DELHI AIRPORT METRO EXPRESS PVT. LTD. versus DELHI METRO RAIL CORPORATION LTD.
[2021] 5 S.C.R. 984, Supreme Court of India, 2021
Outcome: Disposed off
Segment: Facts
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DELHI AIRPORT METRO EXPRESS PVT. LTD.
v.
DELHI METRO RAIL CORPORATION LTD.
(Civil Appeal No. 5627 of 2021)
SEPTEMBER 09, 2021
[L. NAGESWARA RAO AND S. RAVINDRA BHAT, JJ.]
Arbitration and Conciliation Act, 1996: s. 34 – Interference
with the arbitral award – Scope of – On facts, arbitration clause
invoked on account of dispute pertaining to Metro Rail project
between the parties – Arbitral tribunal held the termination notice
issued by the appellant was valid and on basis of ‘Adjusted Equity’
passed an award of Rs.2782.33 crore, along with interest, in favour
of the appellant – Single Judge of the High Court dismissed the
petition u/s. 34 for setting aside the award – However, the Division
Bench partly set aside the award – On appeal, held: While deciding
applications u/s. 34, the courts are mandated to strictly act in
accordance with and within the confines of s. 34, refraining from
appreciation or re-appreciation of matters of fact as well as law –
Courts do not sit in appeal against the arbitral award – Permissible
grounds for interference with a domestic award u/s. 34(2-A) on the
ground of patent illegality is when the arbitrator takes a view which
is not a possible one, or interprets a clause in the contract which no
fair-minded or reasonable person would, or commits an error of
jurisdiction by wandering outside the contract and dealing with
matters not allotted to them – Conclusions of
the arbitrator which
are based on no evidence or have been arrived at by ignoring vital
evidence are perverse and can be set aside on the ground of patent
illegality – Also, consideration of documents which are not supplied
to the other party is a facet of perversity falling within the expression
‘patent illegality’ – If a dispute which is not capable of settlement
by arbitration is the subject-matter of the award or if the award is
in conflict with public policy of India, the award is liable to be 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 erroneous – Judgment of the Division
Bench of the High Court set aside and the arbitral award in the
favour of the appellant is restored.
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Allowing Civil Appeal No.5627 of 2021 and dismissing Civil
Appeal No.5628 of 2021, the Court
HELD: 1.1 A cumulative reading of the UNCITRAL Model
Law and Rules, the legislative intent with which the Arbitration
and Conciliation Act, 1996 is made, Section 5 and Section 34 of
the 1996 Act would make it clear that judicial interference with
the arbitral awards is limited to the grounds in Section 34. While
deciding applications filed under Section 34 of the Act, courts
are mandated to strictly act in accordance with and within the
confines of Section 34, refraining from appreciation or re-
appreciation of matters of fact as well as law. [Para 22][1004-E-F]
Uttarakhand Purv Sainik Kalyan Nigam Limited. v.
Northern Coal Field Limited (2020) 2 SCC 455; Bhaven
Construction Through Authorised Signatory Premjibhai
K. Shah v. Executive Engineer Sardar Sarovar Narmada
Nigam Ltd. and Another 2021 SCC OnLine SC 8;
Rashtriya Ispat Nigam Limited v. Dewan Chand Ram
Saran (2012) 5 SCC 306 : [2012] 4 SCR 122 – relied
on.
Ssangyong Engineering and Construction Company
Limited v. National Highways Authority of India (NHAI)
(2019) 15 SCC 131 : [2019] 7 SCR 522 – referred to.
1.2 The limited grounds available to courts for annulment
of arbitral awards are well known to legally trained minds.
However, the difficulty arises in applying the well-established
principles for interference to the facts of each case that come up
before the courts. There is a disturbing tendency of
courts setting
aside arbitral awards, after dissecting and reassessing factual
aspects of the cases to come to a conclusion that the award needs
intervention and thereafter, dubbing the award to be vitiated by
either perversity or patent illegality, apart from the other grounds
available for annulment of the award. This approach would lead
to corrosion of the object of the 1996 Act and the endeavours
made to preserve this object, which is minimal judicial
interference with arbitral awards. That apart, several judicial
pronouncements of this Court would become a dead letter if
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arbitral awards are set aside by categorising them as perverse or
patently illegal without appreciating the contours of the said
expressions. [Para 24][1007-H; 1008-A-D]
1.3 Patent illegality should be illegality which goes to the
root of the matter. In other words, every error of law committed
by the arbitral tribunal would not fall within the expression ‘patent
illegality’. Likewise, erroneous application of law cannot be
categorised as patent illegality. In addition, contravention of law
not linked to public policy or public interest is beyond the scope
of the expression ‘patent illegality’. What is prohibited is for
courts to re-appreciate evidence to conclude that the award suffers
from patent illegality appearing on the face of the award, as courts
do not sit in appeal against the arbitral award. The permissible
grounds for interference with a domestic award under Section
34(2-A) on the ground of patent illegality is when the arbitrator
takes a view which is not even a possible one, or interprets a
clause in the contract in such a manner which no fair-minded or
reasonable person would, or if the arbitrator commits an error of
jurisdiction by wandering outside the contract and dealing with
matters not allotted to them. An arbitral award stating no reasons
for its findings would make itself susceptible to challenge on this
account. The conclusions of the arbitrator which are based on no
evidence or have been
arrived at by ignoring vital evidence are
perverse and can be set aside on the ground of patent illegality.
Also, consideration of documents which are not supplied to the
other party is a facet of perversity falling within the expression
‘patent illegality’. [Para 25][1008-D-G]
1.4 Section 34 (2) (b) refers to the other grounds on which
a court can set aside an arbitral award. If a dispute which is not
capable of settlement by arbitration is the subject-matter of the
award or if the award is in conflict with public policy of India, the
award is liable to be set aside. Explanation (1), amended by the
2015 Amendment Act, clarified the expression ‘public policy of
India’ and its connotations for the purposes of reviewing arbitral
awards. It has been made clear that an award would be in conflict
with public policy of India only when it is induced or affected by
fraud or corruption or is in violation of Section 75 or Section 81
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of the 1996 Act, if it is in contravention with the fundamental
policy of Indian law or if it is in conflict with the most basic notions
of morality or justice. [Para 26][1008-H; 1009-A-B]
Ssangyong Engineering and Construction Company
Limited v. National Highways Authority of India
(NHAI)(2019) 15 SCC 131 : [2019] 7 SCR 522;
Renusagar Power Co. Ltd. v. General Electric Co. 1994
Supp (1) SCC 644 : [1993] 3 Suppl. SCR 22 – referred
to.
2.1 As there is no ambiguity in the findings of the arbitral
tribunal regarding the time given for curing the defects and the
effective date of termination of the Concession Agreement, the
findings of the Division Bench that there is an ambivalence in
the award concerning the date of termination, having a bearing
on the final outcome of the award is not accepted. The arbitral
tribunal in its award clearly held that DMRC failed to cure the
defects before the expiry of 90 days from the initial notice laying
down the non-exhaustive list of defects issued on 09.07.2012.
The said conclusion is the outcome of interpretation of Article
29.5.1 of the Concession Agreement by the tribunal. An attempt
was made by the Counsel for the Respondent to impress upon
this Court that as the termination notice would become effective
only after 90 days from the date of its issue, i.e., 08.10.2012,
DMRC could avail this period as well to address the defects and
if the defects stood cured or effective steps were taken within
this additional 90-day
period, the termination notice became
defunct and should not be effectuated. Construction of a provision
of the Concession Agreement is within the domain of the arbitral
tribunal. The view taken by the arbitral tribunal that the defects
have to be cured within 90 days from the date of the cure notice,
failing which DAMEPL is entitled to terminate the Concession
Agreement, is a possible interpretation of Article 29.5.1. The
findings of the arbitral tribunal are not interfered with on this
point, even assuming a different view can be taken on a reading
of the said Article. [Para 31][1012-F-H; 1013-A-D]
2.2 The arbitral tribunal was called upon by the parties to
decide whether there was a breach of the Concession Agreement
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due to the fault of DMRC and whether the defects pointed out by
DAMEPL were cured within the period specified in the notice
dated 09.07.2012. Safety of the AMEL was not an issue that fell
for determination by the arbitral tribunal, though DAMEPL had
insisted on not continuing operations of the Line citing safety
concerns arising from the defects in its structural integrity. It is
no doubt true that the Commissioner is the competent authority
to determine the safety of the AMEL. It is also beyond cavil that
the Commissioner would not have granted permission to restart
the AMEL unless it was of the opinion that restarting of
commercial operations would not pose a danger to the public.
