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Informist, Wednesday, Jun. 18, 2025

 

NEW DELHI – The Bombay High Court on Wednesday upheld parts of a 2018 arbitral award that had asked Hindustan Petroleum Corp. to pay INR 62.5 million, along with 7% interest, to G.R. Engineering Pvt. Ltd. However, the court set aside part of the arbitral award asking Hindustan Petroleum Corp. to pay INR 58.4 million, held in liquidated damages by the company, along with 7% interest, to G.R. Engineering.

 

The high court held that the arbitral award does not need any interference from them. However, it set aside the arbitral award's portion on liquidated damages for being devoid of reasons. "The arbitration agreement between the parties subsists insofar as it relates to liquidated damages and the parties are free to have this element subjected to dispute resolution afresh by way of arbitration," the court said.

 

The case has its genesis in Hindustan Petroleum Corp. awarding G.R. Engineering a contract to construct 12 "mounded bullets" to store liquified petroleum gas at the company's refinery in Mahul, Mumbai. The project was to be completed by Dec. 5, 2007 but was completed on Feb. 2, 2010. 

 

Thereafter, disputes and differences between the parties arose out of Hindustan Petroleum Corp. computing liquidated damages in the payments due on invoices raised by G.R. Engineering. Hindustan Petroleum Corp. also withheld various other amounts on the payments made to G.R. Engineering, which led to the arbitration proceedings. 

 

In 2018, the arbitral tribunal held that the amount withheld by Hindustan Petroleum Corp. on account of civil works, under-insurance, customs duty variation, service tax, normalising 'dished ends' and liquidated damages ought not to have been withheld. The tribunal directed the payment of such sums by Hindustan Petroleum Corp. to G.R. Engineering. Challenging the arbitral award, Hindustan Petroleum Corp. moved the high court.  

 

At 1317, shares of Hindustan Petroleum Corp. were down 0.6% at INR 391.00 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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