Shares of VA Tech Wabag jumped more than 6% on Wednesday following the company’s announcement that it will receive Rs 140 crore due to arbitration proceedings related to a contract with the Telangana State Power Generation Corporation Ltd (TSGENCO).
The arbitration was related to a dispute arising from the contract between TSGENCO and a consortium of Tecpro Systems Ltd, VA Tech Wabag, and Gammon Engineers and Contractors (P) Ltd.
Tecpro Systems had initiated the arbitration against TSGENCO without the consent of the other consortium members, violating the consortium agreement.
The arbitration was challenged by TSGENCO, VA Tech Wabag, and Gammon, leading to the appointment of Retired Hon’ble Justice Madan B. Lokur as the sole arbitrator by the Supreme Court of India.
In the arbitration proceedings, Justice Lokur upheld the contention of TSGENCO, VA Tech Wabag, and Gammon, stating that Tecpro Systems, as an individual consortium member, could not invoke arbitration against TSGENCO.
Furthermore, the arbitrator rejected the claims filed by Tecpro against TSGENCO and deemed that arbitration proceedings against Wabag and Gammon were not maintainable.
As a result of this order, VA Tech Wabag, as the consortium leader, is entitled to receive approximately Rs 140 crore, which TSGENCO had held due to the pending arbitration proceedings.
Shares of VA Tech Wabag hit an intraday high of Rs 534.90, climbing 6.7% higher from the previous close price on the National Stock Exchange (NSE). At 1:50 pm, the stock was trading 4.98% higher at Rs 526.15.