State-owned Damodar Valley Corporation (DVC) chairman has provided an undertaking to pay Rs 898 crore to Reliance Infrastructure (RInfra), Anil Ambani group company, after the latter won an arbitration award.
The undertaking was furnished after DVC missed the May 31 deadline as directed by the Supreme Court. The apex court on April 26 had directed DVC to deposit Rs 595 crore as arbitration amount and another Rs 303 crore by way of bank guarantee by May 31.
DVC later moved the court seeking an extension. The court, while granting the extension, directed DVC to make the deposits by July 31.
The Calcutta High Court has also permitted RInfra to withdraw Rs 595 crore by furnishing bank guarantees of equivalent amount with the court. In December 2021, pursuant to a direction by the Supreme Court, DVC had released the bank guarantees furnished by RInfra, however, non-release of bank guarantees till then resulted in an additional interest of about Rs 107 crore.
The Anil Ambani group company had invoked arbitration in April 2017 after a dispute arose between the firms following delays in the completion of an engineering, procurement and construction (EPC) contract.
The case pertains to DVC’s 2×600 MW Raghunathpur thermal power project in West Bengal, which was commissioned in 2012, for which RInfra was an EPC contractor. The contract value of the project was Rs 3,750 crore and the two units of 600 MW each were to be commissioned in a period of 35 and 38 months. Dispute arose over levy of liquidated damages for delay in completion of one of the units and RInfra had invoked arbitration.
The case was first heard by Calcutta High Court, with both companies filing counter cases. The Calcutta High Court ruled in favour of RInfra, following which DVC moved the apex court. The Supreme Court declined to interfere with the Calcutta High Court’s March 25 order, which had earlier directed DVC to deposit Rs 898 crore.
In September 2021, RInfra-promoted Delhi Airport Metro Express Pvt Ltd (DAMEPL) had won an arbitral award of Rs 2,782.33 crore with further interest in connection with the construction of the 22.7-km Airport Metro Express Line project. The Supreme Court had set aside a Delhi High Court division bench ruling, which partly set aside the arbitral award.