The Delhi High Court recently made a decision on February 23, 2026, about a disagreement between Steel Authority of India Limited (SAIL) and M/S Primetals Technologies India Pvt Limited. The case was about money taken away for not meeting the Minimum Guaranteed CENVAT Credit (MGCC) from a contract price.
Steel Authority of India Limited (SAIL) and M/S Primetals Technologies India Pvt Limited had a contract from June 1, 2007, to replace some equipment at the Bhilai Steel Plant. The contract was worth about ₹44.93 crore. The equipment was officially accepted in 2010 and 2013. However, a problem came up when ₹1.40 crore was deducted for not meeting the MGCC from the final payment made in July 2018.
The arbitration started on December 28, 2021, after attempts to resolve the issue failed. The arbitrator had to decide if the claims were too old to be considered, if the deduction was legal, and if M/S Primetals Technologies India Pvt Limited should get the money back with interest.
"The arbitrator focused on seven main questions, mostly about time limits, stopping someone from going back on their word, and getting back the deducted money."
Justice Avneesh Jhingan noted that the arbitration claim was made in time. Even though a notice was given in 2014, the real issue started in July 2018 when the deduction happened. The court said that giving up rights needs clear knowledge and intention, which was not shown here.
The court looked at several parts of the contract, especially the contract price and MGCC.
The court decided against Steel Authority of India Limited (SAIL), supporting the arbitrator's decision in favor of M/S Primetals Technologies India Pvt Limited. The court confirmed that the deduction for MGCC shortfall was not allowed under the contract terms.
This case highlights the need for clear contract terms and shows that deductions not clearly stated in the agreement cannot be made.
