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Informist, Friday, Apr. 25, 2025

NEW DELHI – RattanIndia Power Ltd. on Friday moved the division bench of the Delhi High Court against a single-judge order in March upholding a 2017 interim arbitral award directing the company to pay INR 1.15 billion to Bharat Heavy Electricals Ltd. The high court will next hear RattanIndia Power's plea against BHEL on May 2. 

In 2010, through a letter of award, BHEL was entrusted with designing, engineering, manufacturing, inspection, and testing of a boiler turbine generator for RattanIndia Power's 5x270-megawatt thermal power plant in Amravati, Maharashtra. Pursuant to the letter, a supply contract and a services contract were signed by the parties in 2011, which provided for the supply of material and scope of services, respectively. 

In terms of the two contracts, RattanIndia Power paid an advance amount of INR 1.43 billion to BHEL, secured by an advance bank guarantee of the latter. The amount paid by way of advance was to be adjusted against supplies. Thereafter, disputes arose between the parties because BHEL claimed that RattanIndia Power had failed to discharge its payment obligations for the plant, machinery, equipment and services supplied by the former, and that it had became apprehensive of the petitioner's financial position.

In 2013, RattanIndia Power unilaterally suspended supplies, which was not accepted by BHEL. Ultimately, the contract was terminated in 2015 through a communication by BHEL. RattanIndia Power said BHEL had breached the terms of the contract by failing to supply plant and equipment sequentially. RattanIndia Power characterised such non-sequential supply as "dumping" and, therefore, contended that BHEL was not entitled to payment. 

Consequently, the matter went to arbitration, and both the parties made claims and counterclaims. The current interim award arises out of applications filed by both parties for interim awards. BHEL relied on minutes of meetings between the parties and said its dues of INR 1.15 billion pertaining to the Amravati project, and INR 630 million in respect of another project at Nashik, were admitted by RattanIndia Power. In March, the single judge said that RattanIndia Power had failed to make out a case for interference, as provided under Section 34 of the Arbitration and Conciliation Act, 1996. 

At 1322 IST, shares of BHEL were down 3.5% at INR 222.52 on the National Stock Exchange, while those of RattanIndia Power were down 5.0% at INR 10.75  End

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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