BHEL Challenges Insolvency Petition to Enforce Arbitration Award Against Hiranmaye Energy

18 Aug 2023 , 01:31 AM

Bharat Heavy Electricals (BHEL), a state-owned entity, has contested an insolvency petition against Hiranmaye Energy, a coal power producer in West Bengal. The challenge is rooted in BHEL’s intent to enforce a Rs 388.4 crore arbitration award against Hiranmaye Energy.

BHEL’s response involves filing an application with the Kolkata bench of the National Company Law Tribunal (NCLT) to invalidate the insolvency petition lodged by REC. The initiation of REC’s insolvency application, governed by Section 7 of the Insolvency and Bankruptcy Code, pertains to Hiranmaye Energy’s default on repaying a debt of Rs 2,500 crore.

BHEL’s dispute with Hiranmaye Energy revolves around the encashment of bank guarantees submitted by BHEL for a commissioned boiler turbine generator project. This project, designed for a 450 MW (3×150 MW) coal-based power plant in Haldia, West Bengal, saw BHEL being awarded the contract in October 2010. Delays attributed to financial closure issues postponed the project’s commencement until March 2014.

BHEL alleges that despite completing two units and rectifying turbine stabilization problems, the commissioning of the project was hindered, preventing progress by November 2017. The challenge posed by the insolvency petition aims to prevent the moratorium that would occur if REC’s application is accepted, subsequently obstructing BHEL’s ongoing efforts to secure the arbitration award.

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