Anil Ambani’s Reliance Infrastructure Withdraws SC Appeal in $135 Million Arbitration Award Case

Reliance Infrastructure has withdrawn its appeal from the Supreme Court against a Delhi High Court order issued on March 6. This order had prevented the company from “selling, alienating, transferring or encumbering its assets,” worth $135.32 million, related to the enforcement of an arbitration award won by Chinese company Shanghai Electric Group Co Ltd against the Anil Ambani-led firm.

“Counsel for the petitioner seeks the permission of the court to withdraw the special leave petitions. The special leave petitions are dismissed as withdrawn,” said a Bench led by Chief Justice D.Y. Chandrachud.

High Court Order

Previously, the Delhi High Court had overturned a July 19, 2022 judgement that dismissed Shanghai Electric’s petition under Section 9 of the Arbitration Act. The High Court’s March 6 order stopped RInfra from creating any third-party rights on its assets up to $135.32 million. “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 judgement stated.

However, the High Court clarified that this restriction would not affect any assets already pledged to a bank or financial institution. “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, dismissing RInfra’s objections that Shanghai Electric’s plea for security was moot since the arbitral award had been rendered.

Shanghai Electric’s Appeal

Shanghai Electric’s appeal aimed to secure the arbitration award amount of around ₹1,100 crore, allegedly owed by RInfra.

On December 8, the arbitral tribunal constituted by the Singapore International Commercial Court (SICC) awarded $122.23 million plus pre-award interest of $20.40 million and legal costs of $3.6 million in favour of Shanghai Electric against RInfra. On January 31, SICC upheld this award, ordering the Ambani firm to pay around $146 million in dues and damages to Shanghai Electric.

Background of the Dispute

In June 2008, Shanghai Electric and Reliance Infra Projects (UK), a subsidiary of RInfra Projects, signed an equipment supply and service contract. Shanghai Electric was to supply equipment, erect turbines and generators, and provide supervision services for the Sasan Ultra-Mega Power Project in Madhya Pradesh. Reliance UK was to pay ₹9,461 crore to the Chinese firm. RInfra, as the parent company, issued a guarantee letter for Reliance UK’s obligations. By 2019, ₹995 crore was still owed under the contract.

A notice of dispute was issued to RInfra, demanding compliance with the guarantee letter and payment within 60 days. When RInfra did not comply, Shanghai Electric started arbitration proceedings at SICC.