PPL. The specifications of
the cargo (i.e DAP fertilizer) was specified in the contract, which was
adhered to by us. The cargo was supplied to PPL on the vessel MV
ARNAGA BL dated 23.7.2013.

3.

It is stated that at the Load Port i.e Fangcheng Port, China the Cargo
was inspected for the quantity and quality by a reputed independent
agency as specified by Clause 9 of the Contract dated 29.6.2013.
The Inspectorate (Singapore) PTE Ltd, which is an Independent
Agency of world repute, inspected the Cargo and one composite
sample drawn from the Cargo by the Independent Inspecting

Agency was sent to Independent laboratory for testing for quality


specifications as per the Indian FCO Norms. Based on the testing the
cargo was found to be in conformity with the FCO Norms/Rules (as
amended upto till date) for the DAP Regular fertilizer. The Quality
Report by the Inspectorate (Singapore) PTE Ltd dated 23.7.2013 of
the Cargo was sent to PPL and the same was accepted by your good
self. It is pertinent to point here that the quality of the Cargo was
found to be even of better quality than the

guaranteed

specifications under the Contract.


4.

The Cargo set sail and arrived at the Discharge Port Mundra India on
8th August 2013 and completed her discharge on 12 th August 2013.
The entire discharge/ delivery of the Cargo was taken by PPL i.e your
goodself. It is pertinent to point here that as per Clause 9 of the
Contract dated 29.6.2013 the Quality as determined by inspection
agency shall be final and binding on both the Parties for invoicing.

5.

It is stated that on 6.9.2013 PPL sent us an analysis report from


Central Fertilizer Quality Contract and Training Institute Faridabad,
Haryana of the sample of the product and on 9.9.2013 PPL sent an
email to us stating that the sample failed the test and product has
been declared non-standard. On receiving such an information we,
in order to get a second opinion, on 23.9.2013 sent a sample of the
product drawn from the Cargo from vessel MV ARINAGA to ShriRam
Institute for Industrial Research, pioneer in testing and one of the
most reputed Indian testing laboratory for retesting of the sample of
the product. It is stated that ShriRam Institute tested the product
and found it to be in conformity to the FCO Rules 1985, amended
upto till date, which were the specifications mentioned in the
Contract dated 29.6.2013. The ShriRam testing report was sent to
you on 8.10.2013 itself.

6.

Further vide letter dated 25.9.2013 to Appellate Authority &Joint


Secretary (INM), Department of Agriculture written by your goodself,
you have admitted that as per your own independent testing done
at the Load Port by Independent Inspecting Agency hired by your

goodself , the cargo met all the FCO specification. You further
admitted that even in the testing done by your internal laboratory
the sample from cargo met all the required specification under the
FCO Rules, which were also the specification under the Contract
dated 29.3.2013.
7.

It is pertinent to point here that as per the information in the


market, the entire cargo of the DAP Fertilizer received by you under
the Contract dated 29.6.2013, has been further sold in the market
by your good self at a handsome profit.

8.

However after lapse of more than eight months from sale/supply of


the product to your goodself another report of the alleged sample
form State Fertilizer Control laboratory Jodhpur was sent to us on
14.3.2014 by which we were informed that the product failed in
water-soluble test. Further after a lapse of more than a year from
sale of the product to your goodeslf under the Contract dated
29.6.2013, notice dated 29.10.2014 has been sent to us by you to
make good, the loss of subsidy and compensate you by paying INR
53.50 Crores towards alleged non- standard product.

9.

It is stated that the entire claim demanded by your notice dated


29.10.2014 in respect of the product sold to you by us under the
Contract dated 29.6.2013 is denied as being wrong, malafide and an
after thought.

10.

It is stated that your good self after appropriating the entire cargo
and further selling it in the market and having not raised any
objection on receiving the Cargo, now belatedly cannot raise such
frivolous disputes/ claims for alleged non standard quality of the
product.

It is firstly submitted that as per the Contract dated

29.6.2013 Clause 9 of the Contract clearly provides for quality


testing at the Load Port itself by an Independent Inspecting Agency.
The inspecting Agency i.e Inspectorate (Singapore) PTE Ltd one of
the foremost Inspecting Agency of world appointed by your good
self found the sample drawn of the cargo from the Vessel to be in

conformity with the FCO Rules specifications, which were specified


in the Contract dated 29.6.2013. Infact the quality of the cargo was
held by the Agency to be better than the minimum Contract
specifications. It is further stated that M/S Inspectorate (Singapore)
is renowned world over and possesses the best equipment to test
and certify the results and had they found the product to be not in
conformity with the specifications, they would have reported so.
11.

It is further stated that even as per your own independent


laboratory test of the product, the product was found to be in
conformity with specifications under FCO Rules and the same has
been admitted by your good self in your letter dated 25.9.2013 to
the Ministry of Agriculture.

It is stated that the quality of the

product was as per the specifications in the Contract dated


29.6.2013, which has been confirmed by not only the Independent
Inspecting Agency, but also by Shri Ram laboratory, which is an
Indian laboratory of great repute.
12.

It is further stated that we were not informed about the details of


Faridabad Laboratory Inspectors visit at the discharge port, while
discharging the cargo or how the samples were drawn or the
methodology adopted in drawing the sample of the product or how
the tests were conducted on the sample product to check for
conformity to the specifications, raisings several doubts on the
whole procedure adopted. It is further submitted that the Contract
dated 29.6.2013 does not make us liable to compensate PPL for it
not receiving any alleged subsidy by the Government of India, for
any reasons whatsoever.

13.

It is further stated that as per the quality inspection at the load port,
which is binding in nature, the cargo was found to be in conformity
with the specifications of the Contract and the same has been
accepted by PPL. It is stated that other two independent testing has
found the product in conformity to the Contract specifications,
raising several doubts on the testing done by the Faridabad
Laboratory & subsequently at Jodhpur Laboratory. It is evident that

there have been violations in drawing the sample, testing the


sample and the procedure adopted, similarly there is strong
question mark on the type of equipment used at Faridabad and
Jodhpur

laboratories.

It

is

pertinent

to

mention

here

that

Inspectorate (Singapore) Pte Limited in one of the most reputed


international inspection agency having best of testing equipment in
the world, similarly ShriRam Institute for Industrial Research in India
is one of the most reputed laboratory in India. Conducting test to
find water soluble P2O5 is a very complex test and it is highly
questionable if Jodhpur Laboratory or even Faridabad Laboratory are
best equipped to conduct such complex tests and even comparable
with the standards of world Class testing companies such as
Inspectorate Singapore Pte Ltd.
14.

It is further stated that the entire Cargo was accepted by PPL,


without raising any objections as the product was as per standard
and in conformity to the Contract dated 29.6.2013. It is stated that
PPL cannot raise any such compensatory claim now after more than
one year of sale of the cargo and after appropriating the product. It
is stated that if PPL had any issue/ objection it could have been
raised at the time of the discharge of the cargo or acceptance of the
cargo, which it failed to do. It is most strongly denied that we have
violated any statutory or contractual obligations under the Contract
dated 29.6.2013 or any Law. It is stated that we cannot be saddled
with any liability to make good any loss if at all suffered by PPL. It is
further stated that we have fulfilled all our obligations under the
Contract dated 29.6.2013.

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