Zuari Cement agrees to make lump-sum payment to settle dispute with L&T

MUMBAI: Zuari Cement, a subsidiary of Italian cement major Italcementi Group, has agreed to make a lump-sum payment to settle an acrimonious dispute with engineering and construction company Larsen and Toubro (L&T) over unpaid bills, people familiar with the development said.

L&T had last month filed for arbitration proceedings against the cement maker to claim Rs 188.5 crore in unpaid bills and payment delays. L&T alleged that Zuari failed to pay Rs 31.53 crore it owed to the engineering company for the construction of a 5,500-tonne per day capacity cement plant at Yeraguntala in Andhra Pradesh.

L&T claimed the rest of the amount as a penalty for payment delay and for encashing a performance guarantee.

"It is the commercial maturity of the two parties that has led to this settlement," said Shashank Garg, partner at Advani and Company, the law firm that represented L&T. "As advocates, our objective was to resolve the dispute as effectively as possible.

I am glad that the parties were able to amicably settle the dispute." Arbitration is a form of alternate dispute resolution, where parties refer the dispute to a third person, or arbitrator , instead of moving the court.

The dispute between L&T and Zuari was being heard by a three-member panel, presided over by former SC judge BP Singh. "In last few years, we have witnessed a rise in arbitration matters because even companies have realised that it is in their business interests to choose alternate dispute resolution ," Singh said.