Infrastructure News

Reliance Infra can’t sell, transfer assets worth $135 mn: Delhi HC, ET Infra

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NEW DELHI: The Delhi High Court on Wednesday restrained Reliance Infrastructure from “selling, alienating, transferring or encumbering its assets”, amounting to $135.32 million in a case related to enforcement of an arbitration award that Chinese company Shanghai Electric Group Co Ltd has won against the Anil Ambani firm.

While setting aside the July 19, 2022, judgement that dismissed the Chinese company’s petition under Section 9 of the Arbitration Act, a division bench of justices Sanjeev Sachdeva and Manoj Jain restrained RInfra from creating any third-party rights on its assets. “Though the awarded amount along with interest and costs works out to more than the above amount, however, the order is restricted to the amount prayed for in the petition under Section 9 of the Arbitration Act,” the judgment said.

However, the HC clarified that this restraint would be subject to any charge on the assets already created in favour of a bank or a financial institution (FI). “In case of sale of an already encumbered asset by a bank or FI, the balance, if any left, after satisfaction of the charge shall be kept in a designated account and shall not be utilised by the respondent for any purpose and shall be subject to the outcome of the enforcement petition filed by the appellant,” the bench said while dismissing the cross objections raised by RInfra that Shanghai Electric’s plea for security had become infructuous since the arbitral award had been rendered.The directions came on an appeal by Shanghai Electric against the single judge’s order that rejected its plea to secure the arbitration award amount of around ₹1,100 crore.

On December 8, the arbitral tribunal constituted by the Singapore International Commercial Court (SICC) had awarded a sum of $122.23 million besides pre award interest of $20.40 million and legal costs, expenses and disbursements of $3.6 million in favour of Shanghai Electric against RInfra. On January 31, SICC upheld the arbitral award asking the Ambani firm to pay around $146 millionto Shanghai Electric.

In June 2008, Shanghai Electric and Reliance Infra Projects (UK), a subsidiary of RInfra Projects, had entered into an equipment supply and service contract. Reliance UK, according to the terms of the contract, was supposed to pay Rs 9,461 crore. As per Shanghai Electric, Rs 995 crore was due under the supply contract by 2019.

  • Published On Mar 7, 2024 at 08:49 AM IST

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