Background of Legal Proceeding
This matter originates from a turnkey project for the 1200 MW DGEN Mega Power Project awarded in 2010 by Torrent Energy Limited to the Energy Business of Siemens Limited (Demerged Company). Siemens Limited subsequently issued a subcontract to Paharpur Cooling Towers Limited (PCTL) on December 24, 2010.
PCTL furnished bank guarantees aggregating ₹347.30 million under the subcontract. Due to delays by PCTL in executing subcontract works and failure to meet contractual obligations, Torrent Energy imposed liquidated damages on Siemens Limited. The Demerged Company asserted claims amounting to ₹2605.40 million against PCTL and encashed the bank guarantees in August 2014.
Legal History
- PCTL filed FIR No. 214 of 2014 alleging fraudulent encashment of bank guarantees
- Calcutta High Court quashed the FIR vide order dated July 31, 2015 in CRR No. 3521 of 2014
- Supreme Court upheld the quashing order vide order dated November 6, 2015 in SLP (Cr) 9135 of 2015
- Arbitration proceedings initiated by Siemens Ltd in November 2014
- Arbitral award issued on February 27, 2019, rectified by order dated April 9, 2019
Arbitral Award Details
- Siemens Limited's claims partially upheld to the extent of ₹535.30 million
- After net adjustments, Siemens Limited mandated to remit ₹208.40 million to PCTL with 6.00% p.a. interest
- PCTL challenged the award in Bombay High Court in August 2019, seeking additional entitlement of ₹664.90 million
- Siemens Limited paid award amount with interest, issuing cheques for ₹246.90 million in October 2019
- PCTL accepted the cheques in February 2020
Current Development
Bombay High Court, vide judgment dated June 8, 2026 (received by company on June 8, 2026 at approximately 19:00 hrs IST), dismissed the petition filed by PCTL under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the arbitral award.
The court upheld the arbitral award and rejected all grounds raised by PCTL in its petition.
Financial Impact
The judgment does not result in any additional financial liability on Siemens Energy India Limited as the company has already paid the amounts payable pursuant to the arbitral award (₹246.90 million paid in October 2019).