Odisha HC rules reneging of RE contract arbitrary, asks Paradip Port to pay Rs 8 cr to Surana Solar

• The tribunal has also asked Paradip Port Trust to pay Rs 8.69 crore to Surana Solar

• Paradip Port Trust had terminated a contract awarded to Surana Solar and had encashed Performance Bank Guarantee and Mobilisation advance Bank Guarantee

New Delhi: An arbitration tribunal constituted by the Odisha High Court has ruled in favour of Surana Solar Ltd and against the arbitrary reneging of the renewable energy contract by Paradip Port Trust (PPT). The tribunal has also asked Paradip Port to pay Rs 8.69 crore to the renewable energy developer, Surana Solar informed the stock exchanges in a regulatory filing on Friday. The case pertains to the award of a contract for a 10 MW solar power plant by Paradip Port Trust to Surana Solar in 2016, which the former terminated in the backdrop of disputes that arose between the two.

In the regulatory filing, Surana Solar said, "This is to inform you that the Company was awarded an EPC contract for execution, operation & maintenance of a l0 MW (AC) Solar Power Plant by Paradip Port Trust (PPT) in the year 2016. However in the course of implementation, certain disputes arose between the Company and PPT with regard to the project. PPT had cancelled the LOI / terminated the contract and encashed the Performance Bank Guarantee and Mobilisation advance Bank Guarantee."

Odisha HC asks Paradip Port Trust to pay Surana Solar Rs 8.69 cr

Surana Solar had challenged the matter in the Odisha High Court in 2018. It said that in an order passed on April 8, the tribunal asked Paradip Port Trust to pay Rs 8.69 crore to the company in lieu of the encashed bank guarantee and including the interest on such amount and the arbitration cost. "The Company had challenged such arbitrary action before the Arbitral Tribunal constituted by the Hon'ble High Court of Odisha. Upon the contest, the Tribunal on 8 April, 2021 has passed an Award in favour of the Company for a sum of Rs. 8,69,34,723/- towards the amount of encashed Bank Guarantee, interest on such amount and Arbitration cost."

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The backdrop

Surana Solar was awarded the EPC Contract by Paradip Port Trust for setting up the 10 MW solar power plant at the port in 2016. During the implementation of the project, Surana Solar had made a representation for escalation in cost and extension of time limit in completion of the project. The contention was turned down by PPT, who then invoked the mobilisation advance guarantee and performance bank guarantee amounting to Rs 666.63 lakh.  

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