However, the certificate by itself cannot come to the rescue of
DMRC to show that the defects pointed out by DAMEPL were
cured within the expiry of 90 days from 09.07.2012. The finding
of the arbitral tribunal that the defects were not cured is one of
fact which cannot be interfered with by the court. [Para 33][1014-
C-F]
2.3 The CMRS certificate was relied upon by DMRC before
the arbitral tribunal as a strong piece of evidence to support its
case that the defects were cured. DMRC did not contend before
the tribunal that the CMRS certificate is binding and is conclusive
of the defects being cured/effective steps taken to cure the
defects. The conditions imposed by the Commissioner relating
to speed restrictions and close monitoring of the
Line, according
to the tribunal, support the contention of DAMEPL that the
defects were not fully cured. The issue before the tribunal was
whether the defects were cured within 90 days from the notice
dated 09.07.2012 and the certificate dated 18.01.2013 is relevant
for deciding the said issue. The High Court’s view that the issue
of the CMRS certificate being dealt with separately has a bearing
on the tribunal’s determination of the validity of the termination
notice cannot be accepted. 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
scrutinised in the same manner as one prepared by legally trained
minds. In any event, it cannot be said that the view of the tribunal
is perverse. Therefore, the High Court’s opinion that the award
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of the tribunal on the legality of the termination notice is vitiated
due to the vice of perversity cannot be accepted. [Para 34][1014-
F-H; 1015-A-B]
2.4 The Division Bench referred to various factors leading
to the termination notice, to conclude that the award shocks the
conscience of the court. The discussion in the impugned
judgement amounts to appreciation or re- appreciation of the facts
which is not permissible under Section 34 of the 1996 Act. The
Division Bench further held that the fact of the AMEL being
operated without any adverse event for a period of more than
four years since the date of issuance of the CMRS certificate,
was not given due importance by the arbitral tribunal. 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 exercise of its
jurisdiction under Section 34. On the basis of the issues submitted
by the parties, the arbitral tribunal framed issues for consideration
and answered the said issues. Subsequent events need not be
taken into account. [Para 35][1015-B-E]
2.5 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. [Para 36][1015-
E-F]
2.6 The tribunal focused on two components of Termination
Payment, which are ‘Debt Due’, and 130 % of the ‘Adjusted
Equity’. The tribunal was
correct in holding that the amount of
Rs.611.95 crore advanced by DAMEPL’s promoter would qualify
for inclusion under the definition of ‘Equity’ on a plain reading of
the said definition. Construction of the contract is within the
jurisdiction of the tribunal and merely because another view is
possible, the court cannot interfere with such construction and
substitute its own view. [Para 39][1018-F-G; 1019-A-B]
2.7 The opinion of the tribunal is that the amount of
Rs.611.95 crore was an amount advanced by DAMEPL’s promoter
which was not disputed by DMRC. The submission advanced by
DMRC, that it was only the equity share capital as is understood
within the meaning of the Companies Act, 2013 which is liable to
be paid by DMRC under Article 29.5.2, was rejected by the
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Ttribunal. The view taken by the tribunal that the amount
contributed by a member of the consortium or by shareholders
to meet the ‘Concessionaire’s Capital Costs’ in any form,
including where such funds are classified as subordinated debt,
cannot be treated as ‘Subordinated Debt’ in terms of its definition
in the Concession Agreement, is a reasonable and possible view.
On the other hand, the Division Bench of the High Court relied
upon the board resolution dated 16.03.2011 and held that the
tribunal ought not to have treated the said amount as ‘Equity’
after the share application money was converted into
subordinated debt. After a detailed consideration of the relevant
clauses of the Concession Agreement, the High Court held that
the tribunal had committed a serious error in its tabulation of
‘Adjusted Equity’ by completely ignoring the evidence on record.
[Para 41][1019-G-H; 1020-A-C]
2.8 Even assuming the view taken by the High Court is not
incorrect, a possible view expressed by the tribunal on
construction of the terms of the Concession Agreement cannot
be substituted by the High Court. This view is in line with the
understanding of Section 28(3) of the 1996 Act as a ground for
setting aside the arbitral award. No case has been made out by
the High Court to establish violation of Section 28(3). Having
carefully examined the Concession Agreement, the findings
recorded by the tribunal and the findings recorded by
the Division
Bench, it cannot be held that the opinion of the tribunal on
inclusion of Rs.611.95 crore under ‘Equity’ is a perverse view. It
cannot be said that the tribunal did not consider the evidence on
record, especially the resolution dated 16.03.2011 passed by
DAMEPL’s board of directors. Also, there is no fault with the
approach of the tribunal that the understanding of the term equity
as per the Companies Act, 2013 is not relevant for the purposes
of determining ‘Adjusted Equity’ in light of the express definition
of the term in the Concession Agreement. The support placed
by the Division Bench on the interpretation of Section 28(1)(a) of
the 1996 Act as adopted in Associate Builders’s case is, therefore,
no longer good law. The findings of the High Court are set aside
and the award by the tribunal in respect of the computation of
Termination Payment under Clause 29.5.2 is upheld.
[Para 42][1020-C-H]
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Associate Builders v. Delhi Development Authority
(2015) 3 SCC 49 : [2014] 13 SCR 895 – held not good
law.
Ssangyong Engineering and Construction Company
Limited v. National Highways Authority of India
(NHAI)(2019) 15 SCC 131 : [2019] 7 SCR 522 –
referred to.
2.9 As regards the ground of challenge in SLP(c) No. 8311
of 2019, as the participation of DAMEPL in several meetings
held after issuance of the termination notice dated 09.07.2012
and its decision to continue operating the AMEL was without
prejudice, the tribunal rejected the submission of DMRC that
the doctrine of waiver applied and that DAMEPL was estopped
from terminating the Concession Agreement after having actively
participated in the process of rectifying the defects pointed out.
The Division Bench of the High Court approved the said finding
on the ground that the decision of the tribunal could not be held
to be flawed within the limited scrutiny afforded to courts under
Section 34 of the 1996 Act. The Division Bench of the High Court
rightly refrained from interfering with the findings on waiver by
the tribunal. The prayer for a direction to DAMEPL for specific
performance of its obligations under the Concession Agreement
to operate the AMEL was refused by the tribunal. The Division
Bench of the High Court in its judgment observed that the said
findings had not been challenged before the High Court.
Therefore, there is no reason for this Court to adjudicate on the
point of specific
performance of the Concession Agreement.
[Para 43, 44][1021-B-E]
2.10 The tribunal awarded interest in accordance with the
terms of the Concession Agreement on termination payment.
DMRC contended before the High Court that the award in respect
of interest had to be set aside on the ground that it would result
in unjust enrichment. After a thorough consideration of Article
29.8 and Article 36.2.6.1 of the Concession Agreement, the High
Court has rightly refused to interfere with the findings by the
tribunal relating to interest and there is no cause for interference.
The judgment of the Division Bench of the High Court is set
aside. [Para 45, 46][1021-E-G]
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State of Rajasthan v. Puri Construction Co. Ltd. and
Another (1994) 6 SCC 485 : [1994] 3 Suppl. SCR 616
– referred to.
Case Law Reference
(2020) 2 SCC 455
relied on
Para 23
[2012] 4 SCR 122
relied on
Para 23
[2019] 7 SCR 522
referred to
Para 23
[1993] 3 Suppl. SCR 22
referred to
Para 26
[1994] 3 Suppl. SCR 616
referred to
Para 35
[2014] 13 SCR 895
held not good law
Para 42
CIVIL APPELLATE JURISDICTION : Civil Appeal No.5627
of 2021.
From the Judgment and Order dated 15.01.2019 of the High Court
of Delhi at New Delhi in FAO (OS) (COMM) No.58 of 2018.
With
Civil Appeal No.5628 of 2021.
Tushar Mehta, SG, Harish N. Salve, J. J. Bhatt, P. S. Narsimha,
Parag Tripathi, Ajit Sinha, Sr. Advs., Ms. Anjali Chandurkar, Mahesh
Agarwal, Ms. Megha Mehta, Nishant Rao, Biswabara Dash, E. C.
Agrawala, Tarun Johri, Advs. for the appearing parties.
The Judgment of the Court was delivered by
L. NAGESWARA RAO, J.
Leave granted.
1. Whether in exercise of its power under Section 37 of the
Arbitration and Conciliation Act, 1996 (hereinafter, ‘the 1996 Act’), the
Division Bench of the Delhi High Court was right in interfering with the
award dated 11.05.2017 passed by the Arbitral Tribunal in favour of the
Appellant -Delhi Airport Metro Express Pvt. Ltd. (hereinafter, ‘DAMEPL’
or the ‘Concessionaire’), is the question that arises for consideration in
these Appeals.
2. Delhi Metro Rail Corporation Ltd. (hereinafter, ‘DMRC’), a
joint venture of
the Government of India and the Government of National
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Capital Territory of Delhi, proposed implementation of the Airport Metro
Express Line project in New Delhi, from New Delhi Railway Station to
Dwarka Sector 21 via Indira Gandhi International Airport, New Delhi
(hereinafter, ‘AMEL’). The approximate length of the project was 22.7
kilometers. It was decided to develop the project by engaging a
concessionaire for financing, design, procurement, installation of all
systems (including but not limited to rolling stock, overhead electrification,
track, signaling and telecommunication, ventilation and air conditioning,
automatic fare collection, baggage check-in and handling, depot and other
facilities). DMRC had to undertake design and construction of basic
civil structure for the project, which was in the nature of a public private
partnership.
