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Informist, Wednesday, Mar. 26, 2025

 

--HC bench refuses to stay order in NTPC-Jindal ITF arbitration case 

--CONTEXT: HC judge rejected arbitral award favouring Jindal ITF on NTPC plea 

--CONTEXT: Arbitral tribunal told NTPC to pay INR 18.9 bln to Jindal ITF 

--HC: Can't restrain NTPC from invoking bk guarantee furnished by Jindal ITF

--HC bench notice to NTPC on Jindal ITF appeal, to next hear case on Apr 17 

 

NEW DELHI – The division bench of the Delhi High Court on Wednesday refused to stay a single-judge order that had 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 court said that it couldn't restrain NTPC from invoking the bank guarantees furnished by Jindal ITF.

 

"We can't stay an order dismissing a Section 34 (plea of Arbitration and Conciliation Act, 1996). Once Section 34 (petition) is dismissed, we can't pass an order restricting invocation of bank guarantee," the court said. The division bench issued a notice to NTPC on the appeal by Jindal ITF challenging the single judgment. The division bench will hear the case next on Apr. 17. 

 

In January, the single-judge bench had 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 single judge. 

 

"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 single judge bench.

 

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 had a tripartite agreement to be entered for the purpose of 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 into 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 1249 IST, shares of NTPC Ltd. were down 2.0% at INR 359.50, while those of Jindal Saw Ltd. were up 0.2% at INR 267.30.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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