Court order preventing payment for Chinese fertilizer shipment dissolved
Posted on January 3rd, 2022

Courtesy Adaderana

The Colombo Commercial High Court has dissolved the enjoining order preventing the payment on Letter of Credit to the Chinese company that shipped a disputed consignment of organic fertilizer to Sri Lanka, as all parties had agreed for a settlement. 

The court was expected to deliver its decision on extending or revoking the interim order when the petition filed by the Colombo Commercial Fertilizers Ltd. was taken up before Commercial High Court Judge Pradeep Hettiarachchi.

The Ceylon Fertilizer Company (CFC) had previously secured two enjoining orders from the Colombo Commercial High Court against Seawin Biotech, its local agent and the state-run People’s Bank, preventing the payment on Letter of Credit. 

The first court order against the Chinese firm in question was secured on October 23, blocking the People’s Bank from making any payment under a Letter of Credit opened in favour of the Chinese company.

During a previous proceeding, Additional Solicitor General Susantha Balapatabendi, who appeared on behalf of the CFC, told the court that China-based Qingdao Seawin Biotech Group Co., Ltd. had shipped a fertilizer consignment, which is a partial shipment worth more than a billion rupees that was procured through a tender process initiated by the Agriculture Ministry.

Although the said Chinese firm was required to ship sterile organic fertilizer under the tender contract, it had admitted in its shipping advice that the consignment may contain microorganisms, he had further told the court.

The National Plant Quarantine Services (NPQS), which tested the sample sent to them, had confirmed the presence of organisms, including certain types of harmful bacteria, the Additional Solicitor General had said, adding that, in this context, the Chinese firm in question had failed to complete the accepted terms of the tender.

As per the terms of the contracts, the payment for the controversial organic fertilizer shipment was slated to be made through a Letter of Credit established via the People’s Bank.

however, on December 14, the Sri Lankan government said it has decided to pay USD 6.7 million to the Chinese fertilizer company, on the advice of the Attorney General’s Department.

According to Agriculture Minister Mahindananda Aluthgamage, the payment includes the cash deposit of USD 5 million placed by the company.

The minister added that the company, China-based Qingdao Seawin Biotech Group, has been requested to re-manufacture the fertilizer to comply with the required standards. 

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