Delhi HC Upholds 2,950 Crore Arbitration Award Plus Interest To Reliance Infrastructure's Subsidiary From Delhi Metro

The Delhi High Court, on Tuesday, upheld the Rs. 2,950 crore arbitration award along with interest to Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Reliance Infrastructure Limited (RInfra) against Delhi Metro Rail Corporation Limited.

The order was passed by Justice Sanjeev Sachdeva who was hearing two Petitions on the subject. One had been filed under Section 34 of the Arbitration and Conciliation Act, 1996 by Delhi Metro, challenging the award passed against it in May, 2017. Another Petition had been filed under Section 9 of the Act by DAMEPL, seeking a direction to Delhi Metro to deposit with the Court 75% of the award, i.e. Rs. 3502.62 Crores.

The award was granted in favor of RInfra, on the basis of termination provisions of the concession agreement, which was entered into between the two on August 25, 2008. Under the agreement the DMRC was to carry out the civil works, excluding at the depot, and the balance, including the project system works, were to be executed by DAMEPL. The Airport Express line was commissioned on February 23, 2011 after an investment of Rs 2,885 crore funded by DAMEPL’s promoters’ fund, banks and financial institutions.

DAMEPL had, however, terminated the concession agreement as the DMRC had not cured some defects in the line within 90 days of the notice issued by it. The Agreement was terminated with effect from January 1, 2013 and the project was handed over to the DMRC on June 30, 2013. Till handing over of the project, the DAMEPL had operated the line as a deemed agent of DMRC. Arbitration was resorted to in August, 2013, after failure of efforts to amicably resolve the issues.

The High Court, however, upheld this award, opining, "The Arbitral Tribunal has in great detail examined and assessed the material and evidence placed before it and has analyzed the relevant clauses of the contract and taken a view, which is plausible. I find no infirmity in the view taken by the Arbitral Tribunal so as to interfere with the award, in exercise of powers under Section 34 of the Act."

It, therefore, dismissed the Petition filed by Delhi Metro, and allowed DAMEPL's plea, but has directed Delhi Metro to deposit the amount directly in an Escrow account maintained with the Project Lenders within four weeks.

Read the Judgment