Reliance Infra wins Rs 780 crore arbitration case against Damodar Valley Corp

In the power industry, Reliance Infrastructure Limited is well-known, having a sizable portfolio of power generation projects all over India. The business is also interested in developing infrastructure, such as highways, bridges, and metro rail projects. Reliance Infrastructure also engages in construction, concentrating on projects involving residential and commercial real estate.Through its entry into the defence industry, the company has further diversified its business interests, concentrating on offering the Indian armed forces state-of-the-art technological solutions. Reliance Infrastructure has made a name for itself as a reliable partner for both public and private sector clients thanks to its proven track record of completing high-quality projects on schedule and within budget.

Reliance Infrastructure Ltd. wins against DVC:

The Calcutta High Court upheld the Rs. 780 crore arbitration award against Damodar Valley Corporation (DVC) after Reliance Infrastructure successfully contested the decision. Reliance Infrastructure provided a bank guarantee worth Rs. 600 crore, which the court ordered to be released. DVC’s appeal was denied.

Reliance Infrastructure Ltd. stated in an exchange filing: “The Hon’ble High Court’s Division Bench upheld the Award, which is estimated to be worth Rs. 780 crore, including accrued interest, with the exception of relief on pre-award interest and a reduction in the rate of interest on BG totaling to Rs. 181 crore. The BG of Rs. 600 crore will also be made available in addition.”The court has granted DVC some relief by lowering the interest rate, and it has also taken Rs. 181 crore out of the original arbitration award.

In its exchange filing, Anil Ambani-backed Reliance Infrastructure said that it 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.”

Conflict between Reliance Infrastructure and DVC:

In 2012, DVC commissioned the 1200 MW Raghunathpur thermal power project in West Bengal, with Reliance Infrastructure serving as the engineering and construction contractor. Reliance Infrastructure initiated the dispute in April 2017 by requesting arbitration due to DVC’s tardiness in granting the engineering contract.

The arbitration panel decided in Reliance Infrastructure’s favor in 2019 and ordered DVC to pay Rs. 896 crore and return the Rs. 354 crore bank guarantees within four weeks or else pay 15% annual interest for each week that the payment is delayed. In the Calcutta High Court, DVC appealed this decision, but the court denied the request. Reliance contended that the cost of each input rose during the contract’s extension, supporting their demand for additional compensation.

The stock of Reliance Infrastructure Ltd. has increased 6% intraday:

The stock of Reliance Infrastructure Ltd. is currently trading at Rs. 343.45 per share, up over 6% in the intraday segment. The highest price that has been traded is Rs. 345.00, which is very close to the 52-week high.

Conclusion: After a seven-year battle that began in April 2017, Reliance Infrastructure has finally prevailed over Damodar Valley Corporation (DVC). With the support of the Calcutta High Court, they will shortly receive their deposit back from DVC, which they will use to further expand their business.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.