The Delhi High Court has partly set aside an arbitration award directing Delhi Metro Rail Corporation (DMRC) to pay over ₹2,700 crore to a consortium headed by Reliance Infrastructure Ltd for breach of an agreement between them.
A Bench of Justice Sanjiv Khanna (now a Supreme Court judge) and Justice Chander Shekhar had “set aside the award except to the extent we have upheld the conclusion of the Arbitral Tribunal on the question of waiver”.
The consortium was a successful bidder in the international competitive bidding process for construction, operation and maintenance of the Delhi Airport Metro Express Line based on PPP model for providing high-speed metro connectivity between New Delhi railway station and IGIA Terminal 3 with further line till Sector 21 in Dwarka.
Reliance Infrastructure subsidiary, the Delhi Airport Metro Express Private Limited (DAMEPL), had later pulled out from running the Airport Express Line with effect from July 2012 in view of cracks and defects in the girders, bearings, etc.
Subsequently, the matter was referred to arbitration. An Arbitral Tribunal had in its May 2017 award accepted DAMEPL’s claim that running of operations on the line was not viable due to structural defects. The tribunal had held that the DMRC was liable to pay over ₹2,700 crore as termination payment. In March 2018, a single-judge Bench of the High Court had upheld the award and rejected the objections filed by the DMRC.
However, the Division Bench last week held that “award of ₹2782.33 crore to DAMEPL…as termination payment…is set aside and quashed”.
The Bench said: “The Arbitral Tribunal ignored and did not consider the vital evidence of certification for commercial operations accorded by the CMRS while deciding the question of civil structure faults and in holding that no effective steps to cure the defects were taken.
The court gave liberty to both the DMRC and DAMEPL to invoke an arbitration clause for fresh adjudication.
