RInfra-DMRC: SC order settles legal principles on arbitration awards

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September 14, 2021 8:04 AM

The tribunal had heard the case of dispute between DAMEPL and DMRC for three-and-a-half years and granted a unanimous verdict in favour of the former in 2017 and directed DMRC to pay Rs 4,800 crore as damages to the company.

The money so received will be utilised by the company to pay off its debt to the banks, mostly state owned.The money so received will be utilised by the company to pay off its debt to the banks, mostly state owned.

The Supreme Court’s order last week upholding the Rs 4,600-crore arbitration award in favour of Anil Ambani’s group firm, Delhi Airport Metro Express (DAMEPL) against Delhi Metro Rail Corporation (DMRC) has set the legal standards for judicial review of arbitral awards, legal observers maintain. The judgment will help the high courts to develop and apply standards when it comes to scrutinising decisions made by arbitral tribunals.

The SC basically reiterated that there are only limited grounds available for annulment of arbitral awards.
According to Mahesh Agarwal, who appeared for DAMEPL, “The landmark judgment settles the controversy and directs enforcement of termination payment, which is payable to a concessionaire to compensate for the investment made by the private companies. It also provides comfort to banks/FIs which fund large-scale infrastructure projects…SC reaffirmed the principle of non-interference into arbitration awards.”

The tribunal had heard the case of dispute between DAMEPL and DMRC for three-and-a-half years and granted a unanimous verdict in favour of the former in 2017 and directed DMRC to pay Rs 4,800 crore as damages to the company.

On March 6, 2018, a single judge bench of the Delhi HC headed by Justice Sanjeev Sachdeva upheld the arbitral award and directed DMRC to pay within four weeks Rs 3,502 crore, 75% of the total award money, as per the government of India’s approved guidelines, to Reliance Infrastructure.

This order was challenged by the DMRC before a division bench of the Delhi HC, which, in 2019, set aside the arbitration award, and consequently, the matter reached the Supreme Court.

Finally, the SC order last week brought closure to the eight-year-long legal battle between RInfra and DMRC around the Delhi Airport Express Metro line.

The SC order will pave the way for the recovery of damages and termination fee claimed by Reliance Infrastructure, as per the provisions of concession agreement between DMRC and the company. The money so received will be utilised by the company to pay off its debt to the banks, mostly state owned.

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