3. The bid of a consortium comprising Reliance Energy Limited
(renamed as Reliance Infrastructure Limited) and M/s Construcciones
y Auxiliar de Ferrocarriles, S.A. was accepted by DMRC, by issuing a
letter of acceptance on 21.01.2008. Thereafter, on 25.08.2008, a
Concession Agreement was entered into between DMRC and DAMEPL
for design, installation, commissioning, operation and maintenance of the
AMEL. It was agreed between the parties that all civil works as well as
appointment of consultants, land acquisition and other clearances from
the Government and other authorities have to be obtained by DMRC
and the design, supply, installation, testing and commissioning of
various
systems like rolling stock, power supply, overhead equipment, signalling,
track system, platform, screen doors, ventilation, architectural finishing
etc. were to be provided by DAMEPL. As the work could not be
completed in time, extensions were granted and finally, safety clearances
were obtained from the Commissioner of Metro Railway Safety
(hereinafter, the ‘CMRS’ or ‘Commissioner’) on 10.01.2011. The date
of commercial operation was achieved on 23.02.2011.
4. On 22.03.2012, DAMEPL requested DMRC for a joint
inspection of viaduct and its bearings before expiry of the defect liability
period of the civil contractors. Another letter was written by DAMEPL
on 23.05.2012, complaining of issues relating to the design and quality in
the installation of viaduct bearings. It was mentioned in the said letter
that there were signs of girders having sunk at some locations as a result
of deformations/cracks. DMRC responded to the said letter of DAMEPL
on 08.06.2012 by which DAMEPL was informed that inspections were
carried out at the locations pointed out by DAMEPL and no bearings
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were found damaged. However, DMRC admitted that grouting material
filled above/below the bearings was damaged/loosened for which action
would be taken to repair them on priority. Due to the said defects, DMRC
advised DAMEPL to impose speed restrictions as deemed necessary in
the interest of safety.
5. The Ministry of Urban Development, Government of India
convened a meeting of all the stakeholders on 02.07.2012. The views of
all the parties relating to the defects were obtained and a Joint Inspection
Committee was formed. An interim report was submitted by the Joint
Inspection Committee after inspection on 4th& 5th July, 2012.
Subsequently, DAMEPL stopped operations of the Line on 08.07.2012.
6. A notice was issued by DAMEPL on 09.07.2012, 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 having
Material Adverse Effect on the Concessionaire under the Concession
Agreement. In the said notice dated 09.07.2012, ‘a non-exhaustive list
of defects’ was set out by DAMEPL. Thereafter, a number of meetings
were conducted between the parties which were attended by SYSTRA,
the original design consultant for the viaduct sections. It appears from
the record that DMRC had also engaged some other agencies for carrying
out the repair work.
7. DAMEPL issued a notice dated 08.10.2012 terminating the
Concession Agreement as, according to
it, the defects that were pointed
out in the notice dated 09.07.2012 were not cured within a period of 90
days, resulting in an Event of Default under the Concession Agreement.
DMRC invoked arbitration under Article 36.2 of the Concession
Agreement on 23.10.2012. On 22.01.2013, the Line was restarted with
reduced speed after a certificate sanctioning resumption was issued by
the Commissioner on 18.01.2013. According to DAMEPL, it agreed to
operate the Line only as an agent in public interest and on instructions of
DMRC, although DAMEPL’s stance was not accepted by DMRC.
DAMEPL stopped its operations on 30.06.2013 and handed over the
Line to DMRC on the next day.
8. At this stage, it is relevant to refer to Article 36 of the Concession
Agreement which refers to dispute resolution. Article 36.2.2, read with
Article 36.2.3, provides that all disputes, whatsoever arising between
the parties, out of, touching upon or relating to construction, measuring,
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operation or effect of the Concession Agreement or the breach thereof,
shall be settled through arbitration by reference to a sole arbitrator, where
the total value of claims do not exceed Rs.1,500,000/-. Beyond this limit,
the dispute shall be referred to three arbitrators who will be selected
from a panel of engineers with requisite qualifications and professional
experience relevant in the field to which the Concession Agreement
relates. The panel shall be from serving or retired engineers of government
departments or of public sector.
9. The main issue that arose for determination before the Arbitral
Tribunal constituted under the Concession Agreement is the validity of
the termination notice dated 08.10.2012. DMRC claimed that the
termination notice issued by DAMEPL is illegal, as DMRC had taken
various steps honouring its obligations under the Concession Agreement.
A direction was sought from the Arbitral Tribunal to DAMEPL to take
over operations of the AMEL under the Concession Agreement, and in
the alternative, to grant compensation of Rs.3,173 crore with interest of
18% per annum. Further monetary reliefs were sought by DMRC. The
claim of compensation sought by DMRC was dependent on the
determination of the main issue, i.e., the validity of the termination notice
dated 08.10.2012.DMRC also raised an issue on the real motive of
DAMEPL to terminate the Concession Agreement.  DAMEPL justified
the termination as being in conformity with the
Concession Agreement
and consequently, filed a counter claim seeking an amount of Rs.3,470
crore as termination payment along with interest and further amounts as
detailed in the counter claim, on the ground that DMRC did not cure the
defects in the civil structure in terms of the cure notice dated 09.07.2012.
  As DMRC did not comply with its obligations under Article 29.5.1(i),
DAMEPL justified the termination notice dated 08.10.2012 and the
consequent claim of termination payment from DMRC under Article
29.5.2.
10. The Arbitral Tribunal formulated the following primary issues
for consideration in relation to the termination notice dated 08.10.2012: -
“i) Were there any defects in the civil structure of the airport
metro line?
(ii) If there were defects, did such defects have a material
adverse effect on the performance of the obligation of
DAMEPL under CA?
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(iii) If there were defects in the civil structure, which had a
material adverse effect on the performance of the obligations
under the CA by DAMEPL, have such defects been cured by
DMRC and / or have any effective steps been taken within a
period of 90 days from the date of notice by DAMEPL to cure
the defects by DMRC and thus were DMRC in breach of the
CA as per 29.5.1 (i)?”
11. In assessing whether the defects pointed out by DAMEPL
were cured and/or effective steps to cure them were taken by DMRC
within the time stipulated in the notice dated 09.07.2012, the Arbitral
Tribunal undertook an in-depth analysis of the defects in the civil structure
and steps taken for their repair/rectification. Insofar as the existence of
defects is concerned, the Arbitral Tribunal concluded that there were as
many as 1551 cracks in 367 girders, i.e., 72 % of the girders were affected
by such cracks. Reports of inspections conducted at the behest of DMRC,
giving mapping data of the cracks, were relied upon by the Tribunal to
hold that such cracks were spread in a large number of girders. The
Tribunal referred to the meeting dated 02.07.2012 conducted by the
Ministry of Urban Development during which the Managing Director,
DMRC expressed his views that the cracks occurred during “lowering”
and not during operations. The evidence of Mr. Muls of Systra was
considered by the Arbitral Tribunal to hold that they were not sure of the
cause of
the cracks. On account of such large numbers of cracks in the
base slab of the pre-stressed concrete girders in about a year of train
operation, coupled with unreliable measurement of crack depth and non-
serious inspection of the repairs by an agency appointed by DMRC, the
Arbitral 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, resulting in Material Adverse Effect on
the Concessionaire.
12. As far as twist in the girders were concerned, the Arbitral
Tribunal found that there were about 80 girders with twists varying
between 10 to 20 mm which had not been rectified and no effective
steps were taken to cure the defects in such girders. The defects pointed
out by DAMEPL regarding gaps between the shear key and the girder
being more than 25 mm and between 10 mm to 25 mm were not addressed
and only gaps below 10 mm were addressed by some grinding, detailed
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methodology for which was not brought out by DMRC in its evidence,
as per the findings of the Arbitral Tribunal. Therefore, the Tribunal
concluded that these defects were neither cured nor effective steps
taken by DMRC within the cure period up to 08.10.2012, constituting a
material breach on the part of DMRC.  On the basis of the above findings
and findings in relation to other defects, deficiencies and constraints in
the civil structure of the AMEL which are not referred to herein, the
Arbitral Tribunal concluded that the defects had not been cured within
the cure period of 90 days from 09.07.2012 nor had effective steps been
taken to cure such defects. Ergo, the termination notice issued by
DAMEPL on 08.10.2012 was valid.
