Delhi HC sets aside arbitral award asking BHEL to pay money to Chinese co
This story was originally published at 17:30 IST on 21 August 2025
Register to read our real-time news.Informist, Thursday, Aug. 21, 2025
NEW DELHI – The Delhi High Court Thursday set aside a 2020 arbitral award asking Bharat Heavy Electricals Ltd. to pay INR 1.4 million to Chinese company Xiamen Longking Bulk Material Science & Engg. Co. Ltd. towards the cost of preparation of 65 drawings, including the cost of draftsman, printing, and preparation charges.
"Despite rejecting other such claims for lack of exclusive project engagement, the learned arbitrator, in contradiction to his own reasoning, allowed the entire claimed amount of Rs. 13,65,000/- (INR 1.4 million) towards 65 drawings," said the high court. Further, no reasoning or calculation method was provided by the arbitrator behind allowing the whole claimed amount of INR 1.4 million to cover the design and engineering cost of all the 65 drawings, said the court.
"Hence, in the present case, the award of Rs. 13,65,000/- (INR 1.4 million) is not the outcome of a reasoned evaluation based on cogent evidence but is instead a conclusion based on guesswork and not supported by any evidence," said the high court. Thus, the arbitral award was in conflict with the most basic notions of justice, the court added.
The case has its genesis from the Chinese company submitting a project execution methodology, wherein it assured BHEL that it would either open an office in India or partner with an Indian firm to handle supply, erection, and commissioning of the mill reject system. The conditions of the methodology were that the Chinese company had to set up a local office in India and open a bank account to facilitate the execution of the contract with BHEL.
Despite a letter of award being issued to the Chinese company, the latter failed to open a local office in India and did not furnish details of an Indian bank account. Instead, the Chinese company proposed that it can be permitted to use the office and the bank account of an associated Indian company, namely Longking Engineering India Pvt. Ltd. This was denied by BHEL and it insisted on strict adherence to the methodology's conditions.
The Chinese company sent an e-mail to BHEL stating if it was not allowed to use the bank account of Longking Engineering, it cannot continue the execution of the contract. Thereafter, BHEL communicated to the Chinese company that it would invoke the "risk and cost" clause under the contract. In 2017, the respondent sent a letter questioning the cancellation of contract by the petitioner and thereafter in 2018 the Chinese company invoked arbitration. The Chinese company had claimed INR 30.41 million from BHEL in the arbitration. In its counter claim, BHEL sought INR 24.74 million from the Chinese company.
The arbitral tribunal passed an award favouring the Chinese company and asked BHEL to pay INR 1.4 million. The tribunal held that the 65 drawings submitted by the Chinese company were neither returned nor rejected by BHEL.
On Thursday, shares of BHEL ended 1.0% lower at INR 218.99 on the National Stock Exchange. End
Reported by Surya Tripathi
Edited by Subhojit Sarkar
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
