Delhi High Court takes favorable action for arbitral award of Rs 1981 crore against NTPC

In 2011, NTPC, Jindal ITF, and the Inland Waterways Authority of India (IWAI) signed a seven-year tripartite agreement for the transportation of coal through National Waterway 1 to the power plant.

Delhi High Court takes favorable action for arbitral award of Rs 1981 crore against NTPC
Delhi High Court takes favorable action for arbitral award of Rs 1981 crore against NTPC

An arbitral award against the National Thermal Power Corporation (NTPC) for Rs 1981 crore has been overturned by the Delhi High Court (HC). A single bench of the HC declared the arbitral verdict to be "patently illegal and perverse" in its January 30 ruling, which was posted on Monday. The court believes that the entire contested award must be overturned because it was made under pretenses and is "perverse" and "patently illegal."

The HC order stated, "The parties shall be free to avail themselves of the appropriate legal remedies." Jindal Intralogistics Limited (Jindal ITF), a division of the OP Jindal Group, was given the arbitral award against NTPC. The arbitration concerned the postponement of infrastructure construction required to transport coal to the Farakka thermal power plant in West Bengal.

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In 2011, NTPC, Jindal ITF, and the Inland Waterways Authority of India (IWAI) signed a seven-year tripartite agreement for the transportation of coal through National Waterway 1 to the power plant.

The Farakka plant is managed and controlled by NTPC and Jindal ITF was contracted by the former to build the infrastructure for the transportation of imported coal. The said infrastructure was to be completed in two phases — the first phase was to be completed within 15 months from the date of signing of the agreement, and the second phase within 24 months.

Following a delay of 385 days in the completion of construction of Phase 1 and 674 days for the completion of Phase 2, NTPC terminated the agreement with Jindal ITF. The latter then initiated arbitration proceedings against NTPC in late 2016.

In 2019, the arbitral tribunal awarded an amount of Rs 1,891 crore to Jindal ITF for wrongful termination of the tripartite agreement. NTPC challenged this in the Delhi HC, saying the “award is contrary to the provisions” of the tripartite agreement and “contrary to the established legal principles of law”.

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