Supreme Court extends deadline for DVC to pay Rs 898 crore to Reliance Infrastructure, takes undertaking from DVC chairman

Reliance Infrastructure’s nearly three-year wait to get its claims worth Rs 898 crore from Damodar Valley Corporation may come to an end by July. This may help the Anil Ambani-led company repay a part of its debt.
The Supreme Court has extended the deadline set by it for DVC to pay the dues by another eight weeks from May 31 considering the corporation’s weak financials but took an undertaking from its chairman on the certainty of the payment.

The undertaking, legal experts said, means DVC has no other legal course left but to pay off the dues within the stipulated time.

DVC had filed a petition in the Supreme Court seeking an extension of the earlier deadline of May 31 saying that it was facing a financial crunch and it owed a huge sum from the Jharkhand government.

“On considering the grounds raised in the application, we are inclined to grant extension of time,” the Supreme Court said in its order dated May 31. The Court had directed DVC chairman to file an undertaking stating that the dues would be deposited by it with the registrar of High Court at Calcutta within eight weeks, “to safeguard the interest of the respondent (Reliance Infrastructure)”.

DVC chairman Ram Naresh Singh furnished the undertaking on June 6 to adhere to the Supreme Court order.

Emails seeking response on the matter remained unanswered by both DVC and Reliance Infrastructure.

The matter pertains to the state-owned power generator’s 2x600 MW Raghunathpur Thermal Power Station project (unit 1 and 2) in West Bengal for which Reliance Infra was an engineering procurement and construction (EPC) contractor. The Rs 3750-crore project was commissioned in 2012 but there was a delay in completion leading to disputes over the extent of intangible losses to the EPC. The phase-2 project was even suspended in July 2016 due to paucity of funds and the absence of long term power purchase agreement, according to DVC’s FY21 annual report.

Reliance Infra had subsequently invoked arbitration and got a favourable verdict in December 2019 leading to further litigations. The Calcutta High Court on March 29 this year had directed DVC to deposit Rs 595 crore in cash and Rs 303 crore by way of bank guarantees. DVC had then appealed to the highest court of the land which, also, had directed it to make the payment by the end of May.

Earlier, DVC had released bank guarantees of Reliance Infra to the tune of Rs 354 crore, helping the latter reduce debt which has been the company’s announced endeavour. The private sector infrastructure company suffered a consolidated net loss of Rs 938.4 crore in FY22.