13. Having decided on the validity of the termination notice, the
Tribunal went on to consider certain legal issues so as to determine
questions around specific performance of the contract, or alternatively,
the award of damages and the outcome of the counter claim filed by
DAMEPL. One such issue considered by the Arbitral Tribunal was
whether the issue of certificate by the Commissioner on 18.01.2013,
giving clearance for resuming operations of the AMEL, showed that the
defects were duly cured. After examining the certificate issued by the
Commissioner, the Arbitral Tribunal held that while the Commissioner
had sanctioned resumption of services, certain conditions were imposed,
essentially relating to the restriction of speed up to
50 km per hour, which
had a material bearing on the prime purpose of the AMEL intended to
serve as a high-speed connectivity line. Moreover, the Commissioner
himself recognized that the operation of the Line had to be regularly
monitored. The subsequent operation of the Line by DMRC was found
to be not relevant for determining the validity of the termination notice
dated 09.07.2012.  The Arbitral Tribunal answered this issue in favour
of DAMEPL.  On consideration of the counter claim of DAMEPL, the
principal issue that came up before the Arbitral Tribunal was on
determination of the amount of Termination Payment payable by DMRC
under the Concession Agreement. In this regard, the Tribunal had to
determine the quantum payable under each component of Termination
Payment, one of which was ‘Adjusted Equity’. DAMEPL sought payment
of an amount of Rs.3,470 crore as Termination Payment. In this total, an
amount of Rs.685 crore, which had been infused by DAMEPL’s promoter,
was factored in by DAMEPL for the purposes of calculating ‘Adjusted
Equity’. Relying on the relevant clauses of the Concession Agreement,
the Tribunal first sought to determine the portion of funds that would
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qualify as ‘Equity’ under the Concession Agreement, which would then
be used for arriving at the figure of ‘Adjusted Equity’. Out of Rs.685
crore which was sought to be slotted under the head ‘Equity’ by
DAMEPL, an amount of Rs.611.95 crore was determined to be ‘Equity’
by the Tribunal, on the basis of the evidence produced and the construction
of the relevant provisions of the Concession Agreement. Thereafter, the
Tribunal worked out ‘Adjusted Equity’ at Rs.983.02 crore and awarded
a total amount of Rs.2782.33 crore, along with further interest, as
Termination Payment to be made to DAMEPL.
14. DMRC filed a petition under Section 34 of the 1996 Act for
setting aside the award of the Arbitral Tribunal dated 11.05.2017 in the
Delhi High Court, which was dismissed by the learned Single Judge of
the High Court by a judgement dated 06.03.2018 observing that grounds
for interference had not been made out by DMRC. The learned Single
Judge held that the findings recorded by the Arbitral Tribunal on facts,
law and interpretation of the Concession Agreement were all within the
realm of the Arbitral Tribunal and they needed no intervention by the
Court exercising its power under Section 34 of the 1996 Act.  He was
also of the view that the Court cannot substitute its view when there are
two views possible and the view taken by the Arbitral Tribunal is a
plausible one.
15. DMRC filed an appeal under Section 37 of the 1996 Act
read
with Section 13 of the Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015 (the title since
amended to Commercial Courts Act, 2015), challenging the correctness
of the judgment passed by the learned Single Judge on 06.03.2018
dismissing the objections filed by DMRC under Section 34 of the 1996
Act. The Division Bench reversed the judgement of the learned Single
Judge and allowed the appeal filed by DMRC. The award passed by the
Arbitral Tribunal was partly set aside. The parties were left to invoke
the arbitration clause for adjudication of the issues that were not decided
by the Division Bench. The judgement of the Division Bench dated
15.01.2019 is assailed in these Appeals.
16. DMRC has also filed SLP (C) No.8311 of 2019 challenging
the correctness of the aforesaid judgement of the Division Bench in
relation to the issues of grant of interest, waiver of the termination notice
due to DAMEPL’s conduct of operating the project for more than five
months from 22.01.2013, refusal by the Division Bench to grant relief of
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specific performance of the Concession Agreement and non-consideration
of the issue pertaining to the real reason for the termination of the
Concession Agreement by DAMEPL.
Reasons given by the Division Bench for setting aside the
award
17. The Division Bench of the High Court held that the award of
the Arbitral Tribunal had recorded two different termination dates. As
the Tribunal had based its reasoning on the validity of the termination
notice on two different dates leading to confusion and ambivalence as to
the termination notice and the date of termination, the award was found
to be suffering from the vices of perversity, irrationality and patent
illegality. The High Court observed that in deciding the question on defects
in the civil structure and whether effective steps were taken to cure the
defects, the Arbitral Tribunal had committed serious error by holding,
without ‘reason’, that the vital evidence of the sanction granted by the
CMRS for resumption of commercial operations of the AMEL and the
fact that DMRC had successfully operated the AMEL from 30.06.2013
till the date of the award without any adverse incident were
inconsequential. The High Court found fault with the Arbitral Tribunal in
virtually negating the certificate issued by the CMRS under the Delhi
Metro Railway (Operation and Maintenance) Act, 2002 (hereinafter,
‘the Delhi Metro Act’) and held that the cumulative effect of the findings
of the award on this issue ‘shocked the
conscience of the court’. 
18. On the issue of Adjusted Equity, while considering the approach
taken by the Arbitral Tribunal for computation of the amounts payable
under Article 29.5.2, the High Court was of the opinion that the Tribunal’s
reasoning was completely flawed and perverse. The High Court ruled
that the reasoning adopted by the Tribunal was patently illegal and the
conclusion reached after doing so, was one which no reasonable person
would have come to. According to the High Court, the treatment of
Rs.611.95 crore as ‘Equity’ by the Tribunal, on the ground that such a
project could not have been executed with only Rs.1 lakh as equity funded
by DAMEPL’s promoter (in terms of share capital), was based on an
assumption that the debt-to-equity ratio is commonly 60:40 or 80:20,
contrary to the evidence on record. This was held to be an egregious
mistake committed by the Tribunal. The High Court also found fault
with the award which ignored the resolution passed by the board of
directors of DAMEPL on 16.03.2011, by which the amount of Rs. 611.95
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crore was converted to subordinated debt. The High Court held that
‘Adjusted Equity’ under the Concession Agreement does not contemplate
funds recognized as subordinated debt to be treated as ‘Equity’. With
respect to the interpretation of the various provisions of the Concession
Agreement and the resultant conclusions on ‘Adjusted Equity’, the High
Court held that the findings of the Tribunal on this issue were in violation
of Sections 28(1)(a) and 28(3) of the 1996 Act, as elaborated in Associate
Builders v.Delhi Development Authority1, as contractual provisions
had been interpreted in a way no fair-minded and reasonable person
would.
19. In light of the reasons mentioned, the High Court set aside the
conclusions of the Arbitral Tribunal on the validity of the termination
notice and that Rs.611.95 crore was ‘Equity’ for the purpose of Article
29.5.2 of the Concession Agreement.  Consequently, the award of
Rs.2,782.33 crore to DAMEPL was set aside.  In view of the above
findings, the High Court considered the direction for payment of interest
to have become infructuous.   The High Court felt that it would be
inappropriate to hear the parties on the issue of restitution at that stage
and granted liberty to the parties to move appropriate applications under
the 1996 Act to seek remedies available to them.
Contours of the Court’s power to review arbitral awards
20. The 1996 Act was enacted to consolidate and amend the
law
relating to domestic arbitration, international commercial arbitration and
enforcement of foreign arbitral awards and also to define the law relating
to conciliation and for matters connected therewith, by taking into account
the United Nations Commission on International Trade Law
(UNCITRAL) Model Law on International Commercial Arbitration and
the UNCITRAL Conciliation Rules. One of the principal objectives of
the 1996 Act is to minimize the supervisory role of courts in the arbitral
process. With respect to Part I of the 1996 Act, Section 5 imposes a bar
on intervention by a judicial authority except where provided for,
notwithstanding anything contained in any other law for the time being in
force. An application for setting aside an arbitral award can only be
made in accordance with provisions of Section 34 of the 1996 Act.
Relevant provisions of Section 34 (as they were prior to the Arbitration
and Conciliation (Amendment) Act, 2015) read as under:-
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“34. Application for setting aside arbitral award. — (1)
Recourse to a Court against an arbitral award may be made
only by an application for setting aside such award in
accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if—
(a) the party making the application furnishes proof that—
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law
to which the parties have subjected it or, failing any
indication thereon, under the law for the time being in
force; or
(iii) the party making the application was not given
proper notice of the appointment of an arbitrator or of
the arbitral proceedings or was otherwise unable to
present his case; or
(iv) the arbitral award deals with a dispute not
contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on
matters beyond the scope of the submission to
arbitration:
Provided that, if the decisions on matters
submitted to arbitration can be separated from those
not so submitted, only that part of the arbitral award
which contains decisions on matters not submitted to
arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the
arbitral procedure was not in accordance with the
agreement of the parties, unless such agreement was in
conflict with a provision of this Part from which the
parties cannot derogate, or, failing such agreement, was
not in
accordance with this Part; or
(b) the Court finds that—
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being
in force, or
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(ii) the arbitral award is in conflict with the public policy
of India.
Explanation.—Without prejudice to the generality of
sub-clause (ii), it is hereby declared, for the avoidance
of any doubt, that an award is in conflict with the public
policy of India if the making of the award was induced
or affected by fraud or corruption or was in violation
of section 75 or section 81.
…”
21. An amendment was made to Section 34 of the 1996 Act by
the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter,
‘the 2015 Amendment Act’). A perusal of the statement of objects and
reasons of the 2015 Amendment Act would disclose that the amendment
to the 1996 Act became necessary in view of the interpretation of the
provisions of the 1996 Act by courts in certain cases which had resulted
in delay of disposal of arbitration proceedings and increase in interference
by courts in arbitration matters, which had the tendency to defeat the
object of the 1996 Act. Initially, the matter was referred to the Law
Commission of India to review the shortcomings in the 1996 Act in detail.
