PSPCL Challenges Rs 600 Crore Arbitration Award to EMTA Coal Ltd

• Mar 4, 2025

Punjab State Power Corporation Limited (PSPCL) has moved a Chandigarh court to challenge an arbitration award of over ₹600 crore granted in favor of EMTA Coal Limited. In its application, PSPCL has requested the court to set aside the order.

The arbitrator had directed PSPCL to pay the amount under various heads, including coal crushing and sizing charges, surface transportation charges, rejection of non-conforming coal rakes, late payment of coal invoices, excise duty on royalty, and Central Sales Tax (CST). The surface transportation charges are to be calculated by both parties within a month as per the arbitrator’s directive.

The arbitration proceedings were initiated after EMTA Coal Limited invoked the arbitration clause under their agreements. Following the award, EMTA filed an execution petition through senior advocate Anand Chibber and Amitabh Tewari.

Background of the Dispute

In 2000, the Punjab State Electricity Board (PSEB) entered into an agreement with EMTA to form a joint venture, Panem Coal Mines Limited. A coal purchase agreement was signed between Panem and PSEB for the supply of coal from the Pachwara Coal Block to PSEB’s power stations.

However, EMTA alleged that PSPCL had failed to make payments due under various contractual heads. The dispute escalated after the Supreme Court annulled all coal block allocations made by the Union Government between 1993 and 2011. In March 2015, the government reallocated the Pachwara Captive Coal Block to PSPCL, which then issued a fresh Request for Proposal (RFP) in April 2018, inviting global bids for the selection of a Mine Developer-cum-Operator. The DBL-VPR Consortium emerged as the lowest bidder and was selected for the project.

PSPCL’s Stand

PSPCL has contested the arbitration award, arguing that EMTA is not a direct party to the agreements—only PSPCL and Panem are. It contends that EMTA cannot claim on behalf of Panem and that the claims are both time-barred and waived. Additionally, PSPCL asserts that EMTA’s claims are based on an incorrect interpretation of contractual agreements and that the company is not entitled to any relief.

Despite these objections, the arbitrator ruled in favor of EMTA. The award states that PSPCL must pay the entire amount with an interest rate of 9% from September 19, 2014, the date arbitration was invoked. If the amount is not paid within three months, PSPCL will be liable to pay interest at an increased rate of 12%.