Pursuant to an order passed by the Supreme Court on May 31, Chairman, DVC has furnished an undertaking on June 6, 2022 stating that DVC will comply with the direction to deposit a sum of Rs 595 crore in cash and Rs 303 crore by way of Bank Guarantee within July 31.
The directions for furnishing an undertaking have been issued to safeguard the interest of Reliance Infra whilst granting extension of time to DVC.
The genesis of this matter is an arbitration dispute between Reliance Infra and DVC, wherein a 3-0 Award was passed in favour of Reliance Infra and an aggregate sum of Rs 1,250 crore approximately comprising cash component of approx Rs 898 crore and release of 6 Bank Guarantees of approximately Rs 353 crore was directed to be paid by DVC.
The Award carries an interest obligation of 12 per cent per annum upon DVC on the sum awarded i.e., Rs 898 crore. The aggregate interest burden upon the tax payers, as accumulated by DVC, as on May 31 is approximately Rs 260 crore.
In terms of the order dated May 31, DVC is now bound by its Chairman’s undertaking to deposit the Award amount of Rs 898 crore, in the mode prescribed, by July 31 albeit after elapse of nearly 2.5 years.
Reliance Infra had also preferred a contempt petition against officials of DVC in view of DVC’s failure to comply with the Supreme Court’s order dated April 25 requiring DVC to furnish the deposit of Rs 595 crore in cash and Rs 303 crore by way of Bank Guarantees within 4 weeks.
The Supreme Court by its order declined to interfere with the Calcutta High Court order dated March 25 which directed DVC to deposit a sum of Rs 898 crore i.e. Rs 595 crore by way of cash and Rs 303 crore by way of Bank Guarantee.
The Calcutta High Court also permitted Reliance Infra to withdraw the sum of Rs 595 crore by furnishing Bank Guarantees of equivalent amount with the Registrar, Calcutta High Court.
In an earlier round of litigation between the parties, pursuant to a direction by the Supreme Court, the Bank Guarantees of Reliance Infra have been released by DVC in December 2021.
The non-release of the Bank Guarantees by DVC till December 2021 entailed an additional interest burden of approximately Rs 107 crore on the tax payers.