The Law Commission of India submitted its 176th Report, recommending
various amendments to the 1996 Act. However, the Justice Saraf
Committee on Arbitration constituted by the Government, was of the
view that the proposed amendments gave room for substantial intervention
by the court and were also contentious. Thereafter, on reference, the
Law Commission
undertook a comprehensive study of the amendments
proposed by the Government, keeping in mind the views of the Justice
Saraf Committee and other stakeholders. The 246th Report of the Law
Commission was submitted on 05.08.2014. Acting on the
recommendations made by the Law Commission in its 246th Report,
amendments by way of the 2015 Amendment Act were made to several
provisions of the 1996 Act, including Section 34. The amended Section
34 reads as under: -
“34. Application for setting aside arbitral award. — (1)
Recourse to a Court against an arbitral award may be made
only by an application for setting aside such award in
accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if—
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(a) the party making the application furnishes proof that—
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law
to which the parties have subjected it or, failing any
indication thereon, under the law for the time being in
force; or
(iii) the party making the application was not given
proper notice of the appointment of an arbitrator or of
the arbitral proceedings or was otherwise unable to
present his case; or
(iv) the arbitral award deals with a dispute not
contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on
matters beyond the scope of the submission to
arbitration:
Provided that, if the decisions on matters
submitted to arbitration can be separated from those
not so submitted, only that part of the arbitral award
which contains decisions on matters not submitted to
arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the
arbitral procedure was not in accordance with the
agreement of the parties, unless such agreement was in
conflict with a provision of this Part from which the
parties cannot derogate, or, failing such agreement, was
not in accordance with this Part; or
(b) the Court finds that—
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being
in force, or
(ii) the arbitral award is in conflict with the public policy
of India.
Explanation 1. —For the
avoidance of any doubt, it is clarified
that an award is in conflict with the public policy of India,
only if,—
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(i) the making of the award was induced or affected by
fraud or corruption or was in violation of section 75 or
section 81; or
(ii) it is in contravention with the fundamental policy of
Indian law; or
(iii) it is in conflict with the most basic notions of morality
or justice.
Explanation 2. —For the avoidance of doubt, the test as to
whether there is a contravention with the fundamental policy
of Indian law shall not entail a review on the merits of the
dispute.
(2-A) An arbitral award arising out of arbitrations other than
international commercial arbitrations, may also be set aside
by the Court, if the Court finds that the award is vitiated by
patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on
the ground of an erroneous application of the law or by re-
appreciation of evidence.
…”
22. A cumulative reading of the UNCITRAL Model Law and
Rules, the legislative intent with which the 1996 Act is made, Section 5
and Section 34 of the 1996 Act would make it clear that judicial
interference with the arbitral awards is limited to the grounds in Section
34. While deciding applications filed under Section 34 of the Act, courts
are mandated to strictly act in accordance with and within the confines
of Section 34, refraining from appreciation or re-appreciation of matters
of fact as well as law. (See: Uttarakhand Purv Sainik Kalyan Nigam
Limited. v. Northern Coal Field
Limited.2,Bhaven Construction
Through Authorised Signatory Premjibhai K. Shah v. Executive
Engineer Sardar Sarovar Narmada Nigam Ltd. and
Another3andRashtriya Ispat Nigam Limited v. Dewan Chand Ram
Saran4).
23. For a better understanding of the role ascribed to courts in
reviewing arbitral awards while considering applications filed under
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Section 34 of the 1996 Act, it would be relevant to refer to a judgment of
this Court in Ssangyong Engineering and Construction Company
Limited v. National Highways Authority of India (NHAI)5 wherein
R.F. Nariman, J. has in clear terms delineated the limited area for judicial
interference, taking into account the amendments brought about by the
2015 Amendment Act. The relevant passages of the judgment in
Ssangyong (supra) are noted as under: -
“34. What is clear, therefore, is that the expression “public
policy of India”, whether contained in Section 34 or in Section
48, would now mean the “fundamental policy of Indian law”
as explained in paras 18 and 27 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015)
2 SCC (Civ) 204] i.e. the fundamental policy of Indian law
would be relegated to “Renusagar” understanding of this
expression. This would necessarily mean that Western
Geco [ONGC v. Western Geco International Ltd., (2014) 9
SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done
away with. In short, Western Geco [ONGC v. Western Geco
International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ)
12] ,as explained in paras 28 and 29 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204], would no longer obtain, as under
the guise of interfering with an award on the ground that the
arbitrator has not adopted a judicial approach, the Court’s
intervention would be on the merits of the award, which
cannot
be permitted post amendment. However, insofar as principles
of natural justice are concerned, as contained in Sections 18
and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds
of challenge of an award, as is contained in para 30
of Associate Builders [Associate Builders v. DDA, (2015) 3
SCC 49 : (2015) 2 SCC (Civ) 204] .
35. It is important to notice that the ground for interference
insofar as it concerns “interest of India” has since been
deleted, and therefore, no longer obtains. Equally, the ground
for interference on the basis that the award is in conflict with
justice or morality is now to be understood as a conflict with
the “most basic notions of morality or justice”. This again
5 (2019) 15 SCC 131
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would be in line with paras 36 to 39 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , as it is only such arbitral awards
that shock the conscience of the court that can be set aside
on this ground.
36. Thus, it is clear that public policy of India is now
constricted to mean firstly, that a domestic award is contrary
to the fundamental policy of Indian law, as understood in
paras 18 and 27 of Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204],
or secondly, that such award is against basic notions of justice
or morality as understood in paras 36 to 39 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] . Explanation 2 to Section 34(2)(b)(ii)
and Explanation 2 to Section 48(2)(b)(ii) was added by the
Amendment Act only so that Western Geco [ONGC v. Western
Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC
(Civ) 12] ,as understood in Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204],
and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned,
an additional ground is now available under sub-section (2-
A), added by the Amendment Act, 2015, to Section 34. Here,
there must be patent illegality appearing on the face of the
award, which refers to such illegality as goes to the root of
the matter but
which does not amount to mere erroneous
application of the law. In short, what is not subsumed within
“the fundamental policy of Indian law”, namely, the
contravention of a statute not linked to public policy or public
interest, cannot be brought in by the backdoor when it comes
to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of
evidence, which is what an appellate court is permitted to do,
cannot be permitted under the ground of patent illegality
appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204],
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namely, a mere contravention of the substantive law of India,
by itself, is no longer a ground available to set aside an
arbitral award. Para 42.2 of Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204],
however, would remain, for if an arbitrator gives no reasons
for an award and contravenes Section 31(3) of the 1996 Act,
that would certainly amount to a patent illegality on the face
of the award.
40. The change made in Section 28(3) by the Amendment Act
really follows what is stated in paras 42.3 to 45 in Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , namely, that the construction of
the terms of a contract is primarily for an arbitrator to decide,
unless the arbitrator construes the contract in a manner that
no fair-minded or reasonable person would; in short, that
the arbitrator’s view is not even a possible view to take. Also,
if the arbitrator wanders outside the contract and deals with
matters not allotted to him, he commits an error of jurisdiction.
This ground of challenge will now fall within the new ground
added under Section 34(2-A).
41. What is important to note is that a decision which is
perverse, as understood in paras 31 and 32 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , while no longer being a ground
for challenge under “public policy of India”, would certainly
amount to a patent illegality appearing on the
face of the
award. Thus, a finding based on no evidence at all or an
award which ignores vital evidence in arriving at its decision
would be perverse and liable to be set aside on the ground of
patent illegality. Additionally, a finding based on documents
taken behind the back of the parties by the arbitrator would
also qualify as a decision based on no evidence inasmuch as
such decision is not based on evidence led by the parties,
and therefore, would also have to be characterised as
perverse.”
24. This Court has in several other judgments interpreted Section
34 of the 1996 Act to stress on the restraint to be shown by courts while
examining the validity of the arbitral awards. The limited grounds available
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to courts for annulment of arbitral awards are well known to legally
trained minds. However, the difficulty arises in applying the well-
established principles for interference to the facts of each case that
come up before the courts. There is a disturbing tendency of courts
setting aside arbitral awards, after dissecting and reassessing factual
aspects of the cases to come to a conclusion that the award needs
intervention and thereafter, dubbing the award to be vitiated by either
perversity or patent illegality, apart from the other grounds available for
annulment of the award. This approach would lead to corrosion of the
object of the 1996 Act and the endeavours made to preserve this object,
which is minimal judicial interference with arbitral awards. That apart,
several judicial pronouncements of this Court would become a dead
letter if arbitral awards are set aside by categorising them as perverse
or patently illegal without appreciating the contours of the said
expressions.
25. Patent illegality should be illegality which goes to the root of
the matter. In other words, every error of law committed by the Arbitral
Tribunal would not fall within the expression ‘patent illegality’. Likewise,
erroneous application of law cannot be categorised as patent illegality.
