Supreme Court Refuses To Interfere With Order Denying RCF Right To Retain ₹218 Crore Deposited By Thermax In Arbitration
Kirit Singhania
18 Feb 2026 12:58 PM IST
The Supreme Court on Monday dismissed a special leave petition filed by Rashtriya Chemicals & Fertilizers Ltd (RCF) challenging a Bombay High Court order that refused to allow it to retain Rs. 218.45 crore deposited by Thermax Ltd after an arbitral award in its favour was set aside.
A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe declined to interfere with the January 28, 2026 order of the High Court's division bench.
The Court observed, “While we are not inclined to interfere with the impugned order passed by the High Court, we make it clear that the petitioner shall deposit the amount as directed, within four weeks from today.” With these observations, the special leave petition was dismissed.
The division bench had held that once the arbitral award dated June 5, 2023 was set aside, there was no arbitral award in existence and, therefore, RCF could not claim any right over the amount deposited as a condition for stay of the award.
The dispute between Thermax Ltd and Rashtriya Chemicals & Fertilizers Ltd arose out of a turnkey contract executed on March 3, 2016 for setting up two 25 MW gas turbine generators at RCF's Thal plant in Maharashtra. The contract was valued at approximately Rs.353 crore.
The turbines were commissioned in February and March 2018 and were commercially operated by RCF from March–April 2018. On March 20 and March 22, 2019, the two turbines broke down.
RCF invoked arbitration on November 5, 2019, alleging that the turbines were defective and claiming damages under various heads, including Rs. 173.72 crore towards additional power costs allegedly incurred between April 1, 2019, and November 30, 2020, due to non-availability of the turbines.
A sole arbitrator, by an award dated June 5, 2023, allowed RCF's claim for Rs.173.72 crore towards additional power expenditure, along with other findings under the award. Thermax challenged the award under Section 34 of the Arbitration and Conciliation Act before the Bombay High Court.
On December 9, 2025, a single judge of the High Court set aside the arbitral award in its entirety. Pursuant to an earlier interim order dated October 4, 2023, passed during the Section 34 proceedings, Thermax had deposited Rs. 218.45 crore, including interest, as a condition for the stay of the award.
After the award was set aside, RCF sought permission to retain this sum pending its arbitration appeal.
On 28 January 2026, a division bench of the high court refused the request, holding that once the award stood quashed, RCF had no right over the deposited amount
RCF thereafter approached the supreme court, which declined to interfere, effectively affirming the high court's view that the deposit could not be retained in the absence of a surviving arbitral award.
For Petitioners: Senior Advocates Shyam Divan, Shyam Mehta woth Advocate Jasmine Damkewala, AOR Mac Bodhanwalla, Sheroy Bodhanwalla, Adv. Vaishali Sharma, Divyam Khera, Anusha Misra
For Respondent: Advocate R. Gopalakrishnan, AOR