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SC turns down RInfra arm’s plea, upholds HC’s interest calculation

A bench comprising justice LN Rao and GR Gavai upheld the Delhi High Court judgment that had refused computation of post-award interest on sums awarded to DAMEPL.

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According to the judgment, if there is an agreement between the parties to the contrary, the tribunal loses its discretion to award interest and will have to be guided by the agreement between the parties.

The Supreme Court on Thursday dismissed the plea of Reliance Infrastructure’s arm, Delhi Airport Metro Express (DAMEPL), for additional interest (interest on interest) payment of around Rs 1,200 crore pursuant to an arbitration case that was decided in favour of the firm in its dispute with Delhi Metro Rail Corporation.

A bench comprising justice LN Rao and GR Gavai upheld the Delhi High Court judgment that had refused computation of post-award interest on sums awarded to DAMEPL. Challenging a part of the Delhi High Court’s judgment that asked DMRC to pay balance arbitration award amount of around Rs 3,300 crore it owed to the firm by May 31, DAMEPL said that only the pre-award interest component awarded to it was in respect of the termination payment (TP), while the remaining claims awarded, other than TP which carry interest from May 12, 2017 (the date of stamp duty) were yet to be paid.

The DMRC had opposed payment of any further interest on interest to DAMEPL. Finding “no merit” in the DAMEPL’s appeal, the SC said that in view of the specific agreement between the parties, the interest prior to the date of award as well as also after the date of award will be governed by Article 29.8 of the Concession Agreement, as directed by the arbitral tribunal, which had reached finality on September 9 last year when the apex court had upheld the Rs 4,600-crore arbitration award in favour of DAMEPL.

According to the judgment, if there is an agreement between the parties to the contrary, the tribunal loses its discretion to award interest and will have to be guided by the agreement between the parties. “The provision is clear that the tribunal is not bound to award interest. It has a discretion to award the interest at such rate as it deems reasonable or not to award at all. It further has a discretion to award interest on the whole or any part of the money. It is also not necessary for the tribunal to award interest for the entire period between the date on which the cause of action arose and the date on which the award is made. It can grant interest for the entire period or any part thereof or no interest at all,” the order stated.Both sides differed on how much additional interest has accrued on the award amount. While DMRC said that its liability stood at around Rs 5,000 crore, the RInfra arm claimed it to be around Rs 8,009.38 crore with interest as on February 14, 2022.

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