Reliance Infrastructure is set to get ₹4,600 crore from Delhi Metro Rail Corporation Ltd (DMRC) after the Supreme Court upheld an arbitration award in favour of the Anil Ambani-backed infrastructure company in a case related to the Airport Metro Express Line project.
The case
In 2008, an agreement was entered into between DMRC and Reliance Infra’s special purpose entity DAMEPL for design, installation, commissioning, operation and maintenance of Airport Metro Express Line. In 2012, DAMEPL complained of faulty design and quality in the installation of viaduct bearings. A notice was issued by DAMEPL asking DMRC to cure the defects in DMRC’s works within a period of 90 days from the date of the notice, failing which it shall be treated as a breach of the agreement.
DAMEPL then issued a notice terminating the concession agreement as, according to it, the defects were not cured within a period of 90 days, resulting in an event of default under the concession agreement. DMRC filed for arbitration claiming that the termination notice issued by DAMEPL was illegal and asked for compensation of ₹3,173 crore with an interest of 18 per cent per annum.
DAMEPL justified the termination as being in conformity with the concession agreement and consequently, filed a counter claim seeking an amount of ₹3,470 crore as termination payment along with interest. The Tribunal upheld DAMEPL’s claims and awarded ₹2,782.33 crore, along with further interest, as termination payment. This was challenged by DMRC at the Delhi High Court, which set aside the arbitration award. DAMEPL then challenged this decision at the Supreme Court.
Appeal allowed
The Supreme Court on Thursday said, “the appeal filed by DAMEPL is allowed and the judgment of the Division Bench of the High Court is set aside.”
“The conclusion of the Division Bench that the award of the Arbitral Tribunal suffers from patent illegality and shocks the conscience of the court is held to be erroneous,” it added.