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NEW DELHI : The Supreme Court on Thursday upheld an arbitral tribunal award directing the Delhi Metro Rail Corp. (DMRC) to pay 2,782 crore with interest to a consortium headed by Anil Ambani-led Reliance Infrastructure Ltd (RInfra) that operated the Delhi Airport Metro Express Line till 2012.

The tribunal award passed on 11 May 2017 was invoked at the instance of DMRC after the consortium of Reliance Energy Ltd (renamed as Reliance Infrastructure) and Construcciones y Auxiliar de Ferrocarriles SA terminated the concession agreement in October 2012, citing the failure of DMRC to cure defects in the structure supporting the Airport Metro Express Line.

DMRC had challenged the tribunal’s ruling in Delhi high court, where a single judge on 6 March 2018 upheld the award and ordered the entire amount of 2,782.33 crore be released by DMRC, along with interest at 2 percentage points over State Bank of India’s prime lending rate. Following this, DMRC appealed to a division bench of the court, which ruled in its favour and set aside the arbitral award. The Anil Ambani-led Delhi Airport Metro Express Pvt. Ltd (DAMEPL) then challenged this decision in the Supreme Court.

A bench of Justices L. Nageswara Rao and S. Ravindra Bhat, while upholding the award and the order of the single judge of the high court, said, “It cannot be said that the view of the tribunal is perverse. Therefore, we do not concur with the high court’s opinion that the award of the tribunal on the legality of the termination notice is vitiated due to the vice of perversity."

The top court also objected to the manner in which the division bench scrutinized the award. “The members of the arbitral tribunal, nominated in accordance with the agreed procedure between the parties, are engineers and their award is not meant to be scrutinized in the same manner as one prepared by legally trained minds."

Setting aside the division bench’s 15 January 2019 order, the top court said: “As the arbitrator is the sole judge of the quality as well as the quantity of the evidence, the task of being a judge on the evidence before the tribunal does not fall upon the court in the exercise of its jurisdiction under Section 34 of the Arbitration and Conciliation Act 1996."

Following the judgement, DMRC spokesman Anuj Dayal said, “The judgement is being currently analyzed for future course of action."

The dispute between the two firms relates to the operation of the 22.7km Airport Metro Express Line from New Delhi Railway Station to Dwarka Sector 21 via Indira Gandhi International Airport. DMRC entered into an agreement with DAMEPL in August 2008 for the design, installation, commissioning, operation and maintenance of the airport metro line. The agreement in the nature of public-private partnership required DMRC to undertake the design and construction of a basic civil structure for the project.

In May 2012, the Anil Ambani-led company complained of defects in design and quality in the installation of viaduct bearing that was denied by DMRC. A joint inspection committee was set up that gave its report in July 2012. This was followed by another letter by DAMEPL, giving 90 days for DMRC to cure the defects. On completion of 90 days, DAMEPL issued a notice terminating the agreement on 8 October 2012, accusing DMRC of defaulting on the agreement. DMRC, however, said that it had carried out the required rectifications.

While the dispute between the parties was pending before the arbitral tribunal, DMRC restarted the line after obtaining a certificate from the commissioner of metro rail safety on 18 January 2013. The report placed conditions on the speed limit for safety and insisted on regular monitoring. This was cited by DMRC to show that the structure was safe, contrary to DAMEPL’s claim.

However, the tribunal undertook a detailed enquiry into all aspects and found as many as 1,551 cracks in 367 girders and 80 girders with twists varying between 10 to 20 mm. The tribunal was of the opinion that these defects adversely impacted the integrity of the structure. As effective steps were not taken within the cure period of 90 days, the tribunal held that DMRC was in breach of the concession agreement.

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