Sale and Purchase Pact
HC directs Focus Energy to provide "solvent security" in dispute with GAIL
This story was originally published at 20:24 IST on 7 January 2025
Register to read our real-time news.Informist, Tuesday, Jan. 7, 2025
NEW DELHI – The Delhi High Court on Tuesday directed Focus Energy Ltd. to provide solvent security in the form of a bank guarantee or unencumbered immovable assets to the value of INR 1.58 billion within two weeks in a dispute with GAIL (India) Ltd. The security shall remain attached till the arbitral tribunal adjudicates upon the disputes between the parties.
"There is nothing on record to show that if an award was to be passed in favour of the petitioner, the respondents would be able to satisfy it," said the high court. It cannot be a situation that, in case, an award is passed in favour of the petitioner GAIL, it is unable to recover the awarded amounts, said the court. "For the said reasons, the amount in dispute in the arbitration needs to be secured," the court added.
The case has its genesis in a gas sale and purchase agreement in 2009 between Focus Energy and GAIL for the supply of gas from SGL fields in Jaisalmer to Rajasthan Rajya Vidyut Utpadan Nigam Ltd. As per the terms of the agreement, Focus Energy along with other parties had agreed to share their respective share of natural gas to GAIL.
After a dispute between the parties, GAIL India filed a petition in the high court under Section 9 of the Arbitration and Conciliation Act, 1996. Amongst other relief, GAIL sought the court to pass an order directing Focus Energy to deposit the balance annual take or pay amount of INR 1.57 billion with the court or adequate security for securing the amount in the dispute between the parties.
On Tuesday, the shares of GAIL (India) Ltd. ended 0.8% higher at INR 186.06 on the National Stock Exchange. End
Reported by Surya Tripathi
Edited by Saji George Titus
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