In addition, contravention of law not linked to public policy or public
interest is beyond the scope of the expression ‘patent illegality’. What is
prohibited is for courts to re-appreciate evidence to conclude that the
award suffers from patent illegality appearing on the face of the award,
as courts do not sit in appeal against the arbitral award. The permissible
grounds for interference with a domestic award under Section 34(2-A)
on the ground of patent illegality is when the arbitrator takes a view
which is not even a possible one, or interprets a clause in the contract in
such a manner which no fair-minded or reasonable person would, or if
the arbitrator commits an error of jurisdiction by wandering outside the
contract and dealing with matters not allotted to them. An arbitral award
stating no reasons for its findings would make itself susceptible to
challenge on this account. The conclusions of the arbitrator which are
based on no evidence or have been arrived at by ignoring vital evidence
are perverse and can be set aside on the ground of patent illegality. Also,
consideration of documents which are not supplied to the other party is
a facet of perversity falling within the expression ‘patent illegality’.
26. Section 34 (2) (b) refers to the other grounds on which a court
can set aside an arbitral award. If a dispute which is not capable of
settlement by arbitration is the subject-matter of the award or if the
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award is in conflict with public policy of India, the award is liable to be
set aside. Explanation (1), amended by the 2015 Amendment Act,
clarified the expression ‘public policy of India’ and its connotations for
the purposes of reviewing arbitral awards. It has been made clear that
an award would be in conflict with public policy of India only when it is
induced or affected by fraud or corruption or is in violation of Section 75
or Section 81 of the 1996 Act, if it is in contravention with the fundamental
policy of Indian law or if it is in conflict with the most basic notions of
morality or justice. In Ssangyong (supra), this Court held that the meaning
of the expression ‘fundamental policy of Indian law’ would be in
accordance with the understanding of this Court in Renusagar Power
Co. Ltd. v. General Electric Co.6 In Renusagar (supra), this Court
observed that violation of the Foreign Exchange Regulation Act, 1973, a
statute enacted for the ‘national economic interest’, and disregarding
the superior courts in India would be antithetical to the fundamental
policy of Indian law. Contravention of a statute not linked to public policy
or public interest cannot be a ground to set at naught an arbitral award
as being discordant with the fundamental policy of Indian law and neither
can it be brought within the confines of ‘patent illegality’ as discussed
above. In other words, contravention of a statute only if it is linked to
public policy or public
interest is cause for setting aside the award as
being at odds with the fundamental policy of Indian law. If an arbitral
award shocks the conscience of the court, it can be set aside as being in
conflict with the most basic notions of justice. The ground of morality in
this context has been interpreted by this Court to encompass awards
involving elements of sexual morality, such as prostitution, or awards
seeking to validate agreements which are not illegal but would not be
enforced given the prevailing mores of the day.7
27. In light of the principles elucidated herein for interference
with an arbitral award by a court in exercise of its jurisdiction under
Section 34 of the 1996 Act, we proceed to consider the questions that
arise in these Appeals as to whether the Division Bench of the High
Court was right in setting aside the award of the Arbitral Tribunal dated
11.05.2017.
Validity of the termination notice and consequences of the
CMRS sanction
6 1994 Supp (1) SCC 644
7 Ssangyong (supra)
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28. Mr. Harish Salve, learned Senior Counsel appearing for the
Appellant (DAMEPL), submitted that the High Court committed an error
in setting aside the award of the Arbitral Tribunal by deviating from the
well-settled principles for interference under Sections 34 and 37 of the
1996 Act. The findings recorded by the Arbitral Tribunal in relation to
the existence of defects in the civil structure and failure on the part of
DMRC in curing those defects/not taking effective steps to cure the
defects are findings of fact which cannot be made subject to review by
the court exercising its jurisdiction under Section 34. He asserted that
interpretation of the provisions of the Concession Agreement is within
the domain of the Arbitral Tribunal and even if such interpretation is not
the most accurate interpretation in the opinion of the court, the award
cannot be set aside if the Arbitral Tribunal has taken a possible view. He
contended that the certificate issued by the CMRS, which was relied
upon by DMRC, was considered by the Tribunal to rightly conclude that
the conditions imposed for restarting the AMEL showed that the defects
were not cured. He further submitted that the cure notice was issued on
09.07.2012 demanding the rectification of defects within a period of 90
days from the date of the notice, as per the Concession Agreement.
After the expiry of 90 days, the termination notice dated 08.10.2012 had
been issued. He
stated that there cannot be any doubt that the defects
had to be cured within 90 days from the date of the cure notice. He
emphasized that the observations of the High Court as regards confusion
in the mind of the Arbitral Tribunal regarding the date of the termination
notice are unfounded. The relevant portions of the award were shown
to the Court to argue that the Arbitral Tribunal was clear in its mind that
the defects had to be cured within 90 days from the date of cure notice
dated 09.07.2012. On the defects not being cured within the 90-day
period, the termination notice was issued on 08.10.2012, with the effective
date of termination as 07.01.2013. The further submission made on behalf
of DAMEPL is that the subsequent successful operation of the AMEL
for nearly four years is not relevant for adjudication of the disputes
between the parties by the Arbitral Tribunal. Finally, according to Mr.
Salve, the High Court committed a palpable error in setting aside the
award.
29. Mr. P.S. Narasimha and Mr. Parag Tripathi, learned Senior
Counsel appearing for DMRC, on the other hand, supported the judgment
of the Division Bench of the High Court by arguing that the award is
contrary to public policy. Mr. Narasimha relied upon the Delhi Metro
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Act and the Rules made thereunder to submit that the CMRS is the sole
authority to determine the safety of the Metro Railway and the certificate
issued by the Commissioner on 18.01.2013 is conclusive proof of the
fact that the defects pointed out by DAMEPL had been rectified. It was
contended on behalf of DMRC that the period for curing the defects did
not lapse on expiry of 90 days from the initial notice dated 09.07.2012
but extended for another 90 days from the termination notice dated
08.10.2012. According to the Respondent, a serious error was committed
by the Arbitral Tribunal in its interpretation of Article 29.5.1 of the
Concession Agreement. Abundant material placed by DMRC to show
effective steps were taken to cure the defects was not considered by
the Arbitral Tribunal. The Commissioner in exercise of his powers
conferred by the Delhi Metro Act permitted the opening of the AMEL
on 18.01.2013 after considering all safety aspects and the AMEL has
been in operation since then without any adverse event. The subsequent
smooth functioning of the AMEL is a relevant consideration which was
ignored by the Arbitral Tribunal. DAMEPL’s participation in several
meetings that were conducted which led to inspections and steps taken
to address the defects as well as the AMEL being run by DAMEPL
from 22.01.2013 to 30.06.2013 would show that even DAMEPL was
aware that effective steps had been taken to cure the defects.
30. Termination by DAMEPL for DMRC Event
of Default is
dealt with in Article 29.5.1 which reads as under: -
“29.5 Termination for DMRC Event of Default
29.5.1 The Concessionaire may after giving 90 (ninety) days
notice in writing to DMRC terminate this Agreement upon the
occurrence and continuation of any of the following events
(each a “DMRC Event of Default”), unless any such DMRC
Event of Default has occurred as a result of Concessionaire
Event of Default or due to a Force Majeure Event.
(i)
DMRC is in breach of this Agreement and such breach
has a Material Adverse Effect on the Concessionaire
and DMRC has failed to cure such breach or take
effective steps for curing such breach within 90 (ninety)
days of receipt of notice in this behalf from the
Concessionaire;
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(ii)
DMRC repudiates this Agreement or otherwise evidences
an irrevocable intention not to be bound by this
Agreement;
(iii)
GoI or GNCTD or any Governmental Agency have by
an act of commission or omission created circumstances
that have a Material Adverse Effect on the performance
of its obligations by the Concessionaire and have failed
to cure the same within 90 (ninety) days of receipt of
notice by DMRC in this behalf from the Concessionaire;
(iv)
DMRC has delayed any payment that has fallen due
under this Agreement if such delay exceeds 90 (ninety)
days.”
31. By referring to certain paragraphs of the award, the Division
Bench of the High Court held that there was confusion in the mind of
the Arbitral Tribunal relating to the actual date of termination, which
would have a material bearing on the exegesis of Article 29.5.1. The
confusion around the date of termination is highlighted by the High Court
by referring to the award of the Arbitral Tribunal in which it was held
that the defects were not cured within the 90-day period from the date
of the cure notice dated 09.07.2012. However, in paragraphs 128, 130
and 131, the Arbitral Tribunal, while considering the counter claim, referred
to 07.01.2013 as the date of termination of the Concession Agreement.
