While dismissing the appeal by DVC, the court also directed the release of the Rs 600 crore bank guarantee provided by Reliance Infrastructure
The Calcutta High Court has ruled in favour of Reliance Infrastructure, upholding the Rs 780 crore arbitration award against Damodar Valley Corporation (DVC). While dismissing the appeal by DVC, the court also directed the release of the Rs 600 crore bank guarantee provided by Reliance Infrastructure.
In an exchange filing, Reliance Infrastructure Limited mentioned, “The Division Bench of the Hon'ble High Court, with the exception of relief on pre award interest and reduction in rate of interest on BG totalling to Rs.181 crore and upheld the Award, totalling approximately Rs. 780 crore, including accrued interest. In addition, the BG of Rs.600 crore will also be released.”
To simplify, while the Calcutta High Court did grant the Rs 780 crore award, including interest, in favour of Reliance Infrastructure, but gave some relief to DVC by reducing the interest rate. The court has reduced Rs 181 crore from the original arbitration award to DVC.
The dispute began in April 2017 when Reliance Infrastructure sought arbitration due to delays from the DVC with regards to an engineering contract. The contract was for a 1200 MW thermal power plant in Purulia, West Bengal.
Post this, in 2019, the arbitration tribunal ruled in favour of Reliance Infrastructure and also ordered the DVC to pay Rs 896 crore.
While the DVC did challenge this ruling in the Calcutta High Court, the court dismissed the appeal. Reliance Infrastructure had highlighted as per the court that during prolongation of the contract the value of each and every input used for executing it increased. Thus, the company claimed extra payment for this prolongation.
Following the recent ruling, Reliance Infrastructure mentioned in its exchange filing that the company is “conducting a detailed review of the judgment and will proceed, based on legal advice, either to enforce the Award to the extent upheld or to challenge the judgment dated September 27, 2024, where it interferes with the Award”.