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Informist, Wednesday, Jul. 15, 2026

 

--HC OKs arbitral award asking IOC to pay INR 6.6 bln to Toyo-L&T consortium

 

By Surya Tripathi

 

NEW DELHI – The Delhi High Court Wednesday upheld a 2019 arbitral award that asked Indian Oil Corp. Ltd. to pay INR 6.62 billion to a consortium of Toyo Engineering Corp. and Larsen & Toubro Ltd. Justice Amit Bansal said that he finds no grounds warranting interference with the findings returned by the arbitral tribunal. 

 

The findings of the arbitral tribunal on arbitrability of the disputes and issues concerning delay, extension of time and price adjustment are based on the interpretation of the relevant contractual provisions and appreciation of the evidence led by parties, said Justice Bansal. Indian Oil Corp., by way of the present petition, in effect, seeks a reappreciation of evidence and an alternative interpretation of clauses of the contract, which is beyond the scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996, he said.

 

The high court said that the bank guarantee furnished by Toyo Engineering and Larsen & Toubro will stand discharged after a period of four weeks. The high court asked Toyo Engineering and Larsen & Toubro to raise its prayers of asking Indian Oil Corp. to deposit further amounts towards the principal and interest and reimbursement of money incurred by them towards the bank guarantees in the arbitration award execution proceedings. 

 

The case has its genesis in a contract between the parties with respect to Indian Oil Corp.'s naphtha cracker project in Panipat, Haryana. Thereafter, Engineers India Ltd., the project management consultant for the project, floated a tender seeking contractors for engineering, procurement, construction and commissioning of the project. In 2006, the contract was awarded to a consortium of Toyo Engineering and Larsen & Toubro.

 

However, during the execution of the contract, disputes arose between the parties with respect to delays in completion of the works. Thereafter, Engineers India told the consortium of Indian Oil Corp.'s decision to grant extension for the project, subject to 10% price reduction on the contract value. Aggrieved by various deductions of amounts made by Indian Oil Corp. from the final bills of the consortium, Toyo Engineering and Larsen & Toubro invoked arbitration.

 

The arbitral tribunal fully allowed claims of the consortium with respect to amounts recovered by Indian Oil Corp. towards price adjustment on account of delay and amounts recovered by IOC towards excess utility consumption beyond guaranteed figures during the performance guarantee test runs. The tribunal partly allowed the claims of the consortium regarding miscellaneous recoveries by Indian Oil Corp. and amount withheld by the company from the final bill on account of change in deviation during execution of the original requirements. The tribunal also awarded interests and costs in favour of the consortium.

 

Challenging the arbitral award, Indian Oil Corp. moved the high court. The arbitral tribunal failed to adjudicate on each element of delay and whether this was attributable to the petitioner or the respondent consortium, said Indian Oil Corp. The arbitral tribunal has effectively rewritten the contract and consequently the arbitral award is liable to be set aside under the 1996 Act, said Indian Oil Corp.

 

On Wednesday, shares of Indian Oil Corp. Ltd. ended 2.3% higher at INR 140.24 on the National Stock Exchange, and those of Larsen & Toubro Ltd. ended 1.7% lower at INR 3,783.90.  End

 

Edited by Avishek Dutta

 

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