Victory! Anil Ambani's Reliance Infra Wins Rs 4,600 Cr Arbitration Case Against Delhi Metro

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India, 14 Sep 2021 10:29 AM GMT

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The Delhi High Court judgement setting aside the arbitration award favouring Ambani's firm, which had withdrawn from running the Airport Express metro line due to safety concerns, was overturned by a bench led by Justice L Nageswara Rao.

Anil Ambani-led Reliance Infrastructure has won a five-year-long legal battle and will receive ₹4600 crore from Delhi Metro Rail Corporation Ltd (DMRC).

On Thursday, September 9, the Supreme Court upheld an arbitration award in favour of a case related to Delhi Metro's Airport Express Line Metro project

In 2008, the Reliance Infrastructure unit signed a contract with Delhi Metro to operate the country's first private city rail project until 2038, reported Business Line.

Following disagreements in 2012, Ambani's company ceased operations of the capital's airport metro project and filed an arbitration case against Delhi Metro, alleging contract violations and seeking a termination fee.

What Was The Case?

The Delhi Metro Rail Corporation Limited (DMRC) had entered into an agreement with Reliance Infrastructure's special entity 'Delhi Airport Metro Express Private Limited (DAMEPL) for designing, installation, operation and maintenance of Airport Metro Express Line.

However, after five years, DAMEPL raised complaints about faulty designs and low-quality installations in viaduct and stations which were built under the supervision of DMRC.

It asked DMRC to remove the defects within 90 days failing which it would be treated as a breach of the agreement.

DMRC, however, failed to remove the defects within the stipulated time and DAMEPL ended up issuing a second notice terminating the concession agreement, as per Urban Transport News.

An aggrieved DMRC filed for arbitration stating that DAMEPL's termination agreement was illegal and sought compensation of over ₹3000 crore.

In response, DAMEPL justified the termination as per the provisions in the concession agreement filed a counterclaim of ₹3,470 crore as termination payment along with interest.

After undertaking a detailed study of the defects in the civil structure, the Arbitral Tribunal found that these were neither repaired nor any step was taken by DMRC to rectify it, constituting a material breach on the part of DMRC.

It directed DMRC to pay ₹2,782.33 crore along with interest as the termination payment. The decision was challenged by DMRC at the Delhi High Court which set aside the arbitration award.

DAMEPL, however, went on to challenge this decision at the Supreme Court.

A Major Victory for Reliance

The decision is a significant win for Ambani, whose telecom companies are in receivership, and he is fighting a personal insolvency case filed by the country's top lender. Following the court judgement, Reliance Infra's stock rose by the daily limit of 5 per cent.

During the case hearings, as reported by NDTV Reliance's lawyers stated that the money would be used to pay lenders.