Public Sector Damodar Valley Corporation (DVC) has agreed to pay Anil Ambani’s Reliance Infrastructure Limited Rs 898 crore in an arbitration dispute. The power company has submitted in writing to the Supreme Court that it will abide by the two orders of Calcutta High Court to deposit the sum by July 31.

RInfra will receive Rs 595 crore of the arbitration award in cash, while the rest of the Rs 898 crore will be bank guarantees to be deposited before the Calcutta High Court registrar. The written undertaking in the apex court was filed in the form of an affidavit by Ram Naresh Singh, chairperson of the DVC, pursuant to two earlier directions of the Supreme Court on April 25 and May 31 .

On April 25, while dismissing DVC’s plea challenging a Calcutta High Court direction to pay the Rs 898 cr it owed to RInfra, a Supreme Court bench of Justice B.R.Gavai and Justice Hima Kohli gave the PSU four weeks to pay the sum.

Subsequently, by another order dated May 31 the bench granted DVC another eight weeks to make the payment.

Earlier on March 25, the Calcutta High Court had directed DVC to pay the arbitral award, while rejecting the public sector's plea of huge financial difficulties.

The high court had passed the impugned order while rejecting a petition filed by DVC under Section 36(2) of the Arbitration and Conciliation Act, 1996 seeking a stay of an award dated 21.12.2019 passed in arbitration proceedings between Reliance Infrastructure Limited and itself.

The directive was challenged in the apex court which refused to interfere with the high court order. RInfra was the engineering and construction contractor of DVC’s 2x600 MW thermal project at Raghunathpur in Bengal with a contract value of Rs 3,750 crore.

During execution, the timelines were delayed due to several issues including land, unavailability of inputs such as water and coal and local agitation at the project site.

RInfra in an earlier statement to the stock exchanges said the company had raised claims on DVC in respect of the delays, but the latter had sought to levy liquidated damages for failure to adhere to the contractual schedule.

A three-member arbitration tribunal had given the award in favour of Reliance Infrastructure on December 21, 2019, which DVC subsequently challenged.

(With inputs from Calcutta Bureau)