Bombay HC Partly Upholds Arbitration Award Against HPCL

The Bombay High Court on Wednesday upheld parts of a 2018 arbitral award that directed Hindustan Petroleum Corp. Ltd. to pay ₹62.5 million plus 7% interest to G.R. Engineering Pvt. Ltd. However, the court set aside another part of the award that had ordered

HPCL to refund ₹58.4 million in liquidated damages, also with 7% interest.

While the court ruled that most of the arbitral award didn’t warrant interference, it quashed the portion related to liquidated damages for lacking sufficient reasoning. It added that the arbitration agreement still stands with respect to this element and that both parties can initiate fresh arbitration on that issue.

The dispute stems from a delayed project awarded by HPCL to G.R. Engineering to build 12 mounded bullets for LPG storage at its Mahul refinery in Mumbai. The contract was to be completed by December 5, 2007, but was finished on February 2, 2010.

HPCL had withheld payments over several cost elements, including civil works and liquidated damages, which led G.R. Engineering to initiate arbitration. The 2018 award largely favoured the contractor, but HPCL challenged it in court