Supreme Court upholds Arbitral Tribunal's award in DAMEPL appeal

Delhi Airport Metro Express Pvt. Ltd. Versus Delhi Metro Rail Corporation Ltd.

Delhi Airport Metro Express Pvt. Ltd. Versus Delhi Metro Rail Corporation Ltd. - (2022) 1 SCC 131 Issues Involved:
1. Validity of the termination notice dated 08.10.2012.
2. Computation of ‘Adjusted Equity’ for Termination Payment.
3. Waiver of termination notice due to DAMEPL’s conduct.
4. Grant of interest on termination payment.
5. Specific performance of the Concession Agreement.

Detailed Analysis:

1. Validity of the Termination Notice:
The primary issue was whether the defects pointed out by DAMEPL were cured within the stipulated 90 days from the cure notice dated 09.07.2012. The Arbitral Tribunal concluded that the defects were not cured and thus, DAMEPL's termination notice dated 08.10.2012 was valid. The Tribunal noted that there were significant defects, including 1551 cracks in 367 girders and twists in about 80 girders, which were not effectively addressed by DMRC. The Tribunal also considered the CMRS certificate dated 18.01.2013, which allowed for the resumption of the AMEL with certain conditions, indicating that the defects were not fully cured. The Supreme Court upheld the Tribunal's findings, stating that the Tribunal's interpretation of the Concession Agreement was a possible view and should not be interfered with by the courts.

2. Computation of ‘Adjusted Equity’:
The Tribunal included Rs. 611.95 crore advanced by DAMEPL’s promoter as 'Equity' for the purpose of calculating 'Adjusted Equity'. The Division Bench of the High Court disagreed, stating that the amount was converted into subordinated debt and should not be treated as equity. The Supreme Court held that the Tribunal's view was reasonable and within its jurisdiction to interpret the terms of the Concession Agreement. The Tribunal's decision to include the amount as equity was upheld, and the High Court's interference was deemed incorrect.

3. Waiver of Termination Notice:
DMRC argued that DAMEPL waived its right to terminate the Concession Agreement by participating in the reconciliation process and operating the AMEL for more than five months. The Tribunal found that DAMEPL's participation was without prejudice and did not constitute a waiver. The High Court agreed with the Tribunal's findings, and the Supreme Court saw no reason to interfere with this conclusion.

4. Grant of Interest on Termination Payment:
The Tribunal awarded interest on the termination payment as per the Concession Agreement. DMRC contended that this would result in unjust enrichment. The High Court, after examining the relevant clauses, upheld the Tribunal's decision. The Supreme Court found no cause for interference with the award of interest.

5. Specific Performance of the Concession Agreement:
DMRC sought specific performance of the Concession Agreement, which was refused by the Tribunal. The High Court noted that this finding was not challenged before it. Consequently, the Supreme Court did not adjudicate on this point.

Conclusion:
The Supreme Court allowed DAMEPL's appeal, setting aside the judgment of the Division Bench of the High Court and upholding the Arbitral Tribunal's award. The appeal by DMRC was dismissed, affirming the Tribunal's findings on the validity of the termination notice, computation of 'Adjusted Equity', waiver of termination notice, and the grant of interest on termination payment.