It is reported that Lanco Infratech Ltd Australian subsidiary Griffin Coal Mining Co Pty Ltd has lost the initial round in a USD 3 billion lawsuit filed by Perdaman Chemicals and Fertilizers Pty Ltd in the Supreme Court of Western Australia.

A court of appeal unanimously held that Griffin could not contend that claims against the enforcement of a coal supply agreement were baseless bolstering Perdaman case that is scheduled for a trial in 2012.

The dispute between the companies is over a USD 3.5 billion agreement for coal supply by Griffin to Perdaman urea factory in Western Australia. Lanco bought Griffin earlier this year. The court said Griffin conduct constituted a breach of the 20 year supply agreement with Perdaman.

Predaman said in a statement “In upholding Perdaman appeal, the court also determined that Griffin provide notice to Perdaman before entering into any additional security arrangement, given the effect it would have on Perdaman prospects of recovering damages that might be awarded in the proceedings.”

Perdaman said in a statement that “This ruling ensures Perdaman will have the opportunity to make a further injunction application to the court, restraining Griffin from securing up to $800 million worth of property and assets.”

Lanco said in a statement it might not contest the ruling since this order only entails Perdaman to have 10 days notice on creation of security which is similar to the undertaking we have provided earlier. We will continue to vigorously defend the allegations made by Perdaman in the main case and are confident of a favourable outcome.”

(Sourced www.livemint.com)