Anil Ambani-led Reliance Infrastructure on Monday said it has won Rs 1,250 crore arbitration award against government-owned Damodar Valley Corporation (DVC), which saw stock rising nearly 5 per cent on bourses. The fund proceeds will be used to pay lenders and reduce the debt, company said in the exchange filing.
"Reliance Infrastructure has won a major arbitration award of Rs 1,250 crore against DVC, a government of India undertaking," the company said in a filing to the Bombay Stock Exchange.
Established in 1948, DVC is India's first multipurpose river valley project, operating in West Bengal and Jharkhand.
A three-member arbitration tribunal unanimously gave the award in favour of Reliance Infrastructure on December 21, 2019. Reliance Infra was the engineering and construction contractor for DVC's 2 x 600 MW Raghunathpur thermal power project in West Bengal commissioned in 2012.
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 cent annually, for any delay in payment beyond four weeks, the firm said in the regulatory filing.
Pursuant to the recent Niti Aayog circular, Reliance Infrastructure will request DVC to pay 75 per cent of the arbitral award against bank guarantee immediately, it added.
Commenting on the development, Reliance Infrastructure spokesperson said, "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."
Boosted by the development, Reliance Infrastructure share price gained as much as 4.98 per cent to touch an intraday high of Rs 24.25 against previous closing price of Rs 23.10 on the BSE.
Edited by Chitranjan Kumar
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