Reliance Infrastructure Tumbles 20% after SC Sets Aside Rs8,000 Crore Arbitral Award of Delhi Airport Metro
Moneylife Digital Team 10 April 2024
Shares of Reliance Infrastructure Ltd tumbled 20% to Rs227.40 on the BSE after the Supreme Court set aside an arbitral award of about Rs8,000 crore for the company unit Delhi Airport Metro Express Pvt Ltd (DAMEPL). Delhi Metro Rail Corporation (DMRC) has filed the curative petition against DAMEPL, a special purpose vehicle (SPV) of Anil Ambani-owned Reliance Infrastructure.
 
In a regulatory filing, Reliance Infrastructure says, "The order dated 10 April 2024 passed by the Supreme Court does not impose any liability on the company and the company has not received any money from DMRC or DAMEPL under the arbitral award."
 
A bench of chief justice of India DY Chandrachud and justice BR Gavai and justice Surya Kant allowed the curative petition filed by DMRC against a September 2021 ruling of the apex court.
 
In the order the bench says, “While the cure notice contains allegations about the line not being operational, there is evidence on the record indicating that the line was in fact running…..The award contains no explanation as to why the steps which were taken by the DMRC were not 'effective steps' within the meaning of the termination clause."
 
Further, it says that the arbitral tribunal ignored the specific terms of the termination clause and erroneously rejected the CMRS (commissioner of metro railway safety) sanction as irrelevant.
 
According to a report from Bar & Bench, the SC effectively restored a judgment rendered by a division bench of the Delhi High Court (HC) which had ruled in favour of DMRC before the Supreme Court had set aside the same in September 2021. 
 
In 2017, a three-member arbitral tribunal passed a unanimous award in favour of the DAMEPL accepting the Airport Metro operator's claim that running operations on the line was not viable due to reasons such as structural defects.
 
Subsequently, a division bench of the Delhi High Court partly allowed the appeal filed by the DMRC. However, the award was restored by the Supreme Court on a special leave petition filed by the DAMEPL.
 
The apex court clarified that its curative jurisdiction should not be used to open the floodgate. However, in the specific facts and circumstances of the case, the bench says that SC erred in interfering with the division bench order of the HC which had set aside the arbitral award.
 
"Interference of Supreme Court had led to grave miscarriage of justice," the apex court says.
 
In 2008, DAMEPL had entered into a contract with DMRC to run the airport metro line till 2038.
 
As disputes arose between the parties, DAMEPL stopped operating the metro on the airport line and invoked the arbitration clause against DMRC, alleging a violation of the contract and sought a termination fee.
 
Reliance Infrastructure ended Wednesday 20% down at Rs277.40 on the BSE, while the benchmark Sensex closed marginally up at 75,038 points.
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