Voltas Ltd shares fell over 3% after a Qatar court ordered the company to pay ₹402 crore in a legal dispute involving its joint venture with OHL International and Contrack Ltd. The ruling favored OHLC JV, dismissing Voltas’ claims and affirming overpayment. The company plans to appeal the decision.
Voltas Ltd, part of the Tata Group, experienced a share price decline of over 3% on Thursday, following a ruling from a Qatar court requiring the company to pay approximately ₹402 crore. This decision is linked to a legal dispute involving a joint venture with OHL International from Spain and Contrack from Cyprus, collectively known as OHLC JV, pertaining to a sub-contracting agreement.
The conflict originated from a case filed by Voltas on August 14, 2023, at Doha’s Investment and Trade Court, seeking QAR 771.632 million (around ₹1,754.69 crore) for completed assignments and claims of project delays. In retaliation, OHLC JV issued counterclaims totaling ₹7,384.83 crore, significantly comprising ₹6,409 crore in damages.
As part of this legal issue, Voltas had provided two bank guarantees worth QAR 166.720 million (approximately ₹373 crore), which OHLC JV attempted to encash. However, the bank retained these funds, leading OHLC JV to pursue legal action against the financial institution.
In its latest filing, Voltas stated that the Qatar court favored OHLC JV, compelling the bank to release the guarantees along with extra compensation of QAR 1 million. The court dismissed Voltas’ claims, indicating that the company had received overpayment when repair expenses were accounted for.
Voltas expressed concerns regarding the ruling and is currently consulting with legal advisors, planning an appeal in the Court of Appeal. At approximately 2 PM on Thursday, Voltas shares were recorded at ₹1,348.80, reflecting a 3.27% decrease on the Bombay Stock Exchange (BSE).
The legal battle arises from Voltas Ltd’s subcontract arrangement under its joint venture with OHLC International and Contrack Ltd. The litigation primarily centers around financial claims related to project completion, variations, and alleged delays. The stark counterclaim from OHLC JV overshadowed Voltas’s request for recovery, indicating significant financial implications for the company. Legal disputes in international contexts, especially involving joint ventures, can entail extensive ramifications on shares, investor sentiment, and company liabilities.
Voltas Ltd’s share price has declined due to adverse rulings in a significant legal dispute over payment claims against a joint venture in Qatar. The company plans to appeal the court’s decision, which favored OHLC JV, potentially impacting its financial standing. This scenario emphasizes the financial sensitivity of legal proceedings in global business operations, especially for major firms like Voltas.
Original Source: www.cnbctv18.com
