Case Note: UHK Power Company Ltd. The State Of Himachal Pradesh
- IJLLR Journal
- 7 hours ago
- 1 min read
Eleena Eapen, Symbiosis Law School, Pune
Facts of the case
The conflict between UHL Power Company Ltd and the State of Himachal Pradesh stemmed from the development of the Phina Singh Hydro Electric Project. In 2006, UHL was awarded the project through a competitive bidding process, leading to the signing of an Implementation Agreement on January 3, 2007. The agreement required UHL to obtain statutory clearances and achieve financial closure within specified timelines. However, due to procedural delays in securing environmental and forest clearances, largely beyond UHL's control, the State granted multiple extensions. Despite this, the State unilaterally terminated the agreement on July 21, 2021, citing non-compliance with milestones. UHL, terming the termination arbitrary, invoked arbitration as per the agreement.
A sole arbitrator, Retired Justice R.K. Mahajan, was appointed and issued an award on June 5, 2005, in UHL's favor. The arbitral award granted UHL ₹26,08,89,107.35 towards expenses incurred, along with pre-claim compound interest at the rate of 9% per annum. It also provided for future interest at the rate of 18% per annum on the total amount awarded, should it remain unpaid for six months.
The State of Himachal Pradesh became aggrieved by the award and filed a petition against the enforceability of the award under Section 341 of the Arbitration and Conciliation Act, 1996. In its order dated December 16, 2008, the Single Judge of the Himachal Pradesh High Court set aside the entire arbitral award, disallowing all of UHL’s claims. UHL then appealed the decision in respect to Section 372 of the Act, leading to a Division Bench decision dated May 24, 2011, which partially restored the award.
