Calcutta High Court rules in favour of Reliance Infra, upholds Rs 780 crore arbitration award against Damodar Valley Corp
The Calcultta High Court has ordered the release of a Rs 600 crore bank guarantee submitted by Reliance Infrastructure.
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In a positive development for Reliance Infrastructure, the Calcutta High Court on Friday upheld an arbitration award amounting to Rs 780 crore against Damodar Valley Corporation (DVC), dismissing a plea by the government entity challenging an earlier ruling by the arbitral tribunal ordering DVC to pay Rs 896 crore to the private sector company. All eyes will be on Reliance Infra (RELINFRA) shares when the market opens for trade on Monday, as the stock has already scaled a series of milestones over the past few weeks.
The Damodar Valley Corporation (DVC), under the Ministry of Power, is responsible for power generation and distribution in the Damodar River Valley region.
The high court also ordered the release of a bank guarantee worth Rs 600 crore bank guarantee submitted by Reliance Infrastructure, part of the Reliance Group led by top businessman Anil Ambani.
"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," Reliance Infrastructure said in a regulatory filing on Saturday.
Reliance Infrastructure also said it is "currently 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".
The amount of Rs 780 crore includes interest. However, the division bench of the Calcutta High Court granted relief to the tune of Rs 181 crore to Damodar Valley Corp on pre-award interest and reduction of interest rate on bank guarantee.
The matter dates back to April 2017, when Reliance Infrastructure had invoked arbitration following a dispute with Damodar Valley Corp on account of delays in the completion of an engineering contract awarded by the government body for the construction of a 1200 MW thermal power plant in Purulia, West Bengal.
In 2019, the arbitral tribunal ruled in favour of Reliance Infrastructure, directeing DVC to pay Rs 896 crore to the Reliance Group company.
Meanwhile, Reliance Infra shares have grown exponentially over the recent past, with a return of almost 55 per cent in the past month.
This marks a sharp outperformance to the headline Nifty50 index, which has risen about 4 per cent during this period.
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