It is clear from a careful examination of the award that the Arbitral
Tribunal had in precise terms held that the defects had to be cured within
90 days from the
date of the cure notice dated 09.07.2012. Further, the
Arbitral Tribunal held that the termination notice dated 08.10.2012 was
issued as defects were not cured. The Tribunal expressed its view that
consequently, the effective date of termination was 07.01.2013, which is
90 days from the termination notice. As there is no ambiguity in the
findings of the Arbitral Tribunal regarding the time given for curing the
defects and the effective date of termination of the Concession
Agreement, we are not in agreement with the findings of the Division
Bench that there is an ambivalence in the award concerning the date of
termination, having a bearing on the final outcome of the award. The
ancillary issue that arises for consideration is whether the period for
curing the defects is 180 days or 90 days under Article 29.5.1 of the
Concession Agreement. The Arbitral Tribunal in its award has clearly
held that DMRC failed to cure the defects before the expiry of 90 days
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from the initial notice laying down the non-exhaustive list of defects
issued on 09.07.2012. The said conclusion is the outcome of interpretation
of Article 29.5.1 of the Concession Agreement by the Tribunal. An
attempt was made by the learned Senior Counsel appearing for the
Respondent to impress upon this Court that as the termination notice
would become effective only after 90 days from the date of its issue,
i.e., 08.10.2012, DMRC could avail this period as well to address the
defects and if the defects stood cured or effective steps were taken
within this additional 90-day period, the termination notice became defunct
and should not be effectuated. Construction of a provision of the
Concession Agreement is within the domain of the Arbitral Tribunal.
The view taken by the Arbitral Tribunal that the defects have to be
cured within 90 days from the date of the cure notice, failing which
DAMEPL is entitled to terminate the Concession Agreement, is a possible
interpretation of Article 29.5.1. We refuse to interfere with the findings
of the Arbitral Tribunal on this point, even assuming a different view can
be taken on a reading of the said Article.
32. The High Court was of the view that the Tribunal committed
a grave error in ignoring the CMRS certificate, as the Tribunal lost sight
of the binding nature of the certificate. According to the Division Bench,
the Arbitral Tribunal went wrong in considering the issue of the CMRS
certificate as a separate
issue, distinct from the questions pertaining to
the termination of the Concession Agreement. The Delhi Metro Act
was promulgated for the operation, maintenance and regulation of the
working of the metro railway in the National Capital Region, metropolitan
city and metropolitan area. The Commissioner of Metro Railway Safety,
appointed under Section 7 of the said Act, has the duty to inspect the
metro railway with a view to determine whether it is fit to be opened for
the public carriage of passengers and report thereon to the Central
Government as required thereunder. Section 15 of the Delhi Metro Act
provides that before granting sanction to the opening of the metro railway
by the Central Government under Section 14, a report has to be obtained
from the Commissioner certifying fitness of the metro railway so as not
to be of any danger to the public. Rule 11 of the Opening of Delhi Metro
Railway for Public Carriage of Passengers Rules, 2002 imposes a duty
on the Commissioner to inquire into all relevant matters concerning safety
before coming to a conclusion that the metro railway should be opened.
Sanction to open the metro railway line for public carriage of passengers
is granted by the Central Government after considering the report of the
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Commissioner on the fitness and safety aspects. The contention on behalf
of DMRC is that the certificate issued by the Commissioner is binding
on the Arbitral Tribunal and the Tribunal could not have taken a different
view. In addition thereto, the certificate is conclusive of the fact that
there were no defects in the civil structure, as otherwise, the Commissioner
would not have permitted the AMEL to be opened. On the basis of the
certificate issued by the Commissioner, the Respondent has argued that
all defects pointed out by DAMEPL had been cured. In any event,
effective steps had been taken to cure the defects by periodical meetings
and inspections being held.
33. The Arbitral Tribunal was called upon by the parties to decide
whether there was a breach of the Concession Agreement due to the
fault of DMRC and whether the defects pointed out by DAMEPL were
cured within the period specified in the notice dated 09.07.2012. Safety
of the AMEL was not an issue that fell for determination by the Arbitral
Tribunal, though DAMEPL had insisted on not continuing operations of
the Line citing safety concerns arising from the defects in its structural
integrity. It is no doubt true that the Commissioner is the competent
authority to determine the safety of the AMEL. It is also beyond cavil
that the Commissioner would not have granted permission to restart the
AMEL unless it was of the opinion that restarting of commercial
operations
would not pose a danger to the public. However, the certificate by itself
cannot come to the rescue of DMRC to show that the defects pointed
out by DAMEPL were cured within the expiry of 90 days from 09.07.2012.
The finding of the Arbitral Tribunal that the defects were not cured is
one of fact which cannot be interfered with by the court.
34. The CMRS certificate dated 18.01.2013 was relied upon by
DMRC before the Arbitral Tribunal as a strong piece of evidence to
support its case that the defects were cured. DMRC did not contend
before the Tribunal that the CMRS certificate is binding and is conclusive
of the defects being cured/effective steps taken to cure the defects.
The conditions imposed by the Commissioner relating to speed restrictions
and close monitoring of the Line, according to the Tribunal, support the
contention of DAMEPL that the defects were not fully cured. The issue
before the Tribunal was whether the defects were cured within 90 days
from the notice dated 09.07.2012 and the certificate dated 18.01.2013 is
relevant for deciding the said issue. We are not in agreement with the
High Court’s view that the issue of the CMRS certificate being dealt
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with separately has a bearing on the Tribunal’s determination of the
validity of the termination notice. 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 scrutinised in the same
manner as one prepared by legally trained minds. In any event, 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.
35. The Division Bench referred to various factors leading to the
termination notice, to conclude that the award shocks the conscience of
the court. The discussion in paragraph 97 of the impugned judgement
amounts to appreciation or re-appreciation of the facts which is not
permissible under Section 34 of the 1996 Act. The Division Bench further
held that the fact of the AMEL being operated without any adverse
event for a period of more than four years since the date of issuance of
the CMRS certificate, was not given due importance by the Arbitral
Tribunal. 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 exercise of its jurisdiction
under Section 34.8 On the basis of the issues submitted by the parties,
the Arbitral Tribunal framed issues for
consideration and answered the
said issues. Subsequent events need not be taken into account.
36. For the aforementioned reasons, 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.
Adjusted Equity
37. Article 29.5.2 of the Concession Agreement which deals with
Termination Payment is as follows:-
“29.5.2 Upon termination by the Concessionaire on account
of DMRC Event of Default, DMRC shall pay to the
Concessionaire, by way of Termination Payment, an amount
equal to
a) Debt Due;
b) 130 % of the Adjusted Equity;
8 State of Rajasthan v. Puri Construction Co. Ltd. and Another  (1994) 6 SCC 485
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c) Depreciated Value of the Project Assets, if any, acquired
and installed on the Project after the 10th anniversary of the
COD.”
38. It is relevant to note the definitions of ‘Adjusted Equity’,
‘Concessionaire’s Capital Costs’, ‘Debt Due’, ‘Equity’, and ‘Subordinate
debt’ as provided in the Concession Agreement, which read as follows:-
“Adjusted Equity” means the Equity funded in Indian Rupees
and adjusted on the first day of the current month (the
“Reference Date”), in the manner set forth below, to reflect
the change in its value on account of depreciation and
variations in WPI, and for any Reference Date occurring:
a)
on or before COD, the Adjusted Equity shall be a sum
equal to the Equity funded in Indian Rupees and
expended on the Project, revised to the extent of one
half of the variation in WPI occurring between the first
day of the month of Appointed Date and the Reference
Date;
b)
from COD and until the 4th (fourth) anniversary thereof,
an amount equal to the Adjusted Equity as on COD
shall be deemed to be the base (the “Base Adjusted
Equity”) and the Adjusted Equity hereunder shall be a
sum equal to the Base Adjusted Equity, revised at the
commencement of each month following COD to the
extent of variation in WPI occurring between COD and
the Reference Date;
c)
after the 4th (fourth) anniversary of COD, the Adjusted
Equity hereunder shall be a sum equal to the Base
Adjusted Equity, reduced by 0.42% (zero
point four two
per cent) (This number shall be substituted in each case
by the product of 100 divided by the number of months
comprising the Concession Period. For example, the
figure for a 20 year Concession Period shall be 100/
240 = 0.416 rounded off to decimal points i.e. 0.42)
thereof at the commencement of each month following
the 4th (fourth) anniversary of the Project Completion
Date and the amount so arrived at shall be revised to
the extent of variation in WPI occurring between COD
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and the Reference Date; and the aforesaid shall apply,
mutatis mutandis, to the Equity funded in Indian Rupees.
For the avoidance of doubt, the Adjusted Equity shall,
in the event of Termination, be computed as on the
Reference Date immediately preceding the Termination
Date; provided that no reduction in the Base Adjusted
Equity shall be made for a period equal to the duration,
if any, for which the Concession Period is extended,
but the revision on account of WPI shall continue to be
made.”
“Concessionaire’s Capital Costs” means following:
•Prior to COD, the cost of the Concessionaire’s Works as
set forth in the Financing Documents plus any further
additional capital cost for any Change of Scope instructed
since the finalisation of the Financing Documents; and
• After COD, the actual capital cost of the Concessionaire’s
Works upon Project Completion as certified by the Statutory
Auditors.”
“Debt Due” means the aggregate of the following sums
expressed in Indian Rupees outstanding on the Transfer Date:
a)
the principal amount of the debt provided by the Senior
Lenders under the Financing Agreements for financing
the Total Project Cost (the “principal”) but excluding
any part of the principal that had fallen due for
repayment two years prior to the Termination Date;
b)
all accrued interest, financing fees and charges payable
under the Financing Agreements on, or in respect of,
the debt referred to in Sub-clause (a) above until the
Transfer Date but
excluding (i) any interest, fees or
charges that had fallen due one year prior to the
Transfer Date, (ii) any penal interest or charges payable
under the Financing Agreements to any Senior Lender,
and (iii) any pre-payment chares in relation to
accelerated repayment of debt except where such
charges have arisen due to Authority Default; and
c)
any Subordinated Debt which is included in the
Financial Package and disbursed by lenders for
financing the Total Project Cost.”
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“Equity” means the sum expressed in Indian Rupees
representing the equity share capital of the Concessionaire
and shall include the funds advanced by any Member of the
Consortium or by any of its shareholders to the Concessionaire
for meeting the equity component of the Concessionaire’s
Capital Costs.”
“Subordinated Debt” means the aggregate of the following
sums expressed in Indian Rupees or in the currency of debt,
as the case may be, outstanding as on the date of termination:
a)
the principal amount of debt provided by lenders or the
Concessionaire for meeting the Concessionaire’s Capital
Cost and subordinated to the financial assistance
provided by the Senior Lenders; and
b)
all accrued interest on the debt referred to in Sub-clause
(a) above but restricted to the lesser of actual interest
rate and a rate equal to 5% (five per cent) above the
Bank Rate in case of loans expressed in Indian Rupees
and lesser of the actual interest rate and six-month
LIBOR (London Inter Bank Offer Rate) plus 2% (two
per cent) in case of loans expressed in foreign currency,
but does not include any interest that had fallen due
one year prior to the Termination Date;
sprovided that if all or any part of the Subordinated
Debt is convertible into Equity at the option of the
lenders and/ or the Concessionaire, it shall for the
purposes of this Agreement be deemed to be
Subordinated Debt even after such conversion and the
principal
thereof shall be dealt with as if such
conversion had not been undertaken.”
39. The Tribunal focused on two components of Termination
Payment, which are (i) ‘Debt Due’, and (ii) 130 % of the ‘Adjusted
Equity’. According to the Appellant, the Division Bench committed an
error in concluding that the expression ‘Adjusted Equity’ in the Concession
Agreement should be calculated by taking into account only the share
capital of DAMEPL. The Appellant contended that the Tribunal had
rightly held that the expression ‘Adjusted Equity’ should include the
money brought in by DAMEPL’s promoter and had fairly concluded
that the amount of Rs.611.95 crore was used as expenses, thereby
qualifying as ‘Concessionaire’s Capital Costs’ under the Concession
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Agreement. The Tribunal was correct in holding that the amount of
Rs.611.95 crore advanced by DAMEPL’s promoter would qualify for
inclusion under the definition of ‘Equity’ on a plain reading of the said
definition. Construction of the contract is within the jurisdiction of the
Tribunal and merely because another view is possible, the court cannot
interfere with such construction and substitute its own view.
40. On the other hand, it was contended by DMRC that the amount
of Rs.611.95 crore was recorded as ‘share application money’ in the
balance sheet of DAMEPL as on 31.03.2010. However, the said amount
was shown as subordinated debt in the balance sheet as on 31.03.2011.
The Respondent referred to the resolution passed by the board of directors
of DAMEPL on 16.03.2011, in which a decision was taken to convert
the share application money into subordinated debt. DMRC urged that
the conversion of the share application money as subordinated debt was
a calculated move on the part of DAMEPL. If the share application
money had been allowed to retain the nature of equity, DAMEPL would
have lost the entire amount in the event of termination of the Concession
Agreement by DMRC for Concessionaire Event of Default in terms of
Article 29.1.1. After electing to convert the share application money
into subordinated debt, DAMEPL should not be permitted to claim that
for the purposes of computation of ‘Adjusted Equity’, the said amount
be treated as ‘Equity’. It was
further argued on behalf of the Respondent
that no material was produced by DAMEPL to show that the amount of
Rs. 611.95 crore was actually used for ‘Concessionaire’s Capital Costs’.
Reference was also made to the testimony of one of the witnesses
produced by DAMEPL to contend that the amount of Rs.611.95 crore
cannot be treated as equity in accordance with the provisions of the
Companies Act, 2013. DMRC contended that the High Court aptly set
aside the findings recorded by the Tribunal in respect of computation of
‘Adjusted Equity’.
41. We do not intend to re-examine the entire material on record
for the purpose of deciding whether the High Court was right in reversing
the conclusion of the Tribunal in relation to computation of the amount
under Article 29.5.2 of the Concession Agreement. The opinion of the
Tribunal is that the amount of Rs.611.95 crore was an amount advanced
by DAMEPL’s promoter which was not disputed by DMRC. The
contention advanced by DMRC, that it was only the equity share capital
as is understood within the meaning of the Companies Act, 2013 which
is liable to be paid by DMRC under Article 29.5.2, was rejected by the
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Tribunal. The view taken by the Tribunal that the amount contributed by
a member of the consortium or by shareholders to meet the
‘Concessionaire’s Capital Costs’ in any form, including where such funds
are classified as subordinated debt, cannot be treated as ‘Subordinated
Debt’ in terms of its definition in the Concession Agreement, is a
reasonable and possible view. On the other hand, the Division Bench of
the High Court relied upon the board resolution dated 16.03.2011 and
held that the Tribunal ought not to have treated the said amount as ‘Equity’
after the share application money was converted into subordinated debt.
After a detailed consideration of the relevant clauses of the Concession
Agreement, the High Court held that the Tribunal had committed a serious
error in its tabulation of ‘Adjusted Equity’ by completely ignoring the
evidence on record.
42. Even assuming the view taken by the High Court is not
incorrect, we are afraid that a possible view expressed by the Tribunal
on construction of the terms of the Concession Agreement cannot be
substituted by the High Court. This view is in line with the understanding
of Section 28(3) of the 1996 Act as a ground for setting aside the arbitral
award, as held in Associate Builders (supra) and thereafter upheld in
Ssangyong (supra). No case has been made out by the High Court to
establish violation of Section 28(3). Having carefully examined the
Concession
Agreement, the findings recorded by the Tribunal and the
findings recorded by the Division Bench, we are not in a position to hold
that the opinion of the Tribunal on inclusion of Rs.611.95 crore under
‘Equity’ is a perverse view. It cannot be said that the Tribunal did not
consider the evidence on record, especially the resolution dated 16.03.2011
passed by DAMEPL’s board of directors. We also do not find fault with
the approach of the Tribunal that the understanding of the term equity as
per the Companies Act, 2013 is not relevant for the purposes of
determining ‘Adjusted Equity’ in light of the express definition of the
term in the Concession Agreement. As has been held in Ssangyong
(supra), mere contravention of substantive law as elucidated in Associate
Builders (supra) is no longer a ground available to set aside an arbitral
award. The support placed by the Division Bench on the interpretation
of Section 28(1)(a) of the 1996 Act as adopted in Associate Builders
(supra) is, therefore, no longer good law. In view of the foregoing, we
set aside the findings of the High Court and uphold the award by the
Tribunal in respect of the computation of Termination Payment under
Clause 29.5.2.
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Grounds of challenge in SLP (C) No. 8311 of 2019 filed by
DMRC
43. One of the legal issues considered by the Tribunal is whether
DAMEPL waived their rights to terminate after participating in the
reconciliation process and after operating the AMEL for more than five
months from 22.01.2013 to 30.06.2013. As the participation of DAMEPL
in several meetings held after issuance of the termination notice dated
09.07.2012 and its decision to continue operating the AMEL was without
prejudice, the Tribunal rejected the submission of DMRC that the doctrine
of waiver applied and that DAMEPL was estopped from terminating
the Concession Agreement after having actively participated in the
process of rectifying the defects pointed out. The Division Bench of the
High Court approved the said finding on the ground that the decision of
the Tribunal could not be held to be flawed within the limited scrutiny
afforded to courts under Section 34 of the 1996 Act. In our view, the
Division Bench of the High Court rightly refrained from interfering with
the findings on waiver by the Tribunal.
44. The prayer for a direction to DAMEPL for specific
performance of its obligations under the Concession Agreement to operate
the AMEL was refused by the Tribunal. The Division Bench of the High
Court in its judgment observed that the said findings had not been
challenged before the High Court. Therefore, there is no reason for this
Court to adjudicate on the point of specific performance
of the Concession
Agreement.
45. The Tribunal awarded interest in accordance with the terms
of the Concession Agreement on termination payment. DMRC
contended before the High Court that the award in respect of interest
had to be set aside on the ground that it would result in unjust enrichment.
After a thorough consideration of Article 29.8 and Article 36.2.6.1 of
the Concession Agreement, the High Court has rightly refused to interfere
with the findings by the Tribunal relating to interest and we see no cause
for interference.
46. For the aforementioned reasons, the Appeal filed by DAMEPL
is allowed and the judgment of the Division Bench of the High Court is
set aside. The Appeal arising out of SLP(C) No. 8311 of 2019 filed by
DMRC is dismissed.
Nidhi Jain
Appeals disposed of.
DELHI AIRPORT METRO EXPRESS PVT. LTD. v. DELHI METRO
RAIL CORPORATION LTD.  [L. NAGESWARA RAO, J.]