The Supreme Court on Thursday upheld an arbitration award worth over Rs 4,660 crore in favour of a subsidiary company owned by entrepreneur Anil Ambani’s Reliance Infrastructure, the Bloomberg reported.
The arbitration was initiated in 2012 by the Delhi Metro Rail Corporation against Delhi Airport Metro Express Private Limited, a subsidiary firm owned by Reliance Infrastructure.
The Delhi Metro authority had entered into an agreement with Ambani’s company in 2008 on build-operate-transfer, or BOT basis, for construction of the Delhi Airport Express route, according to Bar and Bench.
Under BOT agreements, private entities usually receive a concession from public sector authorities to finance, build and operate a project for a stipulated period.
In this case, Delhi Airport Metro Express Private Limited had received the contract to run the metro rail project till 2038.
In 2012, the Ambani-owned company terminated the agreement. The company alleged that structural defects in the metro line were not rectified by the Delhi Metro Rail Corporation.
However, the Delhi Metro authority claimed that the notice issued for termination of the agreement was illegal as they had taken steps to honour its obligations under the contract.
The Delhi Metro Rail Corporation then filed an arbitration plea in the matter, according to Bar and Bench.
In 2017, the arbitral tribunal ruled the matter in favour of Ambani’s company and directed the Delhi Metro Rail Corporation to pay Rs 2,800 crore plus interest to the firm.
In 2018, a single-judge bench of the Delhi High Court upheld the verdict, but in January 2019, a division bench of the same court overturned the decision.
The Delhi Airport Metro Express Private Limited then moved the Supreme Court challenging the division bench’s verdict.
On Thursday, a two-judge bench of Justices L Nageswara Rao and S Ravindra Bhat set aside the division bench’s decision.
The judges said that the arbitral tribunal had clearly held that the Delhi Metro Rail Corporation had failed to rectify the defects in the metro line before the stipulated time period of 90 days.
In its annual report, Reliance Infrastructure has stated that the arbitration award of Rs 2,800 crore plus interest is worth more than Rs 4,660 crore, according to Bloomberg.
The development was a victory for Ambani as his telecom firm Reliance Infocomm had declared bankruptcy in 2019. Ambani is also battling an insolvency case against the State Bank of India.
Shares of Reliance Infrastructure rose 5% on the Bombay Stock Exchange during Thursday’s trading.