Arbitration Award
HC sets aside arbitral award asking NTPC to pay INR 18.9 bln to Jindal ITF
This story was originally published at 11:16 IST on 3 February 2025
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--HC sets aside arbitral award asking NTPC to pay INR 18.9 bln to Jindal ITF
NEW DELHI – The Delhi High Court has set aside a 2019 arbitral award asking NTPC Ltd. to pay INR 18.91 billion to Jindal ITF Ltd., the infrastructure arm of Jindal Saw Ltd. The high court said the arbitral tribunal's award suffered from "patent illegality" and "shocked" its conscience. "Since the award is so perverse, it has to go in totality," said the court.
"Accordingly, the impugned award dated Jan 27, 2019 passed by the learned tribunal is set aside....the bank guarantees furnished by the respondent(Jindal ITF) against the release of amount by virtue of under Section 17 of the Arbitration and Conciliation Act may be en-cashed by the petitioner after the expiry of the period available to the respondent for filing the appeal, if any, against the present order," said the court.
In 2008, a memorandum of understanding was executed between NTPC and the Inland Waterways Authority of India to explore the possibility of using inland waterways as a supplementary mode of transportation of coal for the former's Farakka thermal power plant. In 2011, Inland Waterways released a request for proposal for the selection of an operator for the transportation of coal through waterways. The proposal also contained a tripartite agreement to be entered for the purposes of the construction of infrastructure at the Farakka plant site, along with a coal transportation agreement.
Thereafter, Jindal ITF was selected as the preferred bidder and operator for the transportation of coal through waterways to the plant. A tripartite agreement was also entered between NTPC, Jindal ITF, and Inland Waterways for moving coal through National Waterways-I. The agreement also included the construction of the unloading infrastructure and the material handling system by Jindal ITF. Further, the agreement contained a coal transportation agreement, under which NTPC was to procure the coal from imported coal suppliers and transport the same through the waterways to Jindal ITF. As per the agreement, imported coal suppliers had to supply the coal and Jindal ITF had to unload and transport the coal to NTPC's Farakka plant at not less than 12,000 tonnes per day
A dispute arose between the parties and an arbitral tribunal was formed in 2017. Jindal ITF said NTPC was responsible and liable for the delay of construction of phases I and II of the material handling system, and accordingly, it was entitled to claim damages for loss of revenue. Jindal ITF sought damages from NTPC for alleged wrongful termination of the tripartite agreement.
At 1048 IST, shares of NTPC were down 3.5% at INR 306.45, while those of Jindal Saw were down 3.4% at INR 233.30, on the National Stock Exchange.
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Surya Tripathi
Edited by Tanima Banerjee
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