The Delhi High Court has set aside the over Rs 4,500-crore arbitration award in favour of Reliance Infrastructure subsidiary DAMEPL, which had pulled out from running the Airport Express metro line over safety issues, saying that the arbitral tribunal had not considered that the tracks were certified as safe for commercial operations.
The decision by a bench of justices Sanjiv Khanna and Chander Shekhar came on Delhi Metro Rail Corporation's (DMRC) appeal against a single judge order of March 6 last year upholding the arbitral award in favour of Delhi Airport Metro Express Private Ltd (DAMEPL).
The court said the tribunal had ignored and did not consider vital evidence of certification for commercial operations accorded by Commissioner of Metro Rail Safety (CMRS) while deciding the question of civil structure faults and instead it held that no effective steps to cure the defects were taken.
"The reasoning virtually over-rules, negates and rejects statutory certification accorded by CMRS. Arbitral Tribunal without reason has held that the permission accorded and subsequent satisfactory commercial operations were not relevant and inconsequential. Pertinently certification/permission was granted by CMRS after due verification of the civil structure including the defects in girders.
"Cumulative effect of the aforesaid discussions is that the award shocks conscience of the court. Consequently, the award on the said finding would falter and fail," the bench said in its 97-page judgement which was pronounced on January 15 but made available on its website on Friday.
The court gave liberty to both DMRC and DAMEPL to invoke arbitration clause for fresh adjudication on their claims and counter claims.
Under the agreement between the two, if the contract to run the Airport metro line was terminated due to DAMEPL's fault, DMRC would have to pay 80 per cent of the debt, while if it was the metro's fault, then the PSU would have to pay 100 per cent of the debt and 130 per cent of the equity.
DAMEPL had borrowed from 11 banks -- Axis Bank, UCO Bank, Punjab and Sind Bank, Andhra Bank, Central Bank of India, Dena Bank, Allahabad Bank, Canara Bank, Bank of India, IIFC UK and Canara Bank London -- to carry out operations on the line.
DMRC in its appeal had said that it has been running the airport line since June 2013 when DAMEPL had "abandoned" the project despite repairs of structural defects in November 2012.
DAMEPL, on the other hand, has claimed that the CMRS certificate was granted with the conditions that the trains have to be run at reduced speeds and frequency, which would make the operations commercially unviable for it.
The concession agreement between the two was signed on August 25, 2008. Under the agreement, DMRC was to carry out the civil works, excluding at the depot, and the balance, including the project system works, were to be executed by DAMEPL, a joint venture of Rinfra and a Spanish construction company -- Construcciones Y Auxiliar De Ferrocarriles -- with a shareholding of 95 and five per cent respectively.
The Airport Express line was commissioned on February 23, 2011 after an investment of over Rs 2,885 crore, funded by the DAMEPL's promoters' fund, banks and financial institutions.
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