Delhi HC's Split Verdict in JITF v. NTPC is: The Case for Greater Clarity; and Where the Headlines went Wrong?

New Delhi, Oct. 1 -- On September 2, 2026, a Division Bench of the Delhi High Court delivered what looks, at first glance, like a decisive win for Jindal ITF Limited (JITF) in its long-running dispute with NTPC Limited. But is it really? If so, why the 1:1 split verdict? There is certainly more than what meets the headlines.

This is not even a case of fine print. It calls for a deeper exploration into what was missed.

While the final paragraphs of Justice C. Hari Shankar's opinion, and the story appears simple:

"The appeal is allowed, the Single Judge's order is set aside, and a 2019 arbitral award is restored "in its entirety."

But that is only half the story.

Justice Om Prakash Shukla, the second judge on the bench, dissented - sharply and specifically - on the four claims that carry almost the entire commercial weight of the case. Between them, Claims 1, 3, 3A and 5A account for roughly Rs.1,883 crore of the Rs.1,891crore award the Arbitral Tribunal originally granted JITF in January 2019, against a total claim of Rs.1,903 crore - with every one of NTPC's Rs.67.77 crore counterclaims rejected.

"To my mind, the learned Single Judge has very well set aside the impugned award on the ground of Patent illegality and has not exceeded his jurisdiction under Section 34 of the Act. Thus, the findings reached by the learned Single Judge deserve no interference."

The result is not a judgment at all in the conventional sense, but a point of difference, now referred to the Chief Justice for placement before a Third Judge or Larger Bench. The case remains open.

And the judge who actually agreed with NTPC - Justice Shukla - built a detailed, fact-heavy case for why the Tribunal's award should not survive. That case deserves to be read on its own terms, not as a footnote to the judge who disagreed with it.

The Backstory: The full Context to a Contract Built on Performance & Guarantees

The dispute began in 2008, when NTPC and the Inland Waterways Authority of India (IWAI) agreed to explore transporting imported coal to NTPC's Farakka plant through National Waterway-1. Following a competitive tender, JITF emerged successful, and a Tripartite Agreement (TPA) was executed in August 2011.

Under the TPA, JITF was required to build and operate, at its own cost, infrastructure for unloading and transporting coal by barge to Farakka. In return, NTPC committed to a Minimum Guaranteed Quantity (MGQ) of 3 MMTPA for seven years, while IWAI was to maintain the waterway at a minimum depth of 2.5 metres. NTPC's case is that JITF failed to fulfil its contractual obligations.

NTPC's Case: JITF's Performance and Contractual Limits

NTPC's case rests on the following principal grounds. First, JITF's own performance data allegedly showed persistent operational failure: unloading averaged about 8,300 MT/day against the contractual 12,000 MT/day, while coal transportation took 34 -163 days instead of the stipulated five. NTPC argues these chronic defaults justified termination on 24 July 2017 and were inadequately addressed by the Arbitral Tribunal despite JITF's own admissions.

Second, as regards Claim no. 1, Article 3.2(b) provided only extension of COD as compensation. The Tribunal could not substitute this contractual remedy with monetary damages under Section 73. Damages amounting to Rs 424 Cr. were based on hypothetical assumptions and lacked proper adjudication.

Thirdly, NTPC challenges the Tribunal's use of 3 MMTPA as the Minimum Guaranteed Quantity (MGQ), despite MoEFCC subsequently restricting inland-waterway transportation to 1.5 MMTPA. NTPC, inter-alia, argues damages could not properly be based on a quantity prohibited by regulatory clearance.

Fourth, NTPC disputes the Rs.1,108-crore termination damages under Claim 5A. It argues Article 14.1(c) specifically governed termination compensation and capped liability, whereas the Tribunal improperly used Article 7.3's MGQ shortfall mechanism to award an uncapped seven-year revenue stream. Justice Shukla's dissent substantially accepted these arguments.

What Both Judges Actually Agree On

Both judges applied the same Section 34 framework, drawing on Associate Builders, ONGC v. Saw Pipes and Ssangyong Engineering: courts cannot reappraise evidence or act as appellate forums, and may interfere only for patent illegality, perversity, or conflict with the fundamental policy of Indian law. Their disagreement concerns only how that test applies to the Tribunal's findings.

Both also agreed that the Single Judge erred in setting aside the entire award without addressing claims beyond the four considered. Those claims therefore survive, but represent only a small portion of the overall exposure, with the principal dispute exceeding Rs.1,800 crore.

Why the Dissent Is the More Interesting Opinion

Justice Shukla's opinion is not a reflexive defence of the Single Judge; it engages independently, claim by claim, with the Tribunal's reasoning - and its central theme is a coherent one: an arbitral tribunal's authority is a creature of the contract, and where the contract already specifies how a particular breach is to be compensated (extension of COD under Article 3.2(b); a capped termination-compensation regime under Article 14.1(c)), a tribunal cannot reach for a different, more lucrative remedy under the general provisions of the Contract Act simply because the specified remedy has become inconvenient to apply. He grounded this in the Supreme Court's recent line of authority, including SEPCO Electric Power Construction Corporation v. GMR Kamalanga Energy Ltd. (2025), reiterating that an arbitrator cannot travel outside the four corners of the contract.

NTPC's case is not merely a technical rearguard action - it is a substantive challenge to whether the Tribunal ever considered all the facts presented to it.

What Happens Now

The Division Bench has framed a formal point of difference - whether the Single Judge's decision on Claims 1, 3, 3A and 5A is sustainable in law - and referred it to the Chief Justice for constitution of a Third Judge or Larger Bench. Until that reference is resolved, roughly Rs.1,800 crore of the award remains genuinely undetermined, not restored. Only the smaller, undiscussed claims, and the shared Section 34/37 legal framework, can be treated as settled.

For NTPC, the practical reality is that the Single Judge who heard the full record first, and one of the two appellate judges who reviewed it, both found the award unsustainable on the same four claims - on grounds rooted in TPA's provisions, JITF's own performance data, a binding environmental restriction, and the contract's own termination clause. That is a considerably stronger position than a bare 2-1 loss narrative suggests, and it is the position a Third Judge will now have to weigh afresh.

The post is writer's own view, intended for general informational purposes and does not constitute legal advice.

Published by HT Digital Content Services with permission from Millennium Post.