Back
Delhi High Court Orders NHPC To Pay 16 Crore To Hindustan Construction Co Ltd
The , led by Justice Subramonium Prasad, has delivered a significant ruling concerning the enforcement of in the construction sector. The Court held that released under the relief schemes of the do not supersede the established legal principles for the once an arbitral award attains finality.
Background of the Dispute
The conflict originated from a contract between (HCC) and the (NHPC) for the execution of civil works at the Teesta Low Dam Hydroelectric Project, Stage IV. Following contractual disputes, an Arbitral Tribunal awarded HCC approximately ₹53.73 crore in .
During the prolonged legal challenges against this award, the introduced specific Office Memorandums (OMs) in . These measures aimed to ease the liquidity crunch for contractors by allowing Public Sector Undertakings to release 75% of awarded amounts against . HCC accepted these , which became the subject of contention when NHPC claimed that the acceptance of these funds constituted an agreement to deviate from standard .
Legal Arguments and Judicial Analysis
HCC argued that payments should be adjusted first towards accrued interest and subsequently toward the principal amount, citing the precedent set by the in
Conversely, NHPC contended that the letters of acceptance provided by HCC during the implementation of the NITI Aayog scheme indicated an agreement to adjust payments differently, effectively arguing that the had been fully settled.
Justice Subramonium Prasad rejected the argument that could override . The Court observed: “Once the Award has attained finality then the amount under the Award has to be paid in accordance with the law laid down by the Apex Court in Leela Hotels Ltd. (supra) in after adjusting the amounts already received under the OMs.”
Key Observations
-
"Once the Award has attained finality then the amount under the Award has to be paid in accordance with the law laid down by the Apex Court in Leela Hotels Ltd."
-
"The communications do not have any effect once the Award has been upheld."
-
"The correspondence entered into between the parties for the implementation of the OMs reproduced above is not part of the but only an interim measure."
Final Order and Implications
The High Court concluded that the correspondence regarding the interim relief scheme was merely a procedural mechanism to assist contractors during pendency and did not represent a under the final award. Consequently, the Court allowed the application, directing NHPC to pay the outstanding balance of ₹16,39,87,708 to HCC within six weeks from the uploading of the judgment. This decision clarifies that administrative schemes intended for temporary financial support cannot be exploited to circumvent established legal rules governing appropriation in arbitration enforcement.
