Delhi Metro loses ₹4,600 crore arbitral award against Reliance Infra for airport line

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New Delhi, India (Urban Transport News): Anil Ambani-led Reliance Infrastructure is set to get Rs 4,600 crore from the Delhi Metro Rail Corporation Ltd (DMRC), as the Supreme Court of India has granted an arbitration in its favor in a case related to the Delhi Metro’s Airport Express Line metro project. The award is retained.

In 2008, Delhi Metro Rail Corporation Limited (DMRC) entered into an agreement with Delhi Airport Metro Express Private Limited (DAMEPL), a special purpose arm of Reliance Infra, for the design, installation, commissioning, operation and maintenance of the 22.7 km long Airport Metro Express Line. was signed. Indira Gandhi International Airport with 6 stations from New Delhi Metro Station.

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In 2012, DAMEPL complained to DMRC for faulty design and poor quality in installation of bearings in the viaduct of the Airport Metro Express Line. DAMEPL served a notice requesting DMRC to rectify the defects in the viaducts within a period of 90 days, failing which it would be considered a breach of agreement as the entire viaducts and stations were built under DMRC’s supervision. Mangu Singh, the current Managing Director of DMRC, was in charge of the project during the construction period.

As DMRC failed to rectify the defects within 90 days from the date of issue of the notice, DAMEPL issued a second notice to terminate the Concession Agreement, resulting in default under the Concession Agreement. Aggrieved by DAMEPL’s notice, DMRC filed for arbitration, claiming that the termination notice issued by DAMEPL was illegal and sought compensation of Rs 3,173 crore with interest of 18 per cent per annum.

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In response to DMRC’s arbitration claim, DAMEPL justified the termination in line with the concession agreement and consequently, filed a counterclaim seeking an amount of Rs 3,470 crore as termination payment along with interest.

The arbitral tribunal “made a thorough analysis of the defects in the civil structure and the steps taken for their repair/rectification” and “concluded that there were 1,551 cracks in 367 girders, i.e. 72% of the girders were affected by such cracks” it further said. That “these defects were neither rectified nor effective steps were taken by DMRC within the period of treatment up to October 8, 2012, leading to a material breach on the part of DMRC.”

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After hearing both the sides, the arbitration tribunal upheld the claims of DAMEPL and directed DMRC to pay Rs 2,782.33 crore along with additional interest as termination payment. The award was challenged by the DMRC in the Delhi High Court, which quashed the arbitration award issued by the tribunal on May 11, 2017. DAMEPL then challenged this decision in the Supreme Court of India.

Allowing the appeal of DAMEPL, a bench of Justices L Nageswara Rao and S Ravindra Bhat upheld the award awarded to DAMEPL on May 11, 2017 and set aside the order of the Division Bench of Delhi High Court on January 15, 2019, which partially annulled the arbitral award.

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“The appeal filed by DAMEPL is allowed and the decision of the Division Bench of the High Court is set aside. The finding of the Division Bench that the award of the Arbitral Tribunal is prone to patent illegality and outrages the conscience of the Court, is held to be incorrect,” the Division Bench said.

The bench further observed that “there is no ambiguity in the findings of the Arbitral Tribunal as to the time given to rectify the defects and the effective date of expiry of the concession agreement” and therefore, it is “not in agreement with the findings” of the Division Bench. stated that there is an ambiguity in the award relating to the date of expiry, which has a bearing on the final outcome of the award”.

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“The Hon’ble Supreme Court has today delivered its judgment in the Airport Metro Express Line matter and the appeal of DAMEPL has been allowed. DMRC Executive Director (Corporate Communications) Anuj Dayal said, “Analysis of the decision is being done at present for future course of action.”

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