Blue Diamonds, Seylan Bank settle four-year dispute

Monday, 4 November 2013 00:00 -     - {{hitsCtrl.values.hits}}

Blue Diamonds Jewellery Worldwide PLC said last week it has entered into a settlement agreement with Seylan Bank with respect to the arbitration proceedings instituted by Seylan Bank whereby BDJW agreed to settle a sum equivalent to $ 415,000 (around Rs. 54 million) upon the bank releasing the stock of jewellery held as security. BDJWL obtained a credit facility of $ 2.75 million from Seylan Bank PLC in previous years by pledging inventory of jewellery as security. During the year ended 31 March 2005, the Directors resolved to write back the balance outstanding to the said bank in respect of the credit facility on the basis that the company handed over jewellery in lieu of the said credit facility as full and final settlement of the balance due to the bank and there is no further liability due on the said credit facility.  Accordingly, a net amount of Rs. 203.5 million was written back to income statement during that financial year. However, the bank by letter dated 4 December 2009 demanded a sum of $ 4,320,906 together with interest being the total outstanding sum due on the said facilities from the company. The company and Seylan Bank PLC agreed to appoint an arbitrator in accordance with the agreement signed by the company and the bank on 21 November 2003 in respect of the sale of jewellery that was acquired by Seylan Bank in 1999 in lieu of the credit facilities obtained.