NEW DELHI :
Anil Ambani-led Reliance Infrastructure Ltd has won ₹1,250 crore arbitration award against Damodar Valley Corporation (DVC), a government undertaking. The proceeds will be used to pay lenders and reduce the debt, company said in the filing with exchanges.
A three-member Arbitration Tribunal made the unanimous 3-0 Award in favour of Reliance Infrastructure.
At 1040 shares of Reliance Infra were 5% up at ₹24.25 apiece.
The case pertains to DVC’s Raghunathpur thermal power project in West Bengal which was commissioned in 2012, for which Reliance Infrastructure was an engineering and construction contractor. The contract value of the project was ₹3,750 crore.
The Arbitration Tribunal awarded the case in favour of Reliance Infrastructure and directed Damodar Valley Corporation to pay Rs. 896 crore and return the Bank Guarantees of Rs. 354 crore within four weeks or pay additional interest, at the rate of 15% per annum, for any delay in payment beyond four weeks.
“This award by the arbitration tribunal is validation of the rightful position of the company. It is critical for Indian EPC companies to be paid their dues on time so that they can participate in mega-infrastructure projects without the risk of getting bogged down by working capital issues," Reliance Infrastructure spokesperson said.
After emerging the lowest bidder in December 2007, Reliance Infrastructure was issued Letter of Acceptance and two units of 600 MW each were to be commissioned in a period of 35 and 38 months.