Reliance Infra tanks 20% after SC ruling in ₹2,800 cr arbitral award case

In a blow to Anil Ambani-led Reliance Infrastructure Ltd, the Supreme Court on Wednesday set aside an ₹2,800 crore award, which was paid to its subsidiary Delhi Airport Metro Express Private Limited (DAMEPL) in its legal dispute with Delhi Metro Rail Corporation (DMRC) in a 2008 case.

Deciding in favour of DMRC, which had contested the arbitral award, the apex court asked the Delhi Airport Metro to refund the funds paid to the company previously.

"The Curative petitions must be and are accordingly allowed. The parties are restored to the position in which they were on the pronouncement of the judgement of the Division Bench. The execution proceedings before the High Court for enforcing the arbitral award must be discontinued and the amounts deposited by the petitioner pursuant to the judgment of this Court shall be refunded. The part of the awarded amount, if any, paid by the petitioner as a result of coercive action is liable to be restored in favour of the petitioner," the order passed by a bench of Chief Justice of India DY Chandrachud and Justices BR Gavai and Surya Kant says.

The legal dispute dates back to the year 2012 when Anil Ambani-led company called off its agreement with DMRC, citing structural defects, thus leading to the invoking of a clause by DMRC for the alleged violation of a 2008 agreement between the two companies.

In 2017, an arbitral tribunal ruled in favour of Delhi Airport Metro Express, directing DMRC to pay ₹2,800 plus interest to the company. Following several litigations, the arbitral award, along with interest, ballooned to ₹8,000 crore, with the net recoverable amount at ₹4,700 crore.

Amid the development, shares of the integrated power utilities company plunged 20% lower circuit band, touching the ₹227.40 mark. At the time of filing the report today, around 12.5 PM, 7.64 lakh shares were exchanging hands on the counter against the two-week average of 3.54 lakh, taking the company's market capitalisation down to ₹9,008.02 crore.

At the current share price of ₹227.40, the scrip is trading 26.1% lower compared to its 52-week high of ₹308 touched on April 4, 2024. The Reliance Infra share seems to have had a decent run on the bourses in the past year. The share has risen 55.04% in the last one year, while giving a 7.46% return in the year-to-date period. In the past six months, and one month, the share has risen 33.22% and 1.77%, respectively. The stock has seen a 23.04% fall in the past week, partly dragged by today's lower-circuit plunge.

Reliance Infra's Q3 Fy24 revenue was recorded at ₹629.50 crore, down from ₹1,002.30 in the year-ago period. Its net loss came in at ₹1,584.90 crore against the loss of ₹2,059.90 in the year-ago period.

In its annual report in July 2023, Reliance Infra had said that in the matter of arbitration dispute between DAMEPL and DMRC, the company had received a sum of ₹2,599.18 crore, based on undertakings by DMRC before the Delhi High Court. "The entire proceeds have been utilized to repay DAMEPL’s Lenders. The balance decretal sum to be recovered from DMRC as of the date of this report is ₹4,757.30 crore," it stated.

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