Bombay HC Orders Moorgate Industries To Refund ₹19.55 Crore With 24% Interest To ArcelorMittal Over Unreturned Security Deposit

Mumbai: The Bombay High Court has directed Moorgate Industries (formerly known as Stemcor India Pvt Ltd) to refund Rs 19.55 crore along with 24% annual interest to ArcelorMittal Nippon Steel India Ltd (formerly Essar Steel), calling it an “admitted liability” in the form of a security deposit.

In 2012, Essar Steel (now ArcelorMittal) and Stemcor India (now Moorgate) entered into an agreement where Moorgate would help Essar procure raw materials worth Rs 150 crore from international sources. As part of this agreement, Essar paid Rs 25 crore as a security deposit to Moorgate. However, only Rs 5.45 crore was returned. The remaining Rs 19.55 crore remained unpaid.

Moorgate claimed it had adjusted this balance against dues that Essar owed to two of its group entities—Stemcor UK and Stemcor Middle East (Dubai). It said these amounts were part of a larger settlement agreement signed in 2017.

However, ArcelorMittal argued that the dues to the UK and Dubai firms had already been settled during Essar Steel’s corporate insolvency proceedings. It contended that Moorgate had no right to unilaterally adjust the security deposit against those claims, especially when those group companies had already received payments approved by the National Company Law Tribunal (NCLT).

Justice Abhay Ahuja, on June 9, observed that Moorgate had admitted the Rs 19.55 crore was a security deposit and was not entitled to adjust it arbitrarily. The judge rejected Moorgate’s argument that further evidence and trial were needed. He said that since the facts were largely undisputed and the liability was admitted in the correspondence, there was no reason to prolong the matter.

Calling it a case fit for summary judgment, the court directed Moorgate to refund the amount with 24% annual interest from July 2018—the date from which ArcelorMittal had started demanding the refund. It also imposed legal costs of Rs2 lakh on Moorgate.

The court refused Moorgate’s request to stay the order to allow it to challenge the decision. “The petitioner has been deprived of its security deposit for over six years, and the respondent is found to be liable to repay the same with interest. Hence, no case is made out for grant of any indulgence,” Justice Ahuja noted.

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