Tata Power Files FIR Against Kleros Capital, Others Over ₹4,800 Crore Singapore Arbitration Award In Russia Coal Project Dispute

Mumbai: Tata Power Company Ltd has accused Kleros Capital Partners Ltd, its directors and others of fraud involving an award of approximately Rs4,800 crore in arbitration proceedings before the Singapore International Arbitration Centre (SIAC) over a coal mining project in Russia.

Also Watch:

The accused named in the complaint include Kleros and its directors Probhodh Palit and Ingolfur Smulason; Stuart Isaacs; John L Weiss; litigation funder Omni Bridgeway Limited; and former Tata Power employees Vivek Sharma and Shakti Patnaik.

According to the FIR, the complaint, filed at MRA Marg police station by Shantanu Singh, group head (legal) at Tata Power, alleges that the accused conspired to defraud the company and manipulate the arbitration proceedings through criminal conspiracy, cheating and the misuse of confidential company information.

Jet Airways Liquidator Moves NCLAT To Recover ₹873 Crore From Boeing Over Undelivered Aircraft

According to the FIR, Kleros, registered in the British Virgin Islands, approached Tata Power in April 2013, claiming to possess confidential information about coal reserves in Russia’s Kamchatka region. It allegedly assured Tata Power that coal could be supplied to its Mundra plant in Gujarat at less than $50 per metric tonne.

Tata Power entered into non-disclosure agreements (NDAs) with Kleros in Sept 2013 and Sept 2014. The agreements included a non-circumvention clause. Kleros allegedly claimed that the proposed mine contained about 1.1 billion tonnes of coal reserves, with an annual production of 10 million tonnes of enriched steam coal. It also estimated that the licence would cost $175 million.

Kleros proposed a joint venture in which Tata Power would acquire a 40% stake. However, the proposed investment figures kept changing, raising doubts about the project’s credibility. Tata Power withdrew from discussions in March 2016 after discovering that the initial price for the mining licence was approximately $300,000, substantially lower than Kleros’s quotation.

Though The Economic Lens: India Inc’s CFOs Confront Power, Pay And Accountability

In Dec 2017, Tata Power participated in a Russian government public auction and acquired the mining licence for approximately $4 million. A subsequent independent assessment of the project allegedly found that Kleros’s claim of supplying coal to Mundra at less than $50 per tonne was incorrect. The company’s board decided on Nov 10, 2020, not to proceed with the project. Twenty days later, Kleros initiated arbitration proceedings, alleging breach of the NDA and seeking substantial damages.

The complaint alleges that Kleros’ claim was supported by undisclosed relationships and unauthorised transfers of confidential data. Isaacs and Weiss, who allegedly had prior connections with Kleros representatives, were involved in the arbitration proceedings as an arbitrator and expert witness, respectively.

Tata Power claims that Weiss prepared a valuation report without visiting the site and that it was relied upon in arbitration. The company also alleges that Sharma and Patnaik transferred confidential emails and documents to their personal email accounts and subsequently shared sensitive information with Kleros.

The alleged leaked material included draft legal submissions, witness statements, lawyers’ questionnaires and an independent project assessment report. Tata Power claims that the confidential information allegedly shared with Kleros was subsequently used against the company during the arbitration proceedings in Singapore.

The complaint states that Tata suffered nearly $8 million (around Rs95 crore) in direct losses. It further alleges that the arbitration resulted in an unjustified award of $490 million against the company. The allegations have not yet been established in any court.

To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/