Delhi High Court Refers ₹1,889 Crore Jindal ITF-NTPC Arbitration Dispute To Third Judge After Split Verdict

The Delhi High Court has referred Jindal ITF Limited's dispute with NTPC Limited over an arbitral award worth about ₹1,889 crore to a third judge or a larger Bench after the two judges differed on whether the award should be upheld.

The award arose from disputes over delays and deviations in a project for transporting imported coal to NTPC's Farakka Thermal Power Plant

While Justice C. Hari Shankar upheld the award on claims concerning project delays and shortfalls, the guaranteed supply of coal during the first two years of operations, and damages arising from NTPC's termination of the agreement, Justice Om Prakash Shukla agreed with the Single Judge's decision to set aside the award on those claims.

The bench observed that the disagreement would have to be referred for further consideration.

The dispute arose from a Tripartite Agreement signed in August 2011 between NTPC, Jindal ITF and the Inland Waterways Authority of India. Under the agreement, Jindal ITF was to build coal-unloading and material-handling infrastructure and transport coal through inland waterways to NTPC's Farakka Thermal Power Plant. The project was completed in two phases, with commercial operations beginning in June 2015.

Jindal ITF invoked arbitration in November 2016, alleging delays and deviations attributable to NTPC and shortfalls in the supply of coal. NTPC later issued a consultation notice and terminated the agreement in July 2017.

In January 2019, the tribunal allowed four principal claims worth about ₹1,889 crore. The award included about ₹424 crore for delays, deviations and shortfalls during the project period; ₹158 crore and about ₹198 crore for NTPC's alleged failure to provide the minimum guaranteed quantity of coal during the first and second years of operations; and nearly ₹1,109 crore in connection with NTPC's consultation, termination, and requisition notices, calculated with reference to the remaining five years of the contract.

NTPC challenged the award before the Delhi High Court. A Single Judge set aside the award in its entirety in January 2025, following which Jindal ITF appealed.

Justice Hari Shankar found that the Single Judge was not justified in interfering with the tribunal's findings. He upheld the award relating to the guaranteed coal supply during the first two years and found that the tribunal's conclusions could not be reopened merely because the court took a different view of the evidence.

He also upheld the award of nearly ₹1,109 crore. Having found NTPC's termination illegal, the tribunal could use the guaranteed coal quantity for the remaining five years as a basis for determining reasonable compensation, Justice Hari Shankar held. He observed that the Single Judge had effectively re-adjudicated the dispute and sat in appeal over the tribunal's decision.

Justice Shukla took the opposite view. He found that the contract contained specific mechanisms for dealing with delays and termination, and the tribunal could not replace those remedies with different forms of monetary compensation.

He also found that contractual provisions requiring Jindal ITF, as the project operator, to obtain applicable permits and clearances had not been properly considered.

On the termination-related claim, Justice Shukla held that the tribunal could not treat the minimum guaranteed coal quantities for the remaining five years as damages while departing from the compensation mechanism agreed upon in the contract. He agreed with the Single Judge that the defects went to the root of the award and justified setting aside the disputed claims.

The bench has now referred the disagreement over these claims to the Chief Justice for assignment to a third judge or a larger bench

For petitioner (M/s Jindal ITF Limited): Senior Advocates Dr. A.M. Singhvi and Jayant Mehta, with Advocates Nilava Bandyopadhyay, Kumar Shashwat Singh Sawno, Yash Mittal, Surabhi Rana and Om Shelat.

For respondent (NTPC Limited & Anr.): Solicitor General Tushar Mehta, with Advocates Bani Dixit, Adarsh Tripathi, Vikram Singh Baid and Ajitesh Garg.