The Thermax RCF Arbitral Award dispute took a decisive turn when the Bombay High Court quashed the ₹173 crore arbitral award passed against Thermax Ltd in its long-running conflict with Rashtriya Chemicals and Fertilizers Ltd regarding turbine failures at RCF’s Thal fertiliser facility.
The Court held that the arbitral findings could not survive judicial scrutiny under Section 34 of the Arbitration and Conciliation Act.
Court Faults Arbitrator on Evidence, Contractual Interpretation
Justice RI Chagla observed that the arbitrator sidestepped crucial contractual clauses and overlooked technical material which went to the heart of the turbine failure controversy.
The Court noted that Siemens’ final Root Cause Analysis, relied on by Thermax, had clearly documented compressor damage caused by accumulated dirt due to delayed cleaning and non-replacement of clogged filters.
RCF had conceded that hundreds of filter alarms were recorded before the breakdown but the filters were not replaced.
According to the Court, these operational lapses carried significant probative value and yet the arbitrator either ignored them or selectively interpreted them while accepting RCF’s case of alleged design defect and misconfigured alarms.
Consequential Loss Claim Held Contractually Barred
The High Court also set aside the award of ₹173.72 crore granted to RCF towards additional power purchase costs for the period during which the gas turbine generators remained inoperative.
Justice Chagla clarified that the contract expressly excluded consequential loss and that the tribunal was not empowered to rewrite the terms mutually agreed by the parties.
The ruling invoked Section 73 of the Contract Act to emphasise that compensation cannot be awarded for remote or indirect losses. The Court held that RCF’s claim was purely consequential in nature and barred by the contract itself.
Contractual Background and The Technical Dispute
The parties had entered into a 2016 lump sum turnkey agreement valued at ₹353 crore for installation of two 25 megawatt gas turbine generators and associated heat recovery units, using Siemens turbines.
RCF later asserted that the turbines were inherently defective, culminating in the arbitral award now set aside.
Thermax insisted that the failures were attributable to poor operation and maintenance practices at RCF’s end, including delayed compressor washing and non replacement of filters despite repeated alarms.
Siemens’ RCA supported this position, but the arbitrator allegedly brushed aside these findings without assigning cogent reasons.
High Court’s Final Word
Justice Chagla concluded that the Thermax RCF Arbitral Award suffered from patent illegality, lack of reasoning, and findings unsupported by evidence. Consequently, the award was set aside in entirety.
Appearance of Counsel
- For Thermax Ltd: Senior advocates Janak Dwarkadas and Mustafa Doctor with Aditya Thakkar, R Sudhinder, Ranjit Shetty, Rahul Dev and Monika Vyas instructed by Argus Partners
- For RCF: Senior advocate Shyam Mehta with Aditya Bapat, Mac C Bodhanwala, Sheraj M Bodhanwalla, Sayali Puri, Akash Singh and Shreyas Thakur instructed by MS Bodhanwala and Co.
Bench Details
- Court: High Court of Bombay
- Judge: Justice RI Chagla
- Date of Judgment: 9 December 2025
- Case Title: Thermax Limited v Rashtriya Chemicals and Fertilizers Ltd
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