Reliance Infra wins ₹780 cr arbitration case against Damodar Valley; stock surges 7%

Reliance Infrastructure Ltd, a part of the Reliance Anil Dhirubhai Ambani Group, has received confirmation from the Calcutta High Court regarding an arbitration award of ₹780 crore in its favour in a dispute with the Damodar Valley Corporation (DVC) of West Bengal, according to the company’s statement release on September 28. Following this development, shares of Reliance Infra surged as much as 6.8% to reach an intra day high of ₹344.90 apiece on the BSE during early hours today.

At the time of reporting, Reliance Infra shares were trading 5.9% higher at ₹342.25, with a market capitalisation of ₹13,523.92 crore. The stock opened higher today at ₹330.00, in contrast with the weak broader market, against the previous close price of ₹322.95. The company’s. Over the past month, the stock has jumped 66.79%, gained 27.12% in the last six months, and surged 61.24% year-to-date (YTD).

On Tuesday, Reliance Infrastructure shares gained as much as 8.6% to hit a 52-week high of ₹350.90 on the BSE.

The company informed the exchanges that the court upheld the arbitration award, apart from providing some relief regarding pre-award interest and a reduction in the bank guarantee interest rate totaling ₹181 crore. Additionally, the bank guarantee of ₹600 crore will be released. 

The Anil Ambani-led firm stated that it is conducting a comprehensive review of the judgement and will determine its next steps based on legal advice, whether to enforce the upheld award or to challenge the portions of the judgement that interfere with it.

Over ten years ago, Reliance Infra secured a contract for a 1,200 MW thermal power plant in Purulia, West Bengal, for ₹3,750 crore. However, the project faced delays due to disputes and other factors, prompting DVC to seek damages from Reliance Infrastructure. The company contested these claims, and in 2019, an arbitration tribunal ruled in its favour, ordering DVC to pay ₹896 crore; subsequently, the Calcutta High Court directed DVC to release bank guarantees amounting to ₹354 crore.

DVC challenged the tribunal's decision in the Calcutta High Court, which dismissed the appeal. In its filing, Reliance Infrastructure stated that on September 27, 2024, the Division Bench of the Calcutta High Court issued a judgement regarding DVC's petition against the arbitration award dated September 29, 2023, which amounted to approximately ₹780 crore, including accrued interest related to the Raghunathpur Thermal Power Project.

The high court upheld the award in September 2023, noting "four issues," and the matter was subsequently pending before the Bench as both parties filed appeals. DVC awarded the Raghunathpur project, located in West Bengal, to RInfra in December 2007 via an international competitive bidding (ICB) process.