Calcutta High Court Rules in Favor of Reliance Infrastructure in Major Arbitration Case
The Calcutta High Court has delivered a significant ruling in favor of Reliance Infrastructure Limited concerning a substantial arbitration dispute with Damodar Valley Corporation (DVC) amounting to ₹780 crore. This decision marks a crucial moment in the ongoing legal battle and has been officially communicated to the stock market by Anil Ambani’s firm.
Background of the Dispute
Over a decade ago, Reliance Infrastructure secured a contract to establish a 1,200 MW thermal power plant in Purulia, West Bengal, at a project cost of ₹3,750 crore. However, the project faced numerous delays due to various disputes and operational issues. In light of these complications, DVC sought compensation for damages, which led to Reliance Infrastructure challenging the claims made against them.
Arbitration Proceedings
The matter escalated to arbitration, and in 2019, the tribunal ruled in favor of Reliance Infrastructure, instructing DVC to pay ₹896 crore to the company. Following this ruling, DVC contested the tribunal’s decision in the Calcutta High Court, but their challenge was ultimately rejected, upholding the original arbitration award.
Details of the Ruling
In its latest ruling, the Calcutta High Court upheld most of the arbitration award but did exclude the pre-allotment interest relief and made a reduction in interest calculations related to a bank guarantee, amounting to ₹181 crore. This adjustment results in a total recovery of ₹780 crore, which includes the interest accrued. Furthermore, a bank guarantee worth ₹600 crore is also expected to be issued as part of this settlement.
Next Steps for Reliance Infrastructure
Moving forward, Reliance Infrastructure emphasized its intention to evaluate the court’s decision thoroughly. The company will consult legal advisors to determine whether to implement the ruling or to seek further challenges regarding specific aspects of the decision rendered on September 27, 2024.
Conclusion
This ruling is a vital development for Reliance Infrastructure as it navigates through complex legal landscapes and operational challenges. The outcome can significantly influence the company’s financial stability and future project ventures. As the situation unfolds, stakeholders will keep a close eye on the company’s next moves in light of this arbitration ruling, reaffirming Anil Ambani’s dedication to overcoming hurdles in the power sector.
