Reliance Infra wins arbitration award against DMRC amounting to Rs 2,950 cr

(Photo: PTI)
Reliance Infrastructure (R-Infra) on Thursday won a Rs 2,950 crore arbitration award against Delhi Metro Rail Corporation (DMRC) for the alleged breach by the latter of the agreement on the Airport Express line.

Delhi Airport Metro Express (DAMEPL), a subsidiary of R-Infra, has been awarded a compensation of Rs 2,950 crore. If the interest of Rs 1,775 crore is included, the total goes up to Rs 4,725 crore, possibly the largest arbitration award, said a person close to the development.

The compensation covers damages as a result of the alleged breach by DMRC of its obligations under the Concession Agreement and Material Adverse Effect.

“R-Infra participated in the PPP (public-private partnership) model in the Metro sector to lead the Metro movement in the country through PPP but unfortunately had to terminate the agreement. We welcome the award and hope it will encourage the private sector to participate in the nation-building process,” R-Infra said in a statement. 

The DMRC spokesperson said: “We are studying the award… will decide our further course of action in the matter after due deliberation.”

The award has been granted on the basis of termination provisions of the concession agreement, in accordance with which the arbitration tribunal has held the termination of the contract by DAMEPL valid, the statement said. 

The three-member arbitration tribunal, formed out of a DMRC-nominated panel, gave its award after hearing the case for about three and a half years.

The tribunal heard the submissions made by both the parties and after 68 hearings issued its final order. 

Under the government-approved guidelines given by the NITI Aayog, public sector undertakings are expected to pay 75 per cent of the award amount against a bank guarantee even if they want to challenge the award. 

Therefore, R-Infra is expected to get Rs 2,210 crore if DMRC proposes to challenge the award, according to the statement. 

DAMEPL had terminated the concession agreement with DMRC for the Airport Metro line on October 8, 2012. 

Commercial operations of the Airport Express started in February 2011 and were suspended when a faulty civil structure was detected in July 2012 and the project was handed over to DMRC in July 